The Practice and Procedure of the Commercial Court

Anthony Colman, Victor Lyon, Philippa Hopkins

• Publisher: Informa Law from Routledge
• Year: 2020
• Print ISBN: 9781843117308
• eBook ISBN: 9781000341454
• Topic: Law
• Subtopic: Commercial Law
• Index: Law

Practice and Procedures of the Commercial Court is primarily intended as a reference for those who practice in the Court, it also sets those practices and procedures in context, including the Commercial Court's history. It includes the principles and procedure for obtaining and discharging freezing injunctions and the procedures for The Court's supervisory jurisdiction over arbitrations as well.

CHAPTER 1

THE ORIGIN AND DEVELOPMENT OF THE COMMERCIAL COURT

The foundations of much of English mercantile law were laid in the latter half of the eighteenth century. Trials of commercial actions were frequently held in the Court of King’s Bench, one of whose judges would sit at nisi prius in the Guildhall in the heart of the City of London. It was there that Lord Mansfield often sat in the 32 years from 1756 to 1788 during which he was Chief Justice of the Court of King’s Bench. It was there that under his influence there were developed consistent principles of mercantile law, particularly in relation to bills of exchange, insurance and shipping. The incorporation into English law of mercantile usage and the consequent consistent application of those usages to the cases which came before the court was brought about by Lord Mansfield’s practice of empanelling a body of jurymen who were experienced merchants from the City conversant with mercantile usage. He would leave to the jury specific questions as to mercantile usage and then incorporate their verdict on such questions into his judgment. The same jurymen served over a number of years and Lord Mansfield was thus able to conduct the trials at the Guildhall in such a way as to encourage City merchants to feel that their disputes would be decided by a tribunal closely conversant with trade practice and mercantile law.

After the era of Lord Mansfield commercial cases continued to be tried at the nisi prius sittings at the Guildhall but the popularity of this forum with the City merchants seems to have diminished during the nineteenth century. In 1865 the Guildhall sittings were discontinued. The City business houses were obliged to litigate their disputes in the Common Law Courts. This was not an attractive forum. Judges tended to disappear on circuit, dates for trial were uncertain and often not maintained and more often than not the cases came before judges who knew little or nothing about mercantile law or commercial disputes.

There was at this time a strong feeling amongst those trading in the City that the courts were not a satisfactory forum for the resolution of commercial disputes. Litigation was regarded as too slow and too expensive. The widely-held view was that the judges and the juries before whom most commercial actions were tried were out of touch with the world of international commerce and were unfamiliar with everyday commercial activity. There was nothing new about this complaint. Two hundred years earlier Samuel Pepys commented on hearing a case on a policy of marine insurance argued in the Court of King’s Bench that “to hear how the counsel and judge would speak as to the terms necessary in the matter would make one laugh”. There was a considerable increase in the popularity of commercial arbitration. When the Judicature Commission was sitting from 1869 to 1874 the City made great efforts to persuade it to recommend the establishment of tribunals of commerce or a system of judicial arbitration. One witness before the Commission put it thus:

“ To guard myself against the possibility of litigation, this is the clause which I have inserted in my form of charter-party: ‘Should any difference arise between the owners and the charterers as to the meaning and intention of the charter-party, the same shall be referred to three parties in London, one to be appointed by each of the parties here-to, and the third by the two so chosen, and their decision, or any two of them, shall be final and binding; and this agreement may, for enforcing the same, be made a rule of Court’. Now we regard this between two respectable persons as a great safeguard. We know, of course, that litigation may be forced upon us, but between two fair men our differences in nine cases out of ten, or in a greater proportion of cases, are settled by this arbitration reference. I may state that with regard to many articles, especially corn, and sugar, and seed, and so on, there is a clause to a similar effect inserted, particularly in cost, freight, and insurance transactions. There is generally a clause to this effect, ‘If any dispute arises out of this contract it is to be referred to two parties, one to be chosen by each, with power to select a referee’. These disputes, which are generally questions either of quality or of condition of the cargo, or of some minor detail, arise daily. The number of arbitrations that take place daily in London is extremely numerous, and there is, both in the Baltic Coffee House and in other large centres of trade, a regular system of arbitration. At Mark Lane there is a system of the kind.”¹

The Judicature Commission rejected the suggestion that there should be tribunals of commerce or judicial arbitration. Its Report, dated 21 January 1874,² considered the subject of special tribunals for the trial of commercial disputes in some detail:

“We find that those by whom legislation on this subject has been promoted (although generally desiring that some provision should be made for more summary proceedings in many commercial cases), are not agreed as to the character of the tribunals which they wish to establish, or the class of cases that should come within their cognizance. Indeed, there is no unanimity of opinion as to whether the judges should be wholly commercial, or partly commercial and partly legal; whether the commercial members of the tribunals should be judges having an equal voice in the decision, or assessors or advisers only to a legal judge, who would in that case be president of the Court; whether the commercial members should be paid or not for their services; whether the tribunals should observe the ordinary rules of evidence, or be at liberty to admit anything as evidence which they may consider material to the point in issue; whether they should be guided by the principles laid down by the Superior Courts of Law, or decide irrespectively of precedent and according to their own views of what is just or proper in each particular case; whether the parties should be allowed to be represented by counsel or solicitors; whether there should be any appeal, and in what cases, and to what Courts. Upon all these points there appears to be the greatest diversity of opinion.

“We find moreover that, even in the countries in which tribunals of commerce are established, great diversity exists with regard to the constitution of these Courts. Thus, in France, in Belgium, and in some other countries, all the members of the Court are merchants, except the greffier or registrar, and he has technically no voice in the decision. On the other hand, in many of the German States, the Court is presided over by a lawyer. In Dantzig, the tribunal consists of a legal president, four other legal judges, and four merchants, but the merchant judges do not attend unless required. In Konigsberg, the commercial members have no vote, only a deliberative voice, the decision resting entirely with the legal members of the Court. In Prussia, generally, it is in contemplation to substitute a paid lawyer for an unpaid merchant as president. There is, in fact, no uniformity in the constitution of these tribunals; in some countries the mercantile, in others the legal, element prevails, sometimes in the latter case to the exclusion of the commercial altogether.

“ We also find that, where the tribunal is composed entirely of mercantile judges, assisted by a greffier who is a lawyer, the latter, although he has no vote, becomes of necessity the most important member of the Court; and thence arises the anomaly, that the person who virtually decides the case is not clothed with the responsibilities of a judge.

“Now, we think that it is of the utmost importance to the commercial community that the decisions of the Courts of Law should on all questions of principle be, as far as possible, uniform, thus affording precedents for the conduct of those engaged in the ordinary transactions of trade. With this in view it is essential that the judges by whom commercial cases are determined, should be guided by the recognised rules of law and by the decisions of the Superior Courts in analogous cases; and only judges who have been trained in the principles and practice of the law can be expected to be so guided. We fear that merchants would be too apt to decide questions that might come before them (as some of the witnesses we examined have suggested they should do), according to their own views of what was just and proper in the particular case, a course which, from the uncertainty attending their decisions, would inevitably multiply litigation, and with the vast and intricate commercial business of this country would sooner or later lead to great confusion. Commercial questions, we think, ought not to be determined without law, or by men without special legal training. For these reasons, we are of opinion that it is not expedient to establish in this country tribunals of commerce, in which commercial men are to be the judges.”

The Report recognised the disadvantages of the frequent lack of technical knowledge of commerce displayed by judges and juries and recommended that commercial actions should be tried by a judge assisted by two business assessors. They would be commercially-experienced men and their function would be to sit with the judge and to advise him on technical and practical matters which might arise during the trial and by their presence to “deter skilled witnesses from giving such professional evidence as is often a scandal to the administration of justice”.

The Commission was not unanimous in its recommendation and the City was distinctly sceptical as to its usefulness.³

The Government did not adopt the Commission’s recommendation. The Judicature Acts of 1873 and 1875 hindered rather than helped towards the speedy, efficient and informal resolution of commercial disputes. The fusion of common law and equity made available in commercial actions certain features of the procedure of the old Court of Chancery, such as interrogatories and discovery of documents, which tended to lengthen the interlocutory stages of litigation and thereby greatly increase the cost of having disputes resolved in the courts.

By 1894 the decline in the volume of commercial litigation had been so pronounced that one of the judges felt able to publish in an article in The Times of 10 August 1892 the following comments:

“ The bulk of the disputes of the commercial world seldom, in these modern days, finds its way into the Courts. Merchants are shy of litigation. No solicitor can tell his client beforehand, even with a moderate degree of certainty, what is the limit of cost to which a man may be put, either in prosecuting or in defending his just rights. Statements of claim and statements of defence, affidavits of documents, and copies of co...

Table of contents

• Cover
• Half Title
• Lloyd's Commercial Law Library
• Title Page
• Copyright Page
• Preface to The Sixth Edition
• Table of Contents
• Table of Cases
• Table of Legislation
• Table of Civil Procedure Rules
• Table of Rules of the Supreme Court
• Chapter 1. The Origin and Development of the Commercial Court
• Chapter 2. The Commercial Court Users’ Committee
• Chapter 3. The Business of the Commercial Court, the Rules and Practice Directions and the Commercial Court Guide
• Chapter 4. Commencement of Proceedings and Statements of Case
• Chapter 5. Case Management
• Chapter 6. Pre-Trial Applications in the Commercial Court
• Chapter 7. Freezing Injunctions
• Chapter 8. Documents and Evidence in the Commercial Court
• Chapter 9. Trials in the Commercial Court
• Chapter 10. The Commercial Court and Arbitration Proceedings
• Index