English Commercial Court sees increase in claims and continued international profile

Litigation expert Emilie Jones of Pinsent Masons said the rising claims volumes and the international profile of these claims show that the Commercial Court continues to be a dispute resolution venue of choice for businesses and high net worth individuals around the world, as well as providing essential support to London as a leading centre for international arbitration. 

“This is encouraging for those concerned about perceived threats to the attractions of the court posed by developments such as Brexit and the development of international commercial courts in other parts of the world,” she said.

However, litigation expert Mike Hawthorne of Pinsent Masons added that the statistics overall “support our experience that the Commercial Court is operating at or near full capacity and so needs additional judges to ensure it maintains this positive trend.”

According to the Courts and Tribunals Judiciary study (80 pages / 880KB PDF) into claims issued in the Commercial Court, the number of claims issued in the court during the 2022-23 reporting period reached 885, up from 723 the previous year. While a significant part of the increase resulted from 111 Covid-related business interruption insurance claims, there would have been a 7% increase in claims even without those claims. The number of claims issued in all courts covered by the report, including the Admiralty Court and London Circuit Commercial Court, increased too, by 15% from 1,172 claims to 1,352.  

In terms of work types, the Commercial Court continues to see a broad range of commercial disputes, including “growth areas” such as commercial fraud, actions arising out of commercial and business acquisition agreements, and claims relating to banking, financial services and securities transactions.  

The court is currently dealing with a number of significant groups of managed cases, for example, those relating to the impact on leased aircraft of the Russian invasion of Ukraine, and a number of very large disputes, such as a £1.5bn claim alleging dishonest schemes to extract tax refund payments from the Danish tax authority.

The workload of the Commercial Court continues to be highly international. In general, over 70% of the court’s caseload involves one or more parties that are outside the UK, or relates to property or events outside the UK. Around 25% of the claims issued in the Commercial Court arise from arbitration, reflecting London’s continued status as an important centre for international arbitration.

The report also highlighted a number of other encouraging developments in the English Commercial Court, which should help to “ensure that the court continues to deliver an efficient, high-quality service for businesses that use it to resolve their most important and complex disputes”, according to Jones.

The report showed a reduction in hearing numbers and trial numbers but the number of ‘sitting days’ – the days spent by judges in court hearing matters – remained steady. Judges spent more days than in the previous year on reading paperwork in preparation for hearings and writing judgments. As Mr Justice Foxton commented in the introduction to the report, the figures “suggest some success in the court’s efforts to ensure that its resources are focused on those complex and significant cases which the court was established to resolve”. 

“The statistics about hearing numbers, judicial sitting days, and days spent by judges on reading in to matters and writing judgments suggest that there are fewer cases going to trial or other hearings in the Commercial Court, but that those which do go to a hearing are more complex: such matters take longer to hear, prepare for and write judgments about. These are the matters for which the Commercial Court is designed, and it is important that its resources are not unnecessarily used on lower-value, simpler matters which should be brought in another part of the court system,” said Jones.

Two other encouraging signs covered by the report correlate to the lower number of hearings and trials in the Commercial Court – the growing caseload of the London Circuit Commercial Court, and increasing settlement rates.

The number of claims being issued in the London Circuit Commercial Court went up from 290 to 324, reflecting parties more frequently correctly issuing smaller commercial claims in the London Circuit Commercial Court rather than the Commercial Court. The judiciary encourages this and noted in the report that “consideration is being given to increasing the £5 million guideline threshold [for issuing in the Commercial Court,] to reflect inflation and workflow”.

“We would likely see even more use of the London Circuit Commercial Court if, as the report suggests, updated guidance is to be issued about the guideline threshold below which claims should be dealt with by that court instead of the Commercial Court. The trend, which the report identifies, of determining more limited applications on paper also delivers efficiencies and costs savings for parties,” said Jones.

Hawthorne warned, however, that the increase in applications being dealt with on paper “may be driven to an extent by sometimes long lead times for hearing dates. This again suggests that the court is at capacity and needs additional judges”.

The report also noted that settlement rates have increased. Out of 123 full Commercial Court trials listed during the reporting period, around 68% settled, which was an increase on previous years. The London Circuit Commercial Court also saw a marked increase in matters settling before trial, up to 78% from 68% in 2021-22.

Hawthorne said that the notable increase in settlement rates may have a number of drivers. “For example, it may reflect some parties’ concern to limit the costs of disputes in challenging economic circumstances, but it could also reflect the fact that cases are increasingly funded by third-party litigation funders, who may be keen to de-risk through settlement a little earlier than self-funding parties. It may also, in part, be a result of the English courts’ efforts in heavily encouraging parties to engage in ‘negotiated dispute resolution’ (NDR), which is now considered such a central part of litigation that it is no longer termed ‘alternative dispute resolution’ (ADR).”

NDR may take place via mediation, conciliation, expert determination or another type of binding or non-binding process. 

“The procedure in the Commercial Court builds in consideration of NDR at various stages, ensuring that parties’ minds are focused throughout on ways of resolving their dispute without having to proceed to a full trial,” Hawthorne said.

Another part of the report focused on the uptake of the court’s innovative regimes, namely the Shorter Trials Scheme (STS) and the Flexible Trials Scheme (FTS), and suggested that the uptake of the FTS in particular could be improved.

The STS is designed for cases which can be heard in no more than four court days and provides for a timetable which enables determination of a dispute within a year of the claim being issued. The FTS scheme is designed to allow parties to adapt trial procedure to suit their case, such as by limiting disclosure, oral evidence or oral submissions, thereby potentially shortening the time to a final determination.

“The report serves as a reminder that in appropriate cases, these innovative schemes may help businesses achieve resolution of their disputes more quickly and at reduced cost. Parties should be willing to think creatively with their legal teams about whether these schemes may be beneficial to them. They will not be suitable for all cases, such as those where extensive disclosure and lengthy oral evidence is essential, but their utility should not be underestimated: there is, for example, experience of the Shorter Trials Scheme being used to deliver a swift resolution of multi-million pound litigation,” said Hawthorne.

“These schemes rely on parties agreeing to put their cases into them. Perhaps the uptake could be improved by judges more often encouraging parties to consider them when they appear for the first court date,” he added.

The latest report on the Commercial Court covers the year 2022-23, with the statistics running up to September 2023. It covers the English Commercial Court and its associated courts, the Admiralty Court and London Circuit Commercial Court.