A new survey of seven European countries shows that with litigation on the increase the world over, lawyers must extend their expertise to navigate each juridiction’s approach.
Sophisticated clients increasingly expect their lawyers to have a significant appreciation of the pros and cons of resolving disputes in countries other than their own. This greater emphasis on having an international outlook is driven by a number of factors which in turn have led to an increase in forum shopping. They include the growing use of the internet as a medium for delivering goods and services, and the importance of being able to exploit and protect brands on a global basis. A heightened awareness of the international position in a variety of countries may well help secure the client both legal and tactical advantages.
A recent review conducted across seven key European jurisdictions (England, Belgium, France, Germany, Italy,The Netherlands and Sweden) assessed the extent to which there was a common approach to such key issues as the right of appeal, the obligation of disclosure, the attitude of the courts to ADR and the recoverability of costs. The survey highlighted a number of important differences and similarities.
Of principal concern to a party is the length of time the process will take before a resolution is reached. It was clear from the countries surveyed that not only is emergency relief readily available to protect assets and interests in suitable cases but there is little difference in the average length of time it takes for disputes to come to trial (approximately 12-24 months).
However, differences did emerge with regard to the approach taken by the courts to case management and whether or not an unsuccessful party has an automatic right of appeal. It is clear that the reforms instituted under Lord Woolf, which confer on English courts wide powers of case management and encourage a proactive approach, are in many ways a radical departure from the general practice on the continent which tends towards leaving the parties largely in control of the process. That said, the principle of active case management does not seem to have resulted in quicker trial times in England compared to the continent.
In any review of overall timescales, consideration must also be given to the appeals process. Again, the position before the English courts, with the greater restrictions on the right to appeal, is in marked contrast to the continent where, generally speaking, the losing party will have an automatic right of appeal from the first instance court to the appeal court (or equivalent). Thereafter most countries place restrictions on appeals to the highest court.
The fact that a party can appeal as of right any decision of the lower court may be an important consideration for a party seeking to tie the other down in protracted litigation in the country of its choice. This issue is particularly important where jurisdiction is disputed and one party has launched pre-emptive proceedings in its home country. Under Council Regulation (EC) No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (which has largely superseded the Brussels Convention) where proceedings have been brought in the courts of different member states, any court other than the court first seized must stay its proceedings until such time as the court before which proceedings were first commenced has decided whether it has jurisdiction. This is the case even where the proceedings have been commenced in breach of an exclusive jurisdiction clause (see Erich Gasser GmbH-v-MISAT Srl (Case C-116/02). As jurisdiction will not be established until the appeal process has been completed, this means that a party can be fairly confident that it can tie down its opponent in protracted litigation in a jurisdiction of its choice for a substantial period (in some cases for two to three years) even if it loses the jurisdiction battle at first instance.
The parties' obligations with regard to the disclosure of documents are another important area where practices differ. Again the procedure in England is in marked contrast to the approach taken in other jurisdictions. Under English procedural rules a party is obliged to disclose not only those documents on which it relies but also those documents which may be adverse to its case. In all the other jurisdictions there exists no such requirement. Parties are generally under no obligation to disclose documents to each other, whether or not they damage their case. Moreover, while in most countries the courts have limited power to order disclosure in certain defined circumstances, for example, if a document has been specifically identified which the court must see to dispose fairly of the case, in some countries, such as Belgium, there is no sanction even if a party fails to comply with the disclosure order. In Germany the courts have only very limited powers in certain defined circumstances to order the parties to disclose documents to each other.
The disclosure obligations under English law are, of course, subject to a number of important exceptions, one of the most important of which concerns 'without prejudice' communications. English public policy favours the settlement of disputes and in order to encourage settlement English law excludes all negotiations genuinely aimed at settlement from being given in evidence. However, while the privilege associated with 'without prejudice' communications is well established in England it is not so well recognised on the continent. In France, Belgium, the Netherlands and Sweden, for example, there is no special protection afforded to communications, particularly those between lawyers, made for the purpose of trying to facilitate a settlement. In certain circumstances therefore, the courts can order the disclosure of such communications. A party needs to be mindful of this risk when deciding whether to enter into negotiations. Even in countries where 'without prejudice' communications are protected, consideration should be given as to whether there is a risk that documents recording those negotiations might become relevant to proceedings in another country in the future. Another aspect of the survey worth commenting on is the extent to which the courts will actively encourage the parties to settle the dispute using alternative dispute resolution procedures, for example mediation. There have been a series of cases in England in the past couple of years which have highlighted the powers of the courts to require the parties to explore ADR even if they do not want to and to penalise parties in costs should they fail to do so. This again contrasts with the approach to settlement taken on the continent. Here the general position is that the courts, to a greater or lesser extent, will encourage the parties to resolve their dispute through ADR but will not penalise the parties should they be reluctant to do so.
Practices relating to costs also vary widely. In England the general rule is that the loser pays but the court has a wide discretion and can allocate costs having regard to such matters as the parties conduct and the extent to which a party succeeds in all or part of its case. In Sweden, the Netherlands, Germany and Italy the general rule is that the successful party can expect to recover its costs but practice differs as to the extent of the recovery. In the Netherlands, for example, recovery is generally limited to 20-30 per cent of the costs (recovery is lower in complex matters) while in Germany the level of recovery is regulated by law. In France and Belgium a successful party can recover the court fees but generally not the costs of legal advice.