Litigation - Anatomy Of A Court Claim

Civil litigation is a process for resolving legal disputes on civil (i.e. not criminal) matters through negotiation or the court system.

Whilst you might be angry or frustrated enough to want to dive headfirst into court proceedings, litigation is extremely costly.  Taking a simple County Court claim all the way to trial could set you back at least £25,000, but a complex High Court claim could be in excess of £100,000.  Litigation should therefore be avoided wherever possible.

If negotiations have failed or urgent action is needed, you may have no option but to start court proceedings.  The following are steps which may/will need to be taken:

1. Pre-action conduct: You must consider and act in accordance the Civil Procedure Rules (CPR's) specified pre-action protocols or in other cases the obligatory pre-action conduct.  These aim to prevent litigation and promote the exchange of clear information and use of alternative dispute resolution, provide guidance on instructing experts.  They also detail the requirements for a letter to the other side (a letter before action).  If you fail to comply with these protocols, the court may award costs and interest on costs against you.

2. Letter before action: In most cases, such a letter will be necessary.  It will give sufficient details to enable the defendant to understand and investigate the issues; list the documents on which you intend to rely; request copies of any relevant documents which you wish to see; and propose alternative dispute resolution (where applicable).  This step should open the door for detailed correspondence in which the issues may be argued and hopefully settled.

3. Issue a claim: If settlement via correspondence fails, you will need to issue a claim at the County or High Court.  A claim form and Particulars of Claim will need to be completed, setting out concisely and specifically your cause of action, what you are claiming and the facts on which you are relying.  These need to be filed together with a court fee (based on the value and type of claim) and served on the defendant.

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Given that litigation should be avoided if possible due to the cost and inflexibility of the court system (please see our guidance note above on The Anatomy of a Litigation Claim), the parties should consider (and the courts are keen to promote) alternative dispute resolution (ADR). 

It may be that the contract between the parties specifies the method which must be used and/or the procedure for escalation of claims. 

The most common forms of ADR are as follows:

Negotiation

Negotiation is the most flexible and informal of dispute resolution methods.  It can save the costs and time associated with the court system or arbitration.  Discussions could be over the 'phone or round a table, and are usually private and confidential therefore protecting reputations and relationships, and conducted on a "without prejudice" basis (i.e. they may not be referred to in any proceedings).  As such, if the negotiations do not succeed to settle the matter, the parties' rights are not prejudiced. 

Mediation

This is a flexible, voluntary and confidential form of ADR, in which a neutral third party (the mediator) assists parties to work towards a negotiated settlement of their dispute, with the parties retaining control of the decision whether or not to settle and on what terms.  Until an agreement is made as to those terms, the process is non-binding.

Attended by the parties, their legal representatives and the mediator, this method allows the parties to agree terms which often a court would not be able to grant under an order, such as an apology or reference letters, circulation statements or division of assets.  Although you will need to split the mediation fees, it is a far more cost effective way of encouraging the parties to reach an agreement.

Arbitration

Usually, where parties would prefer arbitration as the method of ADR, it will be specified in contractual documentation entered into between them.  It may even be specified that the process will be conducted using one of several arbitral organisations, such as the International Chamber of Commerce or the London Court of International Arbitration.

An effective alternative to court, arbitration is where an arbitrator or panel of arbitrators is appointed by the parties to make a binding decision.  It is conducted in a private forum in which the arbitrator(s) makes an award, acting in a judicial fashion, to finalise the dispute.  The outcome is final and binding on the parties and applications may only generally be made to court in order to support the process or to set aside an award on limited grounds. 

Please see our article in the New Law Journal on the landmark case of Jivraj v Hashwani [2001] UKSC 40, [2001] All ER (D) 246 (Jul), which held that arbitrators are not employees and therefore may be selected on grounds of race, gender or age without discrimination issues arising. 

Expert determination

This is an informal process that produces a contractually binding decision.  Usually a method provided for under a contract, an expert is appointed by the parties to determine an issue, usually of a technical nature and is therefore useful for disputes where the specialist knowledge of the expert is desired.  As an expert's decision is an evaluation, this approach is treated as having different legal characteristics to an arbitration award.  Costs could (if agreed by the parties) be awarded by the expert or dealt with under the contract which obliges the parties to use this method.

Adjudication

This is a procedure that provides for the adjudicator's decision to be temporarily binding until the dispute is finally determined by court proceedings, arbitration or settlement.  It is best known in the construction industry, where there is a statutory right for parties to a construction contract to refer a dispute to adjudication.

If you would like further advice on the methods of alternative dispute resolution, please do not hesitate to get in touch: 020 7440 2540 or  enquiries@fortunelaw.com