posted 5 Apr 2007 in Volume 9 Issue 10

Country report: The Commercial Court in Ireland

By Gerald Moloney, senior partner, G.J. Moloney Solicitors

Until recently, increasingly complex commercial litigation in Ireland suffered from the delays and other considerable disadvantages inherent in an outdated system of court rules and procedures. However, the Commercial Court was established in 2004 and the first thing to say about it is that it has been a major success. It is rare to see change designed so well and implemented so effectively.

The purpose of the establishment of the Court was “to provide efficient and effective dispute resolution in commercial cases1” It quickly achieved that purpose and continues to do so. Commercial litigation is always tactical to some extent. For business disputes eligible for entry into the Court’s Commercial List, a new and highly effective tactic is now available, and that is the speed and focus of proceedings before the Court.

The pace of proceedings is impressive and has undoubtedly influenced the high proportion of early settlements in cases before the Court. The driving force of the new Court, Mr Justice Peter Kelly, recently presented some interesting statistics. By 1 November 2006, two years after it was established, 238 cases had been entered in the Commercial List, of which 166 had been concluded. Extraordinarily, the average time for a case to be brought to a conclusion after entry to the Commercial List (typically soon after the issue of proceedings) is only 18 weeks. The average time for a trial date to be allocated is only nine weeks. Only 36 cases went as far as a judgment being handed down by the court.

Cases eligible for entry in the Commercial List

Order 63A was inserted in the Rules of the Superior Courts in 2004 and deals with the Commercial Court (see www.courts.ie/rules). Rule 1 defines the types of proceedings that can be dealt with, and the range is broader than in many commercial courts in other jurisdictions. Not only are intellectual property and certain public-law disputes included, but there is a discretionary basis for admitting cases that has the potential to broaden the range considerably.

There are several categories of eligible proceedings. The first category is a monetary one covering business disputes where the claim or counterclaim is for no less than €1m. Judge Kelly has essentially described cases in this category as private-law disputes of a commercial nature between commercial entities.

The second category is an interesting one and is essentially discretionary. Rule 1 (b) involves no monetary limit and gives a discretion to the judge to whom the application is made for entry in the Commercial List to decide to enter a case if he/she considers it appropriate “having regard to the commercial and any other aspect thereof”.

A third category concerns proceedings related to the Arbitration Acts and also has a €1m threshold. The fourth and fifth categories (again no monetary limit) relate to certain specified types of proceedings concerning intellectual property and Judicial Review.

As would be expected, many of the cases coming into the Commercial List are cases covered by the first category, i.e. involving business disputes where the value of the claim or counterclaim exceeds €1m.

However, the discretionary basis under Rule 1(b) for admitting proceedings to the Commercial List has thrown up some interesting cases. Judge Kelly’s comments suggest that the Court regards itself as having a broad discretion to admit cases. The primary concern seems to be either that the proceedings involve commercial issues or have serious commercial implications for the parties, rather than the nature of the parties as such, or sometimes even the nature of the dispute.

One case involved Judicial Review proceedings relating to a planning permission, where the Court was satisfied that delay could have had serious commercial implications. Another involved a tobacco company’s challenge to legislation affecting tobacco advertising. Again the Court was satisfied that, while there were constitutional and European Law issues involved in the case, there were serious commercial implications for the company. Yet another case involved a challenge to a Capital Gains Tax charge having regard to a particular double-taxation treaty. The case involved a substantial sale of shares; potentially a substantial charge to tax; and the Court was satisfied that there was a commercial aspect to the case sufficient to warrant it exercising its discretion to admit the case.

Case management

The new rules provide for detailed case management that will be recognised by practitioners in other jurisdictions. The system is designed to streamline the preparation for trial, remove unnecessary costs, and both eradicate stalling tactics and ensure full pre-trial disclosure.

Therefore there is provision for strict time limits for pleadings and a pre-trial conference at which the Judge will consider a summary of the case; a list of issues in dispute and those not in dispute; a list of witnesses; whether interlocutory orders have been complied with etc. There is provision for exchange of witness statements. At the trial, a witness statement will frequently be regarded as the evidence-in-chief of that witness and the hearing can proceed directly to the cross examination.

These procedures are a significant departure and a clear improvement on existing procedures that still apply in the courts outside the Commercial Court. Importantly, Judge Kelly and his colleagues have a reputation for firm handling of proceedings before the Commercial Court and insist on strict adherence to the rules. No doubt this is the real reason that the Court is as successful as it clearly is. The Court is also taking a firm approach to the question of costs. The general rule remains that costs will follow the event. However, the Court has recognised that complex commercial cases sometimes require that it should analyse the extent to which some of the costs were unnecessarily incurred (including in respect of interlocutory applications), and therefore should not, after all, follow the event. Judge Kelly has also gone so far as to imply that in extreme cases of failure to comply with case-management requirements, the practitioners may themselves be ordered to pay an amount of costs.

The Court’s pragmatic approach to the requirement of efficiency, and its focus only on central issues in commercial litigation, is extremely refreshing to practitioners who are interested in getting results quickly and effectively. Cases start and finish in a short timeframe, clients get results and fees get paid. While practising in the Commercial Court can be very challenging, thankfully it is no longer inevitable that complex commercial cases will live with us for years.

References

Mr. Justice Peter Kelly, Law Society CPD Seminar, November 2006