Court fee hike will drive increase in arbitration | Opinion | The Lawyer

See - Court fee hike will drive increase in arbitration | Opinion | The Lawyer





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Higher fees are likely to drive litigants away from the court and into alternative means of resolving disputes.

Issuing a claim to recover money in the English courts now costs significantly more than it used to.  The fee charged for starting proceedings in any case involving a monetary claim, whether for a specified debt or unspecified damages, will now be charged as a percentage of the amount claimed. For any claim (or counterclaim) of more than £10,000 a fee of 5 per cent of value will have to be paid up front. The fee for issuing a claim of £200,000 and above, or claims that are unquantified, will be £10,000.  

By contrast, the registration fee payable to the London Court of International Arbitration (LCIA) for starting an arbitration is £1,750.  Of course, there are other costs associated with arbitrations, most notably the fact that arbitrators charge an hourly rate whereas judges do not.  Even so, the new issue fee is a heavy burden to bear so early in the proceedings, in circumstances where only around 3 per cent of claims issued get to trial. 

Parties are encouraged at every juncture to find an acceptable settlement to their dispute, which often involves an agreement to bear one’s own legal costs.  A large number of cases settle long before any judge has got involved with them.

It is clear, from the flurry of claims being issued and the long queues at the High Court, that parties regard the new fees as a significant outlay.  Of course, that in itself may cause problems to come: although the benefit of taking advantage of the reduced issuing fees is obvious there is a danger that, by hastily issuing in such circumstances, solicitors may find themselves liable to costs orders against them where savvy defendants successfully seek an order for strike out due to the premature issuing of a claim form.  

In the alternative, ill-informed clients unaware of the excessive increase may also seek to bring claims for negligence against their solicitors for not issuing their claim prior to the increase in the issue fee.

Either way, it will drive potential litigants away from the traditional route of court proceedings and lead them to look to alternative means by which to resolve their disputes.  As already discussed, the hike in fees has arguably helped to indirectly remove one of the hurdles frequently cited as a barrier to parties considering arbitration as their preferred means of dispute resolution - namely the associated costs when compared to litigation.

Arbitration provides a confidential and neutral forum for international parties to resolve their disputes and the awards are binding, final and enforceable around the world, via the New York Convention.  Arbitrations are often far more flexible and speedy than litigations too. 

Ad-hoc arbitrations, which require one arbitrator alone to resolve the dispute and possibly also give him the freedom to do so on paper if he thinks it appropriate, have always been an attractive alternative to litigation.  

They are now clearly the way to go for parties wishing to have a dispute resolution mechanism in their contracts which works and doesn’t break the bank.  

Eleni Polycarpou, head of arbitration, Withers

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