Where should I sue? Advising clients on the seat of litigation
Natasha Mellersh reports on panellists’ assessment of what the deciding factors are for parties choosing a venue to resolve a dispute.
The question of venue was addressed in the penultimate session of the day. Chaired by Abdul Jiwaji, partner at Signature Litigation in London, what was a very international panel consisted of DF International’s group general counsel Maria-Theresa Trofaier; Susan O’Reilly, partner at Irish law firm Arthur Cox; Holger Bielesz, partner at Vienna-headquartered firm Wolf Theiss; and Alexandre de Fontmichel, partner at Paris-based Scemla Loizon Verveka & de Fontmichel.
Trofaier stated: “Many in-house counsel will agree that companies do not want to sue, ever. Litigation is a waste of time and costs.”
She added that “you must inform the business where they must absolutely avoid being sued”, for example, the United States.
HAPPY TO SUE YOU
Trofaier pointed out that the key question to ask is not “where would I be ‘happy’ to sue, but rather where would I be ‘happy’ to be sued?”
She added that “you must inform the business where they must absolutely avoid being sued” for example, a Russian company would normally avoid being sued in the US.
The in-house considerations remain the same, said Trofaier, even for a litigator who is advising a company – you don’t want to be sued.
Fontmichel said that the question of “where can I sue” already allows parties to rule out a vast number of potential jurisdictional options.
He pointed out that the subject matter of the agreement is important, as well as the governing law, in then narrowing down those options. Assessing the financial criteria of any litigation is also key, as the parties must be clear what their financial expectations are. He added that a place that is naturally chosen is often the law of England, stating: “Once you have the choice you must assess the criteria – the financial criteria: not only cost but also financial expectations, once you have the decision you must consider whether it can be enforced.”
In that context, Trofaier noted that the costs of resolving a dispute in London, with a double burden of law firm and barrister costs, were significant.
She suggested that the place to sue is where you would feel most comfortable, but she stressed the importance of cost. As the costs of lawyers in different jurisdictions can vary greatly, she stated that many in-house counsel no longer look to London to litigate, because of that double burden, which can act as a deterrent, a proposition with which Fontmichel agreed.
Another topic that was discussed was the direction the courts are going in, and how national courts are restructuring their court systems so they can deal with foreign law in cross-border cases and whether they should have specialist judges. The panel noted that this was a challenge courts in all jurisdictions were facing.
O’Reilly explained that reforms in Ireland have allowed for more efficient litigation as a result of the establishment of the Irish Commercial Court. The Irish Commercial Court provides a speedy process to resolve disputes in a European jurisdiction, providing an alternative to more costly seats such as London. She also emphasised that the court is very commercially minded, and has built up a good reputation.
Agreeing with Trofaier, O’Reilly stated that clients often didn’t want to be in litigation in the first place, noting that they also want to get out of litigation as fast as they got into it.
AVOIDING THE BIG SMOKE
Trofaier said: “When you are budgeting for a legal department and compare the invoices between lawyers in different jurisdictions, for example the UK and US compared to France or Switzerland – who provide a significantly cheaper alternative.”
She maintained that there are alternatives to London as a venue for arbitration stating that we should “re-educate ourselves as to thinking English common law is [not] the only option” for parties. She recommended Zurich or Stockholm as venues, but also suggested Cyprus as an alternative to London for those seeking common law and interim remedies.
“I am probably a pioneer”, she admitted, indicating that this was not necessarily the view taken by other multinationals in the region who have so far been advised by English lawyers and who are therefore still using English law and jurisdiction clauses for the forum for disputes. Although Trofaier’s remarks seemed controversial, she is not alone; German industrial entities often use the ICC in Paris and Swiss law to resolve disputes. Bielesz spoke about asset-tracing and interim relief, claiming that under Austrian law it would be much more difficult to pierce the corporate veil than it would in the UK – noting that this may be a good reason to litigate in London and then seek recognition and enforcement of the judgment or (inter partes) injunction to other European States like Austria, depending on where the assets are located.
A QUESTION OF JURISDICTION
Jiwaji asked if part of the attraction of London courts is the ability to grant interim relief. Bielesz answered that it is significant, but said that it is also important to choose a jurisdiction such as Austria or Switzerland, which will generally uphold an arbitration award. He added that one of the key risks is having an award quashed by the courts of the place of arbitration, so it is important to choose an arbitration friendly jurisdiction, where the scope of review of arbitral awards exercised by the national courts is limited to what is really necessary to safe-guard due process.
O’Reilly noted that it is also important to consider the jurisdiction clauses in conjunction with each other and that the parties must recognise the impact of the law: “Don’t just follow governing law provision – cross border contracts must be drafted carefully to ensure the language is appropriate to avoid conflicting clauses.” Jiwaji pointed out that there is a lot of tactical thinking involved in choosing a jurisdiction in which to litigate, but he warned “not to get too tactical if the substance is lacking”. He added that there may be multiple jurisdictions in play – where the case itself contains several parties from different jurisdictions.
This can give rise to an awkward tension that arises where clients want lawyers to take a strategic and tactical approach, while lawyers will also be mindful of the most important factors affecting jurisdiction on a case-by-case basis.
This article was originally published in CDR magazine, and can be found here.
25 October 2021
25 October 2021
25 October 2021
25 October 2021