Herbert Smith's Ted Greeno assesses the Supreme Court's record on handling commercial disputes

The Supreme Court was born in October 2009 when it replaced the Appellate Committee of the House of Lords as the final court of appeal for England and Wales (as well as Scotland, for civil cases, and Northern Ireland).

The Court will grant permission to appeal only where an application raises an arguable point of law of general public importance which ought to be considered by the Court, bearing in mind that the matter will already have been the subject of judicial decision and may also have been reviewed on appeal.

It is not an easy threshold to meet, particularly for disputes which turn on the construction of a one-off contract as many commercial cases do.

There is, of course, also a limit to the number of appeals that can be heard by the Court's 12 justices.

In its first three years, the Court has decided some 215 appeals. However, only a fairly small proportion of these have been relevant to commercial practitioners, with just a handful of decisions in each year relating to company, commercial, contract or intellectual property cases.

This is disappointing, as more decisions from our highest court would mean more opportunities for the development of the commercial law. The doctrine of precedent, with its mix of predictability and flexibility, is the lifeblood of our system and a significant factor in attracting international parties to the English courts. 

According to court statistics published by the Ministry of Justice, the Supreme Court determined six appeals in contract/commercial cases from October 2009 to the end of 2011, compared to 18 for the House of Lords over a similar period (January 2007 to July 2009).

Conversely, the past few years have seen significant increases in the number of cases categorised as immigration/asylum, employment, and practice & procedure. It remains to be seen whether this will be a continuing trend.

Nonetheless, the past three years have provided a number of noteworthy decisions affecting commercial parties. SerVaas Inc v Rafidain Bank is the most recent (the decision having been handed down in the middle of August, which is in itself something of a break from tradition).

In that case, the Court clarified the scope of the exception to state immunity for property held by a state for "commercial purposes", an issue that has important practical implications both for states and for parties seeking to enforce judgments against assets held by states.

The Court has dealt with a number of cases on contractual construction, an area in which it has very much tended toward a purposive rather than literal approach.

In last November's Rainy Sky SA v Kookmin Bank, the Court found that where a term is open to more than one possible interpretation, it is generally appropriate to adopt the one which is most consistent with business common sense. It is doubtful that this decision changes the applicable principles.

However, it will arguably give further ammunition to those who wish to challenge the most obvious meaning of contractual provisions, particularly in international arbitrations before non-English qualified arbitrators.

In the RTS Flexible Systems decision (March 2010), the Court considered the common problem of parties carrying out work based on a letter of intent, without entering into a formal contract.

On the facts, the Court found that a binding agreement had been reached incorporating the terms of a draft long-form contract (thereby differing from the views of both the High Court and the Court of Appeal).

The Court expressly drew out the moral for commercial parties, which it said was "to agree first and to start work later".

There have also been a couple of notable judgments in the arbitration sphere. In its November 2010 decision in Dallah v Government of Pakistan (a rare case in which the English court refused to recognise and enforce a New York Convention award), the Supreme Court clarified the extent to which the courts will, at the enforcement stage, investigate the jurisdiction of an arbitral tribunal – described by Lord Collins, who gave one of the leading judgments, as an issue of "international importance".

In Jivraj v Hashwani (July 2011), the Court overturned a controversial decision of the Court of Appeal which had held that arbitrators were employees, and as such subject to UK anti-discrimination legislation, and had therefore called into question the legality of provisions found in certain institutional rules which restrict the nationality of arbitrators.

The Supreme Court has also shown a willingness to take on procedural issues. In its March 2011 decision in Jones v Kaney, the Court abolished the immunity from suit that expert witnesses had enjoyed for more than 400 years in relation to their participation in legal proceedings.

Perhaps most significantly, in the long-awaited appeal in the Prudential case due to be heard in November, the Court will look at whether legal professional privilege is restricted, at common law, to members of the legal professions (as the Court of Appeal held) or whether it can extend to advice on tax law given by accountants.

Given the important issues of public policy involved in the case, various bodies are intervening on either side of the dispute including The Law Society (represented by Herbert Smith), the Bar Council and the Institute of Chartered Accountants in England and Wales.

There are, of course, other cases in the pipeline, with the Court having recently granted permission to appeal in two cases which raise interesting issues for international litigants: the circumstances in which an English court will order, or retrospectively validate, service outside of the jurisdiction (Abela v Baadarani); and whether a decision to pierce the corporate veil can make the "puppeteer" bound by the puppet company's contracts including any jurisdiction clauses in those contracts (VTB v Nutritek).

So although commercial cases are a relatively small proportion of the Supreme Court's work, it has addressed – and no doubt will continue to address – a great many issues that are significant to commercial parties and practitioners.

Ted Greeno is a senior litigation partner at Herbert Smith.