No distractions

By amendment to the Grand Court Rules 1995, the Financial Services Division (FSD), one of five new divisions of Cayman's Grand Court, commenced operation on 1 November 2009. Absent was any of the pomp or ceremony which might have accompanied the launch of a new 'institution' for which there was so much anticipation '“ quite unlike that which deservedly accompanied the launch of the new Cayman Islands Constitution five days later.

Perhaps the absence of fanfare was because of the commencement date falling on a Sunday. More likely, it may have been due to the FSD having arrived ahead of its outward manifestations '“ the physical accommodations for its staff and the announcement of the new commercial judges lagging just a bit behind. Or perhaps this was another piece of deft judicial administration by Chief Justice Anthony Smellie and the Rules Committee which, armed with the best intentions, is not always masters of all the processes, and resources, for seeing them realised. After all, this is not a new or separate court, but a division of the Grand Court with all judges of the court capable of being designated 'commercial judges' to meet the requirements of the new rules until, at least, the expected announcement of up to three commercial judges to staff the FSD.

Features of the FSD

All matters defined as 'financial services proceedings' are required to be commenced in or, if already pending, transferred to the FSD. These include all proceedings relating to Cayman-registered investment funds and exempted insurers, proceedings under the Companies Law (including winding up proceedings) most major trust proceedings, proceedings for letters of request, local and foreign bankruptcy proceedings, and proceedings for the enforcement of foreign judgments and arbitral awards. It is no coinci- dence that the list mirrors very closely the list of the most important services provided by Cayman's financial services industry.

Each case will be assigned to one of the commercial judges, who will be responsible for adjudicating all interlocutory applications in the case and for conducting the trial. There will also be proactive judicial case management, with the registrar required to schedule a case management conference within three months of the commencement or transfer of the proceeding.

So what's new?

The FSD is expected to provide for the financial services sector a practical, cost-effective and efficient dispute resolution forum. Yet, it might be argued, thanks to a judiciary acutely aware of the role it plays in maintaining

Cayman's international reputation as a financial centre, and legal practitioners who, actuated by enlightened self-interest, tend more to be cooperative than obstructive, such a regime already existed in the Cayman Islands.

Belying the small size of the permanent Bench (four judges, sometimes augmented by temporary acting judges) somehow it appears that urgent and important applications in large commercial matters, especially those with cross-border elements, were almost always accommodated. Case management by the judges, many times at the prompting of one of the parties, has been fairly commonplace. Top commercial silks, mainly from London, who are often instructed to argue the more complex cases, are openly welcomed by both Bench and Bar as an important element in the development of the jurisprudence '“ a glowing testament to the benefits of free trade.

The legislative underpinning for these practices, if it is necessary to cite one, was the earlier introduction, by way of the preamble to the Grand Court Rules, of the same overriding objective as exists within the Woolf reforms. The provision appears to have engendered in commercial litigation practitioners a culture where no one wants to be seen as uncooperative and obstructive, which is perhaps why it has not been felt necessary to introduce with the FSD a detailed code of practices and procedures.

That culture notwithstanding, there are still very good reasons for the enthusiasm which has met the introduction of the FSD. Not the least important is the planned increase in the number of regularly sitting judges by up to 75 per cent. Just over a year after the Lehman Brothers collapse, Cayman's court system was beginning to show some stress from the large number of major international disputes, most involving hedge funds, which have been brought before it for adjudication. The wait time for hearings was becoming noticeably longer. There was developing justifiable concern that these delays, if they persist, will ultimately influence decisions as to the domicile of choice for hedge funds, captive insurers or trusts. The FSD is therefore expected to provide a timely injection of well-needed additional judicial resources.

The system of proactive, dedicated case management is now a specific requirement of the rules and is no longer dependent on one or another highly motivated party. Aided it is hoped by judges who are highly experienced in and alert to international commercial realities, it is expected that the perception of the Cayman Islands as a forum for international commercial dispute resolution will be even more enhanced.

Further, even though there has been little generalised concern about the quality of Cayman jurisprudence, which is highly regarded in many quarters, there is clearly some advantage in having complex commercial cases being determined by dedicated specialists who have had the advantage of managing the case from commencement to trial and, hopefully, without the burdens and distractions of the general non-commercial lists.