What are the litigation trends in 2025?

As we begin 2025, we are reflecting on some of the key developments in the disputes landscape over the past year, including the introduction of important new legislation aimed at addressing fraud in two key areas, a significant Court of Appeal decision regarding motor finance commissions (due to go to the Supreme Court this year) and some important decisions in the ESG space. You can read our summaries of those key trends below together with our thoughts on where we expect to see more dispute activity over the coming year.

ADR

We previously reported on the important Court of Appeal decision in 2023 in the case of James Churchill v Merthyr Tydfil County Borough Council [2023] EWCA CN1416 which found that the court could order parties to engage in ADR – a shift from what had previously been understood to be the position (see our article). Following consultation on changes to the CPR to reflect this decision, the new rules came into force on 1 October 2024 but were not prescriptive as to what factors a court should take into account in making such an order, leaving it to very much to the discretion of the court. In 2025 we should see more instances of the court using these powers and setting out the basis for exercising its discretion, which may well have an impact on how future cases will be resolved.

AI

This continued to be a hot topic in 2024 as disputes lawyers consider and monitor how AI is being used in aspects of the litigation process with many firms deploying their own large language models in day-to-day work. There has been much discussion about where AI can be used most effectively in the litigation process. Mediation statements, witness statement preparation and assisting in the prediction of case outcomes are all areas we consider in our AI in focus series of articles. The courts too are looking to embrace AI in the process of managing and resolving disputes.

As to AI related disputes, we wait to see how case law develops in respect of AI liability (see our recent article) and as the technology develops. We expect to see disputes arise in respect of regulatory non-compliance, product liability and potential misuse, cyber security and data breaches. In addition, we may see disputes concerning the use of AI both in a negligence and fraud context where issues of liability will be tested although this may be over a longer time frame. 

With respect to regulation in the UK, the Government has said that AI 'must be in a regulated framework' but as yet there are no details as to what this might entail in terms of legislation and regulation regarding the development, creation and use of AI and any liability regime. We await developments in this area.

Class actions

Class actions are rising and there were some significant decisions in 2024. In the case of Commission Recovery Ltd v. Marks & Clerk LLP the Court of Appeal confirmed that that to satisfy the requirement for the 'same interest' in a claim, it was not necessary for all issues to be able to be resolvable on a representative basis. Provided there was no conflict of interest between claimants, issues on which claimants shared the 'same interest' could be resolved on a class basis, with issues requiring an individual assessment being carved off for separate determination. The Supreme Court refused permission to appeal. In the recent decision in Justin Le Patourel v BT Group PLC, the CAT held that despite the charges being excessive, they were not unfair and dismissed the claim. The decision serves as a reminder that meeting the certification threshold does not ensure success on the merits. This was the first collective action to proceed to trial under the UK’s competition law regime.

Recently the High Court handed down judgment in the first substantive trial to take place in the industry-wide NOx emissions group litigation. It held that the English Court was not bound by the findings of the German regulator in decisions establishing the regulatory compliance of vehicles with EU requirements and not bound by German court decisions on appeal of those administrative decisions. The claims will therefore proceed to trial in the English court later this year. 

We expect there to be more representative actions as litigation funders support these claims. This procedure allows a claim to be brought on behalf of those who have the 'same interest' in the claim. Under this approach there is no need for those represented to be joined or even identified in the action, unless and until the claim succeeds at the initial stage (which contrasts to the procedure under a Group Litigation Order). There are issues of how damages can be awarded and costs paid in these cases which we expect to be tested in the courts. 

Consumer-finance 

The recent Court of Appeal judgment in the case of Johnson v FirstRand Bank on motor finance commissions has sent shock waves across and beyond the motor finance industry. This decision is likely to have ramifications for both the consumer-finance sector and other consumer-facing industries with a business model involving the payment of discretionary commissions to third parties. It could even affect business lending. In 2025 we will see this matter make its way to the Supreme Court, where some elements of the judgment may be changed and so this is an area where we can expect further developments.

ESG

In 2024 we have seen judicial review used successfully to hold governments and public bodies to account in the case of Friends of the Earth & Ors v Secretary of State for Energy Security and Net Zero in which the English High Court agreed with the claimants that the government's CBDP was unlawful and breached provisions of the Climate Change Act 2008 (see our article).  In a case in the Netherlands, where the claim was brought directly against the company, Shell successfully appealed a ruling by the lower court that it was required to accelerate its carbon reduction efforts. This may impact the form of claim pursued in climate change cases going forward (see our article). 

We expect to see the focus on director's duties in the ESG space to continue. We also expect to see more claims for redress for alleged ESG - related harm outside the corporate group but within the corporate supply chain.

Fraud and investigations

Quincecare claims have continued to trend despite the Supreme Court's 2023 decision in Philip v Barclays which confirmed that the scope of the Quincecare duty does not extend to authorised push payment (APP) frauds where the payment has been authorised by the account holder. However, the case left open the possibility of claims based on a payment service provider's 'retrieval duty' – ie the duty to take reasonable steps to retrieve misappropriated funds where they have been put on notice of relevant facts. Claimants have sought to bring such claims and we expect that to continue. 

In a related development, the UK's new mandatory reimbursement rules (Reimbursement Rules) came into force on 7 October 2024 (see our article). They aim to protect victims of APP fraud and mark a significant step forward. However, as the maximum mandatory reimbursement amount if £85,000, those falling out of scope will continue to focus on steps that can be taken to recover their funds through the courts, and we are likely to continue to see further disputes in this area.

The Economic Crime and Corporate Transparency Act 2023 was passed in October 2023 and introduced a new corporate criminal offence of 'failure to prevent fraud'. The guidance was issued in late 2024 and confirms that the new offence will come into force on 1 September 2025 (see article). There is a 'reasonable procedures' defence so organisations which fall within scope should ensure that they are prepared and take the time to review and implement suitable fraud prevention procedures in advance of September. 

Investment treaty litigation

We expect an increase in investment treaty litigation in light of the more protectionist global environment. We will be interested in particular to see the scope for argument on frozen Russian monies in Euroclear following the Ukraine invasion, particularly if some resolution is found for the Ukraine war following the start of the Trump administration.

Litigation funding 

A review of litigation funding by the Civil Justice Council was initiated by the last government after the Supreme Court ruling in PACCAR in July 2023. The Ministry of Justice confirmed that the reintroduction of the Litigation Funding Agreement (Enforceability) Bill by the previous government would be delayed pending the outcome of the review. The CJC published an interim report in October 2024 – it intends to publish its final report by 'the summer' of 2025. We anticipate that this year we shall see the publication of revised rules for litigation funding which may well give rise to further disputes in this area. 

Sanctions

Following the proliferation of sanctions in 2022 and 2023, the pace of introduction of new sanctions measures and designation of individuals has slowed. Even so, navigating UK and global sanctions has continued to be a focus for businesses in 2024. The past year saw further guidance on UK sanctions regulations from judicial decisions and official guidance from the OFSI. We also saw an increased focus on enforcement with introduction of a new enforcement agency for trade sanctions in October 2024, the Office of trade Sanctions Implementation within the Department for Business and Trade. While we expect fewer designations and new sanctions measures to be introduced in 2025, compliance with UK and global sanctions will continue to be an issue for businesses and we expect to see a greater emphasis on enforcement and compliance with the introduction of OTSI and as OFSI's investigations work their way towards enforcement action.