Disputes Yearbook 2025:
Commercial litigation

Proposals for the regulation of litigation funding 

The Civil Justice Council (CJC) has published its final report in its review of the litigation funding sector. The review was set up in April 2024 in the light of the Supreme Court's high-profile decision in Paccar which held that litigation funding agreements based on a share of damages were Damages-Based Agreements (or DBAs) and were therefore unenforceable unless they complied with the restrictive regulatory regime for such agreements. 

The CJC's report recommends reversing the effect of Paccar with retrospective effect, as well as introducing a new system of "light touch" statutory regulation for funders, with additional requirements applying to funding for consumers and class actions. The government's response to the report is still awaited. 

In the meantime, the Court of Appeal has confirmed that litigation funding agreements in which the funder's fee is calculated as a multiple of the funding provided, rather than a percentage of damages, will not fall foul of Paccar. 

Abrogation of the so-called Shareholder Rule for legal professional privilege

A Privy Council decision has established that the so-called Shareholder Rule – ie that a company cannot assert privilege against its shareholders save in relation to documents created for litigation against that shareholder – forms no part of English law (or Bermudian law). The decision means that companies can assert privilege against their shareholders, and is highly significant in the context of shareholder litigation, including securities class actions. 

Commercial Court to pilot expanded public access to court documents

A two-year pilot scheme for public access to court documents will run in the Commercial Court and Financial List from 1 January 2026. The pilot will apply to the following documents, where they have been used or referred to at a public hearing taking place during the pilot period: skeleton arguments; written submissions; witness statements and affidavits (but not exhibits or appendices); expert reports (including annexes and appendices); any other documents critical to the understanding of the hearing as ordered by the judge at the hearing; and any other documents agreed by the parties.

Existing orders imposing confidentiality or anonymity regimes will not be affected, and it will be possible to seek a "Filing Modification Order" to exclude documents or sections of documents from the public CE-file where there are particular confidentiality concerns. If successful, the pilot will be extended to further courts, most likely starting with other Business and Property Courts jurisdictions (which include the Chancery Division and the Technology and Construction Court).

Courts grapple with the use of AI

In a number of cases, the courts have criticised parties and their legal representatives for citing fake authorities in court documents, apparently as a result of using AI. In one case, the legal representatives were summoned to attend court to consider what further steps might be appropriate. While the court decided against initiating proceedings for contempt of court, it did refer a number of the lawyers involved to the relevant regulators. 

The court also suggested that practical and effective measures must be taken by leaders in the profession and by regulators to ensure that practitioners understand and comply with their professional and ethical obligations and their duties to the court if using AI. The Law Society and the Bar Council have since issued updated guidance. The Civil Justice Council has also set up a working group to examine the use of AI in the preparation of court documents and consider whether specific rules are needed.

Hague Judgments Convention 2019 in force for the UK

The Hague Judgments Convention 2019 came into force for the UK on 1 July 2025. Hague 2019 provides a uniform framework for the recognition and enforcement of judgments between the UK and the other contracting states where proceedings are commenced after that date. The contracting states currently comprise all EU member states (except Denmark), Uruguay and Ukraine, but more states are expected to join over time, including Albania, Montenegro and Andorra in 2026.

Asymmetric jurisdiction clauses in the spotlight

The Court of Justice of the European Union (CJEU) gave an important judgment on the validity of asymmetric jurisdiction clauses under EU law. The decision clarifies when an asymmetric clause in favour of an EU court will be found to be valid as a matter of EU law. The decision does not address the validity of asymmetric jurisdiction clauses in favour of non-EU courts, such as where a borrower is required to sue in the English court but the lender is permitted to sue either in that court or in any other competent court. However, it has led to concerns that such clauses may not be given effect by an EU court in some circumstances.

The decision means that commercial parties negotiating an English jurisdiction clause where there is an EU nexus should consider whether the potential advantages of an asymmetric clause outweigh the potential uncertainties. In some cases, parties may prefer the certainty afforded by an exclusive English jurisdiction clause, while recognising that such a clause will reduce flexibility.

English court jurisdiction in transnational tort claims

The courts have added to the line of authority which demonstrates that, while the English court has a discretion to decline jurisdiction over UK-based defendants on the basis that another forum is more appropriate (in contrast to the pre-Brexit position, when there was no such discretion), it will not exercise that discretion if the claimants establish a real risk that they would not obtain substantial justice in the alternative forum, including on the basis of funding difficulties. 

In a claim against Dyson, the Court of Appeal overturned the High Court's decision and rejected a jurisdiction challenge in relation to claims brought by migrant workers against English and Malaysian companies in the Dyson group regarding alleged abusive employment practices by one of Dyson's suppliers in Malaysia. The fact that there was a serious risk that the claimants would be unable to fund their claims in Malaysia, together with the various factors connecting the dispute to England, meant that England was clearly the appropriate forum.

In a claim against Brazil Iron, the High Court rejected a jurisdiction challenge by two UK-domiciled companies in relation to alleged damage as a result of pollution from a mine operated by the defendants' Brazilian subsidiary. The court held that, while Brazil had a closer connection to the case, there was a real risk that the claimants would not obtain substantial justice there due to funding difficulties and therefore the case should proceed in England.

Greater clarity for defendants where claims not validly served in time

The Court of Appeal has clarified that if a claim form has not been properly served – whether because service was attempted by an invalid method or because service was out of time – the proceedings cannot be pursued unless the defendant accepts the court's jurisdiction. A defendant faced with an invalidly served claim form is therefore not required to take any further steps, though in many cases filing an acknowledgment of service indicating an intention to dispute the court's jurisdiction and then making an application to challenge jurisdiction under CPR 11 might be the most convenient route to end the claim.