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Disputes are an unfortunate part of business life. While many can be resolved through negotiation or mediation, sometimes court proceedings become unavoidable. This is where commercial litigation comes in.

Understanding what it is, when it may be needed and how the process works will help you make informed decisions and protect your commercial interests.

What Is Commercial Litigation?

Commercial litigation refers to court proceedings relating to business disputes. These cases often involve contracts, partnerships, company law, property, or professional services. The aim is to resolve disputes formally through the courts where alternative solutions have failed.

In England and Wales, the litigation process is governed by the Civil Procedure Rules (CPR), which outline the steps and protocols that must be followed to ensure disputes are handled fairly and efficiently.

When Would You Need Commercial Litigation?

Litigation should always be considered a last resort, as it can be time-consuming, costly, and disruptive. Many disputes can be resolved more quickly and cost-effectively through alternative methods.

Alternative Dispute Resolution Options

  • Negotiation: Direct discussions between the parties to reach a mutually acceptable solution.

  • Mediation: Involving a neutral third party to help facilitate agreement between the parties.

  • Arbitration or Adjudication: Particularly common in construction and commercial contracts, where a third party makes a binding decision.

However, if these approaches do not achieve a satisfactory outcome, litigation may be necessary to protect your position, enforce your rights, or recover losses.

Common Types of Commercial Disputes

Commercial litigation can arise from various business situations, including:

  • Contract disputes and breaches

  • Partnership and shareholder disagreements
  • Professional negligence claims
  • Debt recovery matters
  • Intellectual property disputes
  • Property and landlord disputes
  • Breach of fiduciary duty

What Information Will Your Solicitor Need?

To advise you effectively, your commercial litigation solicitor will require:

  • The contract or agreement at the heart of the dispute
  • Correspondence and records, such as emails, letters, meeting notes, and invoices
  • Details of the breach or dispute, including dates and the impact on your business
  • Evidence of losses or damages, such as financial statements or reports
  • Any previous attempts to resolve the matter, including mediation records or settlement offers

Providing clear, organised information at an early stage will help your solicitor assess your position and advise on the best way forward.

The Commercial Litigation Process

While every case is different, litigation in the UK typically follows these stages:

1. Pre-Action Protocol

Before starting proceedings, parties are expected to exchange information and attempt settlement. The pre-action stage requires the party making the claim to send a detailed letter of claim setting out:

  • The key facts of the dispute
  • The legal basis for the claim
  • The losses suffered
  • The remedies sought

The other party must then provide a substantive response. This stage can often resolve matters without court involvement. The courts may impose cost penalties on parties who fail to engage properly in pre-action correspondence.

2. Issuing a Claim

If settlement is not possible, a formal claim is filed with the court. This involves completing a claim form and paying the relevant court fee. The claim will be issued in either the High Court (for claims over £100,000) or the County Court.

The claim form is accompanied by Particulars of Claim, which set out the detailed background and legal basis for the claim.

3. Defence and Response

The other party responds within a set timeframe, either admitting, denying, or partly disputing the claim. They may file an acknowledgement of service (giving them more time to respond) or submit a defence directly.

A defendant may also file a counterclaim if they have their own claim against the claimant.

4. Case Management

The court sets a timetable for the case, including deadlines for:

  • Disclosure of documents – Both parties must disclose relevant documents in their control, including those that may be adverse to their case
  • Witness statements – Written statements from factual witnesses with first-hand knowledge
  • Expert evidence – If technical expertise is needed (with the court’s permission)
  • Pre-trial preparation – Including agreed bundles of documents and skeleton arguments

A Case Management Conference (CMC) is typically held where the court gives directions and sets the trial date.

5. Trial

Both sides present their case before a judge, who makes a binding decision. Trials can last from a few days to several months depending on the complexity of the case.

The trial typically involves opening submissions, examination of witnesses, expert evidence (if applicable), and closing submissions from both parties.

6. Judgment and Costs

Following the trial, the judge will deliver judgment. In complex cases, judgment may be reserved and handed down at a later date.

The unsuccessful party will generally be ordered to pay a significant proportion of the successful party’s legal costs, in addition to any damages awarded.

7. Appeal (in some cases)

If there are grounds, a party may appeal the decision. However, permission to appeal must be obtained from the court, and appeals can only be brought on specific, narrow grounds.

Time Limits for Bringing a Claim

In the UK, strict time limits (known as limitation periods) apply under the Limitation Act 1980. Missing these deadlines can prevent you from bringing a claim altogether.

Key Limitation Periods

  • Contract Claims: Usually 6 years from the date of the breach. However, if the contract was executed as a deed, the limitation period is 12 years.
  • Negligence Claims: 6 years from the date of damage, or 3 years from when the damage was discovered (subject to a longstop of 15 years for latent damage).
  • Fraud or Concealment: Time limits may be extended until the fraud is discovered or could reasonably have been discovered.
  • Debt Claims: 6 years from the date the debt became due.

Because limitation rules can be complex, it is vital to seek legal advice as soon as a dispute arises. Once the limitation period has expired, your claim will be considered “time barred” and could be struck out.

Standstill Agreements

If proceedings cannot be issued within the limitation period, parties may enter into a standstill agreement to extend or suspend the limitation period. This can provide additional time for settlement negotiations.

Understanding the Costs of Commercial Litigation

Legal costs in commercial litigation can be significant and unpredictable. An important feature of English litigation is that the unsuccessful party will generally be ordered to pay a significant proportion of the successful party’s costs.

This means the losing party typically pays:

  • Their own legal costs
  • A substantial portion of the opponent’s legal costs
  • Any damages or compensation awarded

The courts have broad discretion in awarding costs and will consider factors such as conduct during proceedings and any attempts to settle the dispute.

Frequently Asked Questions

The duration varies considerably depending on the complexity of the case. Simple cases may be resolved in 6-12 months, while complex disputes can take 18-24 months or longer. The pre-action stage alone can take several months.

Yes. The courts actively encourage parties to attempt settlement at any stage of litigation, even after proceedings have been issued. Many cases settle before reaching trial.

If a party successfully obtains judgment but the losing party cannot or will not pay, the court has various enforcement powers including charging orders, third party debt orders, and in some cases, bankruptcy or winding-up proceedings.

For many commercial litigation matters, a barrister (also known as counsel) will be instructed to provide specialist advocacy and drafting skills, particularly for court hearings and trial. Your solicitor will work closely with the barrister throughout the case.

“Without prejudice” correspondence is settlement negotiations that cannot be disclosed to the court (except on the issue of costs at the end of the case). This allows parties to negotiate openly without fear that settlement offers will be used against them at trial.

These are applications made to the court during the course of litigation but before trial. They can range from simple requests to extend deadlines to complex applications for interim injunctions or disclosure orders.

Getting Legal Advice on Commercial Disputes

Commercial litigation is a serious step and should only be pursued when other methods of resolution have failed. With the right advice, you can understand your options, assess the strength of your case, and protect your business interests effectively.

If your business is facing a dispute, Franklins Solicitors’ commercial litigation team can help you evaluate your position, explore alternatives, and guide you through the litigation process where necessary.

Contact us on 01604 344562 (Northampton) or 01908 916096 (Milton Keynes), or email [email protected] for expert advice.

Disclaimer: The information provided on this blog is for general informational purposes only and is accurate as of the date of publication. It should not be construed as legal advice. Laws and regulations may change and the content may not reflect the most current legal developments. We recommend consulting with a qualified solicitor for specific legal guidance tailored to your situation.

Written by George Smith
Head of Litigation and Dispute Resolution, Dispute Resolution at Franklins Solicitors LLP

Specialises in contentious trusts and probate, landlord and tenant matters, debt recovery, contract disputes, Court of Protection, lease extensions, injunctions, guarantor advice and boundary disputes.

George Smith is a Chartered Legal Executive and Commissioner of Oaths with over 29 years’ experience in civil and commercial litigation and dispute resolution. He originally joined Franklins Solicitors in 1994, rejoining in 2023 after a 20-year break.

George handles a broad range of matters including contentious trusts and probate, landlord and tenant disputes, debt recovery, defamation, contract disputes and Court of Protection issues. Known for his no-nonsense, calm approach, he focuses on delivering swift and effective solutions to complex disputes.

Outside work, George enjoys backgammon, reading books, attending concerts, travelling and sharing his passion for the 1980s with his four children.

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