When embarking on any kind of commercial litigation, one of the first important factors to consider is jurisdiction. In which country and indeed in which court, can the case be heard? In some instances, the nature of the circumstances and the place where events transpired will dictate the jurisdiction and which law should be applied. However, in other instances, parties may be able to choose which jurisdiction to litigate in. Therefore, it is important to be aware of the main differences that exist between litigating north and south of the border.
There are many different types of actions that can be raised in the courts, so in this blog we shall focus on a commercial client wishing to raise an action arising out of breach of contract. The 5 key differences between litigating in Scotland and England and Wales in that type of action can be summarised as follows:
In the first instance, we recommend that all businesses operating in Scotland have caveats in place. Scotland is unique in having a 'warning system' in place – if a caveat is lodged in a particular court on behalf of a business, then their solicitor will be provided with advance notice of an interim order being sought against the business (such as interim interdict (injunction)). This gives their solicitor an opportunity to argue against the order being granted. If there is no caveat in place, then the company would have no knowledge of an interim order sought against it until it is granted and served on them.
There are various benefits of having a caveat in place. Crucially, for a relatively low cost, it can save the time and expense which would be incurred in having the order revoked. There is no equivalent in England and Wales.
The position in Scotland is that the latest date on which the business could raise an action would be 5 years from the date they became aware, or with reasonable diligence could have become aware, of loss, injury and damage occurring.
In contrast, in England and Wales the relevant time period for breach of contract actions is 6 years from the date of the breach occurring.
Importantly, standstill agreements, whereby parties can agree to postpone the time bar for a maximum of one year, are now legal in Scotland as well as England (albeit the rules are different in the latter jurisdiction, where the time bar can be either postponed or paused).
Please see this blog for more information on the operation of time bar and standstill agreements in Scotland.
In England and Wales, it is the general position that relevant key documents relied upon are disclosed alongside pleadings at the start of any litigation.
There is also an ongoing duty on the parties, to disclose any documents in their possession and/or control which are relevant to the case in any way, regardless of whether they may positively or negatively impact upon their case. The idea behind disclosure is that parties are compelled to 'put their cards on the table' and should have full access to any documents which may impact upon the case. However, this can be a costly process, and one consequence can be that both sides receive an influx of evidence which can be irrelevant, leading them to incur unnecessary time and expense in reviewing these documents.
In Scotland there is no obligation on parties to disclose evidence from the outset, but in the commercial court there is an expectation that parties will lodge the documents which they seek to rely on at the outset of the action. If one party wishes to compel the other side to produce other documents, then they must make an application to the court (a motion for 'commission and diligence') along with a list of the type of documents requested ('a specification of documents'). However, there must be a basis in the party's court pleadings for this request, as the court will not permit 'fishing' for evidence. Therefore, while a litigant in Scotland does not receive all of the other side's documents at the outset, there is a means by which key documents can be sought to be recovered.
Pre-Action Protocols & Alternative dispute resolution ("ADR")
In England and Wales the general Practice Direction - Pre-Action Conduct and Protocols (the "Practice Direction") sets out the steps which courts expect parties to have undertaken prior to raising proceedings. There are also 14 other pre-action protocols for specialised claims (such as professional negligence or defamation claims). While there is no equivalent protocol in Scotland, there is similar guidance issued by the Court of Session which specifically applies to commercial actions.
In both jurisdictions an emphasis is placed on the importance of engaging in ADR (such as negotiation, mediation or arbitration) before raising proceedings.
However, in England and Wales, the Practice Direction sets out that if proceedings are issued, the parties may be required by the court to provide evidence that ADR has been considered. Likewise, many, if not all, of the specialised practice directions account for some form of ADR being considered by the parties prior to commencing proceedings. If a party does not respond to an invitation to participate in ADR, or refuses to participate, then this could be considered unreasonable by the court and could lead to an order for that party to pay additional costs.
In contrast, in Scotland there is not a formal obligation on parties to consider ADR, although there is certainly an expectation in commercial actions that they will do so at some point before or during the action.
Finally, it is considerably less expensive to raise an action in Scotland.
In Scotland, the court fees for raising an action in the Court of Session are currently £325. In contrast, in England, the lodging dues for a High Court matter are 5% of the value of the claim if it is between £100,000-£200,000 or a fixed amount of £10,000 if the claim is valued at above £200,000.
In this blog we have summarised the 5 key differences between a commercial entity litigating in the two jurisdictions, but there are of course many other reasons (commercial and legal) why a business may choose to raise proceedings north or south of the border. If you are involved in a commercial dispute and wish to find out more about litigating in Scotland or England and Wales, please contact a member of our commercial litigation team or your usual Brodies contact.