With the government’s current proposal to raise the fee to issue proceedings to 5% of the value for claims worth £10,000 or more, research recently undertaken by the Ministry of Justice shows that 61% of respondents believe the proposals will have a negative impact on the UK’s competitiveness in commercial disputes, according to RPC.
The controversial changes were approved in a delegated legislation committee at the House of Commons last week, with the changes scheduled set to take effect later this month.
But RPC disputes partner Geraldine Elliott said the government’s ‘own research shows that the potential fee hike is highly likely to have a detrimental impact on the popularity of UK courts,’ and that although the legal sector is one of Britain’s ‘great success stories, London as a venue for big-ticket litigation could come under threat from other locations if this fee increase is imposed.’
At the lower end of the scale, a £15,000 claim which currently charges £610 in fees would see a 23% rise to £750, while at the higher end a £500,000 claim with a fee of £1,920 would rise 421% to £10,000.
With respondents comprising international commercial lawyers in the UK and abroad, barristers, international companies and members of the judiciary, the research also revealed that Singapore and New York were chosen as the most popular destinations to bring a case under English law outside of the UK, with both taking 19% of the vote, followed by Hong Kong with 13% and Dubai with 8%.
Elliott added: ‘Lawyers will be considering using alternative jurisdictions for dispute resolution. New York court fees already compare favourably with those in the UK, so any fee increase is likely to boost its popularity. Singapore is also likely to become a serious competitor to the UK once its Commercial Court (which officially opened January 5) begins to establish itself.’
Last week the Law Society announced it was challenging the government’s decision, issuing a pre-action protocol letter for judicial review and stating the move would be tantamount to ‘selling justice.’
Represented by Kingsley Napley, the Society’s decision follows its own consultation during late January and early February. Based on responses from 181 members, its research estimated the total value of work in the affected areas could decrease by between 27-36% as a result of the fee increases, while the value of work bought by individuals could fall by 30-40% and the value of work from small and medium-sized companies could potentially decline by 42-55%.