This guide is aimed at clients who may benefit from an overview of how commercial disputes might be resolved. That overview can assist in understanding the steps that are necessary towards resolving a case, and how they fit into the “bigger picture”.
Nonetheless, each case is unique, and this guide is not a substitute for bespoke advice suited to the circumstances of an individual case.
Depending on how and where your case arose, different legal systems and laws might apply to resolving your claim. The guide applies to the legal system and laws in England and Wales. It is important to verify the applicable legal system at the outset of the claim, albeit in many cases this will be self-evident. Some cases may also involve specific methods of resolving disputes, such as contractual arbitration provisions, which are outside the scope of this guide.
Overview of this guide:
Commercial disputes typically involve a claim by Party A (known as the “Claimant”), against a Party B (known as the “Defendant”), which alleges that Party B failed to correctly fulfil obligations that they had to Party A. Party A’s claim usually seeks monetary compensation from Party B.
The English and Welsh legal system uses an adversarial approach, rather than an investigatory approach. This means that each side puts forward its view of the case, and supporting evidence, in the hope of persuading each other – or ultimately a Court appointed Judge – that they are right.
Most claims of this type are therefore resolved in one of four ways:
- The claim is decided by the Court on its merits;
- The claim is decided by the Court on procedural grounds;
- The two sides reach an agreement on the outcome; or
- The claim is abandoned.
Relatively few commercial disputes are resolved by the Court considering the merits of the claim. However, the ability of the Court to resolve a claim based on its merits is a key factor behind the two sides reaching an agreement on the outcome. It is therefore relevant to understand how the Court would decide your case, even if it is unlikely ever to actually do so.
Before the Court decides a claim on its merits, a Court will usually hold a “Trial”. A Trial is essentially a formal hearing led by a Judge, at which the Judge will hear from both sides about the legal test that the claim needs to satisfy to succeed, and the evidence available to satisfy that test, receiving input from:
- the (usually barristers) appointed by the parties (or occasionally the parties themselves);
- people who have first-hand knowledge of what happened (known as “witnesses”); and
- people who can assist the Judge in understanding particularly technical issues (known as “expert witnesses”).
At the end of the Trial, the Judge will decide whether the evidence has satisfied the relevant legal test. The Judge considers this based on whether it is more likely than not that the test is satisfied (known as a “balance of probabilities”).
There are strict rules about gathering and sharing evidence, and arguments on the applicable legal tests, in order to ensure that both sides to a dispute have a fair chance in presenting their case to the Court. We’ll return to those rules a bit later in this guide, though it is worth nothing that they usually arise in four phases:
- Pre-Action Protocol
It takes a lot of work by both Claimants and Defendants to progress through these phases and reach Trial, which leads to significant time and costs being incurred. Legal costs can often be recovered by a “successful” party, but that is a complex topic – we’ll return to that a bit later. Consequently, once both sides have a reasonable understanding of each other’s cases, it is common for them to explore whether there is scope for an agreement on resolving the claim without the need for it to be decided by the Court (known as a “settlement”).
The remainder of this guide considers these factors in more detail. First, we’ll consider what needs to be done, and then the usual process used to deal with it.
Tactical Tip: Most cases are best resolved through settlement rather than by a Court decision at trial, but being ready and able to follow the Court process towards trial can significantly increase the chances of achieving a settlement.