The cost of commencing proceedings in the English Commercial Court has recently increased. Despite of this, there are still real advantages of having the Commercial Court as forum for commercial disputes.
The maximum issuing fee was previously £1,920 for a claim of £300,000 or above. The fee for claims between £10,000 and £200,000 is now 5% of the amount claimed, e.g. £5,000 for a claim worth £100,000 and £10,000 for claims for £200,000 and for unspecified amounts.
The purpose of the increase is to help fund the English courts and to contribute to their on-going modernisation and improvement. Yet there is a danger that, as noted by English judges, the fees will be seen, by international standards, as a high entry price to begin a commercial case in the English jurisdiction.
Benefits of the English Commercial Court
However there are still real advantages in choosing the Commercial Court as the forum for dispute resolution in contracts by domestic and international parties alike. As Lord Denning stated in the Atlantic Star in 1972:
“No-one who comes to these courts asking for justice should come in vain. This right to come here is not confined to Englishmen. It extends to any friendly foreigner. He can seek the aid of our courts if he desires to do so. You may call this “forum shopping” if you please, but if the forum is England, it is a good place to shop in, both for the quality of the goods and the speed of service.”
There is still significant force in these comments today.
Firstly, despite the fee increase, the cost of English Commercial Court proceedings remain significantly lower than many other forums, including arbitration and some countries’ national courts:
- There are still no daily hearing fees: no time spent by a judge will be charged
- There are no administration costs
- The fee for issuing interim applications has only increased slightly to £255The fee when fixing a trial remains at £1,090
In contrast, arbitrators generally charge an hourly rate for work carried out in relation to a reference and often with further additional administration charges. Depending upon the size and complexity of the claim, tribunals are often made of three arbitrators whose costs can well exceed £100,000 for a claim determined at a final hearing. Even with the recent increase court fees will very rarely far exceed £11,000 through to judgment. This represents a large cost saving. The overall court fees are also lower than in alternative national courts such as Singapore, Australia and Dubai.
A criticism of the new scheme is that the fees are front loaded and do not reflect the judicial work involved at that stage. It has been argued that the front loading may prevent or deter the commencement of court proceedings to avoid a time bar or as a tactic to encourage payment of an outstanding debt or settlement discussions. However in our view this is unlikely to have a significant effect and note that many arbitral institutions (such as the ICC and LCIA) commonly require a significant advance deposit for anticipated arbitrators’ fees and administrative costs, which far exceeds the court issuing fee.
A key advantage of the Commercial Court is that parties can rely on fair, transparent and consistent judgments from experienced and highly competent judges. The judiciary and the quality of decisions are considered second to none in terms of their quality, independence and consistency and the increase in court costs needs to be viewed in this context.
The court procedure is now very streamlined and designed to ensure that cases are dealt with quickly and efficiently. It is difficult for parties in the Commercial Court to delay proceedings unnecessarily – a key advantage for claimants. Moreover, parties will often generally get the same judge throughout proceedings. Recently, cost management procedures were introduced for all claims under £10 million to ensure that the parties’ litigation costs were kept to reasonable levels.
It is also worth noting that judges have a number of additional powers which go well beyond the powers generally conferred on arbitrators including the power to:
- issue summary judgment to strike out a bad claim at the outset;
- order quick and effective interim relief (world-wide freezing orders, injunctions, equitable remedies);
- join parties and consolidate
proceedings where appropriate;
- compel witnesses to attend under penalty; and
- enforce awards against assets.
Enforcement is often viewed as a key advantage of arbitration. Whilst this remains the case in relation to certain jurisdictions such as China, Japan or Russia it should be noted that English court judgments are easily enforceable throughout the European Union and in many other jurisdictions worldwide (which is an advantage over other national courts).
Other benefits of using the Commercial Court include:
- the new Rolls Building which is one of the largest specialist centres for the resolution of commercial litigation in the world;
- effective UK-based counsel; and
- the infrastructure and professional support services.
Finally it should be noted that Commercial Court proceedings are almost always public. This can be a disadvantage compared to arbitration if the parties are concerned to keep any dispute private for commercial or other reasons. However, confidentiality may not always be a concern and there can be strategic advantages in public proceedings.
The increase in the cost of commencing proceedings is not insignificant. Arguably, it would have been better to charge increased fees for the different stages in the proceedings rather than front load them, so that parties paid more relative to the level of work performed by the judiciary involved. However, the overall cost of Commercial Court proceedings is still much lower than the costs of arbitration proceedings and those of other national courts. Importantly there remain real and distinct advantages of Commercial Court proceedings which are unaffected by such cost increases.
Consequently whilst parties should always give very careful consideration to the law and jurisdiction clause when drafting contracts, and there will be instances when arbitration is preferable, there will continue to be many occasions where the English Commercial Court will be the best option to safeguard the parties’ interests. In such circumstances, the court’s procedural and other powers and more robust approach should ensure that the cost and length of any proceedings are kept to a minimum.