Insight

It has long since been the experience of litigation solicitors in Ireland that clients are reluctant to bring a commercial dispute before the courts, irrespective of who is right and who is wrong.
This reluctance stems from an expectation that the cost of High Court proceedings will be high with cases taking years, rather than months, to be dealt with.

Up until the relatively recent past, these concerns were well founded. However, this has all changed in the last five years due, principally, to two substantial developments – the establishment of a Commercial Court and the growing use and acceptance of mediation as a form of dispute resolution.

COMMERCIAL COURT

The Commercial Court first opened its doors to disputes on 12 January 2004, and has seen a four fold increase in the number of cases with which it deals. Since its establishment, the Commercial Court has been run by Judge Kelly with the objective of providing efficient and effective commercial dispute resolution.

These objectives have been borne out in the day-to-day operation of the court which can boast highly impressive statistics to include; 90 per cent of all cases are dealt with within one year; cases once entered into the Commercial Court List come on for hearing, on average, within 21 weeks (traditionally commercial disputes could take any where between three to five years to be heard); and, impressively, only 27 per cent of all cases in the Commercial List go to full hearing.

In practical terms, the pleadings (documents detailing the dispute) are lodged in the High Court with an application then being made on behalf of either party for that dispute to be admitted into the Commercial Court List. In order to be admitted into this List, the dispute must fall into one or more prescribed categories of commercial proceedings. These categories are set out in Court Rules, and are defined by reference to different types of commercial disputes with a minimum claim value of €1 million.

There are eleven categories of disputes to include disputes relating to business documents or contracts; the import or export of goods; insurance or re-insurance claims and the provision of services (other than medical, dental or services provided under a contract of employment).
The Court also recognises that not all commercial disputes are readily capable of being quantified and therefore, provision has been made, for example, for all intellectual property disputes to be admitted. Furthermore, the court has retained a discretion to admit what it feels to be complex commercial disputes which do not meet the €1 million threshold. The most recent statistics available for the Commercial Court show that in excess of 60 per cent of all disputes admitted into the Commercial Court List arise from business documents/contracts or disputes.

CAREFUL CONSIDERATION

Although speed and efficiency are all but guaranteed in the Commercial Court, such proceedings should not be entered into lightly. All involved must be very aware of the demands of having a claim dealt with by the Commercial Court. In particular, the fact that the Commercial Court’s efficiency is derived from, amongst other things, short and strictly enforced deadlines has consequent demands and pressures, not only on solicitors but on their instructing clients. Furthermore, the cost of bringing claims before the Commercial Court is not insignificant (although, on average, these costs are no greater than the costs that would be incurred over a longer period of time for similar disputes that would previously had been
resolved in other courts of the High Court). Additionally, litigating before the Commercial Court often gives rise to potentially far greater publicity which may or may not be welcomed by the parties involved.

Finally, the speed and efficiency of the Commercial Court implies that it is not a forum which suits all disputes. It is not for those who wish to take a slower (some might say, less aggressive) approach to commercial litigation. Careful consideration must be given to the objectives of the litigation before applying to have a case admitted to the Commercial Court. It should always be borne in mind that although admission to the Commercial Court List is not automatic, even reluctant parties can be catapulted into the Commercial Court procedure by application being made by another party to the dispute.

MEDIATION

Unlike the formal court process that has to be followed by the parties in the Commercial Court, mediation is an informal method of resolving disputes. In simple terms, mediation is a voluntary non-binding process wherein a neutral person, known as a mediator, helps the parties to reach a negotiated settlement. The process is without prejudice until a binding agreement is put in place. If no agreement is reached, then the parties revert to litigation on the strict understanding that no information gained in the mediation can be used in the court process.

In stark contrast to court proceedings, there is no adjudication involved by a third party. The mediator, who is chosen by the parties, assists, encourages, facilitates and works to keep discussions and dialogue open between the parties, but does not act either as an adjudicator or an advisor. In comparison to court proceedings, mediation has a number of attractive qualities. Firstly, the entire process is confidential and therefore, if a dispute between parties is mediated at an early stage, the detail and substance of that dispute does not get into the public domain. This, in turn, often helps an existing commercial relationship to be maintained.

Furthermore, any dispute can be mediated and any solution is possible. In comparison to a court, which can only direct or prohibit the performance of a particular act or award monetary compensation, at a mediation, the parties can agree to whatever solution best suits them - there are no boundaries.

Although mediation has been in existence for a number of years, it had, for a considerable length of time, been treated with a significant degree of scepticism by Irish legal practitioners and clients alike. Historically, the Court Rules did not accommodate mediation. However, the establishment of the Commercial Court brought with it rules which specifically allow a Commercial Court Judge to temporarily suspend proceedings (for a period of 28 days) on the application of the parties, or at his own discretion, to allow the parties to explore mediation amongst other forms of alternative dispute resolution.

The Commercial Court cannot go so far as to oblige the parties to mediate but experience has shown, if the Court recommends that the case is suitable for mediation, then the parties usually do mediate. The most recent mediation statistics available from the Commercial Court (up to 8 May 2008) indicate that over 60 per cent of the cases which were recorded by that court as having gone to mediation were resolved at mediation. Success rates were higher amongst those case where the parties volunteered to mediate as opposed to those cases where the court suspended the proceedings to allow them to consider mediation. Again, experience has shown that where parties have attempted to resolve disputes by mediation and have failed, these proceedings more often than not tend to resolve at a later stage prior to a full hearing.

Having court endorsement for the mediation process has significantly bolstered legal practitioners’ confidence in mediation. Furthermore, time and experience have shown that mediation is a process that really does work and offers a genuine alternative to going to court.
The existence of the Commercial Court, and growing acceptance of the benefits of mediation, now gives parties to dispute real options to resolve those disputes. Mediation or litigating in the Commercial Court does not suit every dispute but where it does, it is clear that the benefits speak for themselves.
__________________________________________________________________________

© Matheson Ormsby Prentice 2009

This Article first appeared in Irish Director (Spring 2009).

The Information in this document is provided subject to the Legal Terms and Liability Disclaimer contained on the Matheson Ormsby Prentice website. The material is not intended to provide, and does not constitute, legal or any other advice on any particular matter, and is provided for general information purposes only.

For further information please contact Noreen Howard, partner in the Commercial Litigation and Dispute Resolution Department at Matheson Ormsby Prentice; email: noreen.howard@mop.ie or telephone +353 1 232 2000.