Will the Commercial Court resort to PFI for revamp?
24 February 2003
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5 March 2014
Bizarrely, the Comm-ercial Court could be the next Government PFI project on which lawyers race to tender.
The Commercial Court, like many other public sector properties, is in crucial need of a revamp.
The main Commercial Court building at St Dunstans House boasts courts so small that often the participants in a case cannot fit in alongside the documents. Its toilets have been described as slums and one High Court judge has publicly slammed the building as a disgrace.
At the past three-year spending review the Government gave the Lord Chancellors Department (LCD) £12.6bn to spend but allocated nothing for a new Commercial Court, even though the LCD has publicly declared it as a priority.
Legal aid will take £7.4bn of the budget and the rest is likely to go on improving the criminal courts and speeding up the asylum process. It is predicted that a new building will cost about £59m, but the LCD says it cannot even come up with that.
At the end of March the LCD will tell key members of the judiciary, City litigators and the Corporation of London how much it can afford to put into revamping the Commercial Court and what the shortfall will be.
Giving a private developer a contract to build and run a new Commercial Court, which is then leased back to the Court Service, is fast emerging as the only option for plugging the funding gap.
There have been other plausible suggestions, but unfortunately, no one likes them.
For example, new accomodation, which the LCD says is desperately needed, could be paid for by raising the cost of lodging a claim in the Commercial Court.
At present it costs £500 to issue a claim, the same as in other divisions of the High Court.
Last year, the Comm-ercial Court heard cases such as the £180m dispute between Carlton and Gran-ada and the Football League and is currently processing about $3bn (£1.9bn) worth of film finance litigation.
With 1,213 claims made in the Commercial Court last year, it could rein in an extra £6-£12m a year.
So, would litigants really mind doubling, or even tripling, the cost of a claim? Perhaps surprisingly, they would. Many lawyers on the Commercial Court Users Committee have rejected this idea already as they believe clients would transfer their cases to the Chancery Division, or even abroad, if the cost of a claim were to rise.
In December 2001 the LCD released a report by Cap Gemini Ernst & Young on the Commercial Court which suggested introducing a new users fee of £2,100 a day. But the LCD roundly rejected this recommendation for broadly the same reasons lawyers have argued against raising the cost of a claim.
A quick glance at the Commercial Court list at the time of writing showed that multinationals such as Esso, Lehman Brothers, Corus and HSBC were litigating. It doesnt take a mathematician to work out how much £2,100 a day would mean to them.
The LCD would like to think that, for corporations, the Commercial Court is the top of the range in a Rolls-Royce legal system, but it will still only charge minicab rates for a ride.
Without any willingness to raise Commercial Court costs the debate returns squarely to private funding.
There is a batch of, frankly, hilarious letters circulating the City between the City Solicitor Andrew Colvin and various concerned litigation heads about how this could be achieved.
Last month Colvin, who is lobbying for an improved Commercial Court on behalf of the Corporation of London, wrote to litigation heads a reasonable letter mooting the private funding idea.
A business case for private sector involvement in the provision of improved facilities for the courts could be developed, he writes.
Speaking to The Lawyer, Colvin said he doesnt know which method of private funding would be best. He is in discussions with various alternative dispute resolution associations to see if they will help out with a new accommodation project by agreeing to hire out rooms for arbitrations and the like.
Perhaps this is a reasonable suggestion, but there is already a London Court of International Arbitration, so why would users switch venues?
Colvin also admits the Corporation would consider PFI as a reasonable solution to the shortfall.
Another letter seen by The Lawyer is from Tim Taylor, SJ Berwins head of litigation and a member of the Commercial Court Users Committee, and strongly advocates pursuing the PFI route. He even suggests that lawyers who received Colvins letter should encourage their property developer clients to get involved.
Between the various firms on this mailing list we must act for most of the major developers in the UK. Perhaps there is some scope for a few floors of state-of-the-art courtroom suites to be the Planning Gain element of a major new hotel development, with part of it leased to the Court Service on a pepper-corn rent, he writes.
Taylor probably had his tongue firmly lodged in his cheek when suggesting that the Commercial Court should share its new premises with a City hotel, but he does say that users of the court should consider the feasability of a development along these lines.
But what sort of Commercial Court would a PFI solution deliver?
Private contractors like to promote their brand through any public sector development in which they are involved. Of course, no one would ask the Commercial Court judges to swap their robes and mantles for brightly coloured polo shirts emblazoned with the developers brand.
More seriously, what if the developer were to find itself in front of a Commercial Court judge? Should it be forced over to the Chancery division to avoid conflicts? The alternative is chilling.
The Commercial Court makes objective legal decisions against large corporations every day and should be run as distantly from them as possible.
The Lord Chancellor must seriously reconsider raising the costs of using the Commercial Court or somehow find public money to plug the shortfall. Otherwise, PFI could be left as the only available alternative.