A new chapter in the history of the Cayman Islands judicial system
Because of its seat within a leading offshore financial centre, the Cayman Islands judiciary is often called upon to determine actions involving substantial assets, multi-faceted structures and complex legal issues.
Following the recent global financial crisis and resulting economic downturn, litigation of this nature has only increased. The judiciary is cognisant of the fact that, if Cayman is to remain a competitive offshore jurisdiction, the local courts must be able to deal with these actions as efficiently and promptly as possible.
With this in mind, work has now been ongoing for a number of years to reorganise the Grand Court, first established in 1877, into various new Divisional Courts. The newest division to be created is the Financial Services Division, which began operations in November 2009.
The mandate of the FSD, as prescribed by the Grand Court (Amendment) Rules 2009, is to manage all “financial services proceedings”. Proceedings which concern, for example, mutual funds, trusts, applications under the local Companies Law including winding up proceedings, and the enforcement of foreign judgments all fall within this definition.
Monetary entry thresholds apply to certain categories of cases; for example only trust proceedings in which the net asset value of the trust is greater than $1 million will be assigned to the FSD. Transitional provisions in the rules allow for the transfer of active financial services proceedings from the general civil division to the FSD if the circumstances justify such action.
The overriding objective of the FSD is to enable the Court to deal with every cause or matter in a “just, expeditious and economical way”, and a distinguishing feature of the new division is its focus on efficiency through a dedicated case management process with reference to the nature and location of the parties, and the peculiar facts and issues of the case.
The registrar of the FSD also plays an important role in ensuring that these objectives are met. Immediately on filing, the registrar allocates one of the FSD judges, with reference to their specialised knowledge and experience, to deal with each matter from start to finish.
This enables the assigned judge to become familiar with the subject matter of the proceedings, and to take a more hands-on approach to the management and resolution of the dispute. In practice, the judge may also be able to dispose of the matter in a more timely and cost-effective manner as the true strengths and weaknesses of the parties’ respective positions become apparent.
In total, there are six judges available to hear FSD new cases, including three new judges who were appointed immediately prior to the new Division opening its doors – former Acting Judge and local practitioner Angus Foster QC, Andrew Jones QC, also a former practitioner and previously a key member of the Grand Court Rules Committee, and Sir Peter Cresswell, a retired English Commercial Court Judge.
These Judges play a much greater role in the management of the FSD cases assigned to them, particularly as they have a general discretion to convene case management conferences as and when they see fit.
There is also much greater flexibility in terms of access to the allocated Judge, with the Judges able to hear interlocutory matters by telephone or video conference if they consider such a forum to be appropriate in the circumstances of a particular case.
Urgent applications can now be more readily listed and disposed of in short order. Between them, the Judges have already produced a number of leading judgments relating to important legal issues arising in the jurisdiction.
The process of appealing the decision of an FSD Judge is the same as that followed for cases determined in the general civil division. The Court of Appeal ordinarily sits in Cayman on three occasions annually, each for a three week period.
However, pursuant to the Court of Appeal (Special Sittings) Rules 2009, any party to proceedings in the FSD now has the right to apply in writing for a direction that allows a special sitting of the Court of Appeal outside of the usual periods to determine the party’s appeal.
This greater accessibility will undoubtedly ensure increased efficiency in terms of having important issues arising in financial services proceedings fully and finally resolved.
The modern approach taken in establishing the FSD also extends to the bricks and mortar of the local court house. Recent renovations of the Courts have been undertaken to enable the jurisdiction to be promoted as progressive and technologically advanced.
The FSD courts now boast a number of highlights; modern courtrooms and party conference rooms are on offer, as is new technology such as videoconferencing. The focus is now on establishing a computerised system that will enable pleadings and other voluminous documentation to be filed and accessed electronically, and facilitate the payment of court fees online. It is anticipated that all of these factors will ultimately combine to offer up one of the most sophisticated and technologically advanced court systems in the Caribbean.
For litigants submitting to the jurisdiction of the Grand Court, the establishment of the FSD has been a welcome modification to the court structure. Initially feared as being potentially burdensome to potential plaintiffs, the one-off fixed fee of CI$5,000 (US$6,098) charged to commence proceedings in the FSD has in fact revealed itself to be a long term money-saver for litigants who are no longer required to pay separate fees for the filing of other pleadings or evidence relating to the case.
On opening, the Court estimated that it would take on about 200 cases per year, with an average disposal rate of within twelve months. When asked, for the purposes of this article, whether the FSD was performing as anticipated, acting Chief Justice, the Justice Henderson said:
“I think it is fulfilling its mandate. Of course, it takes a while for such things to be implemented, and the first year was a time of transition, but it is now running well.”
It is clear that the FSD is now well-used; in 2010 the number of new proceedings filed was just short of 300 and, half way through 2011, it seems likely that a similar number of new proceedings will be filed this year.
Local practitioners are also encouraged by the now proven benefits offered by a dedicated commercial court. In practice, the parties and their legal representatives are also obliged to help the Court further the overriding objectives through cooperation and adherence to the Grand Court Rules.
To assist with the evolution of the Division and to ensure that the overriding objectives continue to be met, the judiciary, in consultation with an “FSD Users Committee” made up of local practitioners and representatives from professional associations, has so far issued practice directions and, most recently, a draft “FSD User’s Guide”, with a view to ensuring that litigants, practitioners, and the local judiciary all share the same knowledge and expectations as to the functions of the new division.
Almost two years since its commencement, the FSD has proven that it offers litigants a cost-effective and efficient dispute resolution forum and it is playing a key role in enabling the Cayman courts to provide competent, timely, and valued resolutions to both local issues and issues arising in this jurisdiction which also impact on cross-border litigation. Justice Henderson confirmed that “the FSD has significantly enhanced our ability to provide fast and effective resolution of disputed claims in the financial services industry”.
The success of the FSD to date has therefore vindicated the decision to divide the court, and continues to achieve the judiciary’s objectives of ensuring that its systems not only competitive but continually evolving in order to adapt to the modern legal landscape.