CDR (Commercial Dispute Resolution) - Q3 2010 - Issue 1


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Issue 1 of CDR (Commercial Dispute Resolution), a unique magazine for litigation and arbitration professionals.

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CDR (Commercial Dispute Resolution) - Q3 2010 - Issue 1

  1. 1. Q3 2010 Issue 1 T o arms! Akzo Nobel and the battle for privilege GOODBYE INVEST IN TOUGH SOCIAL CAUTION UNREST ACT SCIENCE Has Jackson Third-party The Bribery Bill Get the best out of introduced risk-free litigation funders puts the FCPA in Twitter and litigation? p10 eye up Europe p14 the shade p16 LinkedIn p26 REGION FOCUS Spain & Portugal p38
  2. 2. Akin Gump Launches in Geneva We are a global law firm that emphasizes cross-border, cross-practice collaboration across 14 offices and over 85 practices. Our Geneva office is the headquarters of our global international arbitration practice, anchors our international tax planning and restructuring practice on the European continent and serves as a platform for our international trade practice. Our office also offers services in Swiss transactional, financial, regulatory and litigation matters, as well as access to the knowledge and experience of over 800 Akin Gump attorneys worldwide. 3, rue François Bellot, 1206 Geneva
  3. 3. Editorial When is a Editor: lawyer not a Ben Lewis Contributors: Chiara Albanese lawyer? Elizabeth Bailey Nick Benwell Greg Bousfield The impact of advocate-general Kokott’s opinion on the Commission’s dispute Philip Clifford with Akzo Nobel - that in-house lawyers are not entitled to protection under legal Alan Cox privilege - will be limited. After all, most corporate counsel avoid writing down Sarah Garvey anything that could come back to bite them. Joanna Goodman But that’s hardly the point. The esteemed AG has delivered a deft slap in the Alex Hamilton face for a profession whose members often struggle for recognition in their own Anastasia Hancock companies, as legal diligence often finds itself at loggerheads with quick business. Gregory Leonard At a time when companies depend on their in-house teams more than ever, we Irina Maisak can ill afford to undermine them for the sake of scoring points in litigation. Julian Matteucci In the first printed quarterly edition of CDR, we hear from an Osborne Clarke Douglas Peden lawyer who calls the opinion an “insult” (page 32). We also speak to in-house Ben Rigby lawyers and those at the forefront of the case, including those representing the Alexander Vaneev Association of Corporate Counsel and Dutch competition lawyers (page 28). Also in this edition we take a detailed look at the state of dispute resolution in Production: Spain and Portugal (page 38). With Iberian courts buckling under a mountain of Jodie Mablin insolvencies, will judicial reforms and an arbitration revolution be enough to relieve the pressure? Perhaps the key is technology: as Portugal has found, an Advertising & sales: efficient computer system can make all the difference. Mathew Hance Speaking of technology, we investigate the social networking phenomenon and give five ways lawyers can use websites such as Twitter and LinkedIn to boost Managing editor: their business (page 26). CDR interviewed the European managing director of Alan Falach LinkedIn for his insights. Other highlights include the implications of Jackson LJ’s civil costs review both Publisher: for commercial disputes (page 10) and e-discovery (page 24); and a comparison of Richard Firth Asia’s arbitration rivals in China, Hong Kong, India and Singapore (page 20). Finally, we have a host of regular features, including all the latest partner Cover image: moves, expert briefings, legal events and jobs. Don Troiani But it doesn’t stop there: don’t forget to keep checking back on our website ( for all the latest articles, and to sign up for our free weekly newsletter. Published by: We hope you’ll become a loyal reader and we welcome your ideas and feedback. Global Legal Group Ltd 59 Tanner Street London SE1 3PL, UK Tel: +44 20 7367 0720 Ben Lewis, Editor Fax: +44 20 7407 5255 +44 20 7367 0728 CDR (Commercial Dispute Resolution) Printed by The Magazine Printing Company Plc, June 2010 Copyright © 2010 Global Legal Group Ltd All rights reserved No photocopying This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken ISSN: 2044-5121 from a qualified professional when dealing with specific situations. 1
  4. 4. The CEDR Certificate in Advanced Negotiation Enhancing expertise, ensuring impact Programme Outline ... This course ensures guided learning, greater reflection and re-examination of real world negotiations. This is a unique opportunity to explore the best theory and principles of negotiation integrated with key skills developed MODULE 1: Essential skills for the negotiator’s toolkit from CEDR’s practical experience of working with 15,000 Days 1 and 2 - build a core knowledge base, practice complex ‘deadlocked’ negotiations. We have identified a and receive feedback on a range of approaches, skills pressing need for a comprehensive programme that ensures and strategies. you reach your full potential as a negotiator to deliver results for you, your clients and your organisation. MODULE 2: Dealing with the human factor Days 3 and 4 - learn how individual communication The structured programme enables delegates to develop styles, personality types, approaches to conflict, emo- insights into critical areas of negotiation practice and theory, tions and persuasion impact the negotiation process. exercise some of the key skills, reflect on concepts in the real world of corporate and professional life, and to work MODULE 3: The bigger picture alongside an expert faculty of negotiation and conflict - adding layers of complexity management professionals. The course is structured on a Days 5, 6 and 7 - learn why effective negotiation is modular format across seven days over a period of several not just about what happens across the negotiating months, to allow time for reflection and practice between table but also about longer term relationships. teaching elements. Who should attend? Those explicitly involved in complex negotiations (deal Dates, venue and cost makers, dispute professionals, procurement managers, HR Autumn 2010 specialists) and those for whom negotiation is a simple reality Module 1: Thursday 9 and Friday 10 September 2010 of daily life (executives with a leadership role in a unit, Module 2: Thursday 11 and Friday 12 November 2010 department or business, senior civil servants or others who Module 3: Thursday 20, Friday 21 have to satisfy a range of stakeholder groups). Bar Council and Saturday 22 January 2011 and Law Society CPD points available. The course will be run on a residential basis at the 4-star Our approach Selsdon Park Hotel, located on Addington Road, Sanderstead, Highly interactive, involving extensive participation through Surrey CR2 8YA. demonstrations, role-plays, feedback and coaching, every module includes ‘negotiation clinics’ at which participants The cost of the course is £4,750 + VAT (£5,463 inclusive) bring problems and experience from their own practise. For more information or to book your place, visit: Faculty The Course Director, Dr Karl Mackie, is an internationally renowned mediator and Chief Executive of CEDR. Throughout core faculty, special guest lecturers and observers will be invited to join in sessions, to enhance the practical insights gained from the faculty, participants and course materials.
  5. 5. Contents Litigation Funding Strategy & Technology 10 Jackson’s reactions 24 Jackson on e-disclosure Tackling one of the thorniest What the funding reforms issues in legal costs mean for commercial cases 14 New frontier 26 Social networking: Third-party funders are five tips for lawyers finding opportunities in Think “Twitter feed” is a Europe bag of seeds? Here’s help 28 Cover Feature Financial Litigation Competition & EU Akzo Nobel 16 Stand aside, FCPA? 32 Kokott’s unwelcome Battle for privilege The UK’s Bribery Bill may be tougher than its US opinion One lawyer’s take on the With Akzo Nobel, the Commission cousin latest from Akzo Nobel is stirring up an in-house revolt. 18 Vulture clash Ben Rigby surveys the battle lines The murky world of – and meets some of the key com- vulture fund litigation batants Arbitration & ADR Collective Redress 20 Stars of the East 34 Turning American? Inside Asia’s arbitration UK business turns against hotspots the Financial Services Act 5 Jobs 50 Expert Views BSkyB v EDS 38 Region Focus 7 Comment How to avoid a liability cap The Jackson Review Spain & Portugal 8 People & Firms A commercial lawyer’s perspective CDR (Commercial Dispute Resolution) Rivals in crisis Russia Iberian courts are swamped with 58 Country Reports Sevmash case shows growing acceptance of foreign awards insolvency. Will a growing ap- petite for arbitration be enough to drag them out of the mire? Ben 62 Conference Diary Economists Three cases reshaping patent licensing Lewis reports from Madrid and practice Lisbon 64 Profile 3
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  20. 20. Featured Jobs For Europe’s top dispute resolution professionals Recruiter: Cogence Search Ltd Vacancy: Partner International Arbitration Salary: £200,000 to Full Equity Circa SGD $4-900,000 Location: Singapore Lateral Opportunity: Our clients have a long standing and highly regarded presence in South East Asia and Mainland China and a clear strategic aim of growing their arbitration practice in the region. There is an expectation that a Partner making a lateral move into the prac- tice will have developed a profile in the jurisdiction and be able to bring on board reliable client relationships. This practice is in a position to competitively compensate its Partnership and is happy to consider hires into the equity partnership where the business case exists. To apply for this opportunity in complete confidence please contact Mark Husband, Director at Cogence Search Ltd on +44 (0)207 397 1592 or email: Reference: Cogen43878. Recruiter: Hudson Legal Vacancy: Contentious Financial Services Regulatory Associate Salary: Competitive Location: London This Silver Circle law firm is looking to recruit a financial services regulatory associate into their team. The role will focus on providing advice and assistance to the firm’s financial services clients, both nationally and internationally. There may be an element of civil disputes and criminal investigations in relation to the financial services sector. The successful candidate will ideally have 2-5+ years’ PQE gained within a top City firm, predominantly within the financial services sector. A solid understanding of the UK financial services regulatory regime is essential. To apply please email your CV to or call Baqer on +44 (0)207 187 6205. / Recruiter: Turner Marke Vacancy: Head of Dispute Resolution Salary: To $1m+ Location: Moscow Requirements for the role are as follows: - Significant experience as an advocate in Russia, representing clients in the Russian courts and domestic arbitration tribunals. - Extensive prior consultancy experience at counsel or partner level in the litigation field at a major international or Russian law firm. - Additional international arbitration experience preferred. - A degree of portable client business, to assist with the continued development of the Russian dispute resolution practice. To apply please email or call +44 (0)7971 486 014.
  21. 21. Comment No alternative? T he term “alternative dis- Reason two: nobody can agree Reason three: it’s insular pute resolution” is part of what it means The idea of “alternative dispute resolu- the parlance of law. But Because of the jumble of concepts em- tion” is hopelessly parochial. In many what exactly is alternative bodied by the term, it never seems to countries, litigation is the foreign con- about it? mean the same thing twice. For some cept. Perhaps we should take a leaf from (particularly in the US), “alternative dis- Japanese parties must find it jarring the book of John Sturrock QC, a barris- pute resolution” is synonymous with to hear chotei (conciliation), wakai (com- ter who recently told delegates at a mediation; for others, arbitration. promise) and chusai (settlement-focused Scottish conference that the term That’s just those in the know. Many arbitration) referred to as alternatives to should be consigned to the waste bin clients in Europe and beyond are still litigation – not that they would ever be of terminology. getting to grips with the concepts, let so confrontational as to tell you so. One can see his point. Here are alone the labels. In the Middle East there is a similar three reasons why we might want to Legal practice hinges on definitions. attitude. With legal systems built consider the term to be past its sell-by If the term “alternative dispute resolu- around amicable settlement, litigation is date. tion” is to be retained, it should at least not a default option but a last resort. have a global definition, particularly as It’s tough selling a concept. Just ask Reason one: it’s gone mainstream the practice of commercial arbitration is the Spanish Arbitration Club and the According to Fulbright Jaworski’s inherently international. Portuguese Arbitration Association: as last litigation survey, more than half their members make clear in our feature of UK companies prefer to arbitrate on page 38, some litigators are dyed in than litigate – and that leaves out the growing core of mediation, adju- The idea of the wool. But it’s even tougher when the con- dication and other out-of-court methods. “alternative cept itself is unclear. So where do we go from here? Stur- Even if arbitration is on the wane, as dispute resolution” rock suggests replacing “alternative” CDR (Commercial Dispute Resolution) Fulbright concludes, that’s a hefty chunk of the market that hardly justi- is hopelessly with “complementary”, “supplemental” or “early”. fies “alternative”. What’s more, arbitration has parochial. In many Nevertheless, it’s hard to avoid the thought that if lawyers and lawmakers changed. While once it was fast and countries, litigation are serious about promoting arbitration cheap, the modern process has become and mediation, they should stop charac- ever more similar to litigation, making is the foreign terising them as something different al- further nonsense of its “alternative” status. concept together. With that in mind, how about just… “dispute resolution”? CDR 7
  22. 22. People Firms People and firms UK and Ireland Snelling of Freshfields Bruckhaus De- ter as Sophie Havard Duclos, an IP and ringer and Kelwin Nicholls of Clifford technology specialist, left Freshfields Herbert Smith’s management shake- Chance. Bruckhaus Deringer to join Laude Es- up saw insurance litigator Martin quier Champey as the litigation firm’s Bakes take up the new role of general Austria and CEE fourth partner. counsel. Baker McKenzie reversed the Michael Scott, a competition partner, It’s been a quiet market for lateral hires trend with a lateral hire from a boutique has succeeded David Gold as the in Eastern Europe’s dispute resolution – namely Courtois Lebel. Eric Bory- firm’s senior partner. market. Wolf Theiss did, however, sewicz, a specialist in industrial litiga- The firm’s annual promotions make a double promotion – litigators tion and arbitration, made the move round focused heavily on dispute reso- Holger Bielesz and Clemens Trautten- along with a team of three lawyers. lution, with a number of the new part- berg joined the firm’s partnership in Meanwhile Ashurst promoted ners based in London. They include Vienna. The appointments came Christophe Lemaire, an antitrust Karen Anderson and Nik Kiri (finan- shortly after the firm hired a senior lawyer with experience in the French cial-services litigation); Susannah Cog- competition litigator in Brussels (see competition authority, to the firm’s man (white-collar crime); John Benelux, below). Paris partnership. Whiteoak (insolvency); Chris Parker Linklaters rewarded its competition US-qualified arbitrator and public (arbitration); Kim Dietzel (competi- head for Poland and CEE, Malgorzata law specialist Noah Rubins became a tion); and Jeremy Garson (commercial Szwaj, with a promotion to partner. new partner in Freshfields Bruckhaus litigation). Deringer’s Paris office. There was a boost in London for White Case’s insolvency team, Benelux which poached bankruptcy partner Germany Christian Pilkington from its US rival Having just lost its London arbitration Skadden Arps Slate Meagher head (see UK and Ireland, above), Allen Overy stepped up the rhetoric Flom. Howrey suffered a second walkout as as it announced a “swift repositioning” Rachel Couter, a banking disputes Brussels-based competition litigator in the German market. The firm raided partner, joined SJ Berwin from Gibson Peter Camesasca left for Covington Lovells (now Hogan Lovells) for part- Dunn Crutcher. Burling. Howrey had only recently ner Daniel Busse, who will be Meanwhile Howrey took a blow launched a competition practice in based in Frankfurt and lead the firm’s with the departure of the firm’s UK arbi- France, hiring six lawyers from Clif- German disputes practice. The move is tration head Melanie WIllems to Chad- ford Chance. one of several concurrent hires in Ger- bourne Parke, soon followed by a The Austrian firm Wolf Theiss many by Allen Overy , which second loss in Belgium (see Benelux, hired cartels specialist Jochen Anweiler als o to o k o n a corporate partner below). from O’Melveny Myers in Brussels. and a finance partner in Düsseldorf The moves are a setback for the US In Luxembourg Allen Overy pro- and Frankfurt respectively. That disputes boutique, which has enjoyed moted Katia Manhaeve, an IP technol- should more than make up for the loss recent successes including the hire of ogy specialist with experience in of Marcus Grosch, the Mannheim- competition litigator Shaun Goodman dispute resolution, to the firm’s part- based patent litigator who left Allen from Cleary Gottlieb Steen Hamil- nership. Overy for Quinn Emmanuel earlier ton, and a six-lawyer raid on Clifford Paul Kuipers, an insolvency lawyer this year. Chance’s Paris office. who has advised PricewaterhouseC- Lovells made some promotions in Watson Farley Williams sought to oopers on the collapse of the European advance of its merger with Hogan take advantage of London’s shipping arm of Lehman Brothers, has been Hartson. Three of the new dispute reso- disputes market, as Robert Platt joined elected partner in the Amsterdam of- lution partners are in Germany – they CDR (Commercial Dispute Resolution) the firm from Curtis Davis Garrard, an fice of Linklaters. Also in Amsterdam, are Kim Mehrbrey (Düsseldorf), and Se- energy and transport boutique. The Clifford Chance made litigator Alvin bastian Lach and Christian Herweg move reflects the thriving market for Khodabaks a partner. (Munich). shipping litigation: Ince Co, a firm Freshfields Bruckhaus Deringer specialising in that area, promoted four also sought to strengthen its German dispute resolution lawyers to its part- France offering with the promotion of Frank- nership. furt arbitrator Boris Kasolowsky and Other promotions in London in- The recent trend in Paris for boutique- Düsseldorf competition lawyer Uta clude Mark Clarke of Ashurst, Tom bound defections continued this quar- Itzen to the partnership. 8
  23. 23. People Firms Michael Kremer of Clifford Chance Alberto Fortún and Manuel Monzó was promoted to the firm’s partner- were appointed as equity partners. ship in Düsseldorf. In Portugal Morais Leitão Galvão Teles Soares da Silva Associa- Russia and CIS dos announced its annual promo- tions, which included disputes Russia and CIS lawyer Miguel de Almada. The firm also hired litigator Carla Os- ório de Castro in Oporto. Switzerland A rare mass defection in Geneva led to a lift for Akin Gump Strauss Hauer Feld. The firm’s hire of seven lawyers from a merger-ready Hogan Hartson (now Hogan Lovells), including veteran arbitrator Charles Adams as well as arbitration partner Michael Stepek, gives the Moscow’s litigation market welcomed firm’s nascent Geneva office a strong a new face in April – that of Nicholas start in ADR. Munday, formerly the UK dispute res- olution head of Clifford Chance. The firm relocated Munday to cope with a Middle East and Asia-Pacific surge in local demand. He has prior experience of handling Russian dis- Seems like everyone’s heading for Sin- putes, having already been based in gapore these days. Among the latest Moscow for three months. arrivals is David Llewelyn, White But the celebration was short-lived. Case’s IP and technology specialist. A month later Clifford Chance’s head Llewelyn will join the firm’s new of dispute resolution in Russia, Ivan Singapore arbitration practice, which Marisin, defected to Dechert’s year-old was established with the relocation Moscow office – which must be a relief of energy disputes lawyer Aloke Ray for Dechert following the firm’s earlier in the year. abortive attempt to hire Chadbourne Norton Rose made a more modest Parke’s Russian senior partner advance by promoting arbitrator KC Mikhail Rozenberg last year. Lye to the partnership. There were also promotions in Her- bert Smith’s Asia offices. The firm elected May Tai as an arbitration part- ner in Shanghai and Gavin Margetson Spain and Portugal as a general dispute resolution partner in Tokyo. CDR (Commercial Dispute Resolution) The annual promotions round at Cua- Fai Hung Cheung, a specialist in trecasas Gonçalves Pereira saw complex financial disputes at Allen Expanding? seven litigation lawyers promoted Overy, became a partner in the firm’s to the partn e rshi p – a h e ft y Hong Kong office. ch un k of t h e S pa n i s h firm’s 18 Clifford Chance promoted dispute Please send details of partner appointments. Cuatrecasas also resolution lawyers James Abbott and moves to Ben Lewis at took the opportunity to make Cameron Hassall to the partnership, changes among its existing partners: in Dubai and Hong Kong respec- litigators Ferrán Cerdà, Pedro Claros, tively. CDR 9
  24. 24. Litigation Funding Jackson’s reactions Debate rages on At the Law Society’s dispute resolution conference a Clifford CDR (Commercial Dispute Resolution) Chance partner shared his insights on what Jackson’s reforms mean for commercial cases. Ben Rigby was there. 10
  25. 25. 11 CDR (Commercial Dispute Resolution) Litigation Funding
  26. 26. Litigation Funding L ord Justice Jackson’s magis- ability to recover success fees and ATE the case. terial review on costs opens insurance premiums from unsuccess- This concept of risk-free litigation is doors for private individuals ful defendants. problematic and outside the spirit of to seek justice they are cur- However, the higher fees and there- access to justice, said Davis. rently denied. fore risk associated with commercial He pointed out that the Jackson re- But they are not the only ones it will cases makes conditional fee arrange- forms are likely to be good for compa- affect. Though less trumpeted, the re- ments (CFAs) less attractive to com- nies, more often sued by CFA-backed port also has implications for high- mercial lawyers. One report by insurer claimants than using such arrange- value commercial litigation. First Assist puts the uptake of CFAs at ments themselves. These implications are big enough just 7% of commercial cases. Companies will not have to take that the Law Society’s dispute resolu- When they do use CFAs, commer- into account the risk of paying up to tion section costs conference was cial litigators also tend to structure double normal costs if the case proves awash with lawyers from Slaughter them differently, he said. Often this successful, thus the risk of fighting liti- and May, Linklaters and other high- involves being paid about 75% of gation is reduced. profile commercial law firms. normal fees with an uplift to 125% if Davis also supported making suc- Among them was Clifford Chance successful. cess fees payable by the assisted party. litigation partner Simon Davis, who He acknowledged that whether or spoke in a personal capacity at the con- not this was a good thing depended on ference. He took a proportionate approach The concept of whether one took a claimant or defen- dant standpoint. to his subject, acknowledging that risk-free litigation Looking at damages and cost shift- commercial litigation is a fragment of the dispute resolution market. is problematic and ing, given that most commercial litiga- tion is about money, having less costs But to Davis, Jackson LJ’s proposals outside the spirit to factor in was a benefit, he said. must genuinely enhance commercial Commercial defendants will there- justice just as it aims to do for individ- of access to justice fore benefit from not being obliged to ual justice. pay the opponent’s success fees if they He cited a comment made by Lord But financial pressures resulting lose a case, while avoiding increased Neuberger, the Master of the Rolls, in from the credit crunch mean even com- damages. January. “The time for discussion and mercial parties with ample resources He suggested the cap on success debate is over,” said Neuberger. “It is are beginning to use CFAs to reduce fees was unlikely to be of concern to now time for action.” their legal bills. commercial defendants, and may actu- Action, he argued, that should be One concern about CFAs shared by ally prove a benefit if it means CDR (Commercial Dispute Resolution) swift but not hurried: in many places commercial claimants and defendants claimant lawyers ponder cases more Jackson’s review prescribes a frame- is that they give the assisted party the carefully. work, leaving the detail to be worked ability to pressure the opposition - out. As every lawyer knows, small de- much like the legal aid of old. Inducing settlement: Part 36 offers tails can later turn out to be critical. Davis called this “no-risk litiga- Davis suggested that Lord Justice Jack- tion”. Parties that are insured against son’s suggestions on offers to settle Success fees and ATE insurance loss could avoid paying onerous legal might open up defendants to black- Jackson’s report proposed that success- fees while also avoiding any serious mail. ful claimants should be denied the risk of having to pay costs if they lose He drew similarities with using the 12
  27. 27. Litigation Funding obligation to pay success fees as a the point of settlement. “The language weapon in litigation. of rewards and penalties is inappropri- Davis outlined the existing situation ate,” he said. regarding Part 36 offers - when a de- In his eyes it would be acceptable fendant makes a formal offer to settle a for a claimant to benefit from a bonus case - and their cost consequences. only if the defendant had required an If this offer is not accepted and the actual adjudication on the dispute. unsuccessful defendant is ordered to This, he said, “is what courts are for”. pay less than the offer made, the claimant pays the defendant’s costs Contingency fees from the time of the offer. Davis also commented on contin- Lord Justice Jackson proposes that gency fees. He noted the recommen- dation that the losing party should “The language of not be obliged to pay the contingency fee. rewards and But he did raise an eyebrow at the possible need for independent legal penalties [used by advice when entering into such agree- Jackson] is ments. This was despite Jackson’s claim inappropriate” that contingency fees will not lead to lawyers taking advantage of their clients. this leaves claimants “insufficiently re- Commercial clients are sophisti- warded” for making Part 36 offers and cated ones. The review was ambigu- defendants “insufficiently penalised” ous about whether this will only Simon Davis for rejecting them. apply to private litigants or to compa- But Davis believes Jackson misses nies. CDR Expert partners CDR is partnering with leading law firms and service providers to bring you incisive analysis of dispute resolution topics.
  28. 28. Litigation Funding New frontier eye Third-party funders up Europe Investors may be piling money into London-listed litigation funds, but their eyes have been firmly fixed on lucrative American disputes. Now third-party funders are seeing increasing potential in Europe, writes Greg Bousfield. D Support from Jackson espite another round of media rumours triggered “Although the That is as concrete as it get at this by the Jackson Review, Europe still seems to offer opportunities in stage, but funded cases will continue to fall into Juridica’s strictly commer- investors little compared with the US the US seem to be cial litigation framework, which in- for third-party litigation funding (TPF). larger, we are cludes international arbitration. Competition law damages cases are But Europe, and particularly the UK, is gaining credibility as a TPF thinking about of particular interest, Fields adds, stressing that Juridica does not fund market. Juridica Capital Management how to adjust our retail areas like class actions arising announced in January it is getting seri- ous about the UK and earmarked $50 processes to fit from personal injury (which are ex- cluded from consideration by the So- million for local projects. the UK market” licitors’ Code of Conduct), product Juridica, which has more than $200 liability or mass tort claims. CDR (Commercial Dispute Resolution) million under management, was the In the US, Juridica targets cases first litigation fund to list in London with potential recovery between $15 (on the LSE’s Aim board) in December have made the company aware of UK million and $25 million. This threshold 2007 and has funded three UK cases. possibilities: “We need to have more would have to be substantially lower Juridica chairman and chief execu- presence in London and a more robust in the UK, where cases generally in- tive Richard Fields says that “several business there. Although the opportuni- volve smaller sums, says Fields. “Right opportunities a week” are now coming ties in the US seem to be larger, we are now we are interested in who the lawyers Juridica’s way in the UK. thinking about how to adjust our and barristers are we can deploy, as He says multinational law firm clients processes to fit the UK market.” opposed to the size of the case.” 14
  29. 29. Litigation Funding “Right now we are interested in who the lawyers and barristers are we can deploy [in the UK], as opposed to the size of the case” Richard Fields, Juridica Lord Justice Jackson’s review of the full amount of adverse costs, sub- cused on trying to resolve things out- civil litigation costs was “most en- ject to the discretion of the judge, side the courts whereas the US is a couraging” for the TPF industry, he which would likely add the major cost very court-orientated country with far says, as are the future possibilities of of after-the-event (ATE) insurance to more litigation than any country in the alternative business plans under the whatever part of the claim that was world, with cases that are much vaster Legal Services Act. funded. and complex than anywhere else with Jackson concluded that the cur- “We have done two deals without much larger damages,” he says. rent low volume of TPF does not jus- insurance but most cases would in- “Billions of dollars are needed to tify regulation, which would likely volve some element of ATE,” Fields fund US litigation; there is a huge focus on capital adequacy require- says. gap between need and available capi- ments. tal.” Although abuse-of-process rules Market potential in Europe Contrary to the clichés, acceptance (champerty and maintenance) would Burford Capital has a similar busi- of TPF is weak among the American not be scrapped, nor would they auto- ness model to Juridica. Like its com- public and lacks legislative support. matically exclude TPF under the pro- petitor, the company successfully Third-party funding of US class ac- posals laid out in the report. floated on Aim last October, attract- tions, which are already notorious, is Jackson’s view that TPF is most ing £35 million from UK institutional likely to be regarded as abusive. “TPF really started in Australia in 2003 then moved to the UK and then Burford has no immediate plans to fund to the US at the end of 2007,” Seidel says. “Public acceptance of litigation UK cases - the US is more dynamic and funding is good in the UK. It’s amaz- lucrative. But change is on its way ing in the US how little law firms CDR (Commercial Dispute Resolution) know about TPF; it’s really just arriv- ing there.” readily obtained for high-value cases investors. This relative maturity keeps Europe with good prospects of success also One difference is that Burford has attractive for Burford Capital. “Keep corresponds with the commercial no immediate plans to fund domestic in mind that the UK is a very impor- focus of funders like Juridica. UK cases. For now, the US is simply a tant market where we will be operat- Less appealing for them was his far more dynamic and lucrative mar- ing in the future,” Seidel says. recommendation that third-party fun- ket, says chairman Selvyn Seidel. He seems certain that future is on ders should potentially be liable for The UK and Europe are very fo- its way. The only question is when. CDR 15
  30. 30. Financial Litigation Stand aside, FCPA? The UK’s Bribery Bill received royal assent in April. Writing as the Bill reached its second reading, Nick Benwell of Simmons Simmons explains its implications for companies in the UK - and abroad. W hen the Bribery Bill be- Long-arm jurisdiction Systems and controls comes law as expected A remarkable aspect of the new corpo- It is therefore clear that the key for any in 2010, it will be the rate offence, however, is its long-arm organisation which has a UK presence toughest anti-bribery jurisdiction. In a move the US would will be to ensure it has adequate sys- law in the world. Unlike the US For- have been proud of, the offence applies tems and controls in place. This begs eign Corrupt Practices Act 1977 not only to companies incorporated in the question, what systems and con- (FCPA), it will apply both to public the UK, but to any organisations which trols will be considered as adequate? and private sector corruption, and carry on any part of their business in Following a report by a joint parlia- there will be no exception for facilita- the UK. mentary committee on the Bill, the tion payments. To take a couple of examples - if a Government appears to have accepted In both these respects, it will be no US bank or a Chinese industrial con- that guidance on this issue must be different from existing UK laws. The glomerate operates a small branch in published before the Bill comes into main change (and it is a fundamental London, the bank or conglomerate will force, in order to allow businesses time one) will be the introduction of a new be criminally liable in the UK if an em- to ensure they have adequate systems corporate offence. ployee, agent or subsidiary were to and controls in place. The Bill is set to impose criminal lia- pay a bribe, whether in the public or It is probably too much to hope that CDR (Commercial Dispute Resolution) bility on organisations in the event that private sector, anywhere in the world. the guidance will provide a complete employees, subsidiaries, agents or con- There is no requirement that the code - it is more likely that principles sultants pay bribes in relation to the bribe be approved by or paid through will be published. organisation’s business anywhere in the UK branch - the mere fact of hav- The systems that may reasonably be the world. ing a UK branch will give the UK pros- expected of a multinational will clearly There will only be one defence - if the ecutors and courts jurisdiction. And, as differ from those that may reasonably organisation can prove it has adequate indicated above, the only statutory de- be expected of a small engineering anti-corruption systems and controls in fence will be to prove the existence of company which trades overseas on place. More on that point below. adequate systems and controls. only a few occasions each year. 16
  31. 31. Financial Litigation The guidance is unlikely to be sur- penses defence; and plainly unrealistic) or permitting crim- prising - there has developed a broad • as mentioned above, there will be no inal acts, on the basis they are unlikely consensus on what constitutes interna- exception for facilitation payments. to be prosecuted. tional best practice in this area. This is a difficult area. The Serious Having said that, it is important Fraud Office has made it clear that Cross-party support to ensure that any organisation with prosecutions are highly unlikely if While there are aspects of the Bill that a UK presence will be compliant companies are trying to “do the right may change as it proceeds through the with UK laws - not just FCPA com- thing” by reducing facilitation pay- Parliamentary process, there seems to pliant, given the broader scope of ments. The making of such payments be cross-party support for the Bill. And UK laws. is, however, a criminal offence under despite electoral uncertainty, the Bill the Bribery Bill (as indeed, it is under looks set to come into force this year - Other developments existing laws). probably in the autumn. There are several other aspects of the This leaves organisations with the Through the Bribery Bill, the Gov- Bill that it is important to note: choice of insisting on zero tolerance ernment is trying hard to restore the (and facing the accusation within the UK’s reputation as a country which is • it contains a specific offence of brib- business that such an approach is tough on corruption. The Bill will be CDR (Commercial Dispute Resolution) ing a foreign public official. It will be a the toughest anti-corruption law in the defence to prove that the payment was world, with the ability to catch organi- permitted by local written laws - but not (as had been hoped by many) if the The Act may soon sations which have any presence in the UK. payment was based on a reasonable be discussed in the If the UK Serious Fraud Office is belief that it was permitted under local laws; same tones as the sufficiently funded to rise to the chal- lenge, the UK’s Bribery Act may soon • unlike under the FCPA, there will be no marketing and promotional ex- FCPA be discussed around the world in the same tones as the FCPA. CDR 17
  32. 32. Financial Litigation Vulture clash What happens when the credit rot spreads from companies to countries? Greg Bousfield assesses the chance of vulture fund litigation. G reece and several other No barriers for vulture funds arrangements, prefacing litigation. Eurozone countries are Traded sovereign debt came into exis- The IMF has been criticised for re- unlikely to default on tence in 1989, as part of a failed at- peatedly failing to get agreement on a their debts any time soon. tempt by US treasury secretary sovereign debt restructuring mecha- But if they did, could private holders Nicholas Brady to address national nism which would tie all creditors to a of sovereign debt litigate to get their debt in South America. So-called common restructuring programme. money back? Brady bonds allowed syndicated bank “I never believed that they would In theory they could, says Ioannis debt to be exchanged for traded sover- come up with a single mechanism be- Alexopoulos, head of litigation at DLA eign bonds. cause that would involve a buy-in of all Piper in London. But given the circum- But during the last decade, in the the major economies and that is un- stances they would more than likely context of various African debt relief likely for political reasons, especially in find themselves unable to stand aside initiatives and NGO campaigns, the the case of the US,” says Alexopolous. from a debt restructuring programme. G8, the World Bank and IMF, and the In any case the days of vulture Paris Club have expressed concern funds buying up discounted sovereign over vulture fund practices. debt from creditor banks, typically of In 2007 the Paris Club resolved to heavily indebted poor countries (HIPCs), and often successfully relying avoid the sale of its claims on HIPCs to other creditors who do not intend to Nothing stops CDR (Commercial Dispute Resolution) on litigation or the threat of litigation provide debt relief under a Paris Club funds taking to get back the original debt plus large interest payments are in the past, he HIPC initiative. But this concern hasn’t yet yielded holding out of says. “The political climate has now any major international agreement on debt restructuring which might hinder restructuring changed. And courts are also rejecting banks from selling distressed debt to arrangements, onerous default provisions imposed by creditors in the secondary debt vulture funds. Nor does anything stop funds tak- prefacing market.” ing holding out of restructuring litigation 18
  33. 33. Financial Litigation Interest or penalties? But courts can deem onerous interest “It’s safe to say rates as penalties and therefore unenforceable. English courts will The pivotal UK case was an attempt continue to strike in 2007 by fund Donegal Investments to enforce a government bond debt out onerous default claim in the English courts against provisions” Zambia for $55 million. Donegal had purchased the dis- Ioannis counted Zambian debt from Roma- nia, a creditor of Zambia. The UK’s Alexopoulos, High Court objected to how Donegal DLA Piper had calculated interest and costs on the debt, re-calculating it at $15.5 mil- lion. “Although the court upheld the in an attempt to freeze $284 million of gives funds first bite of the (litigation) new agreement they stuck out the new $1 billion Argentinean distressed debt cherry over debt restructuring arrange- default provisions which would have it holds. ments, has not been judicially ques- been very generous to the new debt The UK’s Court of Appeal ruled on tioned. owners by finding they had the nature a technical issue: the bond contract had And the trade in distressed sovereign of penalties,” says Alexopoulos. “I not submitted Argentina to the juris- debt continues. “Not much of this will think it’s safe to say English courts will diction of the English courts as re- stop vulture funds buying and banks continue to strike out onerous default quired under the State Immunity Act. selling, if the price is right,” Alex- provisions.” Yet despite a tough environment for opolous says. The original vulture fund, Elliot As- distressed sovereign debt litigation, the If these vultures find their way into sociates, has coincidentally lost out fundamentals remain in place. the courts, they may yet get their taste earlier this year in the Court of Appeal The doctrine of pari passu, which of meat. CDR September 12-14, 2010 | Red Rock Casino Resort Spa | Las Vegas, NV Maximizing the Commercial Potential of Your IP Portfolio through Value-Creation Strategies IP experts today are faced with managing a crucial portion of their organization’s capital during the harshest economic downturn in recent history. This summit will highlight current challenges and opportunities through visionary conference sessions, panel discussions and keynote presentations delivered by your most esteemed peers and thought leaders from Americas leading corporations.
  34. 34. Arbitration ADR Stars of the East Asia’s ADR centres compared A sia has become the scene of an same period. Hong Kong. May Tai, a senior associ- arbitration gold rush. Meanwhile Cietac (China Interna- ate of the firm’s arbitration team, has tional Economic and Trade Commis- left London to Shanghai and Patrick The shift in global economics and sion) managed 1,230 cases compared to Zheng, an arbitrator with experience at mounting expenses are increasingly 979 in 2005. Cietac, has joined Herbert Smith’s Bei- driving investors away from tradi- jing office as a disputes consultant. tional arbitration centres such as New Law firms relocate resources Similarly, Allen Overy has relo- York, London, Paris and Geneva. International law firms are relocating cated dispute resolution lawyers to Now Singapore, Hong Kong, India key people and resources to respond to Singapore and Hong Kong. and China are gaining reputation as the growing demand for commercial places where an arbitration case can be arbitration services in the region. Following trade flows successfully settled. White Case has recently launched “The growing interest of international Between 2005 and 2008, the number an international arbitration practice in firms for East Asia is similar to what CDR (Commercial Dispute Resolution) of arbitrations seated at the Hong Singapore with partner Aloke Ray, happened for Japan in the 1980s,” says Kong International Arbitration Centre who has left the firm’s London office Shourav Lahiri, a partner at Pinsent more than doubled from 281 to 602. to head a four-lawyer team. Masons. The firm has been in Hong The growth has been mirrored on a Other international firms have im- Kong for 25 years and has had a pres- smaller scale in Singapore, whose main plemented similar strategies. ence in Singapore for more than a arbitral institution, Siac, saw a sharp Herbert Smith has moved Justin decade. increase from 45 to 71 cases in the D’Agostino, an arbitration partner, to “The UK market is shrinking and 20
  35. 35. Arbitration ADR The ADR community is looking east. Widespread relocations of lawyers and a boom in cases have made Hong Kong, Singapore and their neighbours a battleground for arbitration supremacy. Chiara Albanese compares their offerings. the trade flows are likely to be directed Dominant seats other origin. towards and between China and India It is these two jurisdictions - Hong “It is especially prominent for India- and Southeast Asia,” says Lahiri. “Ar- Kong and Singapore - that have related disputes. Indian and Indonesian- bitration lawyers want to follow that emerged as the strongest contenders in related matters have a natural gravity trade because it will naturally lead to the region. towards Singapore because Hong Kong an increase in the ADR and disputes “Hong Kong is perceived by most is not a viable choice for international workload.” clients as a neutral venue with a stable investors to seat India-related arbitra- He points to arbitration costs as a and reliable legal system,” says Her- tions due to enforcement issues,” says catalyst for the shift. These range from bert Smith Hong Kong dispute resolu- Nicholas Peacock, a partner at Herbert the fees charged by the institution, the tion partner Justin D’Agostino. Smith’s Singapore practice. fee for the arbitrators and the cost of He adds: “It is a happy middle Frances van Eupen, an Allen the lawyers. ground for disputes between a Chinese Overy senior associate who moved “Most major arbitral institutions party and a non-Chinese party. Hong two years ago from London to Hong CDR (Commercial Dispute Resolution) charge similar fees, but a cost advan- Kong is acceptable to Chinese parties Kong, says the competition between tage can be achieved for the legal ad- because it is ultimately part of China Hong Kong and Singapore is palpable. vice and for maintaining the team and has the added convenience of “Seat decisions should be based necessary to support the arbitration. being close to home and therefore less more on legal factors rather than The associated cost is likely to be lower costly.” purely geography,” says Van Eupen. in Singapore and Hong Kong [than in Singapore has a similar promise of “Two criteria for a good seat are that established non-Asian forums].” impartiality, but for disputes with an- the local laws and courts should be 21
  36. 36. Arbitration ADR “Hong Kong is acceptable to Chinese parties because it is ultimately part of China and is close to home” Justin D’Agostino, Herbert Smith pro-arbitration and the state should and has published a set of rules to Asian governments are also seeing have ratified the New York Conven- make it cheaper and more effective. the economic benefits of arbitration tion.” Korea and Japan see a relatively and are trying to promote their coun- Both are true for Singapore and small number of international arbitra- tries’ credentials as attractive seats Hong Kong. tions, but the will is there: Seoul for arbitration. hosted a major regional conference last Most notable among these is Sin- Other regional contenders year and is keen to promote itself as an gapore, whose government is no But the two jurisdictions’ appeal for par- international venue. stranger to economic opportunism. ties in mainland China and India is The Korean Commercial Arbitration The city state has recently introduced slowly eroding, according to Lahiri - a Board has been actively promoting its a 50% tax break for law firms’ income growing number of disputes are simply services. It is a possible area of growth from arbitration. staying at home. in the future. Meanwhile Hong Kong has re- “India and China are still not cho- formed its court rules and engaged sen by foreign parties as a seat for an International bodies react in a programme to promote media- arbitration where the parties are not They had better move quickly. tion. otherwise connected with the country, Like the global law firms, international In January 2010 the jurisdiction in- but if you have a project there and you arbitration institutions have responded troduced Practice Direction 31, follow- are required to arbitrate locally, this is with an aggressive push into Asia. ing reforms to the civil justice system, becoming less and less of a problem.” The ICC International Court of Arbi- implemented in April last year. CDR (Commercial Dispute Resolution) Last November, London’s Char- tration has invested in the region and it Parties are now obliged to consider tered Institute of Arbitrators (CIArb) now has an office in Hong Kong and one whether mediation is an appropriate set up a chapter in New Delhi, fol- in Singapore, launched last January. way to settle their dispute. lowing the launch of a dedicated arbi- During the inauguration ceremony Those who fail to mediate without tration centre by the Delhi High Jason Fry, the ICC court secretary gen- good reason, or fail to give proper con- Court in November. eral, stressed the importance of the sideration to mediation early on in the For the Chinese arbitration body, Asia-Pacific region, pointing to a 13% proceedings and on an ongoing basis, Cietac, the future is online. The organi- increase in ICC arbitration numbers risk having adverse costs orders made sation is investing in online arbitration, during 2009. against them. CDR 22
  37. 37. Arbitration ADR Asia’s ADR competitors Singapore International Arbitration group of business people to focus on pervision of the Delhi High Court. In the Centre: India’s go-to Asian dispute resolution. It is independ- first weeks of operation it has already re- ent and financially self-sufficient. ceived a number of cases. As India at- Characteristics - Siac was established in Trump card - Being simultaneously a tracts international investment the 1991 to respond to the growing demand common-law jurisdiction and since 1997 a caseload is likely to increase. for dispute resolution by the international part of the People’s Republic of China, community. It is a not-for-profit organisa- whose law is based on German civil law Cietac: vast market potential tion overseen by a board of directors. Hong Kong is perceived as a group com- Trump card - It has recently moved to promise for different parties. Characteristics - Formerly known as the Maxwell Chambers, a specially developed The Uncitral Model Law is applied as Foreign Trade Arbitration Commission, complex. the statutory regime for international Cietac was set up in 1956 under the China It is considered a neutral and arbi- commercial arbitration. It is especially Council for the Promotion of International tration-friendly location and local prominent for China-related disputes. Trade. It is headquartered in Beijing and courts actively support ADR. Singa- has three sub-commissions in Shanghai, pore’s International Arbitration Act is Delhi High Court Arbitration Centre: Shenzhen, and Tianjin, respectively. based on the Uncitral Model Law. It is strong start Trump card - The level of international especially prominent for India-related investment in mainland China is in- disputes. Characteristics - Launched on 25 creasing. Last May the organisation November 2009 to provide institutional published a set of rules for online arbi- Hong Kong International Arbitration arbitration under the framework and pro- tration and local courts are becoming Centre: independent, common-law cedures laid down by a committee set up more supportive of ADR. The potential by the chief justice of the court. market is vast and the scope for growth Characteristics - Established in 1985 by a Trump card - It will operate under the su- is extremely high. Champions of dispute resolution With 12,000 members worldwide, we are the professional home for dispute resolution, setting global standards for dispute management. Membership CIArb is the global membership body for everyone with a professional interest in alternative dispute resolution. Professional Training There are several routes to CIArb membership through the Pathways programme, a progressive training ladder for the newcomer right through to the experienced practitioner. CIArb offers a tiered range of professional membership Conferences Events ADVERT qualifications which provide public recognition for various levels of expertise. CIArb delivers a wide range of conferences, events and breakfast briefings on the topic of ADR, all offering CPD points. To become a member or to register for one of our courses or events: W T +44 (0)207 404 4023 E M E D I AT I O N • A R B I T R AT I O N • A D J U D I C AT I O N • I N T E R N AT I O N A L A R B I T R AT I O N