Commercial actions in the Sheriff Court
“What is it going to cost?” “How long is it going to take?”
Almost every litigator will be familiar with hearing at least one of these two questions from their client prior to embarking on any adversarial process. The reality is that litigation can be very expensive (particularly for privately paying clients) and for the vast majority of cases which are litigated in the sheriff courts, increasingly stretched court resources and a number of other factors dictate that the wheels of justice tend to turn very slowly indeed.
The Commercial Action procedure (which for ease here will be described as “commercial procedure”) is available for certain types of cases in a number of sheriff courts throughout Scotland and is, in reality, curiously underutilised. A similar procedure is provided for in the Court of Session, where commercial procedure originated, however this article will focus exclusively on the sheriff court procedure, given the sheriff courts have exclusive jurisdiction for payment actions where the principal sum sued for is £100,000 or less.
Commercial procedure is (to the writer’s knowledge) currently available as an elective procedure in Edinburgh, Aberdeen, Glasgow, Jedburgh, Selkirk, Duns, Inverness, Dingwall and Portree Sheriff Courts. Additionally, the Tayside Commercial Court (based in Perth Sheriff Court) came into being in 2017, serving Dundee, Forfar and Perth Sheriff Courts. Notwithstanding the fact that commercial procedure is not presently available in every sheriffdom within Scotland, it is still possible for the parties to a commercial dispute to agree to prorogate jurisdiction to one of the existing commercial courts, in order to harness the numerous benefits of commercial procedure. It is submitted that good practice would be to include such a clause in commercial contracts where the Scottish courts would have jurisdiction in the event of a dispute.
Commercial procedure under Chapter 40 of the sheriff court’s Ordinary Cause Rules is suitable for cases that fall within the definition of a “commercial action”. The term is one that is (and it is submitted, ought to be) interpreted broadly. The mere fact that both parties to the dispute are not commercial entities, for example, is not of itself a bar to an action that would otherwise be raised as an ordinary action being raised under commercial procedure. All that is required is essentially three things:
The chosen forum offers commercial procedure as an elective form of procedure;
The particular sheriff court has jurisdiction over the defender; and
The action is a “commercial action”.
In terms of the advantages of electing commercial procedure in a case, these are numerous and a full treatment is well beyond the scope of this short article; however, some key features are worth noting.
The primary (and arguably most attractive) features of commercial procedure are expediency and reduced costs. Where commercial procedure is elected by the pursuer (or, perhaps less commonly, by mutual agreement) the period of notice within which the defender requires to intimate an intention to defend the action is 21 days. Thereafter the defender must lodge written defences to the claim within 7 days, rather than the usual 14 days that would be required under ordinary procedure in the sheriff court. Notably, there is no automatic “adjustment period”, where parties can usually flesh out and amend their pleadings after the lodging of written defences. This can reduce the length of the court action significantly. The court will then assign a Case Management Conference (“CMC”) to take place no later than seven weeks after the commencement of the action. The CMC is designed with the express intention of requiring the commercial sheriff to “seek to ensure the expeditious resolution of the action”.
The CMC is a peculiar feature of commercial procedure, which does not appear in the ordinary sheriff court procedure. Under ordinary procedure, it would typically be approximately four months after the initiation of the case before the court would first consider where the case is actually going in terms of further procedure. It is not uncommon for the CMC to take place by telephone at a pre-arranged time (at least in some of the larger commercial courts). This typically has the advantage of reduced expenditure for clients, as opposed to costs incurred by a solicitor charging on an hourly rate physically travelling to and from court to sit (sometimes for hours) for a case to call in a busy procedural court! There has been concern expressed in some quarters that the conducting of hearings by telephone runs contrary to the principle of open justice; however, CMCs which are conducted by telephone are still published on the open court rolls and members of the public may make arrangements with the sheriff clerk to sit in on telephone CMCs should they so wish.
The role of the commercial sheriff significantly differs to that of the role of the sheriff envisaged under ordinary sheriff court procedure - less passive arbiter, more interventionist and proactive case manager. A nominated commercial sheriff will typically be assigned to each case and see it through from its inception to its conclusion. As with continuity of representation, so too should continuity of the court be welcomed. The hearts of most litigators will inevitably lift where they do not require to set out the lengthy background to and procedural history of a case on successive occasions to a succession of different judges! It is noteworthy too that the rules specifically oblige the commercial sheriff to “seek to ensure the expeditious resolution of the action”. This unique approach is one that will often find favour with and be relatable to a number of commercial clients and, in that sense, has been compared to that of a chairperson conducting a board meeting.
The flexibility of both practice and procedure under commercial procedure cannot be overstated. Unlike ordinary actions, the commercial sheriff is largely at liberty to direct the progress of the action as he or she thinks fit. Much of the procedural requirements associated with ordinary procedure can be dispensed with. Although not specifically provided for in the rules, many commercial sheriffs are quite happy to be contacted directly by email from parties’ agents and to accept and deal with motions in the same relatively informal manner. The formalities of court pleadings that are usually required are somewhat more relaxed and technical legal debate – which adds to delay and additional cost – is discouraged. Greater emphasis is placed on “front loading” the case at the outset, which can be advantageous for e.g. early disclosure of expert reports. Lengthy narrative is however discouraged on both sides of the dispute and innovative means of setting out the facts of the dispute in the form of e.g. spreadsheets or schedules is actively encouraged.
It is perhaps testament to the sound operation and cooperation required of parties under commercial procedure that there are comparatively few reported cases on the operation of its procedural rules. The author and legal futurist, Richard Susskind, has written in his works such as Tomorrow’s Lawyers (2nd edn, Oxford University Press, 2017) about an incremental move away from a legal world of “wigs and Rumpole” towards one of virtual courtrooms and online dispute resolution. If this is to be the case, then the innovative operation of commercial procedure is certainly on the right side of change.
The above article was published in the Scotsman on Monday 29th April. Please click here to view on The Scotsman website.