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Where a business is involved in a legal dispute and attempts to resolve matters fail, commercial litigation may be necessary. We take a look at the different types of disagreement that could be heard by the court as well as each step in the commercial litigation process.

What is commercial litigation?

Commercial litigation is legal action involving a company or business. Where organisations trade with each other and with the public, there is wide scope for misunderstandings and disagreements to arise, including in the following areas:

Contract disputes – business is governed by a wide range of contracts, including supply of goods and services, consumer agreements, e-commerce, agency and distribution and employment. Disputes can arise over what was agreed, whether the terms of the contract have been adhered to, late payments and mistakes.

Partnership disputes – those working in a partnership may fall out over time if they disagree over the direction of the business, they feel the other partners are not carrying out their duties or obligations, there are issues over conduct or performance or one party is exceeding their authority.

Shareholder disputes – this type of dispute can arise when either minority or majority shareholders disagree with the company or its directors, for example, over the exercise of powers, where there is a disagreement over action being taken or where the company is treating them unfavourably, such as by diluting their powers.

Director and boardroom disputes – disagreements between directors can be complex, with individuals having different opinions about the running of a company and major undertakings such as raising finance or merging with another business.

Commercial property disputes – this is an area with large financial undertakings and wide responsibilities, including property maintenance, ending a lease and abiding by the terms of a lease.

Whatever the nature of a commercial dispute, it is always advisable to address it straight away. When a disagreement is not dealt with, it can often worsen and positions become entrenched, making it much harder to resolve.

The commercial litigation process step by step

There are three main stages in the litigation process that will need to be gone through in bringing a case to court:

  • The pre-action stage
  • Preparing the case for court
  • Trial

Stage 1: The pre-action stage

The courts prefer that disputes are resolved without litigation wherever possible and this means that during the pre-action stage, attempts should be made to find a solution.

The complaining party is expected to write to the other side setting out in detail the issues under dispute. The other side should have time to consider the claim and respond and both parties should back up their allegations by disclosing relevant documents. Some types of claims have a specific pre-action protocol in place setting out the steps the parties should go through, including exchanging documents.

Where issues cannot be resolved by discussion and negotiation, alternative dispute resolution should be considered. This is usually a faster way of resolving disagreements as well as giving the parties more control over the situation.

For more information in respect of alternative dispute resolution see Commercial dispute resolution and our guide to Arbitration.

Stage 2: Preparing the case for court

Preparing the case for trial is arguably one of the most crucial steps in the process – getting the right legal advice at this point can decide the outcome of your case before it’s even entered the trial phase. Here’s what you commercial litigation lawyers will have to do:

Making a claim

If you have not been able to resolve the dispute, then the first stage in the commercial litigation process is issuing a claim. This sets out the particulars of the claim, or the facts which you are stating to be true, and should be sent to the relevant court with the initial fee.

The claim should also give details of what outcome you are seeking, such as damages, an injunction or an order for specific performance, requiring the other party to carry out a specified act.

The claim should be accompanied by any relevant documents, even if these do not support your claim, as the court will require full disclosure to be made.

Serving the claim

Once the court issues the proceedings, the claim and particulars of the claim form will need to be sent to the other party, the defendant, within four months.

Acknowledgement of service, defence and counterclaim

The defendant then has the opportunity to file an acknowledgement of service form, confirming they have received the claim. They can also file a defence and a counterclaim if they wish. The defence should be lodged within 28 days, where the acknowledgement of service has been filed, and it is open to them to request an extension of time.

Reply to counterclaim

Where a counterclaim is made, with the defendant making a claim against the claimant, the claimant is given the opportunity to make a formal reply to this, setting out their position.

Directions hearing

The parties will then provide the court with a completed directions questionnaire containing information in respect of the documents to be provided and witnesses that will be used. They will also notify each other of the information they intend to disclose. This allows both sides to evaluate the case and consider whether they wish to proceed.

The court will hold a hearing known as a case management conference to set out a timescale for both parties to exchange information and provide witness statements.  A date for the final hearing of the case can also be set.

The court will also allocate the case to one of the following tracks:

  • Small claims track
  • Fast track
  • Multitrack

The small claims track is for straightforward cases where the claim is for less than £10,000. This type of case is conducted on a less formal basis and only very limited costs can be recovered against the other party if you are successful.

The fast track is for claims valued at between £10,000 and £25,000 and where the hearing is likely to take no longer than a day. With a fixed timetable and rules relating to disclosure, experts and witnesses aim to ensure this type of case moves relatively quickly.

The multi-track is for claims valued at more than £25,000. This type of case can also be more complex. The multi-track route is managed more closely by the court than the other tracks.

Disclosure

During the pre-trial period, the parties are expected to disclose relevant documents, except those which are privileged. Privileged documents are communications between individuals and their lawyers where the main purpose is providing legal advice.

This can give further scope for resolving the case, once the parties see the strength of each other’s cases and it also means that the court will be given all of the relevant information to consider.

Witnesses and experts

The case may also use a number of witnesses and experts. Experts can be asked to prepare reports, for example, a forensic accountant may be asked to look at a company’s books and explain in lay terms what has happened. During the pre-trial period, witness statements and expert reports will also be exchanged.

Costs

The parties are also required to attempt to agree on costs budgets in respect of multi-track cases and this aspect of the trial can also be dealt with at the case management conference. Cost budgets should be exchanged at least 21 days before the case management conference. At the conference, the judge will consider the costs budgets and approve them wholly or in part. If the parties cannot agree on costs for each stage of the case, the judge will rule on the issue. Approved costs will generally be recovered by the winning party, with a costs order made to this effect on the finalisation of the hearing.

Settling the case before trial

It is often the case that a matter is settled by agreement during the pre-trial process, even if alternative dispute resolution has previously failed. This is because both parties gain a greater awareness of the other side’s case as well as the fact that a trial can be both lengthy and expensive.

Stage 3: Trial

Prior to the date of the hearing, the parties will provide the court with their skeleton argument. This is a list of the witnesses and experts they will be calling and the evidence they will be presenting.

The court will use a listing questionnaire to confirm any previous estimate the parties suggested for the length of the hearing and will schedule court time accordingly.

The judge will hear both sides’ cases and can raise questions where necessary. Evidence will be presented by a barrister or a solicitor with advocacy rights.

The judge may take some days to consider the case, in which case their judgment will be provided to the parties in writing.

There may also be a subsequent hearing regarding the way in which remedies will be dealt with and a final order will be made. This will often also include an order as the costs of the case, although this could be dealt with separately at a later date (as part of costs proceedings).

Instructing legal experts

Commercial litigation is often complex and you will need an expert by your side if you will be taking on a case. Our commercial litigation team has extensive experience in dealing with litigation across a wide range of issues and a strong track record of success in securing the right outcome for our clients. As well as our legal expertise in putting together the strongest possible case, we are also known for our outstanding level of client service. We work proactively to move matters along and will keep you updated throughout, ensuring we are available to speak to you as needed and to answer your questions and discuss the steps to be taken.

Contact our commercial litigation solicitors

At Witan Solicitors we represent clients in commercial litigation cases in a wide range of areas, including the following:

If you need advice in respect of a dispute, email us at info@witansolicitors.co.uk or fillin our contact form and we will be happy to help you. We have offices in London, Birmingham and Northampton.

Want to learn more about commercial litigation? Check out the article below:

Commercial Landlord’s Rights to Enter Property | Property Litigation | Evicting a Commercial Tenant Without a Lease | Getting Out of a Commercial Lease Early

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