On 1 November 2009, the Grand Court of the Cayman Islands opened a Financial Services Division (the "FSD") in order to more efficiently handle high profile, complex and document-heavy commercial disputes. Proceedings in the FSD are governed by the Grand Court (Amendment) Rules 2009 (the "Rules").
The FSD has been set up in response to an increase in the number of such cases that require dedicated case management tailored to the parties, facts and legal issues involved. The credit crunch and worldwide recession have significantly exacerbated the extent and scale of such litigation.
Implementation of the FSD is also expected to improve the Grand Court's capacity for cases assigned to its other divisions – Civil, Family, Admiralty and Criminal.
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 caseload 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 require and may even promote the settlement of matters at an earlier stage, depending on the circumstances.
The judges constituting the FSD are understood to include 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) that 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 that will be deemed "financial services proceedings". These include proceedings relating to:
- mutual funds
- an exempted insurer
- claims for CI$1million (US$1,219,512) or more arising from
breach of a contract of insurance
- certain financial services regulatory laws
- certain applications under the Trust Law, and claims for
breaches of trust or fiduciary duty, where the trust is worth
CI$1million (US$1,219,512) or more
- the winding up of companies and other applications pursuant to
the Companies Law
- any application for the dissolution of a mutual fund formed as
- certain breach of contract or breach of duty proceedings by or
against a professional service provider
- applications for evidence pursuant to a letter of request
issued by a foreign court
- applications concerning local and international
- enforcement of a foreign judgment or arbitral award
Cases pending in the Grand Court (including matters which pre-date the Rules) may be transferred to the FSD on the basis that the case is a financial services proceeding as defined in the Rules that ought to have been commenced in the FSD, or if 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 may also invite the parties to apply to transfer existing cases to the FSD, and may make the transfer without reference to the parties in certain instances. The Chief Justice may review transfer decisions and their terms, and has the power to substitute or vary the decision of the Registrar.
What are the Costs Involved?
There are fixed fees of up to CI$5,000 (US$6,098) for commencing proceedings in the FSD. These fixed fees credit the parties with 3 days of court hearings in the case, for which a daily fee of CI$750 is otherwise payable.
It is noteworthy that parties issuing proceedings in the FSD are not required to pay ad valorem fees, which represents a significant saving of up to CI$15,000 (US$18,293) in applicable cases.
For existing cases being transferred into the FSD, court fees and any ad valorem fees already paid will be deducted from any fixed fee due. 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.
Appeals from the FSD
It is also worth noting that cases in the FSD will be affected by the Court of Appeal (Special Sittings) Rules 2009 which came into force on 1 January 2010. These Rules allow any party to any civil proceedings (which includes those in the FSD) to apply for a direction that allows a special sitting of the Court of Appeal. Presently, the Court of Appeal only sits in Cayman for three weeks, three times per year. However, the Court of Appeal will now be able to direct that it sits outside of these periods, if deemed appropriate, when requested. Such a direction will attract a fee of CI$20,000 (US$24,390).
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 Islands litigants can enjoy the same benefits. At the same time, it is not quite the same as the Commercial Courts that have been created elsewhere, being specifically tailored to Cayman Islands' 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.