Commercial Litigation
What we saw in 2023
Geopolitical and macro-economic factors have continued to put pressure on commercial contracts, which is leading to disputes. Following the start of the war in Ukraine in early 2022, the conflict in the Middle East has again highlighted the impact of geopolitical factors on both international and domestic commercial relationships and supply chains.
Is the primacy of language in commercial contracts in retreat? A split judgment of the Supreme Court in early 2023 suggested that there may be a degree of movement away from the literal interpretation of wording in commercial contracts. In Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd, the majority of the Court departed from the clear wording of a clause and imposed what it believed was a reasonable outcome consistent with the contract as a whole. The judgment may give claimants more leeway to attempt to escape what turns out to be bad bargain.
There has been a marked increase in the number of businesses in ‘critical’ financial distress since Q2, up nearly 25% to 37,722 in Q3 2023
Almost 480,000 businesses across the UK in ‘significant’ financial distress, 8.7% higher than Q2 and 4.7% higher than the same period in 2022 (Q3 2022: 456,949)
18 of the 22 sectors covered by Red Flag saw a double digit increase in companies in critical financial distress compared to the prior quarter.
Critical financial distress also rose considerably in the retail sector, with Food & Drug Retailers up 33% and General Retailers up 14%, compared to the previous quarter.
2024 trends and insights
English judgments will be easier to enforce abroad… but not quite yet. Following the UK Government’s announcement in November 2023 that it is the right time for the UK to join the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, the UK signed the Convention on 12 January 2024. The Convention will apply to the enforcement of judgments between the UK and other contracting states which include all members of the EU (except Denmark). It will therefore replace some of the mechanisms that fell away on Brexit. Implementing legislation and amendments to the Civil Procedure Rules will be required before the Convention can be ratified. The Convention will then come into force for the UK 12 months after it is ratified.
There will be an increased focus on mandatory alternative dispute resolution (ADR) such as mediation. The Court of Appeal’s landmark judgment in Churchill v Merthyr Tydfil in November 2023 held that the Court has the power to order the parties in litigation to engage in ADR. The Court declined to set out detailed guidance on when compulsory ADR should be ordered. There are therefore likely to be fresh disputes about when ADR will be appropriate and the sanctions on those unreasonably refusing to comply.
Commercial Litigation
Our experienced team of dispute resolution specialists advise clients on a range of commercial disputes including high-value, high-profile and complex matters, often with an international element. We offer a partner-led service, with access to experts in our Corporate, Intellectual Property, Commercial, Employment and Banking teams to provide fully rounded and strategic advice.