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5 Trends to Watch in 2022 UK Civil Fraud & Business Disputes

  1. Growth in civil fraud claims  No sector or industry has been unaffected by the global pandemic, and with it have come opportunities for fraud to be carried out. We saw an increase last year in civil fraud claims, and we expect that to continue over the coming year and beyond - businesses and individuals are increasingly active in investigating suspicious activity, and prepared to make use of the tools offered by the UK Courts, including worldwide freezing orders, search and seizure orders and delivery up and disclosure orders. 

  2. Expected claims against directors and unfair prejudice  Changes to audit rules, corporate governance and directors’ duties are on the horizon as a result of the Department for Business, Energy and Industrial Strategy’s White Paper on audit and corporate governance reform, “Restoring Trust in Audit and Corporate Governance”. Details of the proposals are expected imminently – during the consultation period, businesses and industry bodies expressed concern over the cost of the reforms and their potential effect on the economy, and it is likely that the proposals set out in the White Paper will be watered down. In any event, directors of companies caught by the new rules should expect more regulation and scrutiny, and a commensurate increase in the risk of claims against them.

    Many shareholders continue to take a keen interest in how companies in which they are invested are run, and are increasingly prepared to take action if they consider their investment to be prejudiced in any way. Directors need to ensure they understand the scope of their duties, and the risks of getting it wrong. The growth in litigation funding means it is often easier for claimants to obtain third party financial backing to pursue claims.

  3. Rising number of breach of warranty claims – With M&A activity increasing, breach of warranty claims are on the increase, and with that dispute resolution clauses and notification provisions of the transactional documents are being scrutinised. There is a risk of these clauses being treated as an afterthought in corporate transactions – the caselaw shows the risks of this approach. 

  4. Increase in Insolvency claims – The ongoing pandemic continues to put pressure on businesses yet the packages of support from the UK government are drying up. Following a long covid-related hiatus, company statutory demands are back in creditors’ arsenals, but with increased protection for debtors, e.g. creditors cannot present a winding up petition unless the lower limit of the debt is at least £10,000 (up from £750), if it is for commercial rent unpaid because of the pandemic or without written notice to the debtor. Directors will need advice to understand fully their legal obligations to manage the company’s financial position properly (and to know where they stand in relation to any personal guarantees), so as not to commit offences or expose themselves to claims under the Insolvency Act such as wrongful trading which is now back in play after the covid-related suspension came to an end in July 2021.

  5. Increased use of remote hearings and litigation technology – Tech is transforming the way in which litigation operates, from remote hearings to computer-assisted document review. The UK’s High Court has demonstrated that, despite the pandemic, it is very much open for business, including for applications in support of proceedings in other jurisdictions. Technology has enabled hearings to proceed (our team successfully defended a party in a three month fully virtual civil fraud trial, with witnesses giving evidence in a number of languages and timezones) and for clients, witnesses and experts to “attend” Court without the cost and risk of travel. Judges have discretion over how a hearing should take place, but the default position for the Business Courts is now that hearings of under half a day will be virtual. In the current covid climate, we expect demand for remote hearings to remain high.

About the Authors

Greenberg Traurig's UK Civil Fraud & Business Disputes Group comprises experienced lawyers who have collectively handled myriad high-profile and sensitive multi-jurisdictional civil fraud matters and business disputes. We serve corporations and individuals across a diverse range of sectors/industries, including retail, finance and investment, energy, and real estate. Our years of experience acting for claimants and defendants allow us to deftly advise clients and anticipate opponents’ strategies.