English High Court
If a jurisdiction clause calls for English High Court, this refers to one of the senior courts of England and Wales (along with the Court of Appeal and Crown Court). It has three divisions:-
• Queen’s Bench Division
This court hears a wide range of common law cases and includes specialised courts including the Commercial Court and Admiralty Court.
• Chancery Division
Deals with business law, trusts, probate, and insolvency and includes the Patents Court and the Companies Court.
• Family Division
Usually for Charterparty/BL disputes, a claim will be issued in the Commercial Court. The Admiralty Court is reserved for cases such as collisions, salvage, mortgages, passenger injuries and arrests.
As soon as a claim is issued (that is, a Claim Form sealed by the court and the issue fee paid) the management of the claim is governed by the Civil Procedure Rules (CPR). These are standard rules which set out the timetable for claims from issue to trial, and detail what is required from each party in terms of pursuing or defending a case. Subject to the type of claim, it may be allocated to the small claims track (less than £10,000), fast track (no more than £25,000 and not particularly complex) and multi-track (all other claims).
A key component of the CPR is that claims are dealt with proportionally, with costs in mind, and that the parties explore alternative dispute resolution where appropriate. The rules, however, are less flexible than that of arbitration and can only be varied by agreement between the parties or an application to the judge. However, in the interests of ensuring claims are dealt with expeditiously, the court has certain case management powers which allows it to make orders on its own initiative.
Cases in the High Court will be conducted by English solicitors and often pleadings will be drafted by Counsel. At hearings, Counsel will usually appear before the judge to advocate on behalf of the claimant/defendant, with the solicitors providing support. This, and the need for strict compliance with the CPR, can increase the legal fees incurred subject to the type of claim.
In general terms, if a party is awarded judgment in their favour, they will also be entitled to recover their legal fees. Depending on the judge, and the nature of the claim, a good rule of thumb is that 65% to 70% may be recovered. There will be a statutory entitlement to interest which is currently 8% above the Bank of England base rate per annum.
There may be grounds to appeal a judgment from the High Court if it is considered the appeal would have a real prospect of success or there is some other compelling reason for the appeal to be heard. The case would then proceed to the Court of Appeal and, if further appealed, to the Supreme Court which is the highest court in England and Wales. It should be noted judgments are published and will name all parties involved.
There are a number of instruments governing the enforcement of English judgments within EU Member States and Commonwealth countries. There are no reciprocal arrangements between the UK, USA, Japan and China so the law of the enforcing country will apply alone.
London Arbitration
Where English law and arbitration is provided for in a contract, it will be governed by the Arbitration Act 1996. The Act gives the parties freedom to agree how disputes are to be resolved. If a clause providing for arbitration is silent the procedure is governed by the Act but frequently the parties agree to apply the London Maritime Arbitrators Association (LMAA) model. If so the arbitration clause may provide for the main LMAA terms, or the Small Claims Procedure (SCP) (usually for claims under US$50,000 but can be amended by agreement).
The LMAA terms seek to offer a more cost-effective but specialist mechanism for resolving claims. In particular:-
• SCP
The main advantage is the use of a sole arbitrator and a fixed fee which includes the appointment fee, interlocutories, a hearing not exceeding one day, an award and an assessment of costs. There is no formal disclosure procedure which speeds up the process and reduces time and costs. Costs can be recovered up to a maximum of £4,000 plus claim fee. There is no right of appeal to the courts unless it relates to an arbitrator’s ruling on his own jurisdiction. The fee (currently £3,000) must be paid on commencement of arbitration but if the case settles a proportion of this fee can be recovered subject to the stage of proceedings.
• LMAA Terms
These terms will apply to all claims, regardless of value or complexity, where there is no SCP agreed. There are a number of options available in relation to the composition of a tribunal and this is usually expressly agreed between the parties in the arbitration clause. The fee payable on commencement of arbitration is only £250 but, if the matter proceeds to a hearing, costs can equal those incurred in High Court proceedings. Full rights of appeal to the courts apply under this procedure.
Whilst LMAA terms adopt the procedural timetable as set out in the Arbitration Act 1996, one of the key components of this type of arbitration is the flexibility. The parties are essentially able to agree their own procedure, only reverting to the arbitrator or tribunal if an agreement cannot be reached. Whilst this reduces pressure in complying with the need for pleadings, witness evidence, expert evidence etc. it can also mean that proceedings can stretch out over several years if the claimant does not actively progress matters. Unlike the courts, an arbitrator or tribunal is unlikely to intervene unless expressly asked to do so by one of the parties.
If the claimant is successful, there is an entitlement to recover costs. Whilst recoverable costs in the SCP are capped at £4,000 under the LMAA terms recoverable costs may be in the region of 70% to 80% of the successful party's costs. Arbitrators also have the power to award simple or compound interest on an award (e.g. 4.5% per annum and pro rata compounded at three-monthly rests). Awards are confidential and only reported using the facts of the case, maintaining the parties’ privacy. The only exception is if an award is appealed, when all details will then be made public.
As mentioned above, under the Arbitration Act 1996 arbitrations awards handed down on LMAA terms are capable of being appealed on a question of law or if a serious irregularity can be shown. An appeal would be made to the High Court (usually Commercial Court) and may then follow the same route of appeal to the Supreme Court. It is widely considered the rights of appeal are limited to ensure a balance and prevent parties utilising both arbitration and High Court litigation.
Enforcement of arbitration awards is mandatory in all New York Convention signatory states (nearly all key trading countries, some 148). However, in China for example, there is a “public policy” exception commonly relied on to complicate the enforcement of foreign arbitration awards. Often domestic courts will have the last say as to the enforcement of awards and this is therefore something that should be explored before costs are incurred pursuing an award.
Article by Emily McCulloch
