Being pro-active can spread new caseload

Practices must prepare for court reforms, writes Graeme Watson

Extending the exclusive jurisdiction of the sheriff court may heavily impact on how businesses deal with disputes. Picture: TSPL

THIS September, the key measures in the Courts Reform (Scotland) Act 2014 come into force. This will mark a sea change for litigators, with the establishment of an all-Scotland personal injury sheriff court in Edinburgh, the return of civil jury trials to sheriff courts, a new sheriff appeal court and tight time limits for judicial review.

But one other provision – extending the exclusive jurisdiction of the sheriff court to all actions worth under £100,000 – may heavily impact on how businesses deal with disputes.

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Currently, claims for under £5,000 can only be raised in the sheriff court. Everything else can be raised either in the sheriff court or the Court of Session. The 2014 Act provides that unless the case raises an important point of law, the sheriff courts will have exclusive jurisdiction for claims up to £100,000.

At a stroke, most new disputes which could have been raised in the Court of Session will move to the sheriff court.

So what, you might ask.

Well, the Court of Session has a well-oiled commercial court. It has experienced, specialist commercial judges. And parties can automatically recover the cost of instructing advocates if they are successful. While personal injury actions can all be raised in Edinburgh, commercial disputes will go to the local sheriff court.

Some sheriffdoms have their own commercial courts. And if your local court does not, you can ask for your case to be sent to one that does. The act allows the appointment of specialist sheriffs. So perhaps expertise will not be lost but rather spread out. Still, the fear is that businesses will lose access to the highest courts and that even if they instruct counsel and win, they may not recover those costs. Further, the recent sheriff court closures have seen an increase in the time taken to deal with procedural and administrative matters. The oncoming deluge can only make matters worse. Delays are not attractive to those pursing commercial disputes.

Perhaps, however, these changes are meant to nudge us away from the doors of the court and into the arms of alternative dispute resolution (ADR).

Businesses must seriously consider whether litigation is their best move. They may instead opt for ADR – mediation, adjudication or arbitration. Some sectors, notably the construction industry, are already taking advantage of ADR and these reforms may increase its prevalence elsewhere.

ADR can lead to faster resolution of disputes while allowing parties greater confidentiality and holding down costs. The construction industry currently has a statutory right to adjudication. In addition, the Arbitration (Scotland) Act 2010 sets out mandatory rules and clearer default rules for arbitrations. This all goes towards making ADR schemes more attractive to businesses seeking to resolve their disputes.

But there is another side to the coin. Sheriff court procedure should be quicker and it should be cheaper. If all goes to plan, businesses may be encouraged to litigate knowing their dispute will be dealt with locally, efficiently and at lower cost.

One major barrier to litigation is access to justice. The fear of legal costs – real or imagined – acts as a major deterrent, especially in the Court of Session. Parties settle either to avoid litigation altogether or to avoid the significant costs of proof.

Transferring these cases to the sheriff court should make court action much more affordable for small businesses. Of course, this only works if there are the resources to ensure that the courts are not clogged, and if there is the judicial will to hold parties to tight case management.

The initial mood music is good. Lord Jones, speaking at a recent WS Society seminar on the court reforms, underscored that there must be a culture shift among lawyers: they must become converts to active case management. The new regime will only work if that change of culture takes place. And, he said, the sheriffs stand ready to enforce the new rules. His message for those looking to delay, solicitors and clients alike, was this: be afraid, be very afraid.

Graeme Watson is Partner and Head of the Healthcare Unit at Simpson & Marwick