UK Litigation: 2025 Recap and 2026 Outlook

As we head into 2026, resolutions (however realistic) in hand, we look back at the key English court rulings of 2025 and the lessons they offer for businesses and practitioners alike. The past year saw important developments across the disputes landscape, from litigation funding, collective proceedings, and privilege to misrepresentation, fraud, and contractual interpretation, each underscoring the courts’ continued emphasis on clarity, accountability, and effective risk allocation. Understanding these decisions will be essential to navigating the evolving legal environment and ensuring the enforceability of English law–governed agreements in 2026 and beyond.

1. Commercial Court Declines to Make Declaration of Good Faith but Rejects Allegations of Fraud

Summary

In a case hailed as the Vatican’s “Trial of the Century” by The Telegraph, Athena Capital, Raffaele Mincione, and others v Secretariat of State of the Holy See [2025] EWHC 355 (Comm), the Commercial Court upheld the validity of the 2018 agreements by which the Secretariat of State of the Holy See, through its investment vehicle, acquired a property at 60 Sloane Avenue in London. Related events had also led to criminal proceedings before the Vatican criminal tribunal. The Claimants, relying on an exclusive jurisdiction clause in favor of the English courts, sought declaratory relief from liability related to the purchase of the property, including a declaration that the Claimants had acted in good faith with regard to the negotiation and execution of the sale. In a judgment handed down in February 2025, the Court granted 29 of the 31 declarations sought, one of which was granted in modified form, but the Court notably declined to find that the Claimants had acted in good faith. The Secretariat of State’s allegations of fraud, dishonesty, and conspiracy were rejected, but Knowles J found that the Secretariat of State “had reason to consider itself utterly let down in its experience with the Claimants” and that Mr Mincione’s conduct was “not frank” and “fell below the standards of communication with the State that could be described as good faith conduct.” Notwithstanding this, the judgment confirms that the transaction was lawful and binding.

Key Takeaways

The decision clarifies the boundary between commercial bad faith and economic fraud, showing that serious shortcomings in transparency or fairness do not necessarily meet the threshold for actionable dishonesty. The Court’s refusal to treat commercially self-interested behavior as deceit underscores the high bar for proving fraud or conspiracy in complex financial transactions. At the same time, the finding that the Claimants fell short of good-faith standards indicates a readiness to recognize bad faith in contractual performance where conduct departs significantly from expected norms. Athena Capital is likely to become an important reference point for future cases involving express good-faith obligations and allegations of misconduct that stop short of fraud.

2. Privy Council Rules Out the Shareholder Rule

Summary

In Jardine Strategic Ltd v. Oasis Investments II Master Fund Ltd (No 2) [2025] UKPC 34, the Judicial Committee of the Privy Council abolished the longstanding “Shareholder Rule,” which had been recognized in English law for nearly 140 years. Chitty J’s 19th-century ruling, which established the rule, had treated shareholders as comparable to partners and trust beneficiaries, underpinning the view that a company could not rely on legal advice privilege against its own members. The Privy Council’s decision brings this long line of authority to an end and, through a Willers v. Joyce direction, confirms that the rule is no longer to be regarded as good law in England and Wales.

In Jardine Strategic Holdings, the Shareholder Rule was applied at first instance and by the Court of Appeal of Bermuda. The outcome of the Privy Council appeal was eagerly anticipated after the Commercial Court’s rejection of the rule in Aabar Holdings S.à.r.l. v. Glencore plc [2024] EWHC 3046 (Comm), which we discussed in last year’s annual roundup.

The Privy Council found that the original reasoning for the Shareholder Rule, that shareholders had a proprietary interest in legal advice obtained by the company, was inconsistent with the separate legal personality principle established in Salomon v. Salomon [1897] AC 22. The Privy Council stated that, “like the emperor wearing no clothes in the folktale, it is time to recognise and declare that the Rule is altogether unclothed.”

Key Takeaways

The Privy Council’s decision is a positive move for companies, strengthening their ability to seek legal advice without the possibility of disclosure to shareholders. The decision aligns the law of privilege in the corporate context with the principle of separate legal personality and reflects commercial reality and the modern complexity of corporate ownership. The decision will have implications for ongoing and future shareholder claims. While the Privy Council recognized the imbalance between corporate defendants and shareholder claimants, it declined to weaken the protection afforded to privileged material, even in contexts such as actions under sections 90 and 90A of FSMA, where information asymmetry can already disadvantage claimants.

3. Subconscious Reliance: Privy Council Recasts the Law of Deceit

Summary

In Credit Suisse Life (Bermuda) Ltd v. Ivanishvili [2025] UKPC 53, the Privy Council held that it is not a legal requirement of the tort of deceit that a claimant consciously registered or understood a false representation to have been made. A misrepresentation that influences a claimant’s thinking or conduct, even at a subconscious level, can satisfy the requirement of inducement. Using the analogy referred to by Lord Leggatt, a person who orders food in a restaurant is representing that they have the means and intention to pay. The waiter taking this person’s order may not consciously think about the representation they are making, but assumes it to be the case.

In this case, the Privy Council upheld findings that Credit Suisse Life was contractually obliged to ensure that the claimant’s $750 million policy assets were managed in accordance with a discretionary investment mandate and was liable for losses arising from its employee’s fraudulent conduct.

Key Takeaways

The Privy Council’s judgment provides important clarification of the law governing deceit claims and marks a clear departure from recent English authorities linking deceit to conscious awareness of a misrepresentation. It held that this supposed awareness requirement rested on misconceptions and does not form part of the legal test. The Board confirmed that the focus is on causation and inducement, asking whether a misrepresentation influenced the claimant’s mind and decision to act, even if only subconsciously. The ruling resets and provides a more consistent framework for reliance in deceit and shifts the focus to defendants’ conduct over claimants’ conscious awareness of the representation being made. While claimants no longer need to prove conscious reliance, they must still establish a causal link between the misrepresentation and their loss. The decision is likely to be significant in financial and advisory disputes involving complex instruments or implied representations, where influence may be indirect or cumulative.

4. Condition Unfulfilled: Supreme Court Rules Out Deemed Performance

Summary

In King Crude Carriers SA v. Ridgebury November LLC [2025] UKSC 39, the Supreme Court unanimously held that English law does not recognize the “Mackay v Dick” doctrine of deemed fulfilment, which treats a condition precedent as satisfied where its fulfilment has been prevented by the debtor’s breach. The Court confirmed that where a breach prevents fulfilment of a contractual condition, the innocent party’s remedy lies in damages for breach of contract rather than in a debt claim. The appeal restored the decision of the court at first instance and overturned the contrary ruling of the Court of Appeal.

Key Takeaways

The Supreme Court’s decision provides an authoritative rejection of the long-debated Mackay v Dick principle, holding that it has no place in English law. The Court emphasized that contractual rights and obligations must be determined according to the express and implied terms of the agreement, not by applying legal fictions of “deemed performance.” In reaffirming the primacy of contractual interpretation and damages remedies, the judgment promotes freedom of contract and commercial predictability. The Court also approved the Blankenstein decision ([1985] 1 WLR 435), confirming that preconditions to payment form part of the bargain rather than mere machinery for performance. The decision re-establishes a strict approach to risk allocation under English contract law and underscores that efficient breach, though potentially advantageous to a defaulting party, remains addressed through compensatory damages, not fictional satisfaction of conditions precedent.

5. English High Court Finds BHP Liable for Brazilian Dam Disaster

Summary

In Município de Mariana v. BHP Group (UK) Ltd [2025] EWHC 2935 (KB), the High Court found BHP liable under Brazilian law for the 2015 collapse of the Fundão tailings dam in Brazil, which caused extensive environmental damage and loss of life and is considered the worst environmental disaster in the country’s history. The Court held that BHP had sufficient control over its joint venture, Samarco, to be directly and indirectly responsible on both fault-based and strict liability grounds, with damages (potentially up to £36 billion) still to be determined.

Key Takeaways

The decision in Município de Mariana v BHP Group (UK) Ltd highlights the expanding area of environmental group claims in the English courts, particularly those against multinationals in relation to their overseas operations. It acts as a reminder that the English courts have the ability to look deeper into the parent-company-subsidiary relationship to scrutinize how they operate in practice to establish liability, particularly when involving environmental risks or companies acting in high-risk sectors.

Additionally, the judgment reflects the English courts’ willingness to manage mass tort, cross-border group claims, following other similar cases, where claims linked to overseas conduct were permitted to proceed in England, which sets a precedent for how English courts may approach such cases in the future.

6. Permission to Assign NOT Granted: English Courts Rule That ICSID Arbitration Awards Cannot Be Assigned

Summary

In Operafund Eco-Invest SICAV plc & Schwab Holding AG v. Kingdom of Spain [2025] EWHC 2874, the High Court held that an International Centre for Settlement of Investment Disputes (ICSID) award rendered under the Energy Charter Treaty (ECT) is not capable of assignment to a third party and can only be enforced by the original parties to the arbitration. This expressly departs from the position previously taken by U.S. and Australian courts. The Court also rejected arguments based on issue estoppel from Australian proceedings and found that registration of an ICSID award under the Arbitration (International Investment Disputes) Act 1966 does not generate any new, independently assignable English law rights.

Key Takeaways

The decision introduces a clear limitation on who may seek recognition and direct enforcement of ICSID awards in England and Wales, restricting that role to the original investor.

It highlights a growing divergence between England and other major enforcement venues, creating practical uncertainty for investors and funders involved in structuring enforcement strategies for ICSID awards. Whilst the Court has granted permission to appeal, it remains to be seen whether this stance will change.

7. Jurisdiction Clause Holds Firm: English High Court Refuses Anti-Suit Injunction in Foreign Proceedings

Summary

In FH Holding Moscow Ltd v. AO UniCredit Bank [2025] EWHC 3111 (Comm), the High Court refused to grant an anti-suit injunction to restrain foreclosure proceedings brought in the Moscow Commercial Court. FH Holding argued that those proceedings breached an arbitration agreement in an English law Facility Agreement referring disputes to VIAC arbitration seated in Vienna. The Court held that the Russian proceedings fell squarely within the scope of a separate Russian-law Mortgage Agreement, which contained its own jurisdiction clause in favor of the Moscow courts.

The Court also found that the arbitration agreement was governed by Austrian law (as the law of the seat), and that England had no sufficient “legitimate interest” to justify intervention. Arguments based on sanctions-related public policy were rejected, and the Court emphasized that comity and the parties’ contractual allocation of risk weighed decisively against granting anti-suit relief.

Key Takeaways

The decision underscores the English courts’ reluctance to intervene in foreign enforcement proceedings where related contracts contain differing dispute resolution clauses, and each clause is effective in its own commercial context. This reflects the high threshold for obtaining an anti-suit injunction, particularly where proceedings derive from a contract that expressly designates a foreign court as the competent forum. Parties must ensure that they specify the governing law of the arbitration clause, especially in multi-contract arrangements.

At first blush, this may appear contrary to the Supreme Court’s decision in UniCredit v. RusChemAlliance, where the Court found that the English law–governed contract could extend the court’s jurisdiction, notwithstanding a Paris-seated arbitration clause, and granted an anti-suit injunction in UniCredit’s favor. However, it should be noted that while the English court is prepared to exercise its pro arbitration stance where there is a clear connection to England, it will not deign to do so where that connection cannot be made, as the FH Holding case appears to suggest.

8. Drafting for Enforcement: Lessons from HNW Lending v. Lawrence on Third-Party Rights

Summary

In HNW Lending Ltd v. Lawrence [2025] EWHC 908 (Ch), the High Court held that HNW as a non-party to a contract could enforce a £1.52m peer-to-peer loan and associated charge under the Contracts (Rights of Third Parties) Act 1999 (the “1999 Act”), and under the security or agency provisions, even where the contract did not confer a benefit on the non-party.

Key Takeaways

This decision is treated in commentary as a leading modern authority on section 1(1)(a) of the 1999 Act, confirming that an expressly drafted third-party rights clause can allow a security agent to enforce lenders’ rights even where the contract does not confer a direct benefit on that agent. More broadly, the decision is seen as welcome guidance for transactional and disputes lawyers on structuring finance and other commercial contracts using security agents and third-party rights, illustrating how the 1999 Act and third-party rights can be interpreted widely. Additionally, it highlights the importance of careful drafting and serves as a reminder that if parties wish to exclude the enforcement of a contract by a third party, they must do so expressly. Permission to appeal has been granted, so it remains to be seen whether there will be any further developments on this issue.

9. The MoFo Crystal Ball: What Might 2026 Hold?

Looking forward to 2026, we expect to see substantial development in a number of areas, including the following:

1. As anticipated last year, the UK’s collective actions regime has moved into a period of transition. Recent developments reflect continued judicial and regulatory attention on how opt-out proceedings are funded and managed, particularly following the PACCAR decision concerning litigation funding agreements. In June, the Civil Justice Council published its final report on third-party litigation funding, recommending light-touch regulation, enhanced court oversight, and legislative reversal of PACCAR. This week, the Ministry of Justice confirmed that it intends to introduce a bill to overturn PACCAR, to be brought forward when parliamentary time permits. The government is still considering the Council’s other recommendations.

Meanwhile, to mark the tenth anniversary of the opt-out collective actions regime for competition damages claims, the government launched a call for evidence on the regime’s effectiveness. This indicates possible adjustments aimed at maintaining access to justice while limiting speculative claims. The call for evidence closed on October 14, 2025. The government has indicated that any proposals for reform will be subject to consultation in due course.

2. In Various Claimants v. Mercedes-Benz Group AG, Ford Motor Company, Nissan Motor Co Ltd, Stellantis NV and others [2025] EWHC (Comm) (the “Dieselgate” or Pan-NOx litigation), the High Court is managing one of the largest consumer group actions in English legal history, involving over 1.6 million claimants and allegations that vehicle manufacturers used unlawful “defeat devices” to manipulate emissions tests. The proceedings, with major liability and quantum trials listed through 2026, have already prompted detailed judicial scrutiny of costs and case management, resulting in reductions of more than half to ensure proportionality and efficiency. The litigation now serves as a leading example of how the English courts supervise complex, multi-defendant consumer and environmental claims and sits within a wider wave of group actions, including Município de Mariana and others v. BHP Group (UK) Ltd and another [2025] EWHC (TCC).

3. The Arbitration Act 2025 updates the Arbitration Act 1996, finally resolving longstanding points of uncertainty around governing law of arbitration agreements, summary disposal, and jurisdiction challenges. It introduces a default rule that the law governing an arbitration agreement is the law of the seat (absent an express choice). The Act also introduces a statutory power for tribunals to issue summary awards where a claim or defense has “no real prospect of success.” The Act now narrows the scope of de novo jurisdiction challenges under section 67. All such changes are accompanied by an overall modernized framework. Parties can now be expected to pay greater attention to the drafting of arbitration clauses and how proceedings are conducted. Practitioners will no doubt use the 2025 Act as a useful reference when drafting and reviewing these dispute resolution provisions.

4. From January 1, 2026, a two-year pilot scheme set out in Practice Direction 51ZH – Access to Public Domain Documents comes into force in the Commercial Court and Financial List, meaning the public will now have access to certain court documents used in open hearings, including skeleton arguments, written submissions, witness statements, expert reports, and documents deemed “critical to the understanding of the hearing.” The scheme shifts the default position from non-party applications to proactive public filing. The pilot represents a significant development in open-justice reform, expanding the rights to public access and understanding of proceedings. Its introduction will have practical and strategic implications, and parties will need to anticipate the consequences of greater transparency, manage confidentiality risks, and factor in publicity considerations when drafting their case documents, which may also potentially impact case strategy and settlement decisions.