New World Order? The Disclosure Pilot Comes into Effect
On 1 January 2019, the new two-year disclosure pilot in the Business and Property Courts of England and Wales, which will include the Commercial Court and the Chancery Division, came into effect.
The new disclosure rules are set out in Practice Direction 51U of the Civil Procedure Rules. These rules evidence the judiciary’s recognition of the challenges faced by parties in civil proceedings as a result of voluminous disclosure requirements. Given the potential relevance of email, instant messages and other electronic documents, it is very common for parties to disclose thousands of documents, with those documents being a small subset of the hundreds of thousands and even millions that they have searched.
Overview of the disclosure pilot
Subject to limited exceptions, the disclosure pilot applies to new and existing proceedings in the Business and Property Courts where an order regarding disclosure has not yet been made. In summary, the notable changes to the disclosure regime as a result of the pilot are as follows:
1. Disclosure Duties: The new disclosure rules set out “Disclosure Duties”. These duties apply to a person who knows that it is or may become a party to proceedings that have been or may be commenced. The Disclosure Duties also apply to legal representatives who have the conduct of the litigation on behalf of a party to proceedings that have been commenced or have been instructed with a view to the conduct of litigation where their client knows it may become a party to proceedings that have been or may be commenced.
2. Initial Disclosure: Each party must provide with its statement of case an Initial Disclosure of key documents on which it relies and the key documents which are necessary to enable the other parties to understand the claim or defence they have to meet.
3. Extended Disclosure: A party wishing to seek disclosure of documents in addition to, or as an alternative to, Initial Disclosure must state that they intend to request Extended Disclosure within 28 days of the final statement of case. A request for Extended Disclosure does not presume standard disclosure. Rather, as explained further below, a party making a request for Extended Disclosure must select the appropriate disclosure model.
The pilot sets out a number of duties which apply to: (a) person who knows that it is or may become a party to proceedings that have been or may be commenced; and (b) legal representatives who have the conduct of the litigation on behalf of a party to proceedings that have been commenced or have been instructed with a view to the conduct of litigation where their client knows it may become a party to proceedings that have been or may be commenced.
As regards those duties which apply to a party, in summary these are:
(a) to take reasonable steps to preserve documents;
(b) to disclose, regardless of any order for disclosure made, known adverse documents, unless they are privileged;
(c) to comply with a disclosure order made by the court;
(d) to undertake any search for documents in a conscientious and responsible manner to fulfill the stated purpose of the search;
(e) to act honestly in relation to the process of giving disclosure and reviewing documents disclosed by the other party; and
(f) to use reasonable efforts to avoid producing documents that have no relevance to the issue for disclosure in the proceedings.
Separate to the obligations imposed on parties, the new rules also impose a number of express rules on legal representatives. These obligations are:
(a) to take reasonable steps to preserve documents within their control that may be relevant to the issues in dispute;
(b) to take reasonable steps to advise and assist the party to comply with the Disclosure Duties;
(c) to liaise and cooperate with the legal representatives so as to promote reliable, efficient and cost-effective conduct of disclosure, including through the use of technology;
(d) to act honestly in relation to the process of giving disclosure and reviewing documents disclosed by the other party; and
(e) to undertake a review to ensure that any claim for privilege has been properly made and the reason sufficiently explained.
As part of the pilot, each party must provide with its statement of case an Initial Disclosure of key documents on which it relies and the key documents which are necessary to enable the other parties to understand the claim or defence they have to meet. The rules state explicitly that in giving Initial Disclosure a party is not required to carry out a search beyond the search that had already been undertaken for the purpose of the proceedings. In giving such disclosure, the rules state that a party should briefly describe the searches undertaken to locate the documents being produced.
The rules state that Initial Disclosure is not required where:
(a) the parties have elected to dispense with it;
(b) the court has ordered it is not required; or
(c) a party concludes and states in writing that giving Initial Disclosure would involve it or the other party providing more than the larger of 1,000 pages or 200 documents.
As explained above, parties may request Extended Disclosure in addition to, or as an alternative to, Initial Disclosure. Within 28 days of the final statement of case each party must state whether it intends to request Extended Disclosure. Then, to the extent that a party states that it intends to request Extended Disclosure, it must prepare and serve on the other parties a draft List of Issues for Disclosure within 42 days of the final statement of case, unless such a list has already been agreed. This List of Issues should be set out in a Disclosure Review Document.
For each issue identified the parties should indicate the “model” of disclosure that is sought in their respective Disclosure Review Documents. The models are as follows:
1. Model A: No further disclosure required but note that parties remain under a continuing obligation to disclose known adverse documents.
2. Model B: Is the same as Initial Disclosure but does not have any limit on document counts or page numbers.
3. Model C: Involves the disclosure of specific documents or narrow classes of documents relating to a particular Issue for Disclosure. This should be done by reference to requests set out in Section 1B of the Disclosure Review Document or otherwise defined by the court.
4. Model D: Narrow search-based disclosure involving the disclosure of documents which are likely to support or narrowly affect its claim or defence or that of another party in relation to one or more of the Issues for Disclosure. Unless ordered by the court, disclosure is not to include Narrative Documents.
5. Model E: Wide search-based disclosure involving the disclosure of documents which are likely to support or adversely affect a party’s claim or defence or that of another party in relation to one or more of the Issues for Disclosure which may lead to a train of inquiry which could result in the identification of further documents for disclosure. The Practice Direction states that Model E should only be ordered in exceptional circumstances.
Application of the new rules
In light of the changes brought by the pilot, legal practitioners with cases before the Business and Property Courts in England and Wales will need to think more carefully about: (i) how they document the steps taken to preserve documents; and (ii) the documents they disclose from the time they file their statement of case.
As regards the prescriptive nature of the Disclosure Duties, specifically, in considering how they might perform their Disclosure Duties, parties may wish to include among the steps they take to comply with the Practice Direction:
(a) recording the date on which documents potentially relevant to the dispute were put under preservation. This includes, for example, the date that a legal hold was put on email servers or other instant messaging communication systems and the date hold notices were circulated to individuals who hold potentially relevant communications;
(b) maintaining a preservation list of all individuals (including former employees) who hold potentially relevant documents and ensure that this list is being kept under review; and
(c) tracking the searches undertaken for documents and the time period covered by those searches. Parties should ensure that they have a record, for example, of all servers searched and any search terms applied to the documents collected as a result of that search.
The introduction of Initial Disclosure and Extended Disclosure regimes as part of the pilot is a welcomed effort to try and limit disclosure as much as possible bearing in mind the issues in dispute between the parties. There are similarities that can be drawn between the approach to document production in the pilot and in international arbitration. For example:
(a) the disclosure of key documents, as part of Initial Disclosure, with a statement of case will be familiar to practitioners who have worked on international arbitration matters where it is common for pleadings to have a number of exhibits on which the parties rely. In the international arbitration context, this approach can be helpful for focusing the parties’ requests for documents at a later stage in the proceedings; and
(b) Model C appears reflective of the document production process by way of Redfern Schedule, which is used in international arbitration proceedings and can be laborious with parties trying to agree to the scope and/or relevance of a request. In the international arbitration context, notwithstanding the efforts of the parties and the Tribunal, disclosure by way of document requests can still lead to large volumes of documents being searched and produced.
Finally, Model D is similar to standard disclosure which is the disclosure process with which the courts and parties are most familiar and may require a change of mindset in order to move away from this well established practice.