Cayman’s judiciary grows with the times

Sidebar:Few Secrets in Cayman’s courts 

While those two factors have indeed played a large role in Cayman’s success story, another factor is often overlooked: the role of the Cayman Islands judicial system, where Cayman’s legislation is often put to the test and where its professionals settle the inevitable disputes.

When former Maples and Calder Partner Tim Ridley arrived in the Cayman Islands in late 1973, there were already signs the government knew the importance of the judiciary to the success of the financial services industry.

“When I arrived, the new courts building in George Town had been completed for a year or so before, so there was already an appreciation by the Cayman Islands Government of the need for the right physical infrastructure for the judiciary,” he said.

“The judiciary at the time was understandably small, with maybe one Grand Court judge and perhaps two magistrates.

Small as the judiciary was, Ridley said it was sufficient for the times.

“Financial services litigation was not large, but I do not recall any complaints about the speed and quality of the decisions,” he said. “The general feeling up to the late 80s was that financial services cases got heard and resolved more quickly and more cost effectively in Cayman than elsewhere.”

However, as the Cayman Islands financial services industry continued to grow, the requirements for the judiciary increased.

“The problem was that as Cayman developed as a major financial services centre, the size capacity of the judiciary did not always keep pace,” Ridley says. “The supporting infrastructure even more failed to keep pace, mainly because insufficient financial resources were made available by the Cayman Islands Government.”

Ridley remembers one major commercial litigation case in 1987 that took far too long because “there were no official court reporters and almost no management of the case by the courts office”.

“The judge took handwritten notes and the air conditioning in the small court room used often failed,” he recalls. “There was nothing wrong with the decisions reached by the judge, but there were major problems with the lack of supporting infrastructure.”

Despite the apparent need for more adequate infrastructure and increased staffing for the judiciary, the government took a Band-Aid approach through the 1990s and early 2000s, adding courtrooms – some makeshift and some better equipped – to handle the ever-increasing demands created by an ever-increasing amount of financial services business in Cayman. Courtrooms were added at the Kirk House across the street and more Grand Court judges were brought in. The Town Hall, the Tower Building, the courthouse library and even judges’ chambers were used as courtrooms when needed, but a long-term solution remained elusive.

With the constant prodding of Cayman Islands Chief Justice Anthony Smellie, the government went about acquiring land for a long-promised new Summary Court facility just outside central George Town.

In 2007, tender documents were sent out for the design and project management of the project and a contract was awarded later that year.

Around that same time, however, there was a looming global financial crisis.

In 2008, the government pulled the plug on the construction funding, leaving Smellie and the rest of the judiciary to wait again.

“I can’t tell you… when it’s going to start,” Smellie says, adding that there is some discussion about alternative proposals.

However, the disappointing delay didn’t stop Smellie from acting to meet other demands of the financial services industry, whose matters amount to between 60 and 70 per cent of all Cayman’s court work.

During the opening of Grand Court in 2009, Smellie announced plans to establish a Financial Services Division of Grand Court.

That court became a reality on 2 November 2009. Later that month, three judges – Sir Peter Cresswell, Angus Foster and Andrew Jones – were appointed to serve in the Financial Services Division. These new judges joined Smellie, Alexander Henderson and Charles Quin as Grand Court justices available to sit in Financial Services Division matters.

In September Smellie said there was an intake of about 200 new financial services cases in Grand Court per year, with an average disposal rate of 12 months.

“This is a highly competitive rate of disposal,” he said, adding that the objective of the FSD was to improve the disposal rate “while maintaining the high calibre of decisions for which our courts are known”.

The FSD worked in available courtrooms until August 2010, when renovations to the third floor of Kirk House were completed and Court 6 was established.

Court 6 is the home of the Court of Appeal when it’s here “but when they’re not here, which is forty-odd weeks of the year, is the base for the FSD,” said Smellie.

There were still some loose ends to tie up with the Financial Services Division – like the moving of its registry to Kirk House – and toward the end of 2010, everything was pretty much ironed out.

Smellie said there were immediate benefits seen from establishing the FSD.

“We’re doing a lot more cases a lot more quickly than we could before,” he said.

“The turnaround time that we used to be able to provide can now be provided for a much larger number of cases,” he said, adding that with some less complicated matters, cases could be heard almost immediately.

According to Clerk of the Courts Valdis Foldats, by September 2010 the FSD was handling about 20 additional cases per month.

In addition to disposing of cases more quickly, the FSD will also improve the performance of all Cayman’s judges.

“What we now want to do is allow all the judges more time so that we can all be more efficient in dealing with all the work of the court, but with an emphasis on the financial work because that is typically more urgent than the rest,” Smellie says. “A lot of money is involved, so time means a lot of money and we can’t maintain the competitiveness of our jurisdiction of the Cayman Islands if matters that need to resolve before the court can’t be done efficiently, cost effectively and of course competently.

“What the FSD is all about is being able to maintain that standard of delivery and efficiency.”

Smellie believes having three judges dedicated almost exclusively to doing work in the Financial Services Division, will also help.

“One of my primary concerns is to make sure that we don’t have to be constantly switching gears,” he said.

“We have to have time before we take on any of these cases to prepare for them, time to try them, and time to consider and deliver the judgment afterwards, and not be interrupted by having to switch gears.”

Smellie also noted that Grand Court cases are assigned not only on the basis of judges’ availability but also on the basis of specialised knowledge and experience, with special emphasis placed on the diversity of expertise available among the judges assigned to the FSD.

The Financial Services Division has been welcomed by professional and clients, both locally and internationally.

Walkers partner Colette Wilkins said the establishment of the FSD was extremely timely “given the significant increase that has been seen in complex, high value disputes heard in this jurisdiction”.

“Overall, the Financial Services Division has substantially improved the manner in which civil litigation is conducted in the Cayman Islands,” she said, noting improvements both in terms of case management and the time in which it takes for claims to be dealt with.

“One judge assigned to a matter we are dealing with has been extremely helpful and in our experience, the judges overall have been very responsive and available to deal with urgent matters when required.”

Ritch & Conollypartner Cherry Bridges, commented recently on the usual practice in the FSD of having a judge, once he is assigned a case, to remain with the case from beginning until the final judgement.

“There is a tremendous advantage in having an assigned judge at the commencement of a matter, as this results in the judge having a more individual and hands-on approach in resolving matters,” Bridges said.

Ridley said his impression was that the FSD was very well received.

“The changes help Cayman’s credibility as a financial centre by demonstrating the understanding that delivery of efficient, honest and timely litigation decisions is a key part of Cayman’s attractiveness to international financial business,” he said. “The Cayman platform is multifaceted and the judiciary and courts system are a critical part of that; it is on everyone’s checklist when analysing a major financial services centre.”

Wilkens agrees.

“With the creation of the Financial Services Division, the Cayman Islands has shown a clear commitment to servicing the needs of the financial services sector and demonstrates to our clients that the excellent global reputation of the Cayman Islands judicial system will continue to be maintained going forward,” she said.


The future
Although the FSD has already had a positive effect on the delivery of judicial services to the financial services industry, Smellie says there’s always room for improvement.

“At the moment we are developing… a practitioners’ guide specifically for the FSD, which will have the rules of court and practice directions, forms of pleadings and generally guidance,” he says, noting that when complete, the practice directions will be made freely available to practitioners and to the international client public.

“We have found out that often people will want to know how things will work in Cayman before they take a decision whether or not to, for instance, register a hedge fund here,” he said.

“Indeed, that’s the whole rationale for developing a specialised financial services court so that people from the outside will be able to appreciate that we are set up for business of that kind.”
Smellie said there are also plans to introduce new technologies that will save time and costs.

“We’re going to be having, through the website and through the computerised system that we have for the registry already, the ability to file cases and all this voluminous documentation electronically,” he said, noting that much of what is filed in the FSD comes from overseas.

“The supporting documentation, for instance, to show what a hedge fund is about, would be available where the hedge fund management takes place – mostly in New York, or London or the Middle East.

Smellie said that in one big case he heard recently there were more than 100 binders of hard copied papers.

“You can just imagine the cost of bringing all that stuff here, of photo copying it, and replicating copies for everybody involved in the case and managing and storing it,” he said. “So an important advancement will be to… file pleadings and documents electronically.”

In addition, Smellie said the ability to pay various fees online will also be introduced.

Eventually, Smellie wants to see the new courts facility built. However, when that happens, he envisions the FSD remaining in central George Town.

“For something like this the Financial Services Division, I think it could be easily justified in the interests of the country that we have a beautiful building somewhere just for these purposes,” he said. “But that’s an expensive proposition.”

Although Ridley sees the establishment of the Financial Services Division of the Court as welcome start, he says Cayman must not become complacent.

“Court administration, case management and supporting IT must continue to evolve,” he said, adding that what was needed was a holistic approach to the judicial system that included good laws and regulation that were kept under constant review.

“We must have a highly qualified and experienced judiciary to handle complex commercial litigation and the judiciary must be supported by a state-of-the-art courts system,” he said.

“All this requires a political commitment and understanding and a willingness to devote the financial and human resources to make it happen. We have some of the pieces, but perhaps not all of them right now.”