Civil justice - looking over the fence

THE arbitration and litigation processes have always eyed each other cautiously over the public/private fence that divides them. Prior to the commencement of the civil justice reforms, Lord Woolf praised the flexibility of arbitration in asking the question, "Why can't judges act like arbitrators?"

Arbitration was intended to meet the failings of a rigid and legalistic litigation process by providing expertise and flexibility to meet the needs of a particular commercial situation exacerbated by jurisdictional difficulties. In looking over the fence, Lord Woolf saw arbitration methods as one way of meeting the modern needs of litigation within the jurisdiction. Eighteen months since the inception of his reforms, can we see improvement and progression in resolving disputes through the courts?

Arbitration itself has been the subject of considerable criticism in having become legalistic, over-formal and expensive. The blame for this partly lies with the arbitrators and parties and partly with the courts. There has been a tendency for much arbitration simply to ape the litigation process, a process with which parties and arbitrators, particularly lawyer-arbitrators, are familiar. Historically, this development has been supported by the courts, which have been only too willing to flex judicial muscle and interfere in the arbitration process at the behest of the parties.

The arbitration industry has tried to meet these criticisms, albeit sometimes against the odds. The Arbitration Act 1996 is intended to restrict the ability of the courts to interfere. That Act itself was a product not of governmental impetus but of the efforts of private individuals committed to the arbitration process.

It is no coincidence that, at the time of the development of the Arbitration Bill in the 1990s, Lord Woolf was appointed by the Lord Chancellor to examine the civil litigation process. For their own reasons, both processes were perceived as failing in achieving the end desire. Lord Woolf was examining a process which he regarded as inefficient, over-complex and too costly. This had, in his view, a particular effect in relation to the smaller claim, where litigants were simply dissuaded from exercising an entitlement to access the court because of complexity and expense.

One of Lord Woolf's solutions to the problem was to divide the litigation process into three broad bands producing "tracks" to differentiate between smaller and larger claims, the process for smaller claims being more simplified than that for the others. For litigators in shipping, perhaps the most important reforms were those relating to case management, disclosure and costs.

Case management

Lord Woolf saw the greater involvement of the courts in the litigation process itself as a method of wresting control of litigation away from the lawyers involved to give it to the court. This rested on the assumption that the court could do a better job than lawyers for the parties. Importantly, however, shipping litigators are in any event very familiar with the principles of case management, either through the arbitration process or by the use of the commercial court in London. On one level, case management may simply mean that the same judge deals with the process of litigation as well as determining the issues at trial. By its very nature, arbitration follows a similar course.

It can mean, however, that the judge takes a much more proactive approach to litigation and, where necessary, takes it by scruff of the neck to achieve early resolution. Again, litigators in this area are familiar with such judicial attitude, more particularly in the commercial court rather than arbitration. Indeed, this greater ability of the court might be regarded as one of the criticisms of the arbitration process.

Commercial court

The commercial court in London, and the mercantile courts in some cities, regard themselves as involved in a higher form of litigation requiring and receiving greater judicial control. The practices of the commercial court have differed from those of the ordinary civil courts for many years, and case management has been developed into high art by commercial court judges.

The work of the Civil Procedure Rules committee was determined by a prescribed agenda. The result was that the committee did not examine the procedures of the commercial court when bringing into effect the new system in April 1999. Indeed, the committee treated with some reverence those procedures, believing that they epitomised what the reforms were trying to achieve.

In the end, a short rule (CPR 49), to which was appended a short practice direction, embodied into the rules the commercial court guide. This was and remains a self-contained body of rules for practice in the commercial court. It differed in many respects from the main body of rules.

Whilst expedient, this declaration of independence appeared somewhat contrary to the process of producing a unified system, particularly as it had a knock-on effect on the mercantile courts in the provincial cities and the county courts that have business lists. Now, this independence, at least in its current form, is to be brought to an end. The rule committee is currently examining the commercial court practice with a view to bringing it into the CPR fold. This will not necessarily change commercial court practice to any great extent, but it will bring it into the CPR family.

Disclosure

One of the great concerns of Lord Woolf in the whole litigation process has been disclosure of documents. Lord Woolf saw that discovery, as it was then called, had grown out of all proportion. The extent and cost of it had become a major part of litigation, unnecessarily. Lord Woolf made it a central part of his campaign that discovery should be significantly reduced. As a matter of practice, solicitors might simply provide disclosure of every document that a party has rather than sift through them to determine the relevant documents. On the other side, the party seeking disclosure would as a matter of practice enter into every nook and cranny of the process in order to obtain every document which might have some bearing on the action.

This method of full disclosure had judicial authority in the Peruvian Guano case. Lord Woolf determined that this process should be terminated. As reflected in CPR Part 31, he wanted parties to be more proactive in disclosure, only providing disclosure of documents truly relevant to the issues to be decided by the court, rather than all matters related in some distant fashion to the facts being examined by the court. Additionally, a new concept was introduced of reporting to the other party what search had been undertaken for documents.

In the event, the commercial court agreed to accept Part 31.

Experts

Lord Woolf was highly critical of the use of experts in the litigation process. He criticised the multi-million-dollar industry that had built up around expert evidence, regarding much of it as unnecessary and expensive. Other than generating a cultural change to limit the number of experts, Lord Woolf saw that the use of one expert by both sides was an answer to the problem. Accordingly, he recommended that the court should as often as possible appoint a single expert to give evidence on a matter in dispute. Again, Lord Woolf had in mind the unnecessary use of experts in smaller value claims. The principles he established, however, have become part of the litigation scene for higher value claims as well. The courts have been ready to order a single, jointly instructed expert wherever appropriate. It would be inappropriate to have a single expert where there is a matter of expertise which is in substantial dispute, either within the proceedings or within the particular area of expertise.

Costs

A crusade to reduce the costs of litigation has not only been part of Lord Woolf's recommendations but also of committed government policy. The new Rules made explicit the concept of proportionality, so that costs payable by one party to another would be proportional to the issues in dispute. In fact the concept is not a new one but has never been so explicitly stated within the rules. Again, the target area is the lower value claims where costs very often far exceed the amount in dispute.

The UK government has given these new cost provisions a further spin by introducing conditional fee agreements and, most recently, the recovery of all conditional fee costs from the other party, including the uplift dependent upon the contingent event.

Eighteen months later

It is clear that the reforms started by Lord Woolf were intended to have greatest effect upon lower value claims. They have, however, had a significant effect upon litigation generally. There has been a change in culture in litigation over the past two years. The reforms, however, are not the only factor. The market itself has developed with a much greater degree of sophistication on the part of the user of legal services. The London Maritime Arbitrators' Association (LMAA) would, for instance, say that it has taken up the challenge made by Lord Woolf to carry his reforms further into the arbitration process. Others might maintain, meanwhile, that the success of the procedural changes has been mixed.

The success of the process of making offers to settle and payments into court (Part 36) has been much acclaimed. On the other hand, the changes to the disclosure process under Part 31 have been limited. Undoubtedly, the courts have taken case management to heart and, as far as possible, have been proactive in managing claims before them. In general, the significant lack of resources within the court service has only allowed a limited degree of judicial activism. Separate funding for the commercial court allows it to devote relatively more resources to case management. The UK government has one eye on the international reputation of the commercial court and London as an international centre for resolving disputes. Clearly, the average high street county court is not valued in the same way.

The rules, as they are currently constituted, have been the subject of substantial criticism. This criticism has two sources. Firstly, the rules and practice directions have grown like Topsy. In printed material, the new rules and practice directions far exceed the old rules. This largely derives from the attempt to bring all matters into one source material and to provide long explanatory practice directions to help the user.

The second source of criticism is that the rules have undergone many very significant changes since their introduction eighteen months ago. This had led to confusion and frustration on the part of practitioners in their attempts to keep up with events. This process of change will slow down in the coming period.

The most noticeable effect of up and coming changes will be the abolition of the substantive part of the commercial court guide and its embodiment into the CPR. It remains to be seen to what extent the commercial court will maintain its distinct practice, in differentiation from practice in other courts. What does all this change mean for arbitration? It certainly has given rise to considerable debate within arbitration circles. The arbitration process has been criticised for being over-formal and over-legal. While Lord Woolf looked jealously over the fence at the flexibility of arbitration, it has often been the case that arbitrators have failed to use that flexibility to good effect. On the other hand, arbitration is by its very nature a consensual process, and the power of the arbitrator to impose case management on parties is more problematic. The courts can impose their will against resisting parties even when they act in unison. It may be the turn of arbitrators to look over the fence jealously and ask the question, "Why can't arbitrators be like judges?"