Commercial litigation is an intricate process of taking a case to court. The case, commonly known as a ‘claim’ or ‘proceedings’, will be civil in nature and will usually be between two or more parties, arising when business entities (or individuals) find themselves in dispute. It is a formal remedy for disputes that cannot be resolved through negotiation or other alternative dispute resolution methods. 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 that disputes are handled fairly and efficiently. From pre-action correspondence to the trial itself, each stage of the litigation process is designed to encourage settlement and, where this is not possible, to allow the court to make a just and proportionate decision based on the evidence presented.

At JMW Solicitors, we understand the complexities of commercial litigation and the importance of finding the right legal strategy to align with your objectives. Whether you are at the early stages of a dispute or already engaged in litigation, it is important to understand the legal process in order to provide a better idea of what to expect at each stage.

We have previously written about ways to resolve a dispute by making and receiving offers, and by engaging in alternative dispute resolution such as mediation. This guide provides a complete explanation of the commercial litigation process, and offers insights into the key stages such as issuing a claim, managing court proceedings, and preparing for trial.

What Is the Purpose of Commercial Litigation?

A dispute can be resolved by the parties at any time prior to commencing litigation or, if litigation has been commenced, prior to trial. The courts of England and Wales actively encourage parties contemplating or already involved in litigation to engage in settlement discussions. In certain circumstances, the courts will impose cost sanctions if parties fail to do so.

Where settlement cannot be achieved, liability is in dispute or urgent legal action needs to be taken, it may be necessary to issue court proceedings. This commences the litigation process.

Within the CPR, different types of legal claims have a different set of protocols, such as: 

• The Pre-Action Protocol for Construction and Engineering Disputes
• The Pre-Action Protocol for Debt Claims
• The Pre-Action Protocol for Media and Communications Claims
• The Pre-Action Protocol for Professional Negligence

There is also a general pre-action protocol where none of the specific protocols apply.

A fundamental rule in the CPR is the ‘overriding objective’, which enables the court to deal with cases justly and at proportionate costs.  For the purposes of this guide, we are referring to the litigation process set out under the Practice Direction on pre-action conduct, which is the general guidance to be followed when none of the aforementioned protocols apply.  

The Commercial Litigation Process: Step by Step

Pre-Action Correspondence

The pre-action protocols are there to assist the parties involved by setting out the rules for pre-action conduct. The pre-action stage typically necessitates the early exchange of information about a party’s proposed claim (such as the key facts and the legal basis for the claim) and allows the other party to provide a substantive response.

Where required, the parties are expected to exchange further pre-action correspondence, together with any relevant documents in order to narrow the issues in dispute, with the aim of avoiding litigation. The courts are likely to penalise parties, usually in the form of cost penalties, if they do not engage in pre-action correspondence.

The party intending to pursue legal action should set out its proposed claim in a sufficiently detailed letter of claim. For example, it should include the names of the parties, the factual background relevant to the dispute, the legal basis to pursue the claim, the losses suffered and the remedies sought. The claimant should give the defendant a reasonable period of time in which to respond to the letter of claim (namely 14 days in a straightforward claim, and up to three months where the dispute is more complex).

If the opponent is unable to respond by the deadline stated in the letter of claim, the defendant should acknowledge receipt of the letter of claim and propose an alternative date for their letter of response.

The letter of response usually contains important information such as whether the claim is accepted or whether it is rejected (either in whole or in part) and, if it is rejected, the reason for the rejection should be explained. If more information is required, it should be requested.

During the pre-action correspondence phase, once the parties have set out their respective positions, they often explore settlement in separate correspondence on a “without prejudice save as to costs” basis. This represents an attempt to resolve the dispute without pursuing it through court. Settlement correspondence that has been marked without prejudice other than costs is not usually shown to the court until the conclusion of any claim, when the issue of costs is being considered.

Issuing a Claim

Sometimes, it may not be possible to resolve the issues in dispute during the pre-action stage and, if that is the case, your legal representative may advise you to issue a claim in court in order to pursue the matter further. In court proceedings, the party pursuing the claim is known as ‘the claimant’, and the party responding to or defending the claim is known as ‘the defendant’.

The claimant starts the process by issuing their claim in court, which involves completing a claim form electronically and paying the relevant court fee online. The claim will be issued in either the High Court or the County Court. Court proceedings may only be started in the High Court if the value of the claim is greater than £100,000.

In addition to the claim form, the claimant must also file particulars of claim. The claimant can do that by either providing ‘brief details of the claim’ on the claim form itself, or in a separate document entitled Particulars of Claim, where substantive details about the factual background and the legal cause of action can be fully stated. The latter is common in more complicated claims. If the particulars of claim are contained in a separate document, they must either be served with the claim form (at the same time) or served separately on the defendant within 14 days of service of the claim form.

At the same time as serving the particulars of claim, the claimant must serve the key documents it relies on in support of its claim. This is known as Initial Disclosure. There are specific rules within the CPR regarding service of the claim form, and it is essential that the claimant give careful consideration to the method of service it will choose.

Acknowledgement of Service and Filing a Defence

Once the claim form and particulars of claim have been served on the defendant, the defendant has 14 days to either file a defence or to file at court an acknowledgment of service.

An acknowledgment of service is a court form which the defendant may complete in order to confirm that the claim form and particulars of claim have been received. The defendant will also state that it intends to either:

• Admit the claim;
• Defend all of the claim;
• Defend part of the claim; or
• Contest jurisdiction.

If the defendant files an acknowledgment of service, it then has up to 28 days after service of the particulars of claim to serve a defence.

A defence is a Statement of Case that should respond to each of the allegations set out in the particulars of claim (usually by reference to each paragraph) and explain whether each allegation is admitted, denied or requires the claimant to prove. This enables the court to determine which of the facts are disputed and helps to narrow the issues. For claims in the Business and Property Courts, the defendant will be required to disclose the key documents upon which it relies. If a defendant fails to file a defence within the strict timescales, a claimant can request judgment ‘in default’.

Filing a Reply

Once a defence has been filed, a claimant has the option to file a reply to the defence where it is necessary to reply to one or more of the allegations raised in the defence that were not already referred to in the particulars of claim. A reply to defence may also be used to admit one or more facts alleged in the defence and narrow the issues in dispute. The claimant is not obliged to file a reply and in the absence of a reply, the claimant is not taken to admit the matters raised in the defence.

In general practice, a reply to defence is filed where a defendant has made a counterclaim, and the claimant is required to file a ‘reply and defence to counterclaim’.

Counterclaim

As mentioned above, a defendant may wish to bring a counterclaim against the claimant, in addition to defending the claimant’s claim. It can do this by filing a counterclaim with the defence. This is typically done within one document, with the counterclaim following on from the defence.

A counterclaim is treated as a new claim, and the claimant must file a defence to counterclaim within 14 days (subject to any extension of time agreed between the parties) in order to respond to the allegations set out in the counterclaim. If the claimant fails to do so, the defendant may request judgment ‘in default’ against the claimant.

At this stage it may be possible for a defendant to bring a new claim against a third party. This is known as an ‘additional claim’. Particulars of the additional claim must be filed at the same time as the defendant files a defence, otherwise the permission of the court must be sought.

Upon issuing a counterclaim or an additional claim, a defendant must pay the relevant court fee to the court. The value of the court fee will be determined by the value of the counterclaim or additional claim.

Statements of Case and Statements of Truth

Court documents such as the claim form, particulars of claim, defence, defence and counterclaim, and reply to defence and defence to counterclaim, are known as Statements of Case. The purpose of a Statement of Case is to concisely define the issues in dispute between the parties that the court has the power to consider and decide upon.

Statements of Case are required to be verified by a statement of truth. The statement of truth is a form of wording at the end of a Statement of Case which confirms that the person making the statement believes that the facts contained in the document being verified are true. The court places significant weight on the signing of a statement of truth, and where a statement of truth is signed without an honest belief in the truth of the facts, proceedings for contempt of court may be brought. The maximum sentence for contempt of court is imprisonment.

Judgment in Default

The CPR does allow for some early-stage remedies, without the need for a trial. One of those is judgment in default, which a party can request in circumstances where a defendant fails to file an acknowledgement of service or defence on time, or the claimant fails to file a defence to a counterclaim in time. If granted by the court, a judgment is entered without the need for a trial of issues in the claim.

Summary Judgment

It is possible for a claimant or a defendant to apply to the court seeking permission to determine the claim at an early stage using the summary judgment procedure. The court can give summary judgment without the need for a trial in circumstances where:

1. It considers that the claim, defence or issue has no real prospect of success; and
2. There is no other compelling reason for a trial.

A court can also direct that a claim or defence be subject to summary judgment of its own initiative.

Striking Out a Claim

The court has the power to strike out all or a part of a Statement of Case where:

• There are no reasonable grounds to bring or defend the claim
• The Statement of Case is an abuse of process, or likely to obstruct the just disposal of the proceedings
• There has been a failure to comply with a rule or court order

Examples of why a claim might be struck out include:

• A claim for money without any explanation indicating why or how the money is owed
• A Statement of Case that fails to set out a coherent statement of facts and makes no sense
• When there is no legally recognisable basis for pursuing the claim

Security for Costs

In certain circumstances, the court has the power to order the claimant to give security for costs. This is to protect a defendant from a situation whereby it successfully defends the litigation and the claimant is ordered to pay the defendant’s legal costs, but the claimant cannot afford to or fails to do so. To apply for an order for security for its costs associated with the litigation, the defendant must make the application promptly and must be able to show that it is just to make such an order.

In doing so, it must show one or more of the specific grounds set out in the CPR apply. Those grounds include where the claimant (whether an individual or a corporate body) is located outside of England and Wales, where the claimant is a company or other body and there is reason to believe that it will be unable to pay the defendant’s costs (if ordered to do so), or the claimant has taken steps in relation to its assets that would make it difficult to enforce a costs order.

A court will consider the merits of the claim and the likelihood of the defendant successfully defending it when considering whether to make such an order. If an order for security for costs is granted, the court will decide the amount of the security, the deadline for the claimant to provide it, and the form that the security is to take.

Interim Remedies

The court holds the authority to grant various interim remedies prior to or during a trial, aimed at preserving the status quo, protecting assets, or preventing harm. These remedies are vital in situations where delaying action until a full trial could result in irreversible damage.

Injunctions are among the most commonly sought interim remedies, and they come in various forms:

• Freezing order: prevents others from controlling assets in a way that could damage your business
• Search order: allows for the search and seizing of evidence that might have otherwise been disposed of
• Disclosure order: allows for the search of documents, which must then be disclosed
• Delivery up order: allows for certain property to be delivered up by a third party

Courts will need to assess several factors when deciding whether to grant an interim remedy. For more information on interim remedies and specific types of injunctions, take a look at our Injunctions page.

Case Management

Under the CPR, the court is required to actively manage cases, which includes encouraging the parties to cooperate with each other, fixing timetables or otherwise controlling the progress of the claim, and dealing with as many aspects of the claim as it can on the same occasion. Once the defence has been filed, the court will allocate the case to a particular track, and the parties are required to complete a directions questionnaire.

Directions Questionnaire and Draft Directions

The directions questionnaire is a detailed court document made up of various sections which requires each party to carefully answer a series of questions about the case. The document is designed to obtain information from each party about factors that enable it to efficiently manage the case, such as:

• Settlements
• The court hearing the case
• Pre-action protocols
• Case management information
• Experts
• Witnesses
• Trial
• Costs and directions

Parties are required to agree and file this information at the court’s agreed direction, no later than seven days before a case management conference. Such directions will typically cover the key dates for the parties to undertake various procedural requirements, up to and including the trial. The directions will relate to the disclosure of documents, witness evidence, any expert evidence, pre-trial and trial requirements, costs management, settlement and any other relevant items. 

Costs Budgets

For claims up to £10 million, parties (excluding litigants in person) are required to prepare a costs budget. A costs budget is a prescribed court form, known as a Precedent H, in which each party provides a detailed breakdown of the costs and disbursements they have already incurred, together with an estimate of their future costs and disbursements for each ‘phase’ of the proceedings, up to and including trial. The parties can base their estimates on various assumptions which they must set out on the form.

As with statements of case, a costs budget must be verified by a statement of truth and must be filed and served with the party’s directions questionnaires no later than 21 days before the case management conference.

Once prepared, filed at court and served on the other party, each party must review the other party’s costs budget and attempt to reach agreement in respect of their costs for each phase of the budget. Such agreement, or disagreement, must then be recorded on a budget discussion report, known as a Precedent R, and filed at court in advance of the case management conference.

Where a party fails to file a costs budget, it will be limited to recovering only the applicable court fees.

Case Summary

In readiness for the case management conference and to assist the court, the claimant must file a short case summary (ideally agreed in advance by the defendant), which sets out a brief chronology of the claim, the issues of fact which are agreed and the issues of fact which are disputed, and the evidence needed to decide them.

Disclosure Review Document

In advance of the case management conference, the parties’ legal representatives are also required to prepare and file a disclosure review document (DRD), which aims to help the parties agree on a sensible and cost-effective approach to disclosing the key documents in the claim (known as disclosure). As part of the DRD, the parties must identify and seek to agree a draft list of issues for disclosure by reference to specific disclosure models, and the claimant must file a single joint DRD on behalf of the parties, together with the draft list of issues for disclosure.

Case Management Conference

A case management conference (CMC) is a procedural hearing, during which the court will consider the preparation of the claim to date, including the parties’ compliance with procedure, and will give directions for the further progress of the claim up to trial.

It is common at a CMC for the parties and the court to consider issues in the case, and explore whether such issues can be narrowed. It will also be the point at which draft directions and, in particular, any directions not agreed by the parties, are considered by the court, as well as fixing the costs for each stage of the proceedings up to and including the trial.

Disclosure

The next step in the litigation process is the disclosure of documents by the parties. Disclosure is the process by which each party produces, to the other party, documents in its control which it relies upon in the court proceedings. These are typically historical documents which came into existence prior to or and at the same time as the dispute arose.

The contents of documents (together with the written and oral witness evidence) are often the key evidence which a trial judge will consider and base their findings of fact on, so they are important evidence in litigation.

In this context, a “document” can be a paper document, an electronic document, a text message, voicemail, audio or visual recording, as well as the unique metadata behind each document. Such documents are often held on mobile phones, hard drives, laptops, memory sticks, servers and more, so as part of the disclosure process, it is often necessary for e-disclosure service providers to assist with the retrieval and preservation of those documents from the relevant devices at an early stage.

Disclosure also extends to any adverse documents, which means documents that may contradict or damage the disclosing party’s position or support the other party’s position on an issue in dispute.

The disclosure stage in any claim typically requires a significant amount of work to be undertaken, and time spent carefully reviewing documents. Furthermore, each party and their legal representatives owe express duties to the court and therefore must ensure they comply with their obligations throughout the disclosure process.

For claims issued in the Business and Property Courts on or after October 1st 2022, parties must comply with specific provisions in respect of disclosure as set out in the CPR. As litigation is anticipated, even prior to the issue of proceedings, there is an obligation on each party to take reasonable steps to preserve documents in their control that may be relevant to the issues in the claim.

As mentioned earlier, each party is required to provide the other party with Initial Disclosure of key documents at the same time as serving their statement of case, unless the parties have agreed to dispense with Initial Disclosure.

At this stage of proceedings, the court will determine whether the parties should undertake “Extended Disclosure”, which is the process in which the parties identify a List of Issues for Disclosure, assisting with the documents and electronic documents by reference to the disclosure issues in the claim.  This stage often involves the parties and their legal representatives undertaking a search for relevant documents and identifying disclosable documents, in accordance with the various disclosure models set out in the CPR.  Each of the models requires the parties to disclose any known adverse documents and to sign a Disclosure Certificate.

Witness statements

The next step will be the process of preparing and exchanging written witness statements in advance of the trial. The trial judge must decide the appropriate weight to give to the contents of each witness statement, and ultimately whether or not to accept a witness’s recollection of events.

All witness statements prepared on or after April 2021 must be in the witness’s own words and in their own language (if the witness is non-English speaking). If required, a translation should be obtained. The purpose of a witness statement is to set out matters of fact, of which that witness has personal knowledge. The witness should not argue the case, take the court through documents in the case, or provide opinion evidence.

Like Statements of Case, a witness statement must contain a statement of truth signed by the witness. In addition, the witness must also sign a confirmation of compliance. At trial, a witness will usually be asked to confirm under oath that what is stated in their witness evidence is true, and this may subsequently be followed by cross-examination and re-examination of the witness.

Expert Evidence

In some legal cases it may be necessary to instruct an expert to provide evidence to the court on specific issues. These experts will be specialists in a particular field, with the relevant experience and expertise  to provide evidence to the court in the form of a report.

One or both parties must seek the court’s permission to rely on expert evidence, which is typically undertaken at the CMC stage. If there is an expert for each party, it is likely there will be a simultaneous exchange of the expert witness evidence in accordance with court directions. It is more common in legal proceedings to have a single expert jointly instructed by the parties.

Although the expert is instructed by one or both parties, their duties are to the court, and they are required to comply with the CPR in preparing their evidence.

Pre-Trial Preparation

Legal representatives (usually a solicitor and barrister, or a solicitor advocate) will work together with their client to prepare for the trial. In advance of trial, it is common to attend regular conferences with counsel to discuss trial strategy and to address any issues that may have arisen in relation to the issues in dispute or evidential issues.

The Trial Process

In civil litigation cases, trials are usually held in public (i.e. in open court), unless the court orders otherwise. Parties will be informed in advance of the trial how many days that the trial will last for, and typically a trial timetable will be put in place. Depending upon the nature and complexity of the case, and the number of witnesses involved, a trial can last anywhere from a few days to several months.

In terms of the format, much will depend upon the nature and complexity of the case, but an example of a typical order of proceedings would be:

1. The parties raise any preliminary issues, such as procedural matters involving the late submission of evidence or a change to the availability of a witness
2. The parties’ opening submissions
3. The claimant’s witnesses will give evidence
4. The defendant’s witnesses will give evidence
5. The expert or experts will be cross-examined on their evidence
6. The defendant’s closing submissions
7. The claimant’s closing submissions

Depending on the length of the trial, the judge will either prepare and deliver their judgment at the end of the trial, or will reserve judgment to be handed down at some future point.

Judgments

If a trial lasts a day or only a few days, the judge may hand down judgment immediately after the parties’ closing submissions. However, in more complex cases where the trial has lasted several days, weeks or even months, it is more common for the judge to reserve judgment, which means it will be handed down at court on a later date.

If a party wishes to appeal the decision reached in the judgment, it needs to make an application to court seeking permission to appeal.

Costs

Legal costs are dealt with at the end of a legal claim when judgment has been handed down. The standard position is that the successful party will receive an order for a proportion of their legal costs from the losing party. However, it is unusual for the successful party to receive all of its legal costs. The courts can penalise parties in costs if their conduct has been unreasonable during the court proceedings.
The court may also take account of any Part 36 offers that have been made. A full explanation of what a Part 36 offer is can be found on our offers page.