Is the financial list a welcome initiative?

Lord Chief Justice, Lord Thomas of Cwmgiedd, has confirmed the introduction of a financial
list and a market test case procedure, following a six-month consultation period by a designated working group.

The financial list will consist of docketed judges with specialist technical knowledge of the financial markets established in order to meet the litigation needs of the international financial community.
A designated judge will manage
a case from inception through trial to enforcement, while the administration will be shared by the listing offices of the Chancery Division and Commercial Court (with proceedings commenced in either division). According to
the 'Financial List Initiative Consultation Document', eligible claims for the list would include:

• Loans;

• Project finance;

• Banking transactions;

• Derivatives and complex financial products;

• Financial benchmarks;

• Sovereign debt; and

• Clearing and settlement.

Value of claim

Unless the value of the claim is for at least £50m, the claim must be specifically ordered onto the list. Alternatively, cases qualify for the financial list where the issue in dispute requires particular judicial expertise in the financial markets or raises issues of general importance to the financial market.

For the most part, lawyers
and court users have responded positively to the proposed list, designed to streamline case management and ensure
time and cost efficiencies. According to the official response of the City of London Law Society,
'it is important for the English courts to improve, and be seen to improve the service they provide to international litigants, rather than merely rest on the court's historic laurels'.

Procedural hurdles

However, the scheme is not without its critics. The list introduces procedural hurdles to an already complex system, and although the one judge per case template has its appeal, litigation could incur unnecessary and costly delays where the designated judge becomes unavailable mid-way through proceedings.

Others query the arbitrarily high threshold of £50m, and the fact that lower value cases must rely on the subjective opinion of a judge without a financial markets expertise to determine whether or not the case raises issues of importance to the financial markets community.

The second change confirmed by the lord chief justice is the introduction (subject to a successful pilot scheme) of a market test case procedure [MTCP], enabling financial market issues to be brought before the court by interested parties to resolve unanswered legal questions (and therefore market uncertainty) without the need for a dispute. According to the consultation document, 'in an appropriate case, a relevant trade body or association may join as a party or otherwise be represented.'

MTCP has been met with greater scepticism than the financial list. Some point to the obvious disincentive to financial institutions to bring test cases where their costs are irrecoverable, risking both an adverse judgment and negative publicity. Confusingly, the consultation document does not automatically allow cases to be brought by relevant trade bodies, despite their panoramic market perspective and ability to spread costs across the industry.

MTCP is designed for instances where 'relevant authoritative English law guidance is needed', suggesting that - as guidance only - the outcomes are not binding. Practitioners have questioned whether issues will be properly ventilated where there is no actual dispute before the courts, since the court may be unaware of competing interests. To achieve credibility, the court will have to sufficiently publicise the particular test case at hand to invite all the necessary submissions.

Global impact

There is no doubt that the
Rolls Building is taking significant steps to protect its position as a global epicentre of financial litigation; it needs to, given the emerging competition from
new courts, such as the Dubai International Financial Centre, the Abu Dhabi Global Market, and the Singapore International Commercial Court. Given their financial markets specialism and their ability to learn lessons
from other courts during their legal infancy, they are well-equipped to poach potential international litigants from London's Commercial Court.
The effect could be quite damaging: between 2013 and 2014, 81 per cent of cases involved one foreign party,
while in 48 per cent of cases,
both parties were foreign.

Thus far, the internationally recognised quality of our judgments has been prioritised by litigants over their travel expenses, language barriers, and unfamiliar time zones. According to Robert Musgrove, chief executive of the Qatar International Court and
Dispute Resolution Centre,
the Commercial Court's attraction lies in 'the judges
first, second, and third. Nowhere else can provide the quality, independence and consistency'. But, as the lord chief justice acknowledged, the court must continue to evolve in tailoring its service to be as litigant-friendly as possible to preserve its international prestige. SJ

Kevin Bonavia, pictured, is an associate at Peters and Peters and Kate Parker is a paralegal at 5 Paper Buildings @PetersandPeters