I Introduction to Dispute Resolution Framework
Jersey is a common law jurisdiction, whose legal system draws on both the common law of England and the ancient customary law of Normandy. In areas such as the law of torts, trusts and criminal law, the court draws heavily on English law (particularly where Jersey law closely mirrors English statute) whereas in cases involving disputes over land and contract law, it draws on Norman customary law principles, which have been adapted and developed to deal with modern day disputes.
The Royal Court is the principal court of Jersey and has the following divisions:
a Héritage (dealing with property issues);
c Probate; and
d Samedi (which deals with all other matters including criminal).
The nature of the dispute determines in which division the matter will be heard, but in general, large commercial disputes are heard in the Samedi division. The Bailiff is the President of the Royal Court who determines questions of law, whereas questions of fact are decided by a permanent panel of Jurats, who are a type of lay judge.2
In large commercial cases, the general rule is that all court proceedings are conducted in public, unless otherwise ordered by the court or on the application of one or other of the parties. If a party wants a hearing conducted in private, the court has to be satisfied that the need for confidentiality outweighs the public interest in access to open justice. In certain circumstances, judgments may be anonymised, as in matrimonial disputes or cases involving the welfare of children.
Appeals from decisions of the Royal Court are made to the Court of Appeal of Jersey, and from there to the Judicial Committee of the Privy Council. Any decisions of the Privy Council are final and binding on all the courts below. This is unusual as Jersey law does not recognise the concept of stare decisis in the same way as the courts in England and may depart from earlier decisions (although they will not do so unless the matter is plainly wrong). The Privy Council will generally only hear cases that involve a point of law or that are of general public importance.
In addition to the formal court processes, the Jersey Employment Tribunal has been established to hear disputes arising under the jurisdiction granted to them by the relevant legislation. It comprises a legally qualified chairperson who sits with two lay members with appropriate experience. It is possible to appeal a decision made by the Tribunal to the Royal Court, but on a point of law alone. There is no right to appeal any decision made by the Royal Court, and its decision is final.
II The Year in Review
i Representation of R in the matter of the S Trust
In this case, the Royal Court upheld and confirmed the pre-existing Jersey law position on voluntary dispositions by donors that are sought to be set aside on the grounds of mistake. The Royal Court clearly and firmly rejected the notion that it should adopt principles of English law as set out in the recent case of Pitt v. Holt,4 and instead preferred the approach developed in Re the A Trust and refined in Re the Lochmore Trust.5
The representor had been advised inter alia that gifts she wished to make into the Trust would have no adverse inheritance tax (IHT) consequences, and she was not advised of the risk for the principal beneficiaries, being US-resident – that the potential effect of US tax rules would be to impose a tax charge of up to 100 per cent of the value of the distribution. In fact, this advice was wrong, and an immediate charge to IHT arose in the sum of £1,943,689, including interest. That liability was met by the representor. In seeking to have the Trust set aside on the grounds of mistake, the representor's evidence was that, had she realised the true position, she would not have made the transfers into the Trust.
The Royal Court carried out a comprehensive analysis of the recent English decision of Pitt v. Holt (which had been roundly critical of earlier Jersey authority) and found itself troubled by the weight or preference apparently given to the interests of the English tax authorities. While in no way condoning tax evasion, the Royal Court made it clear that it was still open in Jersey for its citizens to enter into 'lawful and transparent arrangements' that will minimise the tax payable by them.
The Royal Court confirmed the original test for mistake in Jersey as set out initially in Re the A Trust6 and as defined in Re Lochmore:
a was there a mistake on the part of the donor/settlor?
b would the donor/settlor not have entered into the transaction 'but for' the mistake?
c was the mistake of so serious a character to render it unjust on the part of the donee to retain the property?
In light of the above test, the Royal Court confirmed that decision and stated that the transaction is voidable at the instance of the donor, rather than void. The donor may therefore elect to affirm the transaction, or seek to set it aside. When a donor makes a genuine and serious mistake then the gift can be reversed whether the mistake 'was as to the effect of the gift or merely as to its consequences, including any financial, usually tax, consequences'. The Royal Court was not convinced by the English position whereby the fact that the transaction gives rise to unforeseen fiscal liabilities is not sufficient to bring the mistake jurisdiction into play.
The test is now fundamentally different to that in England and it is clear that the Jersey courts will not follow English precedent where it is satisfied that the English court's decisions were either wrong or conflicted with existing Jersey authority. As the Royal Court stated, 'As this case shows, there may now be advantage in choosing one jurisdiction over another, where this is possible, to litigate a matter of this kind'.
ii In the Matter of the Valetta Trust 7
Until this extremely recent case, the legality and enforceability of funding agreements in Jersey had been untested. The case involved a Beddoe application that required the Court to consider the issue of champerty under the law of Jersey, and it was until very recently uncertain as to whether third party funding agreements in Jersey were unlawful on the grounds of champerty and maintenance. The Valetta Trust was a conventional discretionary trust and the only material asset of the Trust was a minority shareholding in a company that in turn owned certain rights to a product. The former trustee ('Lincoln') had sold the Trust's shares in the company to itself as trustee of another trust that also held shares in the company. The representors (the current trustees) contended that the sale was at a gross undervalue, which was known to Lincoln, and they wished to institute proceedings against Lincoln for breach of trust and against others who were said to have been knowingly involved in the sale at an undervalue.
The representors could not afford to bring proceedings as the Trust had no assets other than the claim against Lincoln. In the circumstances, the representors entered into a funding agreement with an entity known as the Harbour Litigation Investment Fund LP ('Harbour'), and under this agreement Harbour were to fund the litigation in return for a share of the proceeds. The trustee wished to become a party to that agreement and, upon the Court being alerted to the nature of the agreement in June 2011, the Court requested that counsel address the Court as to whether or not such an agreement was permissible under Jersey law, as the Court 'did not feel that it would be appropriate to authorise the new trustee to enter into an agreement which was unenforceable under the law of Jersey on the grounds of champerty'.
The Court noted that this was the first ever Jersey case on the law of champerty. It concluded that there was no material difference between the law of Jersey and the law of England in this area and thus carried out an analysis of English law. The Court concluded that English law in this area had shifted in recent years, and in particular that there had been a sea change in public policy in recent years. The main shift in public policy in England was to now recognise that it is desirable in order to facilitate access to justice that third parties should provide assistance designed to ensure that those who are involved in litigation have the benefit of legal representation.
The Court further carried out an analysis of Jersey customary law in this area. It concluded that an agreement that provides for a share of the proceeds of litigation may be held to be unenforceable on the grounds of champerty if it is contrary to public policy. The Court however concluded that the reasons for the sea change in the approach of the English courts as to the requirements of public policy are equally applicable in Jersey.
The Court concluded that the key test was whether the third party funding agreement in question had any tendency to corrupt or adversely affect the purity of justice. It held that in Jersey the importance of access to justice was, as in England, extremely important, and previous concerns about powerful people corrupting the process of justice by acquiring an interest in litigation have faded away because of the independence of the judiciary.
The only test was whether the relevant third party agreement had any tendency to corrupt the purity of justice. The power of each third party funding agreement is to be determined on its own facts to determine whether it was lawful. Key issues were whether the key contract regarding the proceedings remained with the plaintiffs and not with the third party funder, whether the plaintiffs would still retain a substantial portion of the damages if successful and whether the defendants would be protected in respect of all of their costs if the plaintiff's claim failed.
The Court, however, was at pains to emphasise that this judgment applies only to third party funding agreements. It noted that, while there has been a minor relaxation in England as a result of a statutory intervention (which did not apply in Jersey) so as to permit conditional fee arrangements, the requirement of public policy that officers of the court should be inhibited from putting themselves in a position where their own interests could conflict with their duties to the court remained in force in Jersey; in other words, contingent fee agreements between client and lawyer remain unlawful and unenforceable in this jurisdiction.
iii The Federal Republic of Brazil & Ors v. Durant International Corporation & Ors 8
This is a long-running action that is essentially a civil fraud claim by the Federal Republic of Brazil and the Municipality of São Paulo to funds of the order of US$10.5million (plus interest) held in bank accounts in Jersey in the name of the various defendants, Durant International Corporation and/or Kildare Finance Limited, and currently the subject of a freezing order granted by the Royal Court on 13 March 2009.
The funds are said to represent the traceable proceeds of bribes, secret commissions or otherwise fraudulent payments received by Paulo Maluf or his son Flavio Maluf, or by them both, in early 1998 in connection with a major public works contract in São Paulo for the construction of the Avenida Agua Espraiada, the main contractor for which was a company called Mendes Junior Engenharia S/A. Paulo Maluf is a well known figure in the political and business worlds in Brazil. Among other things, he is a former Governor of the State of São Paulo and a former mayor of the Municipality of São Paulo. Flavio Maluf is a businessman and (it is admitted) a director of Durant. Durant and Kildare are alleged by the plaintiffs to be owned or controlled by Paulo Maluf or Flavio Maluf, or by them both.
This particular application related to one of a number of contested interlocutory applications arising in relation to the forthcoming trial and, in particular, the plaintiffs sought leave for the oral evidence of two witnesses for the plaintiffs, Sergio Lima Santoro and Vivaldo Alves, to be given by video-link from Brazil. The defendants resisted the application on the arguable basis that:
a the Court had no jurisdiction to allow evidence to be given in this way;
b the application was no more than the repetition of a previously unsuccessful summons and is, accordingly, res judicata or otherwise no longer open to the plaintiffs to make;
c the evidence said to demonstrate the witnesses' unwillingness to appear in person was unconvincing or otherwise unsatisfactory;
d having to conduct cross-examination remotely by video-link would place the defendants (and the Court) at a considerable disadvantage and would operate to the serious prejudice of the defendants; and
e the application was too late and was incompatible with the plaintiffs' insistence, at an earlier stage, on the action being tried in Jersey rather than Brazil.
There was only one previous instance of such an application being made in civil proceedings, in contrast to criminal proceedings, where such applications are more common. The Court considered the applicability of Rule 6/20(2)(c) of the Royal Court Rules 2004(as amended) and concluded that the wording appeared to be wide enough to include a power equivalent to that provided in Order 38 Rule 3of the Supreme Court Practice 1999: 'However, the Court may ... (c) order that evidence of any particular fact to be specified shall be given at the hearing by statement on oath of information and belief or by production of documents or entries in books or by copies of entries or otherwise as the court may direct' (emphasis added). In coming to its conclusion, the Court stated that:
Quite apart from any provision of the Royal Court Rules, a more fundamental source of authority for the power to permit oral evidence via a video-link lies in my view in the Court's inherent jurisdiction to control its own process including the manner in which evidence is adduced: a jurisdiction which ought not to be treated as cut down by anything other than the clearest possible legislative enactment.
iv Re N 9
The law in Jersey in relation to a trustee's applications for directions is fairly well settled, but a recent case, Re N  JRC 135, has provided a rare but useful illustration of factors the court may take into account in denying trustees their costs even where the court has in fact blessed the trustee's decision. In this case, although the court indicated that, while it had found that the trustees' decision was within the bounds of rationality and therefore ought to be sanctioned, it was very troubled by 'the high-handed manner' in which the trustees had treated the disaffected beneficiary and his advisers in failing to keep him informed of their decision, and indeed in failing to provide a full explanation of the rationale underlying that decision, which departed from the original understanding as to how the trust was to be administered. Against that background, the court found that the trustees had acted unreasonably in their treatment of the beneficiary, and that that unreasonable conduct had a direct effect on the level of costs incurred in the application. There was therefore a causative link between the lack of consultation and notice between the trustees and the disaffected beneficiary and the level of costs incurred. On that basis, the court concluded that the trustees should be deprived of a material part (50 per cent) of their costs.
The decision in Re N, while not fundamentally affecting the law in this area, provided a rare and possibly unprecedented example of a trustee being disallowed its costs in circumstances where the momentous decision it had taken was in fact blessed by the court. It thus represents an additional factor that trustees should take into account in administering trusts, and more particularly in applying to the Royal Court for a blessing of important and momentous decisions.
III Court Procedure
i Overview of court procedure
There are no pre-action protocols such as those in England and Wales in relation to civil litigation. Civil litigation is governed generally by the Royal Court Rules 2004(as amended) and accompanying Practice Directions, which are available on the Jersey Law website10 and which are generally based on England's Supreme Court Practice pre-Woolf Reforms.
ii Procedures and time frames
Legal proceedings in the Royal Court can be commenced by summons, order of justice or representation. A summons is only used when suing for a liquidated sum, and generally most actions are initiated by order of justice, which sets out the plaintiff's claim and is signed by the locally qualified advocate or solicitor.
If proceedings are commenced by summons, service by post is permissible. However, an order of justice must be served personally on the defendant and will be via the Viscount.
Upon service of the order of justice, the defendant is served with a summons giving a date for appearance before the Royal Court. The matter is then 'tabled' by the plaintiff by 12pm on the Thursday before the date on the summons. Assuming the defendant wishes to defend the claim, then the matter may be placed on the Pending List evidencing an intention to defend, or adjourned sine die (to a date to be fixed). If the matter is placed on the Pending List, the defendant has 21days to serve its answer (and counterclaim if required). The plaintiff then has 21days to file its reply, should it wish to do so. If the defendant does not appear on the Friday afternoon then judgment can be taken in its absence. The matter then proceeds through the usual stages of discovery and so on until the matter settles or the parties are ready for trial.
There is little statutory framework for limitation periods and prescription periods in Jersey are, in most cases, based on case law rather than statute. The majority of commercial claims are based on tort and contract law. The prescription period for tort claims is three years from the date on which the cause of action accrued.11The prescription period for contract claims is regulated by Jersey customary law and is 10 years from accrual of the cause of action.
Numerous interim remedies are available on the application of either party before trial and include (among many others) interim injunctions, orders for the freezing of property and search orders. It is not possible, however, to ask for pre-action disclosure.12
If the defendant fails to file an answer, the plaintiff can apply for judgment in default. A party can also apply to strike out the other's case if the opposing pleading:
a discloses no reasonable cause of action or defence;
b is scandalous, frivolous or vexatious;
c may prejudice, embarrass or delay the fair trial of the action or any other proceedings; or
d is otherwise an abuse of court process.
It is also possible to apply for strike out on the grounds that two months have passed since the close of pleadings and no summons for directions has been issued and can also be struck out for want of prosecution.
iii Class actions
Representative proceedings may be brought where one individual wishes to represent a number of individuals with identical interests in the same proceedings13 and a plaintiff in proceedings can apply to the court for the court to appoint a defendant to represent other defendants.14 The judgment obtained will be binding on the people who are represented, but that judgment will only be enforceable with the leave of the court.15 In the exercise of its inherent jurisdiction, the Royal Court may stay an action in circumstances in which there are numerous similar cases and one of them may be used as a test case, which will effectively dispose most of the issues of liability in all the cases.16
iv Representation in proceedings
Only locally qualified Jersey advocates have rights of audience in the Royal Court, but any person who is not a minor or under an incapacity has the right to commence civil proceedings without professional representation and the court will adopt a fairly lenient approach to litigants appearing in person.
v Service out of the jurisdiction
Any civil or commercial matter summoning or citing a person outside Jersey to attend before a court in Jersey may be served in such manner as prescribed by Rules of Court.17 Under Rule 5of the Service of Process Rules 1994, leave must be sought from the court in order to serve out and such leave is governed by Rule 7 of the Service of Process (Jersey) Rules 1994. The case must fall within one of the specified circumstances of Rule 7 and, for example, may be allowed where the claim is founded on a tort and the damage was sustained, or resulted from an act committed, within the jurisdiction but the defendant resides outside Jersey. The summons must be in the appropriate format18 and accompanied by affidavit19 and stating the belief that the plaintiff has a good cause of action,20 showing the country in which the defendant can be found and detailing the grounds under Rule 7 upon which the application is made.
vi Enforcement of foreign judgments
The Judgments (Reciprocal Enforcement) (Jersey) Law 1960 provides for the registration and enforcement in Jersey of judgments given in the superior courts of countries that give reciprocal treatment to judgments given in Jersey.
The reciprocating countries and their superior courts are:
a England and Wales – House of Lords, Court of Appeal, High Court of Justice;
b Scotland – Court of Session, Sheriff Court;
c Northern Ireland – Supreme Court of Judicature;
d Isle of Man – Her Majesty's High Court of Justice (including the Staff of Government Division); and
e Guernsey – Royal Court, Court of Appeal.
However, the judgment of Jersey's Royal Court in Brunei Investment Agency and Bandone v. Fidelis and ors21 has significantly extended its inherent jurisdiction to enforce foreign judgments in Jersey. The court acknowledged that the Law was limited in application to the above territories and the court was therefore concerned with its inherent jurisdiction to enforce foreign judgments. The court noted that in the area of private international law, regard would be given to the English common law position. Dicey, Morris and Collins' The Conflict of Laws is the principle authority on this area, in particular Rule 35(1).22 However, the court departed from this rule having looked at other Commonwealth decisions in this area, but importantly the court made it clear that this jurisdiction would not be confined to being exercised in the context of Article 51of the Trusts (Jersey) Law 1984.
These arrangements do not apply to matrimonial cases, the administration of the estates of deceased persons, bankruptcy, winding up of companies, mental health or guardianship.
The judgment creditor must apply to the Royal Court (ex parte to the Judicial Greffier23) within six years of the date of the judgment itself or, where the judgment has been appealed, the date of the last judgment in the appeal proceedings, and must be supported by an affidavit exhibiting a certified copy of the foreign judgment. A foreign judgment will not be registered if the debt has been wholly satisfied at the date of application or could not be enforced in the foreign country itself. To be registered, the judgment must be for a money sum and must be final and conclusive between the parties.
Once registered, a written notice of registration must be served on the judgment debtor, who has usually 14 or 28 days, subject to any extensions, in which to apply to set aside the registration. A registered judgment cannot be enforced until that time period has expired or any application to set aside the registration has been disposed of, but it can then be enforced in the same way as a judgment given in Jersey.
In relation to foreign judgments to which the 1960 Law does not apply, the foreign judgment creditor must sue in Jersey on the foreign judgment.
vii Assistance to foreign courts
The Service of Process and Taking of Evidence (Jersey) Law 1960 was amended in 1985to enable Jersey to fulfil its international obligations under the Hague Convention, the purpose of which is to improve international judicial cooperation in civil and commercial matters. Where the relevant criteria are met, the requesting court may apply to the Royal Court for assistance in obtaining evidence. The Royal Court has power to make provision for the obtaining of such evidence in Jersey as appears to it to be appropriate in the circumstances.
The Law Officer's Department24 ('the Department') is the central authority for requests for mutual legal assistance, including requests made under the various Hague Conventions, such as the service of documents in civil and matrimonial cases. The letter of request should be remitted with the sealed, original order of the requesting court to the Attorney General on behalf of the Royal Court and the Department will then arrange for service to be effected and a certificate of service returned to the requesting party.
The Attorney General has further powers under local legislation to assist overseas authorities in a number of ways including, inter alia, the obtaining of documentary and oral evidence for use in civil asset recovery investigations and proceedings, as well as freezing and confiscating assets subject to external civil asset recovery proceedings and rendition of suspects.25
The request or its accompanying instructions may take such form as the requesting court deems expedient.
Nevertheless, an order made under the 1960 Law cannot require any steps to be taken that may not be taken in the context of ordinary civil proceedings before the Royal Court (see Continental v. Deery 26).
viii Access to court files
Members of the public are able to access pleadings held by the court save for those that relate to matters that have been held in camera. If a request for copies of pleadings in an action commenced by way of order of justice is to be acted on, it must be in writing and must state the reasons why they are required.27 On receipt of such a request, the court will release the pleadings provided that the reasons given are non-contentious, and they will only be released where answers have been filed by all the parties to the action.
In the case of actions commenced by way of representation, no copy pleadings may be released until the matter has been concluded, then they may be released subject to the conditions mentioned previously.
ix Litigation funding
Fee arrangements are generally set between the advocate and his or her client, generally with time-based charging. Conditional or contingency fees are prohibited by the Jersey Law Society Code of Conduct. A Legal Aid scheme28 is available to individuals satisfying the appropriate means test, but is different to the structure in England and Wales. In Jersey, depending on an individual's earnings, a person is charged a percentage of a fixed hourly rate that is set by the court.29 Those who fall below the threshold are exempt from any fees.30
A company or an individual not in receipt of Legal Aid generally funds its own litigation, although funding can be provided by insurers, but this depends on whether the client's policy covers the relevant claim and whether there is a cap on legal fees payable. There is no after the event insurance cover. In re Valetta Trust31 has clarified the position in Jersey to confirm that in certain cases third party funding arrangements may be upheld as valid, although whether a particular agreement is valid and enforceable as opposed to an abuse of process will be dependent on the circumstances of each case. The Court in this case also confirmed that contingent fee agreements between client and lawyer remain prohibited in this jurisdiction because, in Jersey, no statutory relaxation of this principle has been introduced (unlike in England and Wales).
IV LEGAL PRACTICE
i Conflict of interest and Chinese walls
Conflict of interest is governed by the rules contained in the Jersey Law Society Code of Conduct. Generally, lawyers must refrain from acting in circumstances where there is a real or serious risk that a conflict exists between the interests of two or more different clients in either the same matter or a related matter or where there is a conflict between the lawyer's interests and those of his or her client.
There are circumstances where a lawyer may be permitted to act for more than one client, despite a potential or actual conflict between the client's interests, as may be the case with non-contentious commercial matters. In such cases, a lawyer must obtain written consent of all clients who are party to such a transaction.
Where an actual or potential conflict of interest exists, an existing or former client can apply to the court for an order that the lawyer cease to act.32
Lawyers have a duty to protect all confidential information regarding their clients' affairs, which can preclude lawyers from representing a potential client if:
a they hold confidential information regarding a client (or former client) that may reasonably be expected to be material to the potential client; or
b the work to be undertaken for the potential client would be adverse to the interests of a client (or former client) to whom there is an existing duty of confidence as might occur if a client is likely to become a party to a negotiation or dispute resolution process arising out of the new matter.
Although a conflict of interest may exist, a firm may be able to act by implementing a Chinese wall. A Chinese wall refers to a firm's internal arrangement intended to ensure members of the firm acting for one client are prevented from accessing confidential information belonging to another client.
While Jersey does not have any legislation, rules or authority to provide a procedural framework on how to deal with Chinese walls, it will take guidance from the rules as laid out in the English solicitors' Code of Conduct.
Generally, a firm must obtain written consent from both clients to proceed in such circumstances. However, a situation may arise where a firm is already acting for a client on a matter, when it discovers it holds confidential information belonging to an existing or former client. If this occurs, it may be possible to create a Chinese wall and continue to act without the consent of the client to whom the existing duty of confidentiality is owed, if it is not possible for that consent to be obtained. The new client must still consent to the firm acting on the circumstances where it is prevented from disclosing all relevant information, and it must be reasonable in all the circumstances.
To establish an adequate Chinese wall, all members of the firm who possess the relevant confidential information must be identified. These members will be precluded from having any involvement in the new matter or disclosing any confidential information to other members of the firm. Access to electronic as well as physical documents will be restricted to those identified members.
ii Money laundering, proceeds of crime and funds related to terrorism
As the location of a well-regulated international finance industry, Jersey has a collection of legislation to deal with money laundering and terrorism. Drug Trafficking Offences (Jersey) Law 1988, the Proceeds of Crime (Jersey) Law 1999, and Terrorism (Jersey) Law 2002, and more extensive requirements to prevent and detect money laundering and terrorist financing, are set through the Money Laundering (Jersey) Order 2008 ('the Order').
From 1May 2008, law firms became subject to these laws, and together with other finance businesses, now have a greater responsibility for detecting and preventing financial crime; all regulated firms must disclose to law enforcement authorities any knowledge or suspicion of money-laundering activities.
Each firm must put in place a procedure to identify and verify any client's identity. It will look at the type of client (i.e., individual or company), the nature of its instructions (whether or not it deals with financial services business) and, if they are a financial services business, the level of risk of money laundering the business poses. If any member of a firm has any knowledge or suspicion regarding a client's activities it must report them. Failure to do so is a criminal offence and carries a maximum penalty of five years' imprisonment.
V DOCUMENTS AND THE PROTECTION OF PRIVILEGE
Privilege in Jersey is governed by the common law. The recognised categories of privilege that may be claimed by a party in respect of its documents or communications are:
a Legal advice privilege – legal advice privilege protects confidential communication between a lawyer and client made for the dominant purpose of receiving or giving advice in the relevant legal context.
b Litigation privilege – litigation privilege only arises when litigation is in existence or contemplation. In those circumstances, any communication between a lawyer and client, or a lawyer or his or her client and a third party, is privileged if made for the dominant purpose of obtaining or giving legal advice or collecting evidence or information in relation to the litigation. Litigation privilege is wider than legal advice privilege as it may cover communications with third parties.33
c Privilege against self-incrimination – documents that incriminate or expose a person to criminal proceedings in Jersey or to proceedings for the recovery of a penalty in Jersey are generally protected by privilege. It is sufficient if the document has a tendency to incriminate or so expose the person, provided the risk is apparent to the court.
d Common interest privilege – common interest privilege arises where comm-unications are made between parties who share a common interest in the legal advice. This will arise where parties share the same interest in litigation (or potential litigation), or in a commercial transaction to which the legal advice relates. In such cases, communications of privileged information between the parties will be privileged, even if neither legal advice privilege nor litigation privilege applies.
e Public interest immunity – this immunity applies where production of the document would be so injurious to the public interest that it ought to be withheld. Jersey follows the law of England in this matter.34
f Without-prejudice communications – any communications made in good faith to attempt to settle proceedings are covered by the without-prejudice privilege.
Communications between a company and its qualified in-house lawyers are capable of being privileged, to the extent that the communications concerns the lawyer in his or her legal capacity, rather than some other managerial role.
Communications with qualified lawyers in other jurisdictions may also be privileged in the Jersey courts where they comply with the usual rules of privilege.
Privilege is a substantive right that entitles its holder to refuse to produce any privileged document for inspection. As a substantive right, it can be relied on in all contexts, including in regulatory investigations.
ii Production of documents
Rule 6/17 of the Royal Court Rule 2004provides that civil litigants must give discovery of documents that are or have been in their possession, custody or power relating to matters in issue, whatever the capacity in which the documents came into the party's possession.
The test of relevance is whether the document relates to matters in dispute in the action. This means any document that it is reasonable to suppose contains information that may enable either party to advance its own case or to damage the case of the opponent. The test is whether the document could reasonably be expected to lead to a line of enquiry that would be of assistance to a party in relation to the matters in dispute.
Parties are obliged to disclose all relevant documents that are or have been in their possession (i.e., they hold the document), custody (i.e., it is not their document but they can get hold of it, such as a bank holding documents of a third party) or power (i.e., where a party is holding a document in a bank safe). The fact that a document may be situated outside the jurisdiction is therefore irrelevant.
The meaning of 'documents' in this context is broadly construed. In addition to documents and correspondence, it covers other written materials such as e-mails, handwritten notes, diaries, meeting notes and the like. It will also extend to plans, drawings, photos and videos. Information and documents that are stored electronically on the memory of computers, or other back-up storage media such as discs or tapes, may also be discoverable in proceedings.
There is no authority in Jersey dealing with the position of electronically stored documents; however, it is likely the courts would find the approach adopted by the English courts in dealing with such matters as highly persuasive.
VI ALTERNATIVES TO LITIGATION
i Overview of alternatives to litigation
Alternate dispute resolution is defined at Rule 6/28 of the Royal Court Rules 2004as 'any method of resolving disputes otherwise than through the normal trial process and, without prejudice to the generality of the foregoing, includes mediation and conciliation.' The advantages of ADR– the fact it is usually conducted in private, the parties can agree that the outcome remains confidential and it is often a faster and more cost-effective resolution to a dispute than litigating through the courts – have contributed to it becoming increasingly employed in Jersey.
The Arbitration (Jersey) Law 1998 ('the Law') makes general provision for arbitration in the Island and gives effect to international conventions on the recognition and enforcement of foreign arbitration awards. While the Law itself was approved by the States of Jersey in September 1997 and sanctioned by the Queen in Council in October 1998, it was not immediately brought into force. This was because the British Home Office was concerned that certain provisions in the Law appeared to contravene the Treaty of Rome, in that domestic and non-domestic arbitration agreements were treated differently. Accordingly, the Arbitration Law was only sanctioned on condition that the relevant articles of the Law were amended to conform to European Union Law, prior to the Law coming into force. The Arbitration (Amendment) (Jersey) Law 1999 ('the Amendment') was therefore passed to deal with these anomalies, and like the substantive Law, the Amendment also came into force on 1March 2000.
The Law is based largely on the English Arbitration Acts 1950 to 1982, although in England these have been repealed and replaced by the Arbitration Act 1996. As the Jersey statute had been substantially drafted prior to the legislative changes in England, it was finalised and approved, notwithstanding the introduction of the new Act in England. However, the changes in England were brought in to promote England as a centre for international arbitration; this capacity was not thought to be necessarily appropriate for Jersey.
Part 2of the Law deals with arbitration within the Island and it contains a number of provisions relating to the actual procedure that will be implied in arbitration agreements, unless the parties have expressly agreed otherwise; for example, how proceedings are conducted, specifying the number of arbitrators and provides for umpires, majority decisions, the power to call witnesses, delays, enforcement of awards, costs and interest.
The Law gives the court various powers exercisable at the request of one of the parties to the arbitration: for example, to stay court proceedings pending arbitration, to remove and replace arbitrators, to refer points of law to the court for determination, to grant extensions of time and to tax costs. It also sets out rules of general application to arbitrations, such as the effect of the death or bankruptcy of a party to the arbitrations, and it limits the right of the court to review an arbitration award, to mistakes of fact or law, and limits further rights of appeal to special cases.
Part 3of the Law contains provisions relating to the recognition and enforcement of arbitration awards to which the League of Nations Protocol of 1923or the Geneva Convention of 1927 applies. The Law contains both the enabling provisions and the full text of the 1923Protocol and the 1927 Geneva Convention (in Schedules 1and 2).
Part 4of the Law gives effect to the New York Convention on foreign arbitration awards, which was adopted by the United Nations Conference on International Commercial Arbitration in June 1958 but was not previously applicable in the Island. The full text of the Convention is set out in Schedule 3to the 1998 Law.
The Amendment removed the distinction in the substantive Law between domestic and non-domestic arbitration agreements. Now the court is obliged to stay legal proceedings pending arbitration for both domestic and foreign arbitration agreements. In addition, an exclusion agreement (one which restricts recourse to the Royal Court on a matter of law or for judicial review) has effect in a domestic or foreign arbitration.
Similarly, the powers of the Royal Court to grant relief in cases of fraud can also be limited by an exclusion agreement in both a domestic and foreign arbitration.
There are no rules governing mediation in Jersey. Parties are free to agree between themselves on all aspects of the mediation process.
Mediation in Jersey is a voluntary, informal and confidential process in which parties' discussions and negotiations are assisted by an experienced mediator (usually a lawyer). Procedure at mediation is as agreed between the parties, but is usually guided on the day by the mediator. Discussions are without prejudice, giving the parties freedom to explore potential settlement options before incurring (or continuing to incur) significant litigation expenses. In certain disputes, the parties sometimes submit to expert determination, and are bound by the experts' decision.
A significant development in the mediation culture in Jersey has been the introduction of rules both in the Royal Court and the Petty Debts Court, under which the procedures of both courts permit proceedings to be stayed to allow an attempt at mediation. The courts cannot compel mediation, but a strong recommendation can persuade the parties to participate. Refusal to participate can persuade the court to exercise its discretion on costs.
Mediation is becoming increasingly popular in the Island for disputes of all sizes. Aside from the changes in the court rules to encourage it, there are many obvious advantages as were emphasised by the Bailiff in Jersey in his 2004speech for the launch of the new mediation rules:
Mediation can often leave the parties in a better position than litigation. First, if a dispute can be mediated at a relatively early stage, there can be a significant saving in cost to the parties. Secondly, a dispute settled confrontationally through the courts will often have a bruising effect upon the parties. There is always a loser, and sometimes there is no real winner. A mediated settlement, while not necessarily leading to total satisfaction on both sides, can enable the parties better to understand the other's point of view and occasionally to offer or to accept an apology. Particularly in a small community, where trading and even personal relationships between the litigating parties may continue, the ability to settle a disagreement in private without creating lasting wounds is, arguably, an important positive factor in favour of mediation.
iv Other forms of alternative dispute resolution
In Jersey, the most common forms of alternate dispute resolution are mediation and arbitration. However, there are a range of other processes available (for example, round table meetings or private negotiations) that are less structured than a formal mediation and are simply without-prejudice discussions between parties to try and resolve matters without recourse to the courts or a formal mediator.
VII Outlook and conclusions
The draft Trusts (Amendment 5) (Jersey) Law 201- was debated and adopted by the States of Jersey on 2November 2011and enhances the Trusts (Jersey) Law 1984in a number of important aspects. For example, two definitions are inserted into the Law through an amendment to Article 1. A definition of 'Professional Trustee' is added, as well as a definition of 'purpose'. The latter is of particular significance, as it clarifies that ownership of assets constitutes a sufficient purpose for a non-charitable purpose trust. Article 26 is revised to provide that where a trust instrument is silent on the matter, a professional trustee is entitled to reasonable remuneration. This alters the current situation where, unless payment is authorised by the terms of the trust, a trustee is not entitled to be paid for his or her services. This will hopefully reduce costs, as there will now be no need for the trustees to apply to the Court to amend the trust instrument depleting the value of the assets of the trust. Further, under Article 57 (regarding limitation of actions), a 21-year longstop is introduced that will allow trustees to draw a line in relation to historic events. No date is set yet for this law to receive Privy Council assent.
Fraser Robertson is a partner and head of litigation and insolvency and Davida Blackmore is an advocate at Appleby.
2. Jurats are generally persons of high standing within the local community and need not be legally qualified. There are 12Jurats. Their Inferior Number comprises a judge plus two Jurats, and the Superior Number (convened for serious matters where custodial sentences are likely to exceed four years) comprises a judge plus at least five Jurats.
3. See www.jerseyemploymenttribunal.org .
4.  EWCA Civ 197.
5.  JRC 068. Advocate Fraser Robertson successfully appeared for the settlor in this case.
6.  JLR447.
7.  JRC 227.
8.  JRC 237.
9.  JRC 135. Fraser Robertson appeared on behalf of the disaffected beneficiary and successfully resisted the trustee's application for costs.
10 See www.jerseylaw.je .
11 Law Reform (Miscellaneous Provisions) (Jersey) Law 1960.
12 See New Media Holding Company LLC v. Capita Fiduciary Group Limited  JRC 117.
13 Rule 4/3(1) of the Royal Court Rules 2004.
14 Rule 4/3(2); ibid.
15 Rule 4/3(3); ibid.
16 Labia v. Jefferson Seal Ltd  JLRn3.
17 Article 2, Service of Process and the Taking of Evidence (Jersey) Law 1960.
18 Form 2A or 2B, Schedule, Service of Process Rules 1994.
19 Form 3, ibid.
20 See also the case of Koonmen v. Bender  JLR407, citing American Cyanamid v. Ethicon re where is there is a serious issue to be tried.
21  JRC 152. In this case, proceedings were brought in Jersey by the Brunei Investment Agency to enforce aspects of an order made by the Bruneian courts against Prince Jefri Bolkiah, the youngest brother of the Sultan of Brunei.
22 Which provides that foreign judgments may be enforced if for a debt or definite sum of money; and the judgment is final and conclusive.
23 The Judicial Greffier's office is similar to that of the Master in the English High Court.
24 The office of the Attorney General.
25 See the Attorney General's Guidelines on International Mutual Legal Assistance, www.gov.je/government/nonexeclegal/lawofficers/pages/internationalassistance.aspx.
26  JRC 001. The court should, where possible, give assistance under letters of request duly received: 'It should decline to comply with the foreign request only in so far as it is not proper or permissible or practicable under its own law to give effect to it. Observing faithfully the precept of not delivering what the foreign court has not asked for, and restraining any temptation to rewrite the request, the court may amend letters of request by excision, or by adding or substituting words in order to clarify what is being sought without altering the substance of the Letters of Request'.
27 See the Royal Court circular dated 22April 2003.
28 An advocate of less than 15years' standing must comply with legitimate instructions of the Bâtonnier to represent legally aided clients – by oath of office, the advocate has a duty to represent the veuves, pauvres, orphelins et indéfendues.
29 Practice Direction RC 11/01Factor 'A' rates per hour
30 See guidance on the Legal Aid website www.legalaid.je.
31  JRC 227.
32 See Abacus (CI) Limited v. Bisson  JRC 150.
33 Parties should bear in mind the recent case of Café de Lecq v. Rossborough  JRC 067, in which the court reviewed the law on litigation privilege and considered for the first time in Jersey the circumstances in which a party that has disclosed a document during discovery by mistake is entitled to an injunction requiring its return. The court was satisfied that it was discovered by mistake and that the defendant did not intend to waive privilege. However, although the court accepted the evidence of the lawyers acting for the plaintiff in that they did not realise that the document was privileged (the issue was whether it would have been obvious to a reasonable lawyer), the court held that this was not a mistake that should have been obvious to the lawyers who reviewed the documents, and this was not a case where it would be appropriate to grant an injunction.
34 Deeny v. States of Jersey Health & Social Services UJ 7 April 2003.
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