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Report by the Business Experts and Law Forum (BELF)

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1. SCOTLAND AS A CENTRE FOR DISPUTE RESOLUTION

1.1 Encouraging business to use the Scottish courts and legal system.

1.1.1 For the majority of businesses, legal disputes are an expensive and time-consuming distraction from their main business objectives. When turning to a court for adjudication of those disputes, businesses generally want that court to deliver a service that is:

  • quick and efficient;
  • predictable (so far as possible) both in terms of outcome and costs;
  • provided by judges with relevant skills and experience; and
  • comprehensible and accessible.

1.1.2 Businesses with a choice over jurisdiction will be deterred from using a civil justice system if that system is perceived to be performing less well in some or all of these objectives than other jurisdictions.

1.2 Why business chooses English rather than Scots Law

1.2.1 The reasons why businesses may choose English rather than Scots law in contracts, and litigate in the English rather than Scottish courts, may include:

  • Harmonisation: Paradoxically increasing harmonisation of Scots and English Law (driven, in part, by EU harmonisation) makes it more difficult to "sell" Scots Law where there is a choice between the systems.
  • Size: Because England is a significantly larger jurisdiction than Scotland, its lawyers and judiciary will often have greater breadth of experience, born of scale, in specific areas of law.
  • Global recognition: A legacy of the British Empire is that English law has been successfully exported and embedded across the world, giving it unique global recognition.
  • Geographical/ logistical barriers: Parties may be reluctant to commit to a case being heard "up North" with the perceived inconvenience of logistical issues such as travel and lack of familiarity.
  • Delays: Perceived delays (whether actual or not) in obtaining dates for debates and proofs and in receiving judgments were identified by businesses as a particular concern and an area in which Scotland compares unfavourably to some other jurisdictions. 2
  • Specialisation: Although many commercial disputes are now heard by specialist Commercial Court judges and sheriffs, other disputes involving businesses will still be heard by judges and sheriffs who may have little or no expertise in the legal fields involved, at least in the first instance.
  • Case management: The level of case management applied to commercial cases may vary between courts, but the effective use of case management has been identified by businesses as a key factor in ensuring that cases are driven forward to an outcome efficiently and with reasonable speed.
  • Language: The procedural terms used by the Scottish courts are distinctive and historic, but arguably alienate those unfamiliar with Scots law. They may hinder the creation of an impression among businesses (both local and international) of the Scottish courts as modern, accessible and user-friendly. The fact that Scotland is an English language jurisdiction should give it a competitive advantage over many other international jurisdictions as a dispute resolution forum; retaining archaic procedural terminology could limit this potential advantage.
  • Costs: The levels of cost recovery available in Scotland are in many cases lower than those available in England, creating a financial disincentive to litigating in Scotland.
  • Mediation: Although mediation is available in Scotland, it is still not as regularly utilised in commercial disputes as in other jurisdictions (eg England) and receives only ad hoc judicial support.
  • Arbitration: Many commercial contracts contain provision for arbitration, but except in construction disputes, comparatively little commercial arbitration takes place in Scotland.

1.3 Conclusions

1.3.1 In summary, the combination of scale, harmonisation, and global recognition makes it difficult for Scottish lawyers to persuade clients to choose Scots Law over English Law. That said, of the factors listed above, only the first four might be said to be beyond our control - there is much that Scotland can do.

1.3.2 The Forum considered whether, as a general principle, Scots law should be aligned with English law, both in terms of substance and language, unless there is good reason to be different. There is an argument that this policy of alignment, combined with a communications strategy, could mitigate the negative perceptions of Scotland as a difficult place in which to do legal business. The counter-argument was that it was important that Scots Law should develop in a way which was right for Scotland, rather than be overly influenced by another jurisdiction which has its own limitations and defects.

1.3.3 This issue may be something for the Scottish Law Commission to consider, alongside other possible ways to make Scots law clearer and more accessible to potential users, such as codification.

1.3.4 However, in terms of opportunity, the more important issue is "choice of jurisdiction". Whilst a contract may not be governed by Scots law, there may be opportunities to persuade parties that they should, nonetheless, bring their disputes to Scotland for resolution. There are examples of Scottish arbitrators being used as neutral arbitrators in disputes between international parties.

1.3.5 We see potential for Scotland's dispute resolution system to be developed and marketed as a just, integrated and efficient neutral system that runs like clockwork - the "Switzerland of dispute resolution". However, this would require significant change to both the culture and procedures of the courts. We set out in our recommendations below suggestions as to the priorities for change.

1.4 Recommendations

1.4.1 The Scottish Government should develop a coherent strategy to present Scotland as a centre of excellence for the full spectrum of dispute resolution processes. The Unique Selling Proposition ( USP) of the strategy will be that each type of dispute resolution is represented, providing users with access to a quality service across the spectrum of dispute resolution processes.

1.4.2 The Scottish Government and Scottish Court Service should consider widening the pool of temporary judicial resource available, thus freeing up court time and truncating litigation timescales 3.

1.4.3 The Lord President should consider mirroring or expanding the "Commercial Court" model at Court of Session and Sheriff Court level to include additional specialism of relevance to business e.g. construction law and intellectual property. This could enable Scotland to develop its reputation in those specialist legal markets while providing an enhanced dispute resolution service to businesses in Scotland 4.

1.4.4 The Lord President and Rules Councils should undertake a full review of costs recovery rules including comparative analysis with other jurisdictions. This should include consideration of all areas of fee recovery and the possibility of using a "summary assessment of costs" as a means of achieving interim payments.

1.4.5 The Lord President should establish a working party to review the procedural terminology of the Scottish civil courts and consider whether adoption of "simple English" terminology might provide the courts with a more accessible, user-friendly image to present to local and international users. As one small example, some businesses questioned the use of the term 'taxation' to refer to the assessment of fees.

1.4.6 The Scottish Government, the Lord President and Judicial Appointments Board should review whether greater specialisation could be encouraged in the appointment and deployment of sheriffs and in the Court of Session.

1.4.7 The Scottish Government should commission a detailed study to identify, from comparison with other jurisdictions of a broadly similar size and nature (such as Norway), other ways in which Scottish Civil Court procedures might be made more attractive to business.