knowledge | 23 July 2015 |

Commercial Court Business Reflects Economic Transition

The profile of the Irish courts’ civil business tends to reflect the economic cycle. The current transitional phase is evident in court statistics for 2014 included in the Courts Service annual report.

Like the public service generally, the courts have been tasked for several years with doing “more for less”, and doing it more efficiently. The speed with which the intermediate Court of Appeal was established and opened for business (from October 2014) reflects determined and efficient execution of a complex set of interlocking actions by the judiciary, the Courts Service, the Department of Justice and others. The Court of Appeal Act 2014 mandates much more active judicial case management at appellate level. It might not be coincidental that several of the judges who drove case management in the Commercial Court in its first decade now sit on either the Supreme Court or Court of Appeal, often taking their case management lists. This is helping to drive down waiting times.

Debt Cycle Litigation

Court statistics reflected the decline of deal-driven litigation from its prevalence at the height of the boom and massive increases in enforcement, corporate and personal insolvency and partnership dissolution disputes as the economy shrunk dramatically. However, as in the wider economy, there are signs of change.

Applications to use the debt resolution mechanisms in the Personal Insolvency Act 2012 continue to increase, and there were 448 adjudications of bankruptcy in 2014 (568% up on 2013), though only 16 of these were at the behest of creditors. This reflects many individual debtors finally concluding their positions with their range of creditors. Court-ordered liquidations also increased slightly. Orders for possession increased at Circuit Court level but decreased at High Court level in 2014. Possession and sale of the property is the final remedy in mortgage enforcement cases and it increases at the end of the debt cycle, after other options have been tested, because of its finality and its wider social impacts.

However, judgments for debt reduced between 2013 and 2014 by 27% in the High Court, 43% in the Circuit Court, and 41% in the District Court. The number of new debt cases is also decreasing. This reflects a significant decline in new pure debt recovery litigation and may also reflect that pragmatism borne of experience is leading to more negotiated debt arrangements and acquiescence in solutions such as those under the Personal Insolvency Act 2012. Certainly, the direction of the curve in debt cases is changing markedly.

Profile of Commercial Court Cases

171 new cases admitted to the Commercial Court in 2014, a slight increase on 2013. 111 cases were disposed of, a decrease on the 167 disposed of in 2013. This reflects a number of factors. The Commercial Court’s caseload in the years immediately following the economic crisis leaned more towards applications for summary judgment, which are of their nature often uncontested or otherwise quickly disposed of.

However, our research shows that in 2014- 2015, the Commercial Court’s caseload has spread across plenary actions, summary judgment claims, applications under the Companies Acts (particularly in relation to court-sanctioned insurance reorganisations and cross-border mergers), judicial reviews and intellectual property cases. Also, the Court heard a small number of unusually long trials in 2014, consuming significant judicial capacity. It also underwent the most significant change since its establishment to the composition of the Commercial Court panel, as several judges assigned to the Commercial Court took up more senior judicial positions. The new Commercial Court judges are maintaining the court’s notorious efficiency levels; applications for admission to the Commercial Court continue to have dates immediately available and waiting times for dates for full hearings in 2014 ranged from a maximum of four months to as little as just a week depending on the hearing time required.

The Chief Justice in presenting the 2014 report noted that the courts are at the heart of what is happening in society, in homes, in places of business and on the streets of Ireland; they reflect who we are as a people, an economy, a society, and as a nation.

As the court which most closely reflects who and where we are as an economy, we can expect the new generation of Commercial Court judges to see their 2015 caseload continue to move away from the recessionary litigation which has recently dominated back towards the kinds of deal-related and business-to-business disputes which make up most of its traffic in a renormalised economic environment. 

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.

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