England creates a new financial markets court

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The decision to create a new, specialist financial markets court for high-value cases, or those with international importance will enhance London's position as the forum of choice in which to litigate financial disputes.

Background

The Commercial Court in London has long been regarded by the international financial and legal community as among the most predictable and reliable of the available venues in which to resolve financial disputes, with only the Southern District of New York challenging its status. That reputation is well-founded: the Court is presided over by incorruptible, commercially-minded and formidably expert judges, many of whom have spent their practising and judicial careers fighting or deciding complex, international financial disputes. However, the position of the Commercial Court is under threat from international arbitration, including the excellent alternative and expertise offered by P.R.I.M.E Finance, and from Courts in the Dubai International Financial Centre, Singapore and elsewhere.

Those threats are compounded by the current state of the Commercial Court list. In the immediate post-Mitchell v News Group Newspapers world, the Court was flooded by a spate of applications which significantly slowed the speed at which cases were proceeding to trial, which is only now showing signs of improvement. It is now not unusual to wait six or more weeks for a hearing on a simple application (longer for hearings of a day or more) and disillusionment has resulted among users of the Commercial Court.

Against this backdrop, the Lord Chief Justice, Lord Thomas, confirmed on 8 July 2015 the creation of a new Financial List for financial services claims of £50 million or more, or for complex disputes that raise issues concerning the domestic and international financial markets. The Court will be presided over by ten judges: five from the Commercial Court and five from the Chancery Division, each with particular expertise in financial disputes.

Which disputes will be eligible?

The Financial List will include disputes:

  • worth £50 million or more and relating to loans, project finance, banking transactions, derivatives and complex financial products, financial benchmarks, capital or currency controls, bank guarantees, bonds, debt securities, private equity deals, hedge fund disputes, sovereign debt, or clearing and settlement; or
  • which require particular expertise in the financial markets or raise issues of general importance to the financial markets.

The Court will have the power to order cases falling outside these two categories into the Financial List, from other lists.

How will it differ from the Commercial Court?

A key aim of the Financial List is to retain the efficiency of the Commercial Court, but to improve flexibility and judicial continuity. As a result:

  • the Financial List rules will mirror, in large part, those of the Commercial Court (which are tried and tested for heavy and complex cases);
  • all Financial List cases will be allocated to a designated judge, who will preside over all case management decisions from the beginning of the case until the end;
  • the parties will be able to transfer cases to and from the Commercial List; and
  • in response to "the risks inherent in the markets" starkly highlighted by the global financial crisis, the Financial List will introduce a pilot "market test case procedure" scheme, which will permit financial markets issues requiring immediate relevant and authoritative English law guidance to be brought before the Court by interested parties with opposing interests, even absent an actual dispute between them. The parties to the procedure would bear their own costs. 

When will it be set up?

The Financial List will become operational from 1 October 2015 with new court rules and practice directions coming into effect on that date.

Comment

The creation of the Financial List is a positive move. It signals to the financial markets that the High Court in London is serious about retaining its pre-eminent position for financial disputes and reflects the important contribution of financial services to the UK economy. Judges with deep expertise in such disputes have been pooled into one Court. Qualifying disputes should be heard more quickly and efficiently than in the Commercial Court, and the continuity offered by the new allocation system removes the need for different judges to familiarise themselves with the background and papers.

The innovative "market test case procedure" scheme is particularly welcome, as it provides parties (and, by extension, the broader financial markets) with the ability quickly to obtain commercial certainty on pressing financial issues without the need to commence formal proceedings. Initiatives of this nature differentiate London from its competitors. It is hoped that the pilot is successful and that the scheme becomes a permanent feature.

It remains to be seen whether the Court of Appeal will embark upon a similar process of specialisation, not to mention London's competitors in the disputes field. Watch this space.


This article was originally published in the September 2015 issue of Butterworths’ Journal of International Banking and Financial Law, and is reproduced with permission.