Disputes Briefcase

Background

The ability to enforce a judgment across borders quickly and easily is commercially valuable. For UK corporates dealing with EU counterparties, it has become slower and often more expensive since Brexit. Rules that made intra-EU enforcement a straightforward process ceased to apply to the UK from 1 January 2021.

The Judgments Convention establishes an international framework for the enforcement of judgments, open to all countries. While less sophisticated than the European rules, the Convention is still a game-changer: it could become a litigation equivalent of the 1958 New York Convention which provides for the cross-border enforcement of arbitral awards in c170 countries.

Which countries are party to the Convention?

The EU member states, except Denmark, became subject to the Convention on 1 September 2023, along with Ukraine. It applies to Uruguay from 1 October 2024. It took effect in the UK on 1 July 2025. Albania, Montenegro and Andorra will become bound in 2026.

These dates are important, because the Convention only applies to judgments given in cases begun when it is force for both the state in which the judgment is given and the state in which enforcement is sought. In other words, insofar as the UK is concerned, the Convention will only facilitate enforcement of judgments given in proceedings that were started on or after 1 July 2025.

How does the Convention work?

The Convention defines the judgments to which it applies, sets out the bases on which they will be eligible for enforcement, and specifies the limited circumstances in which enforcement can be resisted.

In summary, a judgment can be enforced if a qualifying connection can be shown between the country whose court gave the judgment, and the defendant or the claim. These connections are listed exhaustively in the Convention and include cases where the judgment debtor was resident in the state whose courts gave judgment, or where the debtor submitted to that court. Importantly, it includes cases where the parties had entered into a non-exclusive jurisdiction agreement. This complements the 2005 Hague Convention, already applicable to the UK and the EU, which allows for the enforcement of judgments based on exclusive jurisdiction agreements.

A court may refuse to enforce an otherwise eligible judgment if one or more of seven grounds in the Convention is met. Broadly, these relate to breaches of natural justice and public policy considerations in the state of enforcement.

What is the procedure for enforcement?

Subject to overarching obligations set out in the Convention, which include an obligation on courts to act expeditiously, each contracting state sets its own rules for enforcement.

In England, a party will need to make an application to the High Court for registration of the judgment. They must persuade the court that the Convention’s requirements are satisfied for that judgment. The judgment debtor is not permitted to object at this stage. Once registered, a judgment will be enforceable in England as if it were a judgment of the English court. But the judgment debtor has a right to apply to court to set aside registration on the basis that the judgment does not, in fact, meet the criteria set out in the Convention.

Read more in our briefing on the Convention.

The crux of the claim was that Mastercard’s involvement in setting unlawful interchange fees on cross-border Mastercard credit card transactions within the EEA had a causative influence on the level of interchange fees charged in the UK. It was alleged that these fees were then passed on by retailers to consumers in the form of increased prices.

Settlement and its allocation

Although the claim was originally valued at £14 billion, the CAT approved settlement at £200 million. This was largely due to a 2024 judgment on factual causation which dramatically reduced the value of the claim.

The CAT approved distribution as follows:

• Pot 1: £100 million, ring-fenced for the class.
• Pot 2: c. £45 million, to cover Innsworth’s costs.
• Pot 3: c. £55 million, to be split into four tranches:

1. 1. Tranche 1: to cover costs incurred by Merricks not covered by the Litigation Funding Arrangement.
   2. Tranche 2: (c. £23 million), Innsworth’s profit (bringing the total amount due to Innsworth to £68 million).
   3. Tranche 3: to top up Pot 1, if more class members than expected come forward.
   4. Tranche 4: (the remainder, estimated to be over £30 million) to go to the charity Access to Justice Foundation.

Broader takeaways

The CAT was keen to stress that its approach to settlement was heavily influenced by the “exceptional” circumstances of the case, whereby the settlement figure was an “extraordinarily low” proportion (1.5 %) of the initial claim value. The judgment is not a “guide” for future settlements. However, the CAT noted that:

• it will assess whether a settlement is just and reasonable from the perspective of the class, rather than other stakeholders (including funders);
• it will not concern itself with the negotiating strategy of the parties: its only concern is whether the terms of the settlement are just and reasonable;
• it will not shy away from ordering that costs be assessed for reasonableness by an independent third party;
• going forward, parties will need to proactively set out arguments that could be raised in opposition to the settlement;
• it will “ordinarily” expect an opinion from leading counsel setting out why the proposed settlement is in the reasonable interests of the class; and
• it needs sufficient time to consider settlement proposals. Parties that propose settlement shortly before trial run the risk of trial being adjourned. This could lead to difficulties in multi-party cases where only some parties are seeking to settle and the trial is required to go ahead for the remainder in any event.

Innsworth has filed an application for permission for judicial review of the CAT’s decision on distribution and seeking to quash its decision on Pots 1 and 3.

Read more about the CAT’s decision in our briefing.

Background

The bank offers ‘second chance’ lending to individuals with low or adverse credit histories. The CMC specialises in bringing volume ‘no win no fee’ irresponsible lending claims. The CMC submitted around 33,000 irresponsible lending complaints to the bank and the Financial Ombudsman Service, alleging that the bank did not undertake adequate checks before issuing credit.

The bank brought claims against the CMC for the tort of causing loss by unlawful means, arguing that the CMC had breached contractual and regulatory obligations to its clients by making complaints without sufficient information or properly assessing their viability. The bank also argues that the CMC made misleading representations to its clients about the viability of their claims and did not advise them of the consequences of bringing complaints (in particular, the suspension of credit). As a result, the bank argues that its relationships with its customers have been interfered with and the bank has suffered loss including the costs of engaging additional staff and wasted management time dealing with unviable complaints, lost profits and FOS fees.  

Court’s decision

The judge dismissed the CMC’s applications. In reaching his decision, the judge considered each of the four essential elements of the tort: (i) the existence of unlawful acts against and independently actionable by a third party; (ii) interference with the actions of the third party in which the claimant has an economic interest; (iii) intention to cause loss to the claimant by unlawful means; and (iv) actual loss.

The judge considered that whilst the facts of the case are novel, the bank’s claim applies well-established legal principles to a new fact pattern. The judge was also not persuaded by the CMC’s argument that regulatory frameworks overseen by the Solicitors Regulation Authority, Financial Conduct Authority and FOS precluded a private law remedy, particularly where the regulatory schemes afforded no route to compensation for the bank.  The case can therefore proceed to trial.

Takeaways

The mass claims market is a burgeoning sector. But there has been growing concern about the conduct of some claimant firms that undertake these types of claims, particularly in the context of high-volume financial service claims. For example, last year, the SRA issued a warning notice threatening disciplinary action against firms operating in this area that failed to comply with their regulatory obligations when undertaking such activities.

The judge in this case stressed that he expressed no view as to whether the bank’s case is right, which will be a matter for trial. However, the decision indicates that financial institutions may have a new route to challenge – and be compensated for – blanket volume claims made recklessly against them. It remains to be seen whether similar challenges may be brought in the relation to mass claims outside the financial services sector.

The Supreme Court has announced that it will hand-down its decision in the landmark case of Hopcraft and another v Close Brothers and FirstRand on 1 August. The Supreme Court has been asked to determine the nature of the duties owed by car dealers who arrange car finance on behalf of their customers and the circumstances in which lenders can be liable as a result of undisclosed commissions. The Supreme Court’s judgment follows a fast-tracked appeal from the Court of Appeal’s decision last year and will have significant implications for lenders in the motor finance industry. Slaughter and May act for Close Brothers in the appeals.

The Privy Council has held in Jardine Strategic v Oasis Investments that the ‘shareholder rule’ is and always has been “a rule without justification”. The shareholder rule is a longstanding principle of English law that a company cannot assert privilege against its own shareholder (except in relation to documents created for the dominant purpose of hostile litigation against that shareholder). However, the Privy Council has found that “[l]ike the emperor wearing no clothes in the folktale, it is time to recognise and declare that the Rule is altogether unclothed.” Last year, the English Commercial Court in Aabar v Glencore similarly found that the shareholder rule should no longer apply, but that decision is on appeal and due to be heard by the Court of Appeal in January 2026. Whilst Jardine v Oasis related to Bermudan law, significantly, the Privy Council directed (under the Willers v Joyce principle) that their decision be regarded by the English courts as abrogating the shareholder rule in English court litigation. The Privy Council’s judgment therefore puts to bed what has been a live issue before the English courts.

In its recently released 2025 snapshot of global trends in climate change litigation, the Grantham Institute on Climate Change reports that climate litigation continues to evolve and mature, and remains a global phenomenon. At least 226 new climate cases were filed in 2024 across almost 60 countries, with 20% of those cases targeting companies, or their directors and officers. The range of sectors targeted for corporate strategic litigation also continues to expand, including against professional services firms and the agricultural sector. Read more in our blog post.

In recent months we have continued to see significant climate decisions from domestic and international courts. For example:

• In May, the European Free Trade Association Court issued an advisory opinion declaring that under EU/EEA law, oil and gas projects must not be approved without first assessing Scope 3 greenhouse gas emissions. This opinion is among a growing body of decisions on the requirement to assess Scope 3 emissions, including the landmark decision from the UK Supreme Court in R(Finch) v Surrey County Council. Read our blog post.
• The same month, a German appeals court in Lliuya v RWE dismissed a claim against the parent company of a multinational energy group, whilst finding that a company may, in principle, be liable for climate-related harms. Read our blog post.
• In July, two leading international courts issued advisory opinions on the obligations of states in relation to climate change. The UN International Court of Justice, the world’s highest court, released its highly anticipated advisory opinion finding that states are obliged to protect the environment from GHG emissions. To fulfil this obligation, states are required to cooperate and to undertake due diligence, including regulating the activities of private actors to limit their emissions. States will incur legal responsibility if they breach their obligations and may be required to cease, and provide assurances they will not repeat, the wrongful conduct, and make reparations to injured states. For background on the opinion, read our blog post from earlier this year. Earlier the same month, the Inter-American Court of Human Rights issued an advisory opinion finding that under the American Convention on Human Rights there is a human right to a stable and safe climate. International courts are increasingly being drawn into climate change issues. Last year, the International Tribunal for the Law of the Sea confirmed that states must reduce marine pollution from greenhouse gas emissions. An advisory opinion has also been sought from the African Court on Human and People’s Rights. Whilst the opinions concern the international law obligations of states, they could have important implications for companies by moulding climate legal frameworks and influencing future litigation.

Further cases also continue to be brought. In July, for example, an environmental NGO and two individuals filed a complaint with the European Court of Human Rights arguing that the UK government’s climate adaptation plan breaches the European Convention of Human Rights, which is enshrined in domestic law through the Human Rights Act 1998.

On 22 July, Mr Justice Hildyard handed down his judgment on quantum in long-running proceedings brought by Hewlett-Packard against Mike Lynch and Sushovan Hussain, relating to HP’s acquisition of Autonomy. The judgment, delayed by the tragic death of Dr Lynch and others in August last year, is the first decision on quantum in claims brought under section 90 and section 90A/schedule 10A of FSMA. Dr Lynch’s estate was ordered to pay damages of in excess of £700 million. The judgment follows further exchanges of evidence and submission in the wake of Hildyard J’s decision on liability in May 2022. In assessing the losses that flowed from the wrongs the judge had identified in his 2022 judgment, he started from the premise that an award of compensation under the relevant provisions of FSMA should seek to put the injured party in the same position as it would have been in but for the wrongs it had sustained. That meant it was necessary to devise a counterfactual scenario that took account of all relevant factors. The establishment and detailed analysis of that counterfactual is the subject of much of the 200-page judgment and will be closely studied in the coming weeks.

We reported previously that the Arbitration Act 2025 (amending the Arbitration Act 1996) received royal asset in February. Commencement regulations have now been published providing that the substantive reforms being brought in by the Arbitration Act 2025 will enter into force on 1 August 2025. Among the most significant of the changes is a new default rule on the law applicable to arbitration agreements, which provides that, unless the parties expressly agree otherwise, the law applicable to their arbitration agreement will be the law of the seat of arbitration.  For more information about this and other reforms being brought in by the Arbitration Act 2025, see the May edition of Briefcase.

The London Court of International Arbitration has published its 2024 casework report and the International Chamber of Commerce has similarly published its 2024 dispute resolution statistics. The reports summarise trends in both institutions’ respective workloads across the year. Notably, in 2024, London was the most frequently chosen seat and English law the most frequently chosen substantive law in new cases before both institutions. Some key figures from each report are set out below:

In Energyen Corporation v HD Hyundai Heavy Industries, the High Court dismissed challenges under section 67 and section 68 Arbitration Act in the context of a corporate restructuring under Korean law which led to a dispute over the correct claimant in the arbitration. The High Court found that contractual and arbitration rights had passed to the claimant successor entity, even though it was not a signatory to the arbitration agreement, and notwithstanding certain defects in the Request for Arbitration, the arbitration was validly commenced as the ICC Rules’ requirements for Requests are not necessarily jurisdictional requirements. The High Court found that there was no requirement to give notice of the transfer before commencing arbitration.

In a recent decision on arbitration costs, the High Court in Ravfox v Bexmoor found that an arbitral tribunal which lacks jurisdiction can still award costs, but the English court cannot award costs if the tribunal declines to do so. Further, following a hearing in July in the high profile case of P&ID v Nigeria, we await judgment from the UK Supreme Court on the issue of when, if ever, an English court should make an award of costs in a foreign currency following Nigeria’s successful application to set aside two arbitral awards.

A decision from the UKSC is also pending in the case of Ridgebury November v King Crude Carriers & Ors. The case concerns a section 69 Arbitration Act appeal on the question of whether a party can rely on the non-fulfilment of a condition precedent to a debt to avoid its obligation to pay where the non-fulfilment was due to its own breach of contract (the ‘Mackay v Dick’ principle). Further down the track, we can expect a decision from the UKSC in Spain & Anr v London Steam-Ship after it granted in part permission to appeal on the question of whether a tribunal can award equitable remedies against a state for breach of its equitable obligation to arbitrate. However, the UKSC has refused to hear appeals in General Dynamics v Libya and Hulley & Ors v Russia, both of which concern exceptions to state immunity in the context of enforcement of arbitral awards against states.

The Court of Appeal in Saxon Woods v Costa has upheld a High Court decision that a shareholder suffered unfair prejudice when a company failed to comply with its contractual obligations to work in good faith towards an exit by means of the sale of the company or its assets by an agreed date.

Importantly, however, the Court of Appeal overturned the High Court’s decision that a director had complied with their duty under section 172 Companies Act 2006. The section 172 duty requires a director to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. In reaching its decision, the High Court relied on the director’s subjective belief that they were acting in the best interests of the company and that the shareholders “will thank me in the long run”.

The Court of Appeal disagreed. The Court of Appeal considered that the concept of ‘good faith’ requires honesty. Applying the test for honesty in Ivey v Genting Casinos, the Court of Appeal held that where a director’s conduct falls below a minimum objective standard of honesty, a director cannot not rely on their subjective opinion of what would be in the best interests of the company. In this case, the Court of Appeal found that the director had acted dishonestly by misleading the board. As a result, the director had not acted in good faith and had breached their section 172 duty.

The High Court in JD Wetherspoon v Burger has found that the owners of a pub were not vicariously liable for an assault on a customer carried out by door staff employed by a security company contracted to work for the pub. The security company was an independent contractor providing specialist services under a commercial arrangement, a relationship that did not satisfy the established test for vicarious liability. The decision confirms that, where a business genuinely engages an independent contractor, it is unlikely to be found to be vicariously liable for the actions of that contractor’s staff. The comprehensive details of the contractual relationship between the pub and the contractor were essential in convincing the High Court that there was a true independent contractor. Read more in our Employment Bulletin.

We have written previously about the greater push towards transparency in court proceedings (see January and May Briefcase). This continues to be a live issue before the courts in the context of public (non-party) access to court documents. In July, for example, the High Court in the NOx (‘dieselgate’ emissions scandal) litigation ruled that interested third party NGOs could obtain unredacted copies of the parties’ statements of case even though the defendants argued that the documents contain commercially confidential technical information about the alleged ‘defeat devices’ at the centre of the dispute.

The Civil Procedure Rule Committee, the body responsible for court rules, has recently confirmed that it will introduce a new pilot governing non-party access to certain court documents. The pilot will apply in the Commercial Court, the London Circuit Commercial Court and the Financial List for an initial two-year period. The pilot is expected to come into force on 1 October 2025. More detail is due to be published shortly. 

The CPRC is consulting on proposed changes to modernise the rules on the electronic service (formal delivery) of court documents. If implemented, lawyers that confirm they are authorised to accept service of court documents on their client’s behalf will automatically be taken to have agreed to accept service via email. Separate confirmation will no longer be required. Responses are requested by 12 September 2025.

In May 2024, the CAT approved a £25 million settlement between the class representative and Stagecoach in a long-running, multi-party dispute about boundary fares (Gutmann v First MTR Southern Western Trains). Only £200,000 has been claimed by the class. A stakeholder entitlement hearing has been scheduled for 10 September to discuss how the unallocated balance (circa £10 million) should be distributed. The lawyers, funders and insurers have been given permission to intervene. The Access to Justice Foundation (expected to receive a “substantial” amount) has been invited to make written representations.