Vive la différence? Blurring the lines between commercial and chancery

Will the new Business Court spell the end of the great divide? Nina Goswami reports

The new home of chancery and commercial law may be a few years away from completion, but legal tongues are already wagging over how housing the two areas under one roof will affect them.

The name of their new home, the Business Court, hints that the chancery-commercial divide may not stand the test of time. And as the lines between chancery and commercial continue to blur, some in the legal profession claim the two are indistinguishable, going so far as to insinuate the former no longer really exists at all.

So will the advent of the Business Court signal an end to the divide? Linklaters litigation and arbitration partner Tom Lidstrom claims this could be the case, saying that even today the categorisation of chancery and commercial is no longer meaningful and is often arbitrary.

“There’s a slice of large-scale chancery work, such as huge insolvencies and offshore trust work, which is heavily commercial. That work is classified as chancery, but the classification is imposed by the rules, not by the parties or those advising them,” explains Lidstrom.

Lidstrom adds that, when the Commercial Court and Chancery Division start to cohabit, judges will be forced to implement some common sense reforms.

“The reality is that we need flexibility, not labels. The future lies in a single commercial business court,” adds Lidstrom.

However, as Sonya Leydecker, head of litigation and arbitration at Herbert Smith, points out, the Chancery Division is currently enjoying a revival among litigators.

“The Chancery Division remains the forum of choice in many business-related disputes,” says Leydecker. “For many litigators the Chancery Division would be considered the first port of call for any dispute not falling within the usual jurisdiction of the Commercial Court.”

Certainly, chancery cases seem to be on the increase, with the regions seeing a surge in claims. Birmingham, for instance, has seen a twofold increase in the number of chancery High Court hearings since 2001.

So far this year the Chancery Division in England and Wales has seen the number of claims issued reach 1,737, compared with 1,086 in the Commercial Court. Antony Dutton, head of dispute resolution at Norton Rose, says this is an indication that litigators still see chancery as a good jurisdiction for proceedings.

“Despite the continuing evolution of the Commercial Court, the number of claims issued in the Chancery Division so far this year clearly shows that chancery is still seen as the appropriate division for a wide range of specialist proceedings that either cannot be commenced elsewhere in the High Court or that can be dealt with most efficiently in chancery,” Dutton says.

The Chancery Division also has strong backing from other big hitters in the litigation arena, including Simon Davis, a partner at Clifford Chance and president of the London Solicitors Litigation Association, and Richard Millett QC of Essex Court Chambers.

Davis says: “The inclusion of part of the Chancery Division in the new Rolls Building shows, if anything, chancery’s determination to continue to serve business clients. There are many excellent judges in both the Chancery Division and the Commercial Court whose expertise and commercial approach will continue to be attractive to business litigants.”

Millett adds that chancery is still alive and well, providing an excellent service for commercial clients.

“Its judges, particularly the new crop, come from chancery and commercial sets, such as Mr Justice Briggs, and have huge expertise in commercial disputes and client needs,” explains Millett. “Chancery has long had an undeserved reputation as a repository for the dusty and out-of-touch, but nothing could be further from the truth. There are aspects of heavy commercial work that require chancery expertise and for which few commercial judges would have a natural feel.”

That said, Millett points out that the divide between commercial and chancery is not perfect.

“The master system in the Chancery Division, which the Commercial Court does not have, isn’t particularly useful or appropriate for heavy commercial cases and can lead to delays and extra expense,” he explains. “On the other hand, commercial judges go out on circuit, which tends to undermine the effectiveness of judicial continuityon big cases and can create diary problems. There’s a powerful case for a combined business court offering the best of each.”

But it is the idea of a combined business court that is the bone of contention, because it could be seen as the end of the divide between chancery and commercial.

Senior clerk Paul Shrubsall of One Essex Court says he can see the terms ‘chancery’ and ‘commercial’ dying out within three or fours years – just in time for the Business Court.

“Once the new court’s set up I can see it becoming a super business court as opposed to simply being commercial or chancery,” says Shrubsall. “What I can see is that commercial and chancery will no longer exist and instead we’ll have something similar to the model Financial Dispute Centre in Dubai instead.”

The evidence of the lack of divide between chancery and commercial speaks for itself. Word in the legal sphere is that the Commercial Court is bringing in a pilot scheme relating to its daily fee. The pilot would see a change in the structure of fee rates, which many lawyers are not willing to take a chance on. The result, sources say, is that the Chancery Division will find a lot more claims being filed in its court with a drop in the number of Commercial Court claims. This is another sign of how claims between chancery and commercial are interchangeable.

The divide has narrowed to such an extent that chambers are no longer classifying themselves as simply chancery. For example, on Wilberforce Chambers’ homepage it highlights the fact that it is “not just a chancery chambers”.3 Verulam Buildings, too, has long been known for its chancery work, but now markets itself as a commercial set; and 3 Stone Buildings and Maitland Chambers now ensure that they are seen to straddle both chancery and commercial, referring to themselves as either ‘commercial chancery’ or ‘chancery commercial’ sets. An indication, perhaps, that chancery and commercial can no longer stand alone.

Although there is much support for the Chancery Division as a standalone court, the likelihood is that, once housed in one building, the lines between commercial and chancery will blur even more than they have already.

The Business Court is likely to see the two great houses of litigation merge to produce a super legal arena. ‘Business law’ here we come.