London's new financial super court
The London courts are often seen as the venue of choice for high value international claims. London attracts international financial disputes as its courts system is seen as truly independent and impartial. English judgments are also recognised internationally, which allows parties to enforce their judgments abroad.
That said, the London courts are facing competition from various courts in other jurisdictions seeking to become the new venue of choice for high value disputes. For instance, the Dubai International Finance Centre has seen a significant increase in the value of cases being filed with it, since opening up to legal businesses around the world, with no connection to Dubai. There is also a trend in parties looking to alternative dispute resolution such as arbitration.
Against this background, a consultation is underway which could see the London courts implementing a Financial List designed to handle high value financial disputes as soon as October this year. Under current plans, claims which can be heard under the new Financial List are those with a value of more than £50 million and which require the presiding judge to have particular expertise in financial markets in order to properly assess the case, such as those relating to loans, financial instruments, bank guarantees and private equity deals. Claims of a lesser value but which have a 'general importance' to financial markets can also form part of the new list.
The implementation of this Financial List will effectively create a "new" court, housed in the existing Royal Courts of Justice building in London but specialising in high value financial disputes. Cases heard in this court will benefit from being heard by one of a select few specialist financial services judges, who will manage the case from start to finish.
Adopting this targeted approach is designed to deal with criticism previously levied at the English judicial system, that complex financial services hearings were being heard by High Court judges without the relevant specialism, which would then be quickly overturned on appeal adding unnecessary delay and expense.
Whilst the new list responds to the increasing competition posed by the courts of other jurisdictions, the plans also recognise the reality that particularly since the financial crisis, English commercial courts are doing more financial services work than ever before.
A new pilot scheme may also be introduced which will enable potential Financial List litigants to test cases which "raise market issues" before a formal dispute has arisen, and where there is no previous court decision or other authority on the point – the point of law will be decided by a specialist financial judge. It is hoped this procedure will bring about significant costs savings and also prove to be much quicker than a full trial. As a way of incentivising parties to use the new test case scheme, each party will generally pay its own costs, rather than the unsuccessful party having to pay its own as well as the successful party's costs.
Whilst the effect of these changes remains to be seen, the new Financial List and ability to bring test cases are likely to prove useful tools in maintaining London's status as the venue of choice for high value financial disputes.