Procedure

Specialist courts

Do you have a specialist court or other arrangements for the hearing of financial services disputes in your jurisdiction? Are there specialist judges for financial cases?

The Financial List is a special initiative established to ensure that judges with knowledge and experience in financial markets are allocated to hear cases involving such issues. It is not a separate court – proceedings are issued in the Commercial and Chancery divisions in the normal way. Cases are then placed in the List and allocated to a specialist judge if the case meets one of the following criteria:

  • the claim is worth more than £50 million and relates to banking or financial transactions;
  • it requires particular expertise in the financial markets; and
  • it raises issues of general importance to the financial markets.

 

The list is available to claims commenced on or after 1 October 2015. The selected judges are all Commercial and Chancery judges who are nominated to the List based on their expertise.

Procedural rules

Do any specific procedural rules apply to financial services litigation?

Normal procedural rules apply to the Financial List. Also, it has its own procedural rules contained in the Civil Procedure Rules (CPR) Part 63A, Practice Direction 63A and the Guide to the Financial List.

Arbitration

May parties agree to submit financial services disputes to arbitration?

Arbitration is permitted but has been perceived as less popular for disputes in financial services compared to other sectors. However, its use is not insignificant and is growing. For example, the London Court of International Arbitration Annual Casework Report 2020 states that banking and finance made up the third largest proportion of its caseload (20 per cent – 12 per cent lower than in 2019, though we anticipate that this is due to the pandemic). Advantages include confidentiality and the ability to select seats and procedural rules that offer more flexibility than the default jurisdiction. Another advantage for cross-border disputes and parties in emerging jurisdictions is that enforcement of arbitration awards is streamlined and regulated by the New York Convention 1958.

Factors relevant to the preference for litigation include the English courts having wider powers to provide swift interim and summary relief, the relevant expertise of judges in the Financial List and the High Court and the need for publicly available precedent in regulated and fast-moving markets.

Out-of-court settlements

Must parties initially seek to settle out of court or refer financial services disputes for alternative dispute resolution?

The English court has emphasised that to compel parties to use alternative dispute resolution (ADR) would be a constraint on the right of access to the court, violating article 6 of the European Convention on Human Rights (see Halsey v Milton Keynes General NHS Trust [2004] EWCA (Civ) 576).

However, that case emphasised that courts should generally encourage parties to explore ADR if it is appropriate in the circumstances. Where a party has unreasonably refused ADR, the court can order parties to take steps to engage in ADR.

Failure to explore ADR may also lead to cost sanctions. The CPR Pre-Action Protocol encourages parties to use ADR before issuing proceedings. CPR Rules 44.3 and 44.4(3) allow the court to vary the rule that the unsuccessful party pays the successful party’s costs to take account of the parties’ reasonableness in behaviour throughout the dispute, including their willingness to explore ADR.

When unable to resolve a dispute with consumers, financial institutions are required to inform the consumer of their right to refer the dispute to the sector’s ADR scheme, the Financial Ombudsman Service (FOS).

Pre-action considerations

Are there any pre-action considerations specific to financial services litigation that the parties should take into account in your jurisdiction?

There are no pre-action considerations specific to financial services litigation, although if a consumer is bringing a claim to FOS, then there is a set procedure.

Unilateral jurisdiction clauses

Does your jurisdiction recognise unilateral jurisdiction clauses?

Unilateral or asymmetrical jurisdiction clauses (ie, a clause that requires one party to bring proceedings in one specified jurisdiction only, while the other may choose to bring concurrent proceedings in an unlimited number of jurisdictions) are allowed under English law (see Mauritius Commercial Bank Ltd v Hestia Holdings Ltd [2013] EWHC 1328 (Comm)).

The UK has ceased to apply the EU regime on jurisdiction since it left the EU on 31 January 2020 and currently the common law rules on jurisdiction apply, under which the inherent imbalance that those clauses create is not usually a problem (although exceptions exist).

Recently, the English court rejected an argument that the asymmetrical jurisdiction clauses were not exclusive for the purposes of the Hague Choice of Court Convention 2005 (see Etihad Airways PJSC v Flöther [2019] EWHC 3107 (Comm)).