Scotsman Legal Review: Litigation and alternative dispute resolution

Wind farms - both offshore and onshore - continue to keep litigators busy. Picture: Shutterstock

The interesting and, at times, uncertain economic and political situation over the past 12 months has had little detrimental impact on the flow of work keeping litigators, arbitrators and mediators at the top of their game.

“I think it’s fair to say that just about the whole business world paused for breath after the Brexit vote but we have found across the board that there is still a lot of business to be done in the commercial arena and no let-up in new dispute work for existing and new clients,” says Stephen Goldie, head of litigation and partner at Brodies.

“The Brodies litigation department, now up to 24 partners, is extremely busy.

“In particular our contentious construction team has seen an upturn in business and we have also attracted new business as a direct result of a new partner, David Arnott, joining the firm.

“Our debt recovery team has been extremely busy as well. People are definitely chasing and pursuing commercial debts a bit harder.”

Axiom Advocates has reported an equally busy year, with the nature of some cases changing as senior members move on to more senior roles.

James Wolffe QC was appointed Lord Advocate in May, while Alistair Clark QC was appointed as senator of the College of Justice.

“That has been interesting to see how that affects the work coming into the stable,” says Axiom advocate Roddy Dunlop QC.

“It has not in any way been to the detriment of what has been coming in, it has just meant different people stepping up.

“Axiom have been heavily involved in one of the most valuable claims ever raised in Scotland, known as the ‘tunnel’ litigation. There were seven counsel involved in that case and they were all from Axiom.”

The “tunnel” litigation, in which SSE brought a £130 million claim against Hochtief after a pressurised water tunnel at the Glencoe Hydroelectric Scheme near Fort Augustus collapsed in 2009, not long after the scheme had been brought into operation, concluded in April after 87 days in court.

Other notable cases for the stable include Donald Trump’s appeal against a wind farm off the Aberdeenshire coast, which was decided in December 2015, and A & J Allan v the Strathclyde Fire Brigade which saw the Inner House (the Scottish Appeal Court) very significantly limit the duty of care that applies to the Scottish Fire & Rescue Service in dealing with fires.

The defending brigade was represented by senior and juniors from Axiom.

But with the Scottish courts system undergoing major changes, many law firms are advising clients to consider alternative dispute resolution (ADR).

“Across the board at Brodies, the work that goes to court is really the tip of the iceberg as there is a strong body of advisory work going on as well,” says Goldie.

“We have plenty of mandates going through ADR; including international arbitrations, expert determinations and mediations.

“There are various reasons why clients might prefer to stay out of the court system.

“The great benefit of ADR for the client is that they do retain a bit more control and they are out of the public gaze.

“It can also speed the process up, as with some expert determination clauses, you will find that a matter could be resolved within a matter of months. If you go through the court system, it can take a year or two to get to a conclusion, depending on appeals.”

John Sturrock, founder, chief executive and senior mediator at Core Solutions is a great advocate of the benefits of mediation for settling disputes and hopes the Scottish courts will encourage greater use of the process.

“Mediation is a very practical and useful tool in the armoury of tools which lawyers have available to serve their clients,” says Sturrock.

“It’s an opportunity to focus the clients’ and the lawyers’ minds in a relatively short period of time on what the real issues are, what lies beneath the dispute and what the options for resolving the matter are.

“Approaching it with all those factors in mind and with a constructive commitment to finding a solution among a range of possible outcomes will usually help to satisfy clients’ needs.”

He says there will always be significant use of mediation within the management of organisations in both the public and private sectors and is seeing a lot of activity in the corporate field around the purchase and sale of companies.

“We are now seeing, in Scotland, very effective use of mediation by lawyers,” says Sturrock.

“Over the last ten years I would say there has been a significant increase in effectiveness, competence and understanding of the process and of skilful negotiation generally.”

While litigation and arbitration are both processes designed to produce a result – if not necessarily the best result for both parties – ADR can offer more flexibility.

“A lot of clients see the benefits of recognising that they are in a dispute and looking at how they are going to resolve that sooner or later,” says Colin Hutton, partner in dispute resolution at CMS.

“However, in our experience, it only really works when you are prepared to put the effort in at the start. For us, it’s never too early to consider it.”

If the opposing party does not invest in the dispute, the process of achieving a resolution can be hampered.

Renewables is one area that has been keeping the team busy at CMS.

Hutton points to two fairly high-profile projects; the John Muir Trust which reached the end of its legal challenge against Scottish Government-backed plans for an onshore wind farm in the Monadhliath mountains, and the RSPB which challenged plans for four offshore wind farms off the Tay and Forth estuaries.

“What we are seeing is that there are still major capital projects in the pipeline – certainly on the renewables side that has kept us very busy,” says Hutton.

The challenges for banks seem to be never ending and banking and finance is another sector continuing to provide work for Scottish law firms.

“It’s part and parcel for the major financial services players that they need to be equipped to deal with these kinds of challenges,” says Hutton.

“There’s a whole industry that’s become fairly sophisticated at challenging and pursuing banks. PPI is a classic example.

“The claims companies are not going to shut up shop overnight and we continue to scan the horizon for our clients to try and spot the next wave of attack.”

Graeme MacLeod, a fellow partner at CMS, agrees.

“There are still different types of claims coming through and people thinking up different types of challenges to what the banks have done in the past,” says MacLeod.

“Inevitably it must come to an end at some point but it may not be for a little while yet.”

Tackling cyber crime has been high on the political agenda in Scotland with campaigns to help businesses and individuals spot the signs of potential threats online.

A corresponding trend is seemingly emerging in the legal sector, with firms reporting an increased interest in cyber. This is an area with great potential to generate a steady stream of work.

“Before Brexit came along, people said cyber should be the main issue on the board agenda and, even if it is not number one, it should still be high up,” says MacLeod.

“The interesting question is going to be not just whether people need assistance with handling data breaches but whether we are going to see claims coming out of them.”

Briefing: Public law, by Peter Sellar

Let it not be forgotten that we are still very much in the European Union.

EU public law life goes on despite the 23 June vote.

While we wait for the shape Brexit will take, EU law applies, is enforced, and is therefore subject to legal challenge.

The cases currently pending before Scottish courts will continue to run on the EU arguments raised, and new ones will be raised as appropriate.

So practitioners should continue challenging awards of public contracts if there has been a perceived breach of the regulations and EU law (see, for example, Boston Scientific Ltd v Common Service Agency); lawyers should look forward to the Court of session’s application of the Court of Justice of the ruling of the European Union (CJEU) in the Scotch Whisky Association v Lord Advocate case; and in general, we should all continue to avail ourselves of the myriad remedies that have existed – but not oft enough been used – since 1973 including challenges of state aid, direct judicial review applications to the CJEU and preliminary references from any of our courts and tribunals.

And once Brexit finally assumes a more specific shape, who knows, maybe it will be subject to challenge in a Scottish court.

Peter Sellar is an advocate with Axiom Advocates.

Briefing: Mediation, by John Sturrock QC

Someone recently said: “Mediation is now part of the dispute resolution fabric in Scotland”.

Hundreds of lawyers use mediation.

We need to encourage many more to approach it with confidence and skill.

Assuming that Scotland leaves the European Union as part of Brexit, there could be a number of initiatives to enhance the Scottish economy. Even if we don’t, we need constantly to generate new business to create jobs and wealth.

One area is dispute resolution. Commercial activity will always generate disputes. Nowadays, businesses want to be able to resolve disputes quickly and effectively.

The ability to do so may be a factor in determining the location of commercial activity. If a jurisdiction is perceived to be unfavourable in its dispute resolution offerings, people may choose to go elsewhere.

That may happen already. Clients (and lawyers) from elsewhere sometimes express surprise at what they perceive to be slow momentum in Scotland regarding expedited dispute resolution, including use of mediation.

The new culture in our courts heralds change. The Simple Procedure rules for small claims are encouraging; we need these ideas extended to all civil claims to send a clear signal that Scotland recognises and meets today’s commercial needs, regardless of value.

John Sturrock QC is chief executive and senior mediator at Core Solutions.

The Scotsman’s annual legal review looks at some of the most active areas of legal practice in Scotland. Informed by comprehensive data published by Chambers and Partners and Legal 500, the articles give exclusive insight into the work of more than 11,000 practising solicitors and over 460 practising advocates.