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Concerns raised as consultation closes on court fee hikes

City lawyers have voiced concerns over government policy once again as the deadline for written submissions closes this month on the latest round of court fee hikes proposed by justice minister Shailesh Vara.

Vara’s proposals are intended to generate an additional £48m per year in income, on top of fee increases which began in March aimed at bringing in £60m each year. While the suggested fee hikes touch on various areas, the proposal for an increase in maximum fees for money claims from £10,000 to at least £20,000 has some lawyers raising the red flag.

The Admiralty and Commercial Court Users’ Committee, in a submission prepared by a subcommittee chaired by Quinn Emanuel Urquhart & Sullivan partner Ted Greeno, said a spike in fees will be perceived by court users as a tax – which like all taxes are likely to go up.

 ‘The revenue lost from taxes generated by both the high-value litigation brought in the English courts by such non-domestic parties and the loss of pre-dominance of English law as the chosen law for international transactions would be likely to offset any revenue raised by enhanced fees in the medium to long term, if not earlier,’ said the submission.

Herbert Smith Freehills partner Damien Bryne Hill said: ‘The point is that by having raised it to £10,000 and now suggesting £20,000 or more, we can see that this is the thin end of the wedge, as it is acknowledged not to be the actual cost of services it’s aiming to raise revenue for.’

He added: ‘I have considered the question of whether is there is anything we can say now that we didn’t say last time, either as a firm or a lobbying body. There are two points here, the comparative point disparity with other jurisdictions is bigger as the increase is starker, but they also haven’t taken any time to see what the effect of the last hike was.’

However, White & Case partner John Reynolds argued that when it comes to large commercial cases, court fees were a neutral factor and litigants use English courts because of the quality of the system rather than cost.

‘Our English court system is maybe a victim of its own success, it’s got people coming from all over the world to want to use it, but it has been largely funded state funded rather than largely by its users and that’s the difference. One can see why someone would want to take a commercial view on that,’ he said.

In a joint letter to lord chancellor Michael Gove, the City of London Law Society and Commercial Bar Association also warned losing tax revenue to foreign courts will ‘dwarf’ any additional income from court fees.

The letter was addressed to Gove personally, because the groups say previous attempts to explain this risk to the Ministry of Justice have apparently been ignored.