The government risks driving international litigants out of England and Wales if it insists on a sixfold increase in court fees, City lawyers have warned.
The City of London Law Society today gave a damning verdict on Ministry of Justice plans to generate around £200m a year in higher fees.
Proposed changes include increasing fees paid by parties in commercial disputes to up to £20,000 and introducing a daily hearing fee of £1,000.
Fees for cases involving claims for money will increase on a sliding scale, with a maximum fee of £1,870. In future the government is to consider introducing a system where the fee is calculated as a percentage of the amount under dispute in a case.
The litigation committee of CLLS, chaired by Clifford Chance partner Simon James, accused the government of seeking to ‘exploit the courts’ near-monopoly position by using them as a means to raise money’.
The committee’s response said: ‘Many international parties may be able to afford the higher fees proposed, but a more than sixfold increase in fees will make the level of court fees a subject that lawyers must discuss with their international clients, will not encourage parties to litigate in England and will inevitably offer a marketing opportunity to competitors.
‘Any increase on this scale will send a message that the UK government does not wish to encourage litigation services in England and Wales and, in particular, foreign commercial litigation.’
The response criticised the premise of the consultation paper, which grouped civil court business with family court business to show a deficit of more than £111m. CLLS pointed out that HM Courts and Tribunal Service's annual report found that 99% of the deficit was attributable to family courts business, with the deficit for civil courts a ‘negligible’ £1,495.
The committee response says that the government proposals in effect ask civil court litigants to ‘subsidise’ the business of the family courts.
The response added: ‘A civil justice system is essential to the proper functioning of a democratic society, and should not be used as a means to raise money from those unfortunate enough to find themselves involved in a dispute in order to subsidise a distinct area.’
The committee did accept a justification for a ‘mildly graduated’ scheme to avoid low-value claims being charged a disproportionate fee.
The government’s consultation paper notes a ‘pressing need’ to place HMCTS on a ‘solid financial footing’.
Courts minister Shailesh Vara said last month: ‘We have the best court system in the world and we must make sure it is properly funded so we keep it that way.
‘Hardworking taxpayers should not have to subsidise millionaires embroiled in long cases fighting over vast amounts of money, and we are redressing that balance.’
The consultation closed on January 21 but there is no date yet for a response from the MoJ.