UK to strengthen global grip on financial disputes with autumn launch of specialist banking court
Given that it has long been a part of the sales pitch for English courts that they have the specialist judges to handle complex commercial matters – and London’s status as one of the world’s leading finance centres – it’s strange that it has taken this long. But it has been confirmed this week that the UK is to create a financial court to handle major banking disputes at The Rolls Building in London.
Lord Chief Justice of England and Wales, Lord Thomas, said in a speech at Mansion House on Wednesday (8 July) that the new regime for financial services disputes, initially dubbed The Financial List, will make sure banks ‘order their affairs on the basis of a sure knowledge of their rights and obligations in the market place’. He added that the Financial List would ‘provide the necessary environment for economic activity to thrive’.
Financial disputes worth over £50m, or disputes that set the precedent for behaviour in the financial services sector, will be able to go through the Financial List presided over by a small group of judges specialised in the field.
Derivatives, FX and the commodities markets will all be covered by the new financial court, which will become the go-to venue for legal precedent on new financial products when it launches in the autumn.
The balance of work across the commercial jurisdictions of the High Court have increasingly leaned towards the financial services sector in the years following the financial crash, which also coincides with a fall in the volume of shipping and reinsurance cases going through the courts as those sectors tilt towards arbitration. Financial matters now makes up around 40% of the work going through the Commercial Court, The Chancery Division and the Technology and Construction Court.
There will be 10 judges presiding over the Financial List, five from the Commercial Court and five from the Chancery Division, with cases set to go onto the new list in October. Cases will be dealt with by a docketed judge who will manage the case from inception, through the pre-trial stages, through trial and even enforcement.
The new financial court will include an innovative test case procedure to resolve market issues on which there is no previous authoritative English law precedent. This expedited method for testing market understanding before a dispute has even arisen will permit financial services firms to quickly resolve issues without having to publicly reveal the full commercial impact on each institution. Lord Thomas said this would ‘help to avoid costly and time-consuming litigation, through providing a mechanism for authoritative guidance before disputes have arisen’ and comes as part of wider reform to promote access to justice across the courts system.
The test case procedure will also bring about a more rigorous testing of market understandings in the financial sector as each party will pay their own legal costs, removing fear from bringing the issue to courts that the losing party will have to cover the other side’s legal fees. Trade bodies will be able to join the test case to ensure that the views and practices of different firms are aired before precedent is set.
The launch of the court follows a consultation earlier this year. Discussing the proposed court at Legal Business‘s Commercial Litigation Summit in May, Brick Court Chambers’ Jasbir Dhillon QC told delegates: ‘As I understand it, the test case procedure enables the dispute to be resolved with no order as to costs. If it encourages an ability to get a quicker and more effective resolution of a dispute with less adverse consequences if you do not win, then it seems to me to be welcome.’
Commenting on the court’s launch, Ted Greeno (pictured) of litigation leader Quinn Emanuel Urquhart & Sullivan, told Legal Business: ‘Having a separate list over which judges with deep expertise in disputes under financial instruments will preside can only enhance London’s attractiveness both as a forum for resolving international disputes and as an international financial centre. There are enough financial markets cases to justify a list with specialist judges and concentrating judicial expertise in this way will give users even greater confidence that they will get a fair and informed decision on financial disputes. One of the advantages of such a court over, for example arbitration, is that it will set precedents so that once instruments are ruled upon everyone will know where they stand.
‘Although the List will only hear claims worth over £50m, it is to be hoped that the Ministry of Justice will avoid the temptation to hike court fees for these cases. Justice should not be taxed and everyone should be equal under the law. Moreover, those who help set precedents will be doing a public service for the benefit of the wider community.’
Founding partner of Signature Litigation, Graham Huntley, added: ‘Something similar is frankly needed for the Court of Appeal. It is under great stress and we are seeing a real shortage of Appellate Judges to deal with all kinds of cases. The result is that occasionally clients in the banking and financial services sector feel that they are just not getting Appellate Judges who understand their business and their markets, which is critical when the Appellate Judges do not have the opportunity to hear all the evidence that is available in the trial process.’
With London generally regarded to have strengthened its position as a global disputes hubs in recent years, despite concerns over court funding, the English courts appear to have another useful string to their bow.
Read the original article in Legal Business here.
Sep 30, 2020
Sep 29, 2020
Sep 30, 2020
Sep 29, 2020