On 1 November 2009, the Grand Court of the Cayman Islands is due to open its Financial Services Division ("the FSD"). The operation of the FSD will be governed by the Grand Court (Amendment) Rules 2009 ("the Rules").
The Grand Court already had a steadily increasing amount of high-profile, complex and document-heavy commercial disputes which require dedicated case management tailored to the parties, facts and legal issues involved. The credit crunch and worldwide recessions have significantly exacerbated the extent and scale of such litigation. The aim of the FSD now is to create a forum to allow the Court to enhance the management of its heavy caseload in order to promote greater efficiency, and also to improve its capacity for cases which are assigned to other divisions of the Grand Court (Civil, Family, Admiralty and Criminal).
To achieve this aim, the Registrar of the FSD, a new post established by the Rules, will assign a specific judge to deal with each case within the Court's commercial case load from the start to the finish of that case. Assigning a judge to each commercial matter should allow that judge to become more intimately involved with the facts and the issues in dispute. It could reduce the amount of actual Court time that a matter may demand and may even promote the settlement of matters at an earlier stage, depending on the circumstances.
The judges constituting the FSD are understood to be two new appointees who will sit solely in the FSD (and also the Admiralty Division), together with certain Grand Court judges who may be assigned to particular proceedings in the FSD as appropriate.
In addition to the assignment of a judge to each case, the Rules set out the Registrar's wide-ranging responsibilities to maintain records and documents within the FSD. The Registrar will also have the power to request attorneys (and any foreign lawyers they instruct, of which they must notify the Registrar) to attend before the assigned Judge for a case management conference at any time.
Attorneys will also be responsible for the preparation and filing of an agreed case memorandum (within such period as directed by the Registrar) which will set out a short and uncontroversial description of what the case is about, a list of the issues (i.e. of fact and law) to the extent that it is practical to do so and a procedural history of the case.
Which cases will be eligible for the FSD?
The Rules list various categories of proceedings which will be deemed "financial services proceedings". These include proceedings relating to: (i) mutual funds; (ii) an exempted insurer; (iii) claims for CI$1million (US$1,219,512) or more arising from breach of a contract of insurance; (iv) certain financial services regulatory laws; (v) certain applications under the Trust Law, and claims for breaches of trust or fiduciary duty, where the trust is worth more CI$1million (US$1,219,512) or more; (vi) the winding up of companies and other applications pursuant to the Companies Law; (vii) any application for the dissolution of a mutual fund formed as a partnership; (viii) certain breach of contract or breach of duty by or against a professional service provider; (ix) applications for evidence pursuant to a letter of request issued by a foreign court; (x) applications concerning local and international bankruptcies; (xi) and enforcement of a foreign judgment or arbitral award.
It will be possible to transfer cases pending in the Grand Court (including matters which pre-date the Rules) to the FSD on the basis that (a) the case is a financial services proceeding as defined in the Rules which ought to have been commenced in the FSD, or (b) the Court is satisfied that it would be appropriate in all the circumstances for the case to be tried by a judge in the FSD (even though it does not fall within the definition). The Registrar will also be able invite the parties to apply to transfer existing cases to the FSD and the Registrar could make the transfer without reference to the parties in certain instances. However, transfer decisions and their terms can be reviewed by the Chief Justice, who may substitute or vary the decision of the Registrar with his own decision.
What are the costs involved?
In order to commence proceedings in the FSD, there are fixed fees of up to CI$15,000 (US$18,293). While this sum may seem high, it represents no more than the maximum fee currently payable for cases where more than CI$1million (US$1,219,512) is in issue; however, that fee may never get collected by the Court in cases which settle before trial. The FSD approach effectively guarantees collection of the fee up front. In addition, this fee effectively credits the parties with 20 days of court hearings in the case, for which a daily fee of CI$750 is otherwise payable. Finally, for existing cases being transferred into the FSD, court fees and any ad valorem fee already paid will be deducted from that sum. Of course, there will be some financial services proceedings for which a fee of this size would be disproportionate: in those cases, it is expected that one or both parties will want to stay in another Division of the Grand Court. The Rules also allow the parties to agree whether and how to share the fees for transfer into the FSD, failing which the allocation will be determined by the Registrar in accordance with default provisions set out in the Rules.
The FSD is a welcome addition to the Grand Court from a litigant's perspective. It should facilitate the delivery of a more expeditious and cost-effective judicial system by separating out heavy commercial matters for management by a specific judge. This notion has been successfully adopted in many other jurisdictions and now Cayman litigants can enjoy the same benefits. At the same time, it is not quite the same as the Commercial Courts which have been created elsewhere, being specifically tailored to Cayman's financial services industry: the FSD will provide timely support to that industry, as the current economic climate exposes it to a surge in litigation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.