U.K. Court Proceedings And Arbitrations: Pre-Action/Early Disclosure

(Sea Venture Volume 21)

The Civil Procedure Rules (CPR) which govern litigation in the English Courts allow a party to obtain before commencement of proceedings disclosure of documents of a type normally disclosable in litigation. An application for pre-action disclosure can be made in all types of cases.¹

The London Maritime Arbitration Association Terms 2002 also give parties the right to apply for disclosure prior to service of submissions or pleadings.

This procedural device, which has only recently begun to be properly exploited, could prove to be very effective in reducing costs and defeating speculative and spurious claims.

Applications are governed by CPR 31.16. The application must be supported by evidence. The court may make an order under this rule provided that:

a) The respondent is likely to be a party to subsequent proceedings 

b) The applicant is also likely to be a party to those proceedings 

c) If proceedings are commenced the respondent would have to disclose the documents sought in any event, and 

d) Disclosure before action is desirable in order to 

i) dispose fairly of the anticipated proceedings 

ii) assist in resolution of the dispute without proceedings 

iii) save costs.

Provided the above criteria are met, the court will be able to consider granting an order for pre-action disclosure.

The Court of Appeal decision in Black v. Sumitomo² gives guidance on the criteria considered by the Court in applications for pre-trial disclosure. This decision is not only important for High Court proceedings but also for arbitrations.

In Black v. Sumitomo the claim related to alleged unlawful manipulation of the hard commodities market. Trader A claiming unrealised losses as a result of market manipulation by trader B sought disclosure of a vast array of documents relating to the various activities of trader B during the period of the alleged manipulation. The High Court granted the order for disclosure. However, the Court of Appeal overturned the decision. In reaching his decision, Rix LJ addressed each of the requirements of CPR 31.16, as well as the issue of the ultimate discretion of the Court.

Are proceedings likely?

Rix LJ confirmed that in these circumstances "likely" meant no more than "may well". (This requirement is of little relevance in arbitration proceedings as proceedings have of necessity to be commenced, by formation of the tribunal, before disclosure can be sought.)

Are the documents requested of a type which are normally disclosable?

Rix LJ:

"The extent of standard disclosure cannot easily be discerned without clarity as to the issues which would arise once pleadings in the prospective litigation had been formulated."

Thus the more clearly the plaintiff's claim is expressed, the easier it will be to obtain disclosure of specific documents. In the context of arbitration, therefore, it would be best to make such an application at the same time as serving Points of Claim.

Is pre-action disclosure is desirable for the purposes of CPR 31.16?

Rix LJ:

"The court is only permitted to consider granting of pre-action disclosure where there is a real prospect in principle of such an order being fair to the parties if litigation is commenced or of assisting the parties to avoid litigation, or of saving costs in any event."

In most cases the granting of pre-action disclosure is likely to save costs and accelerate proceedings, so it is ultimately the discretion of the court that will be most important. Rix LJ underlined that in exercising discretion all the facts, not merely in principle but in detail, should be considered. The key factors to be addressed before exercise of the court's discretion are:

•  the nature of the loss claimed 
•  the clarity and identification of the issues 
•  the nature of the documents requested 
•  the relevance of any pre-action protocol³ or pre-action enquiries and 
•  the opportunity which the complainant has to make his case without pre-action disclosure.

Considering these issues the Court of Appeal ruled against the complainant in Black v. Sumitomo. The complainant's failure was largely attributable to the unspecific nature of the claim and the width of the disclosure sought. Rix LJ was keen to stress that the court should be slow to allow a merely prospective litigant to conduct a review of documents of another party, replacing focused allegation by roving inquisition:

"The more focused the complaint and the more limited the disclosure sought in that connection, the easier it is for the court to exercise its discretion in favour of pre-action disclosure, even where the complainant might seem somewhat speculative or the request might be argued to constitute a mere fishing exercise.

"… the more diffuse the allegation, and the wider the disclosure sought, the more sceptical the court is entitled to be about the merit of the exercise".

The majority of disputes in which shipowners become involved are far more focused than the dispute in Black v. Sumitomo. Consequently, both Owners and Charterers should be able to avail themselves of this procedure in a number of claims. The procedure for obtaining pre-action disclosure under the LMAA Terms 2002 is to approach the other side before service of the submissions or pleadings and to attempt to obtain their agreement. If they are unwilling to grant the request an application needs to be made to the tribunal.

When dealing with disputes of a factual rather than legal nature, the disclosure of documents on which the other party is likely to rely, either before the commencement of proceedings in the High Court or at the Points of Claim stage in arbitration, will enable a Member to take a position on the merits of the claim with regard to either settlement or continued litigation at an earlier stage and with less expense than before. For example, in cargo claims, early access to the cargo interest's documents in relation to quantum will enable a shipowner to settle a claim at a stage that could save up to 70% of the legal fees that would normally be incurred.

Use of this procedure should be considered whenever possible. It is a device that is likely to prove useful in moving entrenched parties towards settlement and the resulting time and cost savings are likely to be considerable.

 

1.Prior to implementation of the CPR pre-action discovery was only available in claims relating to personal injury and death. 

2.2002 EWCA Civ 1819

3.Under the CPR pre-action protocols apply to certain types of proceedings, including personal injury claims.