2026 litigation outlook: top 10 trends

Early 2026 data from Solomonic shows that the UK litigation landscape is increasingly active (12,301 claims were issued in 2025 compared to 11,165 claims in 2024). From a procedural perspective, we appear to be entering a period of regeneration, where funding rules are recalibrated, mass claims are more closely managed, court transparency is expanding, and artificial intelligence (AI) begins to alter how disputes are run. 

This article sets out the commercial dispute resolution team’s top trends and predictions for the year ahead.

At a glance

• Litigation funding – government to reverse PACCAR and introduce light-touch oversight of litigation funding.
• Mega group litigation managed – courts enforce proportionality in mass claims such as ‘Dieselgate’.
• Arbitration Act 2025 in force – modernised framework strengthens London’s arbitration hub status.
• Commercial Court transparency – new pilot mandates public filing of more key documents via e-filing.
• AI integration accelerates – AI transforms litigation workflows and sparks new disputes.
• Restructuring and insolvency – continued pressure on business results in continued court activity.
• Directors’ conduct – is the defence of ‘honest belief’ weaker?
• Property (Digital Assets etc) Act 2025 – formal recognition that digital assets (including Bitcoin and NFTs) can be a third category of personal property.
• ESG and greenwashing claims – an increase in regulatory scrutiny indicates a potential rise in environmental claims.

Competition collective redress claims surge – UK remains a magnet for antitrust and tech-related claims with growth and reform predicted for the future.

Funding regulation: beyond PACCAR to ‘light touch’ oversight

In 2023, the Supreme Court ruled in PACCAR that litigation funding agreements (LFAs) are damages based agreements (DBAs) as a matter of law. This led to many LFAs, which did not comply with the Damages Based Agreements Regulations 2013, being  unenforceable. The decision was a blow to the funding industry and risked undermining the stability and competitiveness of England and Wales as a global hub for commercial litigation.

However, on 17 December 2025, the government announced that it intends to legislate to reverse the PACCAR decision by clarifying that LFAs are not DBAs (with prospective effect). This also involves introducing ‘proportionate regulation of LFAs’, although the form and substance is still to be decided. It is said that the legislation will be introduced ‘when parliamentary time allows’.

PREDICTION: Watch this space.

Mega group litigation: a test for case management

The High Court’s management of the Pan‑NOₓ ‘Dieselgate’ litigation (Various Claimants v Mercedes-Benz Group AG, Ford Motor Company, Nissan Motor Co Ltd, Stellantis NV and others [2025] EWHC) serves as an important reminder of the need for cost proportionality and procedural discipline (even when the claim value is in the region of £6 billion).

The proceedings, brought by approximately 1.6 million claimants against various household names in the automobile industry, centre around the use of unlawful ‘defeat devices’ in order to manipulate vehicle emissions tests. Various liability and quantum trials are listed to take place this year.

The courts are reinforcing a clear willingness to drive efficient case and costs management even in large-scale group litigation, as evidenced by the successful claim of over 600,000 Brazilian claimants in Municipio de Mariana and others v BHP Group (UK) Limited and another [2025], with the Technology and Construction Court (TCC) recently holding that BHP was strictly liable for damage caused by the collapse of the Fundão Dam in Brazil, pursuant to environmental and civil codes of Brazilian law.

According to recent reports, the claimants’ interim costs budget of £113.5 million has been halved by Mrs Justice O’Farrell in the stage 1 judgment. Permission to appeal was also refused, although BHP has confirmed its intention to apply for permission directly to the Court of Appeal.

PREDICTION: It seems likely that the courts will take more of a no-nonsense approach to claimed costs and the parties should be ready to justify these where required.

Open justice: Commercial Court transparency expands

In a significant shift toward greater transparency (similar to the approach adopted in the US), the Public Domain Documents Pilot is now in force in the Commercial and Circuit Commercial Courts, providing public access to additional documents falling under the definition of ‘Public Domain Documents’.

These will include skeleton arguments, witness statements and other materials deemed to be critical to understanding court proceedings. The primary purpose of the scheme is to promote the fundamental principle of open justice, but it is expected to face some potential practical and strategic roadblocks, including the impact that increased transparency may have on potential settlement and ADR discussions.

PREDICTION: Teething problems are anticipated, but greater public access to additional documents is here to stay and may lead to pressure on other courts and tribunals to follow suit

Arbitration Act 2025: modernising the 1996 framework

The Arbitration Act 2025 came into force on 1 August 2025. The act updates the 1996 statute, resolving several interpretive ambiguities and reinforcing London’s position among the top global arbitration seats. What impact will this have in practice? The act provides tribunals with early dismissal powers, including summary disposal, which should result in the faster resolution of weaker claims.

Further, increased court powers in order to support arbitration via emergency arbitrations, for example, will be widely welcomed by practitioners. Corporations with arbitration‑heavy portfolios (for example in the finance, energy, and tech industries) should see smoother procedural pathways and sensible interventions by the English courts when required.

PREDICTION: Increased arbitral efficiency, coupled with the Commercial Court’s drive towards greater transparency (see 3 above) may encourage an increase in claims being issued in private dispute resolution forums, including arbitration.

AI everywhere: new dispute frontiers

AI‑related litigation in the UK is already on the rise and is expected to accelerate in 2026. Initial claims in the UK have mostly centred around intellectual property. The Supreme Court’s decision in Emotional Perception AI Limited v Comptroller that an artificial neural network (ANN) used for media recommendation technology can be patented under UK law, has been welcomed as likely to deliver a boost for patenting AI innovations in this jurisdiction. Recent analysis predicts a surge in UK AI-related disputes across a range of legal practice areas, including claims for breach of contract, consumer protection and data and privacy.

The landmark case of Getty Images v Stability AI [2025] has controlled the AI litigation sphere in recent years. The High Court held that Stability AI had not committed ‘secondary infringement’ by using Getty Images to train its AI model, Stable Diffusion. However, permission to appeal has just been granted, on the basis that Getty’s claim has ‘a real prospect of success’ and relates to a ‘novel and important’ point of law that ‘has potentially far-reaching ramifications for AI models and intangible articles such as software more generally’. The Court of Appeal’s assessment is awaited.

UK regulators are tightening their focus on AI, albeit on a sectoral basis, consistent with the UK government’s pro-innovation approach.

PREDICTION: An increase in regulatory scrutiny, coupled with the underlying structural changes to the UK litigation playing field (the increased significance of funding models and mass claims), will result in an overall increase in AI-related disputes.

Restructuring and insolvency

Following a busy 2025, 2026 is expected to see continued activity. The difficult climate for UK businesses looks set to remain, particularly in retail, hospitality, construction and manufacturing, due to persistent cost, wage, and lending pressures.

Last year saw a number of significant decisions in restructuring plans (for example, the Thames Water litigation). The introduction of the new practice statement in September 2025 signals a change of approach to case management under part 26A, stating that its objective is to achieve the ‘orderly and efficient resolution’ of issues between the parties whilst improving the overall efficiency of the court’s resources. In practice, companies are expected to engage with creditors prior to pursuing any plan. Specific changes include a requirement for applicants to file a listing note (enclosing an indicative timetable).

Last year, the Court of Appeal decision in Servis-Terminal LLC v Drelle [2025] confirmed that it was not possible to issue insolvency proceedings in England and Wales on the basis of an unregistered foreign judgment. However, permission to appeal was granted by the Supreme Court (the defendant has cross-appealed in relation to costs), and its decision is awaited this year.

PREDICTION: Insolvency disputes to increase, with key decisions on the horizon that may expand their scope. 

Scrutiny of directors’ conduct – defence of ‘honest belief’

Recent judgments have indicated uncertainty when it comes to the defence of ‘honest belief’. The Court of Appeal’s decision in Saxon Woods Investment Ltd v Costa [2025] reinforces the court’s willingness to intervene if necessary and to reinforce the need for objective honesty under section 172 of the Companies Act 2006.

In summary, the Court of Appeal overturned the High Court’s decision that simply acting in the company’s best interests could be a complete defence, in circumstances where the director had allegedly misled the board and ultimately caused the company to breach contractual obligations. The Supreme Court has granted permission to appeal and therefore the final decision is yet to come. For now, it is fair to say that the defence is restricted and parties (in particular directors) should tread carefully.

PREDICTION: Increased scrutiny of directors, particularly pending clarification from the Supreme Court.

Property (Digital Assets etc) Act 2025

The act came into force on 2 December 2025 and marks the conclusion of an extensive law reform project. The hope is that the act represents an important step forward in the UK’s quest to remain a leading jurisdiction in the digital asset economy.

Put simply, the act aims to modernise UK property law by formally acknowledging that digital assets (including Bitcoin and NFTs) can be recognised (through case law) as a third category of personal property. While it does not change the position reached already under the common law, in practice it offers owners, custodians and the courts for that matter, a much surer foothold when dealing with digital assets in the context of litigation. Issues such as the definition of ‘control’, the risk of layered custody arrangements, and questions of jurisdiction will need to be flushed out in developing case law.

PREDICTION: The act is a very welcome step in the right direction, but the next few years (post implementation) will be key in understanding what digital assets rights really mean in practice.

From ESG to privilege: litigation a board-level risk?

UK regulators appear to have their eye on environmental claims. Recent developments in the regulatory framework, including the FCA’s sustainable finance regime and anti‑greenwashing rule for regulated entities, and the new failure to prevent fraud offence introduced by the Economic Crime and Corporate Transparency Act 2023 (which specifically mentions greenwashing), have significantly widened the enforcement landscape.

These measures, combined with further action from the Competition and Markets Authority and the Advertising Standards Authority to enforce environmental claims, signal a rise in ESG claims. Boards should be ready for more coordinated enforcement action, driving an increase in ESG-related investigations and investor‑driven group litigation into environmental failures.

On a more positive note, the recent dismantling of the law in Jardine Strategic Ltd v Oasis Investments II Master Fund Ltd & Ors No 2 (Bermuda) [2025] represents an official end to the shareholder rule. Privileged legal advice sought on behalf of a company will not be disclosable to shareholders in the event of a subsequent dispute. The ruling provides welcome clarity for senior management of companies, who can now be confident that privileged communications with legal advisers will remain protected in the event of a subsequent dispute.

PREDICTION: Boards will be more confident in taking legal advice, which is a welcome step given the increasing risk of ESG litigation and activist shareholders.

Competition litigation: UK still a magnet

The UK remains a preferred forum for competition law damages claims with mature funding markets, clear procedural routes, and the Competition Appeal Tribunal (CAT) willing to address digital markets issues at scale. 2026 is poised to deliver more merits decisions, and potential government intervention affecting the CPO regime will be closely watched by tech and platform defendants.

The collective proceedings order (CPO) regime is under active review following a government call for evidence, in October 2025, with the Ministry of Justice considering reforms alongside the Civil Justice Council’s recommendations on funding. The Competition Appeal Tribunal (CAT) delivered mixed merits outcomes in 2025, but crucially found an abuse of dominance in Kent v Apple [2025], a reminder that well‑pleaded tech and consumer claims may prevail.

PREDICTION: In 2026, stricter scrutiny of how opt‑out actions are financed, how returns are disclosed, and how classes are constituted and notified, is anticipated.

Penningtons Manches Cooper prides itself on delivering clear, commercially focused advice across all areas of commercial litigation. Our teams work closely with clients to anticipate challenges, navigate complexity and provide practical, solutions‑driven support whenever it’s needed.