As we embark on a new year, the dispute resolution landscape continues to evolve. Here is a breakdown of some of the key developments to keep an eye on in 2024:
Fixed Recoverable Costs (FRC) Amendments in April 2024
Fixed Recoverable Costs (FRCs) will continue to play a crucial role in determining the legal costs recoverable by the “winning” party in civil litigation. Already applied to low-value personal injury cases, recent extensions now cover most civil cases valued up to £100,000 as of October 2023.
The amount of costs that can be recovered from the “losing” party is now set at a fixed figure. FRCs mean that the amount that can be reclaimed may not cover the actual costs of employing a legal team to help with the case.
In April 2024, amendments to the Civil Procedure Rules (CPR) will refine FRC figures and governing rules. These changes will target various aspects of the litigation process, including allocation and assignment to court tracks, case management conferences, disclosure rules, and clarification on contracts that seek to disapply the court’s jurisdiction to award fixed costs. Notably, preparation fees in settled or vacated cases will also be addressed.
The objective of these changes is to improve the foreseeability of legal costs in litigation. However, a consequential effect will be the expansion of cases where it is uneconomical to engage the services of a solicitor. Given the substantial sums at stake, potentially reaching £100,000 in dispute, this is poised to significantly reshape the approach to handling such claims in 2024.
Review of Electronic Service
The formal process of “service of documents” in legal proceedings is undergoing a modernisation initiative with a focus on promoting electronic service by default, the aim is to simplify and clarify the process of serving legal documents.
In a legal context, “service of documents” refers to the formal process of delivering or providing legal documents to another party involved in a legal proceeding. This is a crucial aspect of the legal system, ensuring that all parties are properly informed of legal actions, proceedings, or important documents relevant to their case.
The service of documents is governed by specific court rules and procedures to ensure fairness, transparency, and adherence to due process. The proposed modernisation seeks to align service methods with the evolving digital landscape while maintaining efficiency.
Judicial Guidance on AI Use
A significant development in December 2023 was the publication of the “Guidance for responsible use of AI in Courts and Tribunals”. This guidance addresses the key risks and challenges associated with the use of artificial intelligence (AI) in legal proceedings.
Offering principles for responsible AI use, the guidance emphasises understanding AI capabilities and limitations, upholding confidentiality and privacy, ensuring accountability and accuracy, being aware of bias, maintaining security, taking responsibility for AI-produced materials, and recognising the use of AI by court and tribunal users.
As AI tools become increasingly integrated into legal processes, these guidelines underscore the need for caution, verification, and responsible practices.
Online Civil Money Claims Pilot Scheme
Running until October 2024, the Online Civil Money Claims pilot scheme is streamlining the initiation of money claims in the County Court.
With a user-friendly approach, this pilot continues to expedite the resolution of money claims, particularly those up to £25,000 whilst promoting access to justice for individuals and small businesses.
Cases Under Appeal
Several cases under appeal in 2024 have the potential to shape legal precedents. From contract variations and force majeure clauses and insurance claims, each case will cover some pivotal legal issues:
Cobalt Data Centre 2 LLP v Commissioners for His Majesty’s Revenue and Customs:
Examining when a variation of a contract makes a “new” contract for tax purposes. In this case, tax allowances depended on when a building contract was made. The original contract was made in time to claim the allowance.
However, the Court of Appeal held that later changes to the contract, following the agreed variation procedure set out in the contract, had effectively created a new and different contract and raised the question of whether tax relief remained available.
The question depended not on the procedure followed, nor on what the parties subjectively wanted to achieve (to change the contract while keeping the tax relief), but on the substance of the changes, their compatibility with the original terms and the extent of the difference.
The Supreme Court gave permission to appeal in April 2023. The Supreme Court will address the issue of if/when a variation makes a “new” contract. (Case Citation: [2022] EWCA Civ 1422)
MUR Shipping BV v RTI Ltd:
Examining when a force majeure clause requires a party to accept a departure from the agreed payment terms in a contract. In 2022, the Court of Appeal, interpreting a force majeure clause, effectively forced a shipowner to accept payment in euros, although the contract’s payment terms required dollars.
The paying party had invoked the force majeure clause because sanctions against the receiving party made payment in dollars illegal. The clause defined force majeure as excluding anything that could be “overcome by reasonable endeavours from the party affected”.
The Court of Appeal held that “overcoming” force majeure could involve accepting a departure from the contract terms that had no ill effect on the receiving party. The Supreme Court gave permission to appeal in April 2023.
Similar points have arisen in a series of cases in 2023 (Case Citation: [2022] EWCA Civ 1406)
Various Eateries Trading Ltd v Allianz Insurance Plc:
Examining insurance claims related to Covid-19. The court determined various issues arising out of a claim by the owner of various eating venues against insurers for a £16 million indemnity in respect of Covid-19 related business interruption loss.
The High Court judgment on aggregation and on government support payments effectively denied most of the multi-million insurance claims in three linked cases. All parties appealed.
In November 2023, two of the three appeals were settled but the Court of Appeal heard the third. The Court of Appeal’s decision, likely in early 2024, will impact insurers and businesses using similar insurance wordings, providing guidance on Covid-19 related claims. (Case Citation: [2022] EWHC 2549 (Comm).