Civil proceedings can sometimes be launched where a criminal investigation is already underway into the same underlying events. Can civil proceedings be stayed in these circumstances?
- The court has the power to order a stay of civil proceedings until ongoing criminal proceedings have concluded.
- The test applied sets a high burden for any defendant wishing to stay civil proceedings.
- The court will consider whether other safeguards would suffice to prevent any prejudice arising from the parallel proceedings.
It is becoming increasing common for civil litigation to arise out of related criminal proceedings. When a company is accused of criminal wrongdoing, there will usually be a party who believes that it has suffered a loss as a result of the alleged misconduct. Waiting until the criminal proceedings are complete will allow the claimant to use any evidence which becomes public as part of that process and possibly the fact of conviction in support of their case. However, the limitation period for civil claims may force the claimant to start proceedings before the conclusion of criminal proceedings, which can be slow moving in white collar criminal cases. A party may also see an advantage in forcing a defendant to deal with multiple proceedings simultaneously and hope that this will make reaching a settlement easier.
When considering how to manage both sets of proceedings a party (typically the defendant) may want to consider an application to stay the civil proceedings on the basis that they could negatively impact or interfere with the related criminal proceedings. The investigating agency may have indicated that the defendant company should not interview witnesses relevant to the criminal proceedings for example, thereby making preparation of a defence in the civil claim very difficult. Proceedings that are commenced but then stayed are already underway for the purposes of limitation.
The Court has a discretionary power to order a stay of proceedings under its inherent jurisdiction and case management powers. There is also a separate provision under Practice Direction 23 which allows a party to make an application on the basis that there are related criminal proceedings.
CPR Rule 3.1 (f): “The court may… stay the whole or part of any proceedings or judgment either generally or until a specified date or event”
CPR PD 23A paragraphs 11A.1 - 11A.4: “An application for the stay of civil proceedings pending the determination of related criminal proceedings may be made by any party to the civil proceedings or by the prosecutor or any defendant in the criminal proceedings”
There is a substantial body of case law which sets out the principles which will apply when an application is made in the context of related criminal proceedings. The main principles are summarised in the judgment of Gloster J in Akciné Bendrové Bankas Snoras v Antonov:
- There must be a real and not merely notional risk of serious prejudice to the applicant. The Court’s discretionary power must be exercised with great care and only where there is a risk of serious prejudice which may lead to injustice.
- The discretion must be exercised by reference to the competing considerations between the parties. A claimant has a right to have his civil claim decided: therefore the burden lies on the defendant to show why that right should be delayed.
- There is no right to invoke the privilege of self-incrimination. The fact that a defendant would, by serving a defence in civil proceedings, be giving advance notice of his defence in any related criminal proceedings, carries little weight in the context of an application.
- Civil proceedings should not be stayed if appropriate safeguards can be imposed.
A court will be reluctant to order a stay of proceedings if alternative safeguards can be imposed to mitigate against the risk of concurrent criminal proceedings. Some examples include:
- orders restricting reporting of proceedings
- orders restricting access to documents
- orders that the civil court will sit in private, and
- orders embargoing the civil judgment until the conclusion of the criminal proceedings.
A high bar
In practice the bar to obtaining a stay of proceedings is very high. To use the “related criminal proceedings” test, there must be a critical overlap between the issues in the criminal claim and civil litigation.
The period of stay being sought is important - the court is more likely to order a stay for a specified period of time than for an indefinite period. A party considering such an application should review what appropriate safeguards could be applied for in the event that the application is refused, to ensure it gets the highest level of protection available.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.