Reforming the civil legal process

How the planned development of the commercial division of the Grand Court may enhance the Cayman brand as offshore financial centres vie for business.

Like other jurisdictions, such as Ireland, Singapore and Dubai – which have sought to improve their civil legal processes as an incentive to international business, the Cayman Islands, using the Chief Justice as its mouthpiece during the opening of the Grand Court in January 2009, has announced that a commercial division of the court is to be set up.

The establishment of a commercial division may provide an opportunity to review and, if appropriate, update Cayman procedure, which is based on the 1999 version of the English Rules of the Supreme Court. Lord Woolf, in his 1996 report Access to Justice, identified a number of problems caused by the old rules, including expense, delay and uncertainty (in terms of time and cost), which led him to criticise them as too complicated and too adversarial. The majority of the recommendations made by Lord Woolf, in his report, found their way into the Civil Procedure Rules, which were introduced in England and Wales on 26 April, 1999.

While recognising that the needs and requirements of Cayman’s legal system differ from those of England and Wales, and that the Rules of the Grand Court have been adapted to meet those requirements, there may nevertheless be some scope for further modifications. So what can Cayman learn from the experiences of England?

On the face of it, the CPR has reduced litigation, speeded up the disposal of proceedings and increased certainty in terms of time and cost. The number of cases being issued has fallen allowing existing cases to be progressed more quickley and with more judicial involvement. Where claims have been issued, after the parties have dealt with their pleadings, the court holds a case management conference at which the case is allocated to a track (which determines the complexity of the procedure to be used and the amount of costs that may be recovered), a trial date is fixed and directions are given to ensure the case is ready by the trial date. The average time from issue to trial has fallen by a third from about 18 months to about one year.

However, it is arguable that the front loading of the costs of litigation by requiring parties to engage in very detailed pre-action correspondence, which can sometimes include considerable disclosure of documents and the provision of experts’ reports, has increased the costs of litigating rather than reduced them. The extent to which the CPR has simplified the system or made it less adversarial is also questionable.Rather than considering adopting the CPR, Cayman could seek to cherry-pick the most successful elements from the CPR and other common law systems to improve its own procedure. In fact, some of this could probably be done within the existing rules, which specifically allow the court to use costs orders where parties have failed to cooperate with each other or haven’t help the court to further the overriding objectives of the rules.

In general, some pre-action correspondence (comprising more than simply a letter before action) is a good idea, since it helps to crystallise and narrow the issues. This can reduce the costs of any subsequent litigation. On the other hand, too much work at the pre-action stage can dramatically increase costs, as parties argue over (non-) compliance with formal pre-action protocols and work is then repeated once the proceedings begin.

The CPR has also highlighted the benefits of active case management by judges, which the judges of the Grand Court have also increasingly demonstrated in recent times. Under the CPR, case management is relatively limited compared with the US docket system, although there is scope to extend it as and when court resources allow. Although not always successful (the BCCI case where opening speeches took more than 200 days being perhaps the most cited example of failure), on balance, more active case management has improved the process. In particular, the holding of a case management conference at an early stage in the proceedings has a number of advantages. By taking a wider view of the case than would be expected at a traditional directions hearing, the judge can help the parties to narrow the issues and encourage them to resolve matters. Parties are required to inform the court of the steps they have taken to resolve the dispute and to indicate their views on mediation. If the court believes that a party is unreasonably refusing to participate in attempts to resolve the issues out of court, the judge may exercise his discretion on costs by refusing to allow that party to recover its costs.

The fixing of a trial date at the case management conference stage and a reluctance to allow any extensions of time which prejudice the trial date helps to ensure that parties are aware of what needs to be done and the time available to do it. Combined with the summary assessment of costs after interlocutory applications and orders for the losing party to pay the costs within 14 days, this has reduced any appetite for making a large number of interlocutory applications. Instead, parties need to consider carefully whether an interlocutory application is necessary and likely to succeed. The strict timetable also helps to control costs by avoiding the additional costs that are inevitably incurred by delays. While the judiciary and staff of the Grand Court are sympathetic to and mindful of the need to dispose of matters as speedily as possible, the CPR has served to reinforce the need for speedy resolution in the minds of litigants and their counsel as well as the English judiciary.

The introduction of formal mechanisms for putting forward offers which have consequences in Part 36 of the CPR has encouraged parties to make offers. Although payments into court have similar consequences under the existing rules, Part 36 is more flexible and allows claimants well as defendants to put forward offers. The consequences of not accepting a reasonable offer include the payment of additional interest on any sums awarded as well as costs.

Despite some initial scepticism and reluctance within the judiciary and the legal profession, mediation has proved itself to be remarkably successful at resolving disputes, with mediation providers such as the Centre for Effective Dispute Resolution, reporting success rates of between 75 and 80 per cent. Experience also suggests that even if a case does not settle on the day of the mediation, the better understanding of the other party’s position that comes from participating in the mediation process often leads to a negotiated settlement shortly afterwards. Mediation has been particularly successful in lower value commercial disputes, where parties tend to take a view on settlement, based on the costs they will incur to progress the matter to trial, but has also worked in cases where costs are a lesser consideration due to the large amounts at stake.

Cayman is competing for business with other offshore jurisdictions. As it has embraced financial regulation, there is a case to say that Cayman should seek to offer the best possible civil legal system and a new commercial division with streamlined procedures may allow it to do so.


The Centre for Effective Dispute Resolution plays piggy-in-the-middle