Procedure, damages and costs

Written by Aimee Talbot

Key developments in 2025

The drive to control the costs of litigation continued in 2025 with the introduction of three new costs budgeting light pilot schemes, catchily titled PD51ZG1, PD51ZG2 and PD51ZG3, which capture certain Part 7 multi-track claims issued on or after 6 April 2025. Each scheme has detailed criteria, but they mainly target sub-£10m claims in the Business & Property Courts; claims worth less than £1m in Leeds, Bristol or the Central London County Court; and Manchester and Birmingham QOCS claims.

As the pilot schemes are in their infancy, there is not yet any reported case law, so it is too early to tell whether the pilot schemes achieve the right balance between judicial scrutiny of the costs of litigation and minimising the costs of the budgeting process itself. We may see some judgments in 2026 under the pilot schemes but it may take longer for issues to surface as we still await the expected satellite litigation arising from the extension of fixed recoverable costs in 2023.

On the topic of reducing the costs of litigation, artificial intelligence is lauded as capable of doing just that, although it of course comes with well publicised risks, including the risk of hallucinating case citations. The first judgment dealing substantially with this issue was handed down in April this year, when Mr Justice Johnson in R (on the application of Frederick Ayinde) v The London Borough of Haringey [2025] EWHC 1040 (Admin) gave judgment in two referrals that had been made under the court's inherent jurisdiction to regulate its own procedures and enforce the duties owed to it by lawyers.

In both cases, fictional citations had been put before the court – one by a pupil barrister and one by a solicitor. In the latter case, the court commented: "Putting before the court supposed “authorities” which do not in fact exist, or which are not authority for the propositions relied upon is prima facie only explicable as either a conscious attempt to mislead or an unacceptable failure to exercise reasonable diligence to verify the material relied upon." Read our detailed analysis of the decision here. The use, or misuse, of AI continues to feature in litigation, especially by litigants in person, and we expect this trend to continue into 2026 and beyond.

What to look out for in 2026

From 1 January 2026, a new two-year pilot scheme improving access to court documents by non-parties comes into force in the Commercial Court, London Circuit Commercial Court and Financial List. Under the scheme, various categories of documents referred to at public hearings must be uploaded to the Court's electronic file, which will make them available to download by non-parties. This is in line with the common law rule that documents read out in open court lose confidentiality; however, it will make access to such documents easier, and this easy access is likely to encourage non-parties to seek such documents more frequently than under the current regime.  As such, Insurers may want to consider whether to include arbitration clauses in policy wordings, and whether to propose arbitration, or another confidential form of ADR in sensitive disputes, particularly those relating to policy coverage.

In addition to specified documents, such as witness statements and experts' reports, judges can designate any document deemed "critical to the understanding of the hearing" as a public domain document. The parties can also agree that a document become a public domain document. The scheme is likely to bring with it increased costs incurred in dispute "Filing Modification Orders" as well as increased media scrutiny on positions taken, or statements made, by parties, witnesses and experts. However, concern over confidentiality may drive earlier settlements. Read our detailed analysis of the pilot scheme here.

We may also see adjustments to the fixed recoverable costs regime in 2026, as the Ministry of Justice published a consultation on 31 October 2025 seeking input to enable them to carry out their planned "stocktake" exercise. The consultation closes on 5 January 2026 and is likely to spark interest across sectors as parties continue to grapple with the ambiguous complexity band criteria in the intermediate track, amongst other issues.