England and Wales: The legal structure

Abstract

The 3 forums that deal with commercial disputes in England and Wales are the High Court of Justice, the County Court, and arbitration. The High Court is divided into the following divisions: 1. the Chancery Division, 2. the Patents Court, 3. the Companies Court, 4. the Queen's Bench Division, 5. the Official Referee's Court, 6. the Commercial Court, and 7. the Admiralty Court. Although there are detailed rules relating to jurisdiction, the English courts are able to resolve disputes where the parties want them to. Thus, parties sometimes voluntarily submit to the jurisdiction of the High Court. The legal profession can be divided into 3 categories - the judiciary, barristers, and solicitors. High Court judges are appointed by the Lord Chancellor. At present, with one exception, only barristers have become High Court judges. The law was recently changed to allow solicitors to become High Court judges after serving as circuit judges.

THE LEGAL STRUCTURE

This section is an overview of the legal structures which exist in England and Wales for the resolution of commercial disputes. It aims to provide potential users with a general understanding of the system, and in terms of litigation in particular, make them realize what they might be letting themselves in for. Although a special Commercial Court exists, it is necessary to cover a much broader spectrum of legal structures since the Commercial Court itself only deals with relatively narrowly defined types of commercial disputes.

This chapter does not deal with the position in Scotland or Northern Ireland, which have their own laws and procedures.

THE COURTS

There are three forums which deal with commercial disputes in England and Wales. These are:

* the High Court of Justice; * the County Court; and * arbitration.

A businessman seeking resolution of a commercial disputes most often finds himself in the High Court. The High Court is principally located in the Strand in London but has a branch network throughout the country. It is divided into a number of divisions, those of relevance here being the Queen's Bench Division and the Chancery Division.

Disputes involving sums of up to 25,000 (and sometimes more are dealt with by the County Court unless there are special reasons for not so doing, such as a particularly complex point of law. The County Court system is a nationwide layer of regional civil courts set up to deal with less important cases. Recently, however, the jurisdiction of the county courts was considerably widened and their importance has increased.

The assignment of business to the various divisions and sub-divisions of the High Court can be perplexing to the outsider. e apparently complex organization stems from the incremental development of the system over many centuries, and the unititiated require a brief explanation of which court deals with what case. This is given below.

* The Chancery Division generally deals with disputes concerning land, trusts, probate, bankruptcy and intellectual property (e.g. copyright and trademarks). Sub-divisions of the Chancery Division are the Patents Court and the Companies Court.

* The Patents Court deals with patent disputes, disputes under the Registered Designs Acts and the Defence Contracts Act 1988. It has a sister court, the Patents County Court, which also has the same jurisdiction over patent disputes, but different procedures.

* The Companies Court deals with matters arising out of the companies legislation.

* The Queen's Bench Division deals with everything else. The relevant sub-divisions of the Queen's Bench Division are the Commercial Court, the Official Referee's Court and the Admiralty Court.

* The Official Referee's Court deals with complex technical disputes, often relating to the construction industry.

* The Commercial Court is empowered to deal with disputes arising out of the ordinary transactions of merchants and traders, including construing mercantile documents, the export and import of merchandise, freight, insurance, banking and agency.

* The Admiralty Court, as its name suggests, deals with shipping matters.

However, the way in which the rules are framed is such that there is a significant degree of overlap between the Chancery and Queen's Bench Divisions. This often gives a claimant the ability to choose and there can be significant tactical reasons for doing so. A defendant can also challenge that choice. For example, pre-trial hearings are held in private in the Queen's Bench Division but are held in public in the Chancery Division. This can be important where publicity is an issue.

JURISDICTION

Although there are detailed rules relating to jurisdiction, the English courts are able to resolve disputes where the parties want them to. Thus, parties can, and sometimes do, voluntarily submit to the jurisdiction of the High Court.

Jurisdiction is basically founded upon the presence of the defendant within England and Wales. However, there are detailed rules which enable legal proceedings to be issued and served on defendants resident outside England. Important examples include:

* claims for an injunction restraining an act within England;

* claims in respect of contracts made or broken in England;

* civil wrongs committed, or damage sustained, in England;

* and claims over land situated in England.

The courts also respect parties' agreements to submit to the English jurisdiction and to apply English law.

The English courts will apply English law unless one of the parties claims that another country's laws should be applied. For such situations, the courts have developed reasonably well-defined rules for deciding which law to apply.

People and corporations resident outside England and Wales are permitted to commence proceedings in England but, particularly if they are resident outside the European Community, may find that they have to provide security for the defendant's costs, either in the form of cash, a bond or a bank guarantee. Whilst poor individuals resident within the jurisdiction cannot be required to provide security for costs, it is important to appreciate that impecunious companies can. Thus, subsidiaries of foreign corporations without real substance can often find that they and/or their parent are required to provide security for costs in order to pursue a claim.

THE LEGAL PROFESSION

The profession can be divided into three categories, the judiciary, barristers and solicitors.

THE JUDICIARY

High Court judges are appointed by the Lord Chancellor. At present, with one exception, only barristers have become High Court judges. The law was recently changed to allow solicitors to become High Court judges after serving as circuit (more junior) judges, but so far only one has been appointed.

The pay differential between a practising lawyer and a judge can dissuade some able lawyers from taking up judicial appointments whilst still in their prime, although it is not always the case that the best advocates make the best judges.

The Commercial Court judges are almost exclusively selected from a pool of lawyers who have significant experience of commercial litigation. They have rightly developed a reputation for concentrating on the principal issues and weeding out time-wasting tactics. However, they have to some extent become the victims of their own success and, unless more resources are applied (basically we need more judges) this court is in danger of becoming overloaded.

The Chancery Division is less well developed and reliable, although some of the judges are of an extremely high calibre, having previously obtained significant experience of commercial litigation, particularly in the Companies Court. However, allocation of judges is not usually determined by reference to previous experience. Thus, for example, it is possible that a judge without any experience of copyright or trade mark law could deal with such a case.

The Official Referees specialize in technical disputes and have developed very effective procedures for dispensing with these matters efficiently. They have also developed expertise in dealing with breach of warranty cases. They have become pioneers in the use of technology to assist in reducing court time and paperwork.

BARRISTERS

Barristers are an independent body of specialist advocates who have the almost exclusive right to present cases orally in the High Court, although this may change in the future as it becomes easier for solicitors to appear in the High Court.

The term barrister has been used in England and Wales since the fifteenth century for a person who has been called to the Bar (admitted to practise in the superior courts and entitled to represent a party to an action in court). A barrister may not simultaneously be a solicitor.

The power to call to the Bar is exercised by the four Inns of Court. On being called to the Bar, a barrister joins a group of barristers practising in a set of chambers, which are established for the purposes of legal specialization, administrative ease and reputation. However, despite the joint occupancy of a set of chambers, all barristers are self-employed and may not form business partnerships with one another.

The work within the ordinary scope of a barrister's practice is advising on questions of law, drafting pleadings and other documents and advocacy in court. Barristers have virtually exclusive rights o audience in the superior courts and, in inferior courts, concurrent rights of audience with solicitors. When appearing in court, barristers wear wig and gown (except for the magistrates' courts and in chambers). A barrister may not normally advise client or accept a brief without being instructed by solicitor. He must accept any brief in the courts in which he practises. This is known as the cab-rank rule which prevents a barrister from refusing instructions except for reasons of conflict of interest or lack of time.

A barrister with substantial experience may be appointed to be a Queen's Counsel (QC), also known as leading counsel, leader or Silk. Until a barrister is appointed as a Silk, he is known as a Junior irrespective of his age or experience. A Queen's Counsel is almost always assisted by a Junior when appearing in court.

SOLICITORS

The functions of a solicitor include:

* general legal and business advice; * the sale and conveyancing of real property; * the drafting of wills, trusts and settlements advice and administration; * family law; * criminal probate; and * company and commercial work.

The term solicitor also dates back to the fifteenth century and it wasn't until the eighteenth century that the differences between solicitors and barristers were crystallized. A solicitor's full title is Solicitor of the Supreme Court of England and Wales. They are regulated by the Law Society.

Solicitors have a right of audience in inferior courts and tribunals but not generally in the superior courts. However. the Law Society is currently conducting a campaign to reform the rules governing these restrictions. In 1990, a formal application for extended rights of audience for solicitors in the higher courts, namely the Crown and High Courts, was made to the Lord Chancellor, the senior member of the judiciary.

In April 1992, the Lord Chancellor's Advisory Committee on Legal Education and Conduct endorsed the Society's proposals that solicitors in private practice with relevant experience and training should be granted appropriate rights. Therefore, in accordance with the mechanics created by the Courts and Legal Services Act 1990, legislation has been enacted to improve solicitors' rights of audience. This marked the beginning of a relaxation of the strict demarcation between the two professions.