Litigation & Dispute Resolution

Litigation & Dispute Resolution 2018 Seventh Edition

Contributing Editor: Michael Madden GLOBAL LEGAL INSIGHTS – LITIGATION & DISPUTE RESOLUTION 2018, SEVENTH EDITION

Contributing Editor Michael Madden

Production Editor Andrew Schoﬁ eld

Senior Editors Suzie Levy Caroline Collingwood

Group Consulting Editor Alan Falach

Publisher Rory Smith

We are extremely grateful for all contributions to this edition. Special thanks are reserved for Michael Madden for all his assistance.

Published by Global Legal Group Ltd. 59 Tanner Street, London SE1 3PL, United Kingdom Tel: +44 207 367 0720 / URL: www.glgroup.co.uk

ISBN 978-1-912509-29-4 ISSN 2049-3126

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 from a qualiﬁ ed professional when dealing with speciﬁ c situations. The information contained herein is accurate as of the date of publication.

Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY August 2018 CONTENTS

Preface Michael Madden, Winston & Strawn London LLP

Australia Colin Loveday, Richard Abraham & Sheena McKie, Clayton Utz 1 Bermuda David Kessaram, Matthew Watson & Sam Riihiluoma, Cox Hallett Wilkinson Limited 14 Brazil Eduardo Perazza & Ariana Anfe, Machado, Meyer, Sendacz & Opice Advogados 25 British Virgin Islands Scott Cruickshank & Matthew Freeman, Lennox Paton 32 Cayman Islands Ian Huskisson, Anna Peccarino & Neil McLarnon, Travers Thorp Alberga 47 China Cui Qiang & Li Qishi, Commerce & Finance Law Ofﬁ ces 55 England & Wales Michael Madden & Justin McClelland, Winston & Strawn London LLP 62 Finland Markus Kokko & Niki J. Welling, Borenius Attorneys Ltd 96 France Olivier Laude, Victor Champey & Olivier Guillaud, Laude Esquier Champey 105 Germany Dr Thomas Nebel & Thomas Weimann, Herbert Smith Freehills Germany LLP 121 Greece Spyros G. Alexandris & Eirini Panopoulou, Bahas, Gramatidis & Partners 131 India Rishi Agrawala & Vishnu Tallapragada, Agarwal Law Associates 141 Italy Micael Montinari & Filippo Frigerio, Portolano Cavallo 149 Japan Shinya Tago, Takuya Uenishi & Landry Guesdon, Iwata Godo 160 Liechtenstein Thomas Nigg, Eva-Maria Rhomberg & Domenik Vogt, GASSER PARTNER Attorneys at Law 173 Malaysia Datuk Peter S.K. Yap, Amin, Yap & Co. Mark Ho, Chellam Wong Ooi Huey Miin, Raja, Darryl & Loh 183 Mexico Miguel Angel Hernandez-Romo Valencia & Miguel Angel Hernandez Romo, Foley Gardere Arena 195 Romania Silvia Uscov, USCOV | Attorneys at law 202 Russia Dr Viktor Gerbutov & Artem Kara, Noerr 209 Singapore Chia Boon Teck & Wong Kai Yun, Chia Wong LLP 217 Spain Pedro Moreira & Isabel Álvarez, SCA LEGAL, SLP 227 Switzerland Balz Gross, Claudio Bazzani & Julian Schwaller, Homburger 239 Taiwan Hung Ou Yang, Hung-Wen Chiu & Jia-Jun Fang, Brain Trust International Law Firm 254 Turkey Orçun Çetinkaya & Burak Baydar, Moroğlu Arseven 261 Turks & Caicos Tim Prudhoe, Prudhoe Caribbean 268 Islands Ukraine Oleksandr Zavadetskyi, Zavadetskyi Advocates Bureau 278 UAE Hamdan Al Shamsi, Hamdan AlShamsi Lawyers and Legal Consultants 288 USA Rodney G. Strickland, Jr., Matthew R. Reed & Anthony J Weibell, Wilson Sonsini Goodrich & Rosati, P.C. 299 PREFACE

very year we are bombarded with commentaries on the legal profession with law fi rms being rated often, in terms of Eprofi tability or by reference to client, competitor or other surveys. While these commentaries provide certain perspectives on how we as lawyers may be performing they cannot, and to be fair they generally do not purport to, provide the entire picture of the work undertaken by lawyers around the world and the vital role the profession plays in supporting one of the central pillars of any democratic constitution. The structure of a nation’s constitution and the degree to which the powers comprised within the executive, judicial and legislative branches are separate and independent is a useful indicator of the approach taken by that constitution to values such as political and individual freedoms and human rights – although essential to that measure is the extent to which the members of each branch, particularly the legal and judicial, strive to maintain their independence and to play a fundamental role in preserving a true separation of powers. It can be all too easy for today’s “high fl ying” commercial lawyers, sitting in their modern, air-conditioned offi ces, working on transactions or disputes worth $ billions, and strategising on securing the next profi table instruction to maintain their fi rm’s status in the directories, to forget that they are part of that profession and subject to the duties and responsibilities this creates. However, the legal systems in which they operate are the same systems that are responsible for preserving essential human rights and for keeping the other sources of power within the constitution in check. It is as much in their interest, as it is for lawyers more directly involved in cases where human rights and liberties are being threatened, to ensure that their legal system operates with integrity and effi ciently, and that access to justice is readily available and preserved for the benefi t of all and not just those with the right political connections or the fi nances to afford it. In preparing this year’s edition of Global Legal Insights – Litigation and Dispute Resolution we sought comments from contributors on the costs and funding of litigation. The rapid growth of the litigation funding industry, following the relaxation of medieval principles such as Maintenance and Champerty, refl ects a need within society to provide better access to justice. However, the provision of such services needs to be monitored to ensure that users still obtain independent advice and benefi t from the proceeds of any successful claim. Next year we will consider in further detail how different legal systems operate to preserve their independence and promote diversity within the administration of justice. I do hope that you enjoy reading (or at least dipping in and out of) the book and I would like once again to pay my thanks to all those who have contributed and worked very hard to secure its publication. As always, I welcome any feedback that you may have on this Global Legal Insight.

Michael Madden Winston & Strawn London LLP Australia

Colin Loveday, Richard Abraham & Sheena McKie Clayton Utz

Effi ciency of process Australia has a federal system of government, in which powers are divided between a central government and individual States. Each State and Territory is a separate jurisdiction and has its own hierarchy of courts. The High Court of Australia unites the various court hierarchies. It is the ultimate court of appeal for all Australian courts. State and Territory Supreme Courts hear monetary claims above a certain threshold (typically, from A$750,000), or claims for equitable relief. Each State Supreme Court has an appellate division, or Court of Appeal, which hears appeals from the Supreme Court and lower courts in the State system. Most of the States have two further levels of inferior courts. In addition, some States have established specialist courts of limited statutory jurisdiction, designed to hear specifi c categories of disputes. The jurisdiction of the Federal Court of Australia (Federal Court) covers almost all civil matters arising under Australian federal law. All civil matters are heard by a judge alone. Appeals from a single judge are heard by the Full Federal Court – a court constituted by three Federal Court judges. The Federal Circuit Court hears less complex disputes. There are also a range of tribunals created under Commonwealth law. For example, the Administrative Appeals Tribunal. In the Federal and several State jurisdictions, legislation has been enacted to impose pre- litigation requirements on persons involved in civil disputes. While generally a failure to comply with pre-litigation requirements will not invalidate the proceedings, the court may take this into consideration when awarding costs associated with the proceedings. In the Federal Court, the parties to a dispute are required to fi le a “genuine steps statement”, which outlines the steps taken to attempt to resolve the dispute. Proceedings are commenced by way of originating process. Once service has been effected and the defendant entered an appearance, the parties exchange pleadings (such as a statement of claim and defence), which serve to defi ne the issues in dispute. Once the parties have closed their pleadings, the parties will give discovery (or “disclosure”). Subpoenas may be used to obtain documents from third parties. In most jurisdictions, discovery and inspection takes place before the parties serve the evidence on which they intend to rely at trial. Each party will then prepare its evidence for use at the fi nal hearing, often utilising written witness statements or affi davits in place of oral evidence in chief – there is no deposition procedure in Australia. Where relevant, parties may also engage expert witnesses to give

GLI - Litigation & Dispute Resolution 2018, 7th Edition 1 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Clayton Utz Australia evidence concerning fi elds of specialised knowledge. Most Australian jurisdictions have Codes of Conduct with which expert witnesses must comply. Occasionally, the court will direct both parties’ experts to prepare a joint report, setting out their areas of agreement and disagreement. Throughout the proceedings, the parties will attend court at regular intervals for case management. At directions hearings, orders will be made to govern the conduct of the matter. Once all the parties’ evidence has been prepared and all the interlocutory disputes resolved, the case proceeds to a fi nal hearing. Most civil cases are heard by a judge sitting alone, who will usually deliver a written judgment. Australian courts have broad case management powers which are generally defi ned by the relevant court rules. Judges have a wide discretion to manage cases as they see fi t to ensure that the real issues in dispute are identifi ed and the matter is progressed to trial as soon as possible. Australian court systems have, over time, introduced methods of court-instigated “management” of litigation. The reforms have involved shifting control of aspects of the conduct of litigation from lawyers to the courts, and a focus on case management orders designed to “… facilitate the just, quick and cheap resolution of the real issues in the dispute or proceedings” (described as the “overriding purpose rule”). While parties may apply to the court for a wide range of interim orders, including orders for evidence, discovery, the issue of subpoenas and the referral of the matter to mediation, parties must have regard to the overriding purpose. In a 2013 per curium decision, the High Court of Australia made clear its view that it is the duty of the parties and their lawyers to assist the court in furthering the overriding purpose and “unduly technical and costly disputes about non-essential issues are clearly to be avoided”. Australian courts have wide discretion to impose sanctions (which may include adverse costs orders) on a party that has not complied with court orders or directions. Each court has its own case allocation system. The Federal Court has adopted the individual docket system where cases are allocated to judges and the case will ordinarily stay with the same judge from commencement until it is fi nalised. Cases requiring particular expertise are allocated to a judge who is a member of a specialist panel. The Docket judge monitors the parties’ compliance with the court’s directions, deals with interlocutory issues and ensures that the proceedings progress according to timetable. The judge may direct the parties to participate in alternative dispute resolution processes, such as referrals to mediation. In many State and Territory courts, cases are allocated to judges in particular divisions or lists according to the subject matter of the claim. For example, the Supreme Court of New South Wales has established a Commercial List to deal with disputes arising out of commercial transactions involving substantial amounts of money or issues of importance to trade and commerce. The list system provides litigants with judges with specialist expertise and access to a relatively high level of case management where needed. The Federal Court and most state Supreme Courts have also instituted specifi c “Fast Track” or Expedition Lists. The principal object of these lists is to ensure that urgent matters can be heard and determined quickly. The case management principles applied in the fast track lists are innovative. Their primary objective is to speed appropriate matters through the court lists and limit parties’ exposure to delay and wasted costs by adhering to strict time limits. Recent practices which have

GLI - Litigation & Dispute Resolution 2018, 7th Edition 2 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Clayton Utz Australia been adopted in appropriate cases include limited discovery, interlocutory applications without hearing (otherwise known as ‘on the papers’) and stop-watch hearings. The Australian class action regime has become a key feature of the Australian legal landscape. Outside of North America, Australia is the place where a corporation is next most likely to fi nd itself defending a class action. The Australian class action regime comprises essentially identical rules in the federal court system and the courts of New South Wales and Victoria. This regime has some important features: (a) There is no certifi cation requirement – that is, no threshold requirement that the proceedings be judicially certifi ed as appropriate to be brought as a class action. Once a class action has been commenced, it continues until fi nally resolved by judgment or settlement, unless the defendant can convince the court to terminate the proceedings on certain limited grounds. (b) There is no requirement that common issues predominate over the individual issues. (c) The Australian rules expressly allow for the determination of “sub-group” or even individual issues as part of a class action. (d) A representative plaintiff can defi ne the class members by description. This means that a person who meets the criteria set out in the class defi nition will be a class member unless they “opt out” of the proceedings. If a class member fails to opt out by the specifi ed date, they are a class member in the proceedings. Thus, a person may be a class member and bound by the outcome of the proceedings without their knowledge or consent, simply on the basis that they fall within a class defi nition. Despite a slow adoption of the procedure (which was fi rst introduced in 1992), class actions are now fi rmly embedded in the Australian legal landscape. Developments in the class action landscape cannot be viewed without considering the developments in litigation funding in Australia (discussed further below). A key driver of the Australian class action industry has been the emergence of the litigation funding enterprises.

Integrity of process Application of rules of natural justice, independence and impartiality of the judiciary There are three arms of government in Australia – the legislature (responsible for debating and voting on new laws), the executive (responsible for enacting and upholding laws) and the judiciary (responsible for enforcing laws). The judiciary is independent of the other two arms and it is part of the judiciary’s role to decide upon whether the other two arms of government act within their powers. The separation of powers is mandated by Australia’s Constitution. Courts in Australia apply the rules of natural justice. Natural justice has been deﬁ ned as a condition governing the exercise of a statutory power. In adjudicating the exercise of a statutory power, a court will have regard to whether the procedure adopted in exercising that power was reasonable and fair – the concept of “procedural fairness”. The elements of procedural fairness include providing prior and adequate notice of a decision, sufﬁ cient information and a reasonable opportunity or real chance to present a case to a tribunal or make representations to a decision-maker, and whether or how a hearing should be held. See also the speech of Justice Alan Robertson (4 September 2015, see http://www.fedcourt. gov.au/publications/judges-speeches/justice-robertson/robertson-j-20150904).

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Privilege and disclosure In broad terms, the uniform Evidence Acts govern privilege issues on occasions when evidence is adduced at trial, while the common law governs questions concerning privilege which arise pre-trial. At common law, there are three elements necessary to establish legal professional privilege over communications passing between a legal adviser and client: • the communication must pass between the client and the client’s legal adviser; • the communication must be made for the dominant purpose of enabling the client to obtain legal advice, or for the purpose of actual or contemplated litigation; and • the communication must be confi dential. The uniform Evidence Acts create a privilege for confi dential communications made or prepared for the dominant purpose of a lawyer providing: (a) legal advice; or (b) professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is, or may be, or was, or might have been, a party. “Dominant” in this context means the ruling or prevailing purpose. The purpose or intended use for which a document is brought into existence will be a question of fact. Legal professional privilege may be waived or lost where there is conduct inconsistent with the maintenance of the privilege. A third stream of privilege exists in the form of “without prejudice privilege”. This involves communications between parties which are generally aimed at settlement. These communications cannot be put into evidence without the consent of parties in the event that negotiations are unsuccessful. Disclosure, or ‘discovery’, is an interlocutory procedure whereby a party is able to obtain from an opponent the disclosure and subsequent production of documents which are relevant to a fact in issue in the proceedings. Disclosure must be made of the existence of all documents which the party has in its possession, custody or power. General discovery involves discovery of all documents relevant to a fact in issue. While most jurisdictions permit an order for general discovery to be made, the courts and the parties may seek to limit the documents to be discovered to those falling within a particular category or class. In the Federal Court, a party must not apply for an order for discovery unless it will facilitate the just resolution of the proceedings as quickly, inexpensively and effi ciently as possible. In practice (depending on the complexity of the case), discovery may still be very large, expensive and time-consuming for all parties. In most jurisdictions, where an order for discovery is made by the court, the parties are required to compile and exchange lists of discoverable documents. Documents that are not relevant to a fact in issue do not need to be disclosed. After the lists have been exchanged, the documents will be produced for inspection by the other party. In large and complex cases, discovery will often be exchanged on an electronic basis, in accordance with a pre-agreed protocol. Documents obtained on discovery are not able to be used for any purpose other than the proceedings in which they were disclosed. The “Harman Undertaking” is the implied

GLI - Litigation & Dispute Resolution 2018, 7th Edition 4 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Clayton Utz Australia undertaking given to the court by any party obtaining documents on discovery (or by virtue of some other compulsory process) that it will not use such documents (or any other information gained from them) for any collateral purpose. The court rules in each jurisdiction provide that a party to proceedings can apply for an order for discovery against a non-party. In the alternative, a party may choose to seek documents from a non-party by way of subpoena. While a party cannot seek general disclosure from a non-party through a subpoena, it can request documents that relate to narrowly defi ned categories – the issuing party can only legitimately ask for documents which are relevant to the issues in dispute in the proceedings. Whether a subpoena has legitimate forensic purpose turns on whether the documents would materially assist the issuing party in relation to the proceedings. If a subpoena is in terms which are too broad, it is liable to be set aside. Commercial litigation often involves the disclosure of commercially sensitive documents. While confi dentiality is not a basis for resisting production, parties will often enter into confi dentiality and non-disclosure agreements to manage the exchange of such documents (for example, by agreeing to limit access to commercially sensitive documents to a party’s external legal counsel, or a tightly controlled group of individuals for the purposes of obtaining instructions). If a case proceeds to hearing (at which stage, confi dential documents may be put into evidence or otherwise disclosed in court) the parties can apply to the court for suppression and non-publication orders.

Costs Australian courts have broad discretion over the costs of all proceedings. In effect, a court may make whatever order as to costs is justiﬁ ed in the circumstances; however, there are general court rules that govern the exercise of that power. Ordinarily, costs follow the event, which means a successful litigant receives costs in the absence of special circumstances justifying some other order. A party is usually entitled to costs of any issue on which it succeeds, assessed on an ordinary basis. The onus is on the unsuccessful party to show the presence of “special circumstances” sufﬁ cient for the court to depart from the rule that costs follow the event. There are two main classes of costs: (a) those that arise by virtue of the retainer with the client and are governed by contract (“solicitor/client” costs); and (b) those that arise by order of the court, which may either be on an ordinary basis (“party/ party” costs) or an indemnity basis (“solicitor/client” costs). Indemnity costs are usually awarded against a party in circumstances where that party has engaged in unreasonable behaviour in connection with the conduct of the proceedings. Class action proceedings are unique in many ways. One of the characteristics peculiar to class actions is that a successful respondent can only recover costs against the lead applicant, as group members are immune from having costs orders awarded against them. This immunity is underpinned by important policy considerations, including affordable access to justice. However, it means that respondents will often be forced to defend an action at considerable costs, with no ability to recover those costs if they are successful. That dynamic can impact many aspects of the proceedings, including settlement negotiations. It shifts the balance of power in favour of applicants.

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An offer of settlement may entitle the party making the offer to obtain costs on an indemnity basis. The offer may not be the only issue that determines the court’s decision on this issue, but it is certainly a key factor. There are two types of offers of settlement, namely: (a) more “informal” offers – commonly referred to as Calderbank offers; and (b) offers made in accordance with the court rules – referred to as offers of compromise. A Calderbank letter refers to an informal offer of compromise made on a “without prejudice” basis between the parties, in accordance with the principles set out in Calderbank v Calderbank [1975] WLR 586 and subsequent authorities. Although such letters are “without prejudice”, the courts may have regard to them on the question of costs, and can order a party who rejected the offer of settlement to pay the successful party’s legal costs: (a) on an ordinary basis, up to the time the offer was made; and (b) on an indemnity basis, from the date the Calderbank offer was made (unless the party who rejected the offer can establish that it was reasonable to reject it). The provisions regarding (formal) offers of compromise are found in the court rules. Although the court retains a discretion to decide whether or not to award costs, the rules provide that, subject to this discretion, the rejection of a more favourable offer made in compliance with the rules will entitle the offeror to a higher proportion of costs from the day the offer was made. Security for costs orders are usually sought where the defendant alleges that the plaintiff will not hold enough funds to satisfy a costs order. The defendant asks the court to order the plaintiff to provide “security” to “protect” the defendant from this occurrence. The usual forms of security include: (a) money paid into court; (b) payment into an interest-earning bank account under the control of a third party or solicitor for the plaintiff, who has given an undertaking regarding the circumstances when the money will be released; (c) a bank guarantee in favour of the court to be held by the court until further order; or (d) a deed of guarantee pursuant to which another entity agrees to guarantee payment of the amount to satisfy the costs order. The making or refusal of an order for security for costs is discretionary. The court must consider and weigh the totality of the circumstances. Where an applicant or plaintiff fails to pay security in accordance with a court order, the court will order that the proceedings be stayed until the security is given. Security for costs applications have had a chequered history in class action litigation. The Full Federal Court decision of Madgwick v Kelly (2013) 212 FCR 1 has made it clear that security for costs applications are not prohibited in representative proceedings.

Litigation funding Australian lawyers are currently prohibited from entering into contingency fee arrangements with their clients under which their professional fees are calculated by reference to the amount of any judgment or settlement received by the client. While there have been recent calls to remove the prohibition on contingency fees for lawyers, legislative reform in this area is yet to occur.

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Importantly, the prohibition on contingency only applies to lawyers. Litigation funders are not so constrained, and have found a very profi table role in the Australian legal (and in particular, class action) market. Australian lawyers are, however, permitted to enter into conditional costs agreements (where payment is conditional upon a successful outcome) which involve the payment of a premium or “uplift” fee calculated against legal fees (rather than by reference to any judgment or settlement amount). Such “no win, no fee” arrangements are common in Australian class actions. Litigation funding agreements are commercial arrangements under which the funder agrees to pay the fees and out-of-pocket expenses of the lawyer representing the plaintiffs. The funder will also agree to satisfy any adverse costs orders. In return for accepting this risk, the funder will take a portion of any judgment or settlement, usually one-third to two-thirds, calculated after the costs of the proceedings have been reimbursed. While initially a matter of some debate, the validity of litigation funding was established by the High Court in 2006 and subsequently reaffi rmed in 2012. The fl ourishing litigation funding industry that has emerged as a result of the light- touch legislative scheme in Australia has been active, particularly in class actions and in an insolvency context. Concerns have been raised as to whether the current regulatory arrangements can ensure the proper protection of consumers, management of confl icts, and proper fi nancial supervision and capital adequacy. These concerns may drive regulatory reform in this area. Despite the light-touch legislative scheme and High Court authority in favour of litigation funding, the growth of the industry has not occurred unchecked. For example, the Victorian Court of Appeal recently held that a particularly novel funding model amounted to an abuse of process, and stayed the proceedings as a result. Recent changes to the Federal Court Class Actions Practice Note requires visibility to be given to the Court, class members and the other parties to litigation funding agreements. Details of costs agreements must also be provided to the Court and class members. A well-known feature of plaintiff fi rms in class actions in Australia is the “no win, no fee” retainer its solicitors often enter into with group members in a class action, who otherwise could not afford to fund the litigation. In the result of a win, the retainer agreement often contains provision for the payment of an “uplift” fee, in addition to professional costs. Subject to the court supervision inherent in the class action regime in Australia, this arrangement is permissible. Usually in litigation in Australia, where a respondent does not expect to be able to recover costs from a plaintiff, it has an option to make an application for security for costs. The involvement of third-party funders with no pre-existing interest in the proceedings, but who stand to benefi t substantially from any recovery from the proceedings, is a material consideration in the courts considering whether to grant security for costs. The courts proceed on the basis that funders who seek to benefi t from litigation should bear the risks and burdens that the process entails.

Interim relief Australian courts have a wide discretion in determining whether to grant injunctive relief. An injunction is a court order that restrains a person from performing a particular act (prohibitory injunction) or requires a person to perform a speciﬁ ed act (mandatory injunction). Injunctions may have an effect for a limited time, or permanently, and may be

GLI - Litigation & Dispute Resolution 2018, 7th Edition 7 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Clayton Utz Australia granted before proceedings are commenced, during a proceeding, or as fi nal relief. When seeking an interlocutory injunction, an applicant is required to prove that there is a serious question of law to be tried, and that the balance of convenience favours the granting of the injunction sought. The court will have regard to factors including whether damages would otherwise be an adequate remedy and whether the grant of an injunction would preserve the status quo. Typically, such applications are made on ex parte basis and without notice to the other party. With very few exceptions, the court will refuse to grant an interlocutory injunction unless the plaintiff provides what has become known as “the usual undertaking as to damages”. In essence, this is an undertaking to compensate the defendant for any damage suffered as a consequence of the injunction, if it turns out that the injunction should not have been granted (because the plaintiff fails to prove its case at the fi nal hearing). Courts may also grant other interim orders including freezing orders (sometimes referred to as “Mareva orders”), and search orders (known as “Anton Piller orders”). Orders for preliminary discovery are generally made where the applicant has made reasonable inquiries but still has insuffi cient information for the purpose of determining a prospective defendant’s liability or whereabouts for the purpose of commencing proceedings, or deciding whether or not to commence proceedings against the prospective defendant.

Enforcement of judgments Successful plaintiffs have a range of mechanisms available for the enforcement of judgments. The most common mechanism for enforcing a judgment against companies is issuing a statutory demand. If the judgment debtor company does not respond to a statutory demand within 21 days, the successful plaintiff can apply to the Supreme Court to have the company wound up on the basis that it is insolvent (unable to pay its debts). Where the judgment debtor is an individual, there are a range of mechanisms including applying to have the judgment debtor declared bankrupt; garnishee orders to have money taken from the judgment debtor’s bank accounts or wages; and writs authorising the sheriff to seize and sell property belonging to the judgment debtor. The enforcement of foreign judgments in Australia is governed by a statutory regime and common law principles. Enforcing a foreign judgment in Australia depends on where the judgment was issued and the type of judgment that was issued. Australia is not a party to the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters 1971. However, Australia has reciprocal arrangements for the enforcement of judgments with a number of countries. Australia has a statutory scheme in the Foreign Judgments Act 1991 (Cth) for the recognition and enforcement of judgments entered in foreign countries with which Australia has reciprocal arrangements. The Foreign Judgments Regulations 1992 (Cth) list the countries to which the statutory scheme applies. The Foreign Judgments Act applies to enforceable money judgments that are obtained either on a ﬁ nal or interlocutory basis. Non-monetary judgments must be enforced at common law. Where no international treaty or statutory arrangement operates, a foreign judgment may be enforced under common law principles. A judgment may be enforceable at common law provided the Australian court is satisﬁ ed the foreign court has exercised jurisdiction in the international sense, which includes in circumstances where:

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(a) the defendant voluntarily submitted to the foreign court’s jurisdiction; or (b) the defendant was ordinarily resident in the foreign jurisdiction, or present in the foreign jurisdiction at the time that the defendant was served with the originating process. Provided that the relevant Australian court is satisﬁ ed that the jurisdiction of the foreign court to make the order can be shown, prima facie, the judgment will then be entitled to recognition at common law. Generally, the only objections that the defendant can raise against enforcement of the judgment are that: (a) the judgment was obtained by fraud; (b) the foreign court acted contrary to natural justice; or (c) the foreign judgment is contrary to Australian public policy.

Cross-border litigation Australian courts may make two kinds of transnational freezing orders: (a) orders which apply to foreign assets in aid of Australian judicial proceedings (sometimes called worldwide orders); and (b) orders which apply to Australian assets in aid of foreign judicial proceedings. In relation to the fi rst category, Australian courts have jurisdiction to make freezing orders and ancillary orders against those over whom they have personal jurisdiction, even if they reside overseas and even in relation to overseas assets. An important long-arm service rule provides: “An application for a freezing order or an ancillary order may be served on a person who is outside Australia (whether or not the person is domiciled or resident in Australia) if any of the assets to which the order relates are within the jurisdiction of the court”. In order to prevent harassment of a respondent in multiple actions around the world, the Australian example form of freezing order contains several undertakings that must be given by the claimant to the court. These refl ect “Dadourian guidelines” laid down by the English Court of Appeal. In relation to the second category, the primary elements for obtaining such an order from an Australian court are: (a) a foreign judgment or “good arguable case” in a foreign court; (b) a suffi cient prospect of registration or enforcement of the foreign judgment or prospective judgment in the Australian court; (c) a danger that the foreign judgment will go unsatisfi ed; and (d) satisfaction of discretionary matters (such as the effects on the respondent and third parties and the diligence and expedience of the applicant in bringing the application). For example, in Davis v Turning Properties Pty Ltd (2005) 222 ALR 676, a freezing order was granted in support of a freezing order from a Bahamas court made over the defendant’s assets worldwide, including its assets in Australia. It was the fi rst time that such an application had been made in Australia. Australia is a party to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965, which governs the international service of process on a defendant who resides in Australia. The primary method for taking evidence in Australia for a foreign proceeding is through the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters (Hague Evidence Convention).

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Australian authorities will not accept any Letters of Request that require a person to state what documents relevant to the proceedings are or have been in their possession, or produce any documents, other than particular documents speciﬁ ed in the Letter of Request which the requested court believes to be in their possession. Given the strict statutory regime regarding pre-trial discovery in Australia, any veiled request for pre-trial discovery that circumvents that process is likely to be rejected. Australian law also permits the taking of evidence without compulsion and the giving of evidence by video link testimony, provided it is otherwise consistent with evidentiary requirements of the relevant court. Australian courts will generally respect an exclusive jurisdiction clause if it is consistent with the construction of the relevant contract. However, an exclusive jurisdiction clause does not necessarily prevent an Australian court from exercising jurisdiction where there is a strong case for the court to do so, namely, where the party would be deprived of a legitimate juridical advantage available in an Australian court.

International arbitration Australia offers an established and hospitable environment for international commercial arbitration, with highly experienced legal practitioners and arbitrators. Australia has been a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) since 1975, is a signatory to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention) and was one of the fi rst countries to adopt the UNCITRAL Model Law on International Commercial Arbitration (the Model Law) in 1989. International arbitration is governed by Commonwealth legislation: the International Arbitration Act 1974 (Cth) (IAA). The IAA incorporates the UNCITRAL Model Law. Unless parties have excluded the Model Law by an agreement in writing, the Model Law will apply to international arbitrations seated in Australia. If parties exclude the Model Law, the arbitration will still be governed by the IAA as the curial law. In addition to giving force of law in Australia to the Model Law, the IAA implements the New York Convention and the Washington Convention. In 2010, amendments were made to the IAA to enhance the effi cacy and cost-effectiveness of international commercial arbitration. For example, one amendment specifi ed that Australian courts have no residual discretion to refuse enforcement of an arbitral award on any grounds other than those provided in ss8(5) and 8(7) (which reproduce the grounds embodied in Art 5 of the New York Convention). While Australian courts have in the past taken a rather conservative approach to the enforcement of foreign arbitral awards, they are developing a strong track record of enforcement. International arbitral awards are now almost universally enforceable in Australia without the need to reopen the substance of the dispute in court. In 2013, the Australian Commercial Disputes Centre (ACDC) and the Australian International Disputes Centre (AIDC) became the Australian Disputes Centre (ADC), aiming to provide an alternative dispute resolution (ADR) centre of excellence that is the “fi rst choice for businesses, government and the community to resolve or learn how to resolve confl icts and disputes”. The ADC has a history of co-operation with leading ADR providers including the Australian Centre for International Commercial Arbitration (ACICA) and the Chartered Institute of Arbitrators (Australia) Limited (CIArb).

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ACICA is the sole default appointing authority competent to perform the arbitrator appointment functions under the IAA. ACICA has a standard set of arbitration rules (including an expedited option) which are to a large degree based on the UNCITRAL Arbitration Rules 1985. However, these Australian rules are not compulsory and parties are free to (and commonly do) use foreign procedural rules. In 2010, a scheme of uniform Commercial Arbitration Acts based upon the UNCITRAL Model Law was also introduced to apply to domestic arbitration. The new scheme was adopted to minimise court intervention and promote ﬁ nality in arbitral awards, while simultaneously endeavouring to enhance the arbitration process.

Mediation and ADR Alternative dispute resolution mechanisms, including arbitration and mediation, are increasingly popular in commercial matters in Australia. Indeed, some of the Australian courts are now directing parties to use specifi c alternative dispute resolution mechanisms to attempt to resolve or narrow issues in dispute. In addition, there are a number of tribunals in each jurisdiction which have been established to deal with disputes in a specifi c area and provide affordable alternative dispute resolution mechanisms. There has been an increasing focus by the judiciary on the costs of litigation, which in turn has promoted a greater use of alternative dispute resolution in Australia. In the Federal Court, the parties to a dispute are required to fi le a “genuine steps statement”, which outlines the steps taken to constitute a sincere and genuine attempt to resolve the dispute. In the Commercial List of the Supreme Court of New South Wales, it is common for the court to order that the parties mediate before the matter is set down for hearing. Many contractual agreements now contain alternative dispute resolution clauses which require the parties to attempt to resolve the dispute in a specifi c way, prior to the commencement of proceedings. In Australia, the court may order that the proceedings be stayed until such time as the process referred to in the dispute resolution clause is completed. A dispute resolution clause may, however, be deemed to be unenforceable where the clause is found to be so vague as to be uncertain in terms of setting out the method by which to resolve the dispute. An arbitration award is binding on the parties and will be enforced by the Australian courts. An application for enforcement can be made to the courts in Australia. The relevant legislation applicable will depend on whether it is classifi ed as domestic arbitration or international arbitration. In practice, the arbitrators of choice for major commercial arbitrations in Australia are usually retired judges of the High, Federal or Supreme Courts. One consequence of this is that the conduct of the arbitration can sometimes involve many of the formalities of a legal proceeding. There are no laws or rules that govern the conduct of alternative dispute resolution mechanisms such as mediation or expert determination. Settlement agreements reached at mediation do not require court sanction and will be binding and enforceable upon the parties if a valid contract has been formed. Whether an expert determination is binding and enforceable will depend on the process adopted by the parties and the terms of the particular clause. The major dispute resolution institutions in Australia are ACICA and the Australian Disputes Centre, which provides a range of training, professional development, case management and consultancy services in relation to alternative dispute resolution.

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Regulatory investigations Australia has important Federal regulatory authorities, which have their own prescribed areas of responsibility, including: 1. the Australian Competition and Consumer Commission (ACCC) is the Federal regulatory authority responsible for ensuring individuals and businesses comply with Australian competition, fair trading, and consumer protection laws; 2. the Australian Securities and Investments Commission (ASIC) oversees Australian corporations and fi nancial markets. In particular, ASIC regulates the provision of consumer credit, fi nancial products and fi nancial services; 3. the Australian Prudential Regulation Authority (APRA) is the prudential regulator of the Australian fi nancial services industry, which is responsible for regulating the conduct of banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurance, friendly societies, and most of the superannuation industry; and 4. the Therapeutic Goods Administration (TGA) is Australia’s regulatory agency for therapeutic goods including medicines, medical devices, blood and blood products. Australia also has a process whereby the Governor General of Australia can establish a Royal Commission for the purpose of investigating a reporting on certain matters. The Royal Commissions Act 1902 (Cth) grants the Royal Commission considerable powers to, for example, compel the attendance of persons to give evidence, or produce documents or information. On 14 December 2017, a Royal Commission was established to inquire into and report on misconduct in the banking, superannuation and fi nancial services industry.

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Colin Loveday Tel: +61 2 9353 4193 / Email: [email protected] Colin Loveday is internationally recognised as an experienced litigation lawyer specialising in complex commercial litigation, the defence of class actions and product liability claims. He is one of the leaders of the Clayton Utz Class Actions team and head of the national Product Liability group. Colin has defended some of Australia’s most high-profi le class actions involving complex consumer product and fi nancial services claims. He has worked extensively with lawyers in other jurisdictions in the co-ordinated defence of multinational claims, developing international defence strategies and working with international expert witnesses. He also advises corporations and fi nancial institutions on securities class actions and in regulatory investigations and inquiries. Colin is regularly voted by peers as one of Australia’s “best lawyers”, including in Litigation (2013) by Best Lawyers Australia.

Richard Abraham Tel: +61 2 9353 5729 / Email: [email protected] Richard Abraham is a Senior Associate in Clayton Utz’s Commercial Litigation practice group and is a member of the national Product Liability group. Richard has assisted in the defence of a number of class action proceedings for clients across a number of industries. Richard has advised on white-collar crime, fraud, anti-corruption and regulatory issues, and has been involved in a number of general commercial disputes, including matters before the NSW Court of Appeal. Richard has contributed to a number of publications and presentations regarding Australian product liability law, pharmaceutical and device regulation, as well as Australian practice and procedure.

Sheena McKie Tel: +61 2 9353 5732 / Email: [email protected] Sheena McKie is a Special Counsel in Clayton Utz’s Commercial Litigation practice group and is a member of the national Product Liability group. Sheena has been involved in a broad range of product liability and general commercial matters, including advisory and contentious work. Sheena has experience in the running of both small and large-scale commercial litigation matters, including class actions, in the Supreme Court of NSW and Federal Court of Australia. Sheena’s advisory work centres on product safety issues, including product recalls, as well as regulatory work for clients in the consumer products, pharmaceutical and medical device industries.

Clayton Utz Level 15, 1 Bligh Street, Sydney, New South Wales, Australia Tel: +61 2 9353 4000 / Fax: +61 2 8220 6700 / URL: www.claytonutz.com

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David Kessaram, Matthew Watson & Sam Riihiluoma Cox Hallett Wilkinson Limited

Effi ciency of process Large commercial disputes in Bermuda are resolved by either: (a) litigation; (b) arbitration under the UNCITRAL Model Law; or (c) mediation. Litigation of such disputes is conducted in the Supreme Court, which has an unlimited jurisdiction. The Supreme Court can grant any one or more of a range of different remedies: damages, specifi c enforcement of contracts, injunctive relief, declaration, restitution, and receivership orders. Actions in the Supreme Court are normally between commercial entities (companies or partnerships), or arise out of internal disputes between shareholders and partners, etc. Any person, whether corporate or an individual, whether resident in Bermuda or resident abroad, can invoke the jurisdiction of the Supreme Court. In certain circumstances, a non-resident person may be required to provide security for the costs of the action to the defendant. The Supreme Court also has long-arm jurisdiction over persons, corporate or otherwise, not resident in Bermuda. This jurisdiction can be invoked only in cases where the subject matter of the action falls within defi ned categories. The types of disputes commonly heard in the Supreme Court are claims and counterclaims arising out of: • trade and commerce; • banking and fi nancial services; • insurance and reinsurance; • purchase and sale of commodities; and • applications made under the Companies Act 1981. These actions are tried in the Commercial Court, a division of the Supreme Court. The judges in the Commercial Court are experienced in commercial matters and decide cases without a jury. The Commercial Court has dedicated courtrooms and administrative support provided by the Registrar of the Supreme Court. The two Commercial Court Judges of the Supreme Court of Bermuda have recently changed. Chief Justice Kawaley is due to retire effective as of mid-July 2018 and Mr. Narinder Hargun is appointed as the new Chief Justice. Justice Hellman has resigned effective as of mid-June 2018 and his replacement is yet to be announced as at the date of this publication. There is a small pool of senior members of the local Bar who also sit as assistant judges from time to time. The judges of the Supreme Court are known for their independence and impartiality, and for dealing with cases expeditiously. In appropriate cases where there is a need for urgent action to be taken, e.g., to prevent a threatened or continuing breach of a legal duty, the Supreme Court acts quickly to achieve a fair balance of competing interests pending a full hearing of the dispute between the parties.

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Litigation is adversarial in nature. In regulating the conduct of adversarial litigation, however, the Supreme Court applies a set of principles known as the Overriding Objective to ensure that cases are dealt with fairly and justly. Proof of the facts at trial is on a balance of probabilities. The Bermuda legal system is founded upon the English common law, and decisions of the English Court of Appeal and Supreme Court are highly persuasive authority in the Bermuda Courts. Much of Bermuda’s statute law is derived from English legislation, as are the Rules of the Supreme Court (RSC) which govern civil procedure. Bermuda legislation is modernised and updated regularly to enhance the jurisdiction’s attractiveness as an efﬁ cient and favourable place to carry on business; and to ensure that Bermuda retains its reputation as a leading offshore jurisdiction. The Court of Appeal for Bermuda hears appeals from the decisions of the Supreme Court. It sits three times a year in Bermuda and comprises the President and two Justices of Appeal; typically these sittings take place in April, June and November, although the precise dates may vary each year and are published on the Bermuda Government website at www.gov.bm. The current President of the Court of Appeal is Sir Scott Baker, a former Lord Justice of the Court of Appeal of England and Wales. The ultimate appellate court is the Judicial Committee of the Privy Council which sits in London. In civil cases, a party may appeal to the Privy Council as of right against any ﬁ nal order where the sum or value of the matter in dispute is $12,000 or more. The judges of the Privy Council are eminent judges who also sit in the Supreme Court of the UK. Decisions of the Privy Council are binding on the Supreme Court and Court of Appeal, whether on appeal from Bermuda or from any other common law jurisdiction where the common law or statutory provisions in question are the same as those in Bermuda; see Grayken v Grayken [2011] Bda LR 15.

Integrity of process Bermuda is the oldest British Overseas Territory. The Governor of Bermuda, appointed by the British Foreign Offi ce, acts as the representative of the Queen and thereby as de facto head of state. The judges of the Supreme Court are appointed by the Governor and are renowned for their independence and impartiality. These judges are drawn from the ranks of senior members of the Bermuda Bar and the Commonwealth Bars and Judiciary. The Bermuda Bar is regulated by the Bermuda Bar Act 1974 and its governing body is the Bermuda Bar Association. The Bermuda Bar follows many of the traditions of the English Bar and adopts a similarly stringent Code of Professional Conduct. However, unlike England (which still maintains a distinction between barristers and solicitors) there is a fused legal profession in Bermuda similar to that in Canada and some Australian jurisdictions. All lawyers admitted to practice in Bermuda (called “Barristers and Attorneys of the Supreme Court of Bermuda”) have the right of audience before the Bermuda courts. The Bermuda Bar comprises Bermudian lawyers who have met certain minimum qualifi cation and training requirements, and lawyers from Commonwealth jurisdictions who have been approved by the Bar Association for the grant of the right to work in Bermuda. English Queen’s Counsel are admitted to practice at the Bermuda Bar on a temporary basis in individual and appropriate cases. No requirements exist in relation to foreign lawyers appearing on behalf of a party in arbitration proceedings being conducted in accordance with the UNCITRAL Model Law in Bermuda. Any duly qualifi ed legal practitioner who has been instructed by a party to represent him in the arbitration can participate in international commercial arbitration

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Privilege and disclosure Standard disclosure Parties to commercial litigation in the Supreme Court must disclose all documents in their possession, custody or power that relate to any matter in question between them in the litigation. This obligation is mutual between the parties and arises after the close of pleadings until trial. However, the parties can agree to dispense with or limit their discovery obligations. The parties must exchange lists of all relevant documents and permit the other party to inspect and take copies of them. The time period set by the rules of court is 14 days after the close of pleadings. However, this period can be extended by agreement between the parties or by order of the court. If a party fails to disclose all relevant documents in its possession, it is usual for the other party to request a verifi cation of its list of documents by affi davit. If this is not complied with, the party can apply to the court for an order for a verifying affi davit. A failure to comply with discovery obligations can ultimately result in the striking-out of the claim or defence and entry of judgment, as may be appropriate in the circumstances. Outstanding matters relating to discovery are usually dealt with by the court on the application of a party at the summons for directions stage. Specifi c disclosure A party can apply to the court for discovery of specifi c documents or specifi c classes of documents, if it is considered that the other party failed to comply with its discovery obligations. This application is made by summons returnable before a judge and supported by an affi davit stating the evidence on which the application is based. Such an application may be made at any time following ordinary discovery. Privileged documents Under Bermuda law there are three main types of privilege: • Legal advice privilege. • Litigation privilege. • Without prejudice correspondence. Legal advice and litigation privilege attaches to documents produced internally within an organisation in connection with obtaining advice from in-house legal advisers and written communications with outside lawyers. However, for litigation privilege to apply, the correspondence must have been made for the purposes of litigation or in contemplation of litigation. Letters and oral communications between the parties to actual or contemplated litigation, which are made or written for the purposes of settling the dispute and are expressed to be written or made without prejudice, cannot be admitted into evidence. Other non-disclosure situations The disclosure of confi dential information can be compelled in litigation where disclosure is necessary to dispose of the case fairly. Relevance alone may not be a suffi cient ground to order disclosure. In general, the court seeks to balance the private interest in preserving confi dence against the public interest in seeing that justice is done.

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Costs and funding Costs The general rule in Order 62 of the RSC is that costs follow the event (i.e., the unsuccessful party pays the successful party’s costs.) However, there can be circumstances in which the costs of separate issues in the trial are subject to different costs orders. A typical costs order is “costs in the cause’’. This means that whichever party succeeds at trial obtains its costs of the application in which the order was made. Another typical costs order is “costs of the [claimant or defendant] in any event’’. This order is made where the court is satisfi ed that the claimant or defendant ought to have its costs of a certain application regardless of which party prevails at trial. It should be noted, though, that the Court’s discretion on costs is wide and can take into account a variety of factors including taking a view as to how litigation should have been conducted. In the recent case of David R. Whiting v Torus Insurance (Bermuda) Ltd [2015] Bda LR 18, a successful claimant who claimed damages of $300,000 but was awarded only $1,909 was left to bear his own legal costs. The judge awarding the costs of an application to a party can make a summary assessment of the amount of the costs of the application to be paid. However, it is more common for costs to be assessed at the end of the trial after judgment. In the absence of an agreement by the parties as to the amount of costs to be paid under a costs order, the Registrar of the Supreme Court, in the role of Taxing Master, assesses the claim for costs following the production of an itemised bill of costs by the party claiming its costs. These assessments are called taxation proceedings. The taxation of costs is an exercise which involves the Taxing Master determining what legal costs were reasonably incurred for the purposes of obtaining the result achieved. The use of without-prejudice offers is commonplace in circumstances where a payment into court is not permissible under the rules of court. A payment into court is appropriate in civil cases, where monetary damages are claimed for breach of a contract or commission of a tort, and the defendant wishes to limit his exposure to the payment of the claimant’s legal costs. The effect of an offer to settle puts the offeror in an advantageous position during the costs assessment, if the successful party recovers no more than the amount offered. Interest is awarded on costs from the date of the order for costs. However, these costs do not need to be ascertained at the date of the order but only quantifi ed when assessed (taxed). The statutory rate at which interest is awarded is currently 3.5% per year. Funding The usual fee structure between a lawyer and his client is for invoices based on the time spent performing the client’s work, charged at an agreed hourly rate. In some cases, a lump sum can be agreed at the outset as the lawyer’s remuneration. The Barristers’ Code of Professional Conduct does not permit Bermuda lawyers to enter into contingent fee arrangements. However, this rule does not apply to undefended debt collections, where a Bermuda lawyer can charge a percentage of an undefended debt as his fee for its collection. The matter of contingent fees is currently under review by the Bermuda Bar Association. Litigation is usually funded by the parties to the litigation out of their individual fi nancial resources. Legal aid is not available in commercial litigation cases. Some large-scale litigation is conducted in Bermuda with funding from third-party funders. Although after- the-event insurance is not available in Bermuda from local insurance sellers, insurance to cover these risks in Bermuda litigation can be purchased from UK insurers.

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Interim relief The Bermuda procedural rules provide a number of fl exible remedies to preserve and detain property pending a substantive hearing, and for a party to apply for a case to be dismissed before trial. These remedies include: Strike-out orders Under the RSC Order 18, a claim can be struck out before trial. The usual ground for striking out a claim is that it fails to disclose a reasonable cause of action. The basis of this application is equivalent to a demurrer (that is, a plea in a lawsuit that objects to or challenges the suffi ciency of a pleading fi led by an opposing party). A statement of claim must plead all the essential elements of a cause of action under Bermuda law. For example, a claim in tort must plead the duty of care, the breach and loss or damage arising from the breach. A failure to plead any one of these elements gives rise to an application to strike out. Other grounds for striking out a claim exist under the Rules of Court; for example, that the claim is an abuse of the process, or is frivolous or vexatious. Applications to strike out are usually made at an early stage of the proceedings (for example, after the statement of claim is served). The application is made by summons, returnable before a judge in chambers. If the ground relied on is a failure to disclose a reasonable cause of action, no evidence is served in support of the application, as the defects of the statement of claim are usually apparent on its face. However, other grounds for striking out require the service of evidence in support. The evidence is given by way of an affi davit. The fi rst hearing of the summons to strike out is usually treated as a directions hearing at which a timetable for the fi ling of evidence (if any) and the return hearing are provided for. Summary judgment The summary judgment procedure under RSC Order 14 is another means of disposing of a claim without a full trial. Summary judgment may be granted in favour of the claimant in circumstances where it can be established on affi davit evidence, usually at an early stage of the action: • that there is no defence to the claim or part of a claim; and • that the defence is only as to the quantum of damages. The applications are also made by summons supported by an affi davit verifying the relevant facts. Summary judgment applications are usually made following service of the statement of claim. On the hearing of the application, judgment may be given for the claimant. However, if the court has doubts as to whether the defendant has a defence to the claim, leave to defend may be given on condition that the defendant pays the amount in dispute into court. Summary judgment can also be given in favour of a defendant on any counterclaim made against the claimant. Security for costs RSC Order 23 provides for a defendant sued in the Supreme Court to obtain security for its legal costs in defending the claim. The usual grounds for this application are where: • the claimant resides abroad; or • the claimant is suing in a representative capacity as a nominal claimant on behalf of some other person and may not be able to satisfy an order for costs made against him. An application for security for costs is made by summons supported by an affi davit stating the material facts. Orders for security for costs usually provide for a percentage of the estimated legal costs (around two-thirds, although this is not a hard and fast rule) up to the

GLI - Litigation & Dispute Resolution 2018, 7th Edition 18 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Cox Hallett Wilkinson Limited Bermuda date of the summons for directions, to be secured in favour of the defendant. If granted by the Court, the security can be provided by: • letter of credit issued by a local bank; • bond given by a third party acceptable to the defendant; or • the claimant’s fi rm of lawyers giving an undertaking to the defendant to satisfy any costs order up to a certain level. A claimant cannot obtain security for costs against a defendant. The Supreme Court has jurisdiction to make third-party costs orders where, for example, the named defendant ordered to pay the plaintiff’s costs is without fi nancial resources. In such circumstances the Court may order a third party who directed/controlled the defence of the claim for its benefi t to pay the plaintiff’s costs. (This risk of being held liable to satisfy the costs incurred by another does not apply to pure funders.) Notice of a claim for third-party liability is usually given by letter and sent to the third party as soon as possible. The third party may be joined as a party at the conclusion of proceedings; see Phoenix Global Fund Ltd v Citigroup Fund Services (Bermuda) Ltd [2007] Bda LR 61. The Commercial Court’s jurisdiction to make such orders extends to ordering disclosure of documents which might lead to the identifi cation of further funders; see Majuro Investment Corporation v Timis & ors [2016] SC Bda LR 23. Interim injunctions Interim injunctions are available in the Supreme Court in Commercial Court actions. They aim to preserve the subject matter of the proceedings or to prevent a defendant from dissipating his assets in order to render nugatory any judgment obtained against him in Bermuda (Mareva injunctions). Mareva injunctions can be accompanied by disclosure orders regarding the defendant’s assets and are limited to the amount claimed in the action. They can also permit ordinary business expenses and the cost of defending the action to be paid from the assets, if no other assets are available for that purpose. The Court must be satisfi ed that a prima facie case exists for granting the interim relief sought. Following the fi ling of the application, an interlocutory injunction can be granted on an urgent basis. These orders can be made without notice to the defendant where circumstances so require to ensure their effi cacy. An injunction is usually sought without notice to the defendant, for example, where there is reason to believe that the defendant will immediately seek to transfer his assets out of the jurisdiction if made aware of the commencement of proceedings. The test to be applied to whether an injunction should be granted generally follows the well-established American Cyanamid principles, including: consideration of whether there is a serious issue to be tried; the determination of where the balance of convenience lies; and whether damages would be an adequate remedy. The Commercial Court recently applied these principles in Oung Shih Hua James v Paladin Ltd [2014] Bda LR 75, to the question of whether directors purported to have been removed at a special general meeting should be restrained from acting. The court determined that the question of whether the meeting was properly called was a serious issue and that the balance of convenience lay in preserving the status quo between ‘rival boards’. The court in that case also ordered an expedited trial, as it was held to be in the interests of justice generally and the reputation of Bermuda and the Hong Kong Stock Exchange, for a dispute about who controls a company to be resolved at the earliest opportunity. The court can, in an appropriate case, grant a mandatory injunction instead of the usual prohibitory injunction to compel a defendant to perform an act or function. Where the

GLI - Litigation & Dispute Resolution 2018, 7th Edition 19 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Cox Hallett Wilkinson Limited Bermuda order is made without notice to the defendant, the usual course in challenging the order is to apply to set the order aside. If that fails, an appeal against the order can be lodged. Interim attachment orders Interim orders are available in the Commercial Court to preserve the subject matter of an action brought in the court or to prevent the defendant from dissipating its assets, with the intention of making itself judgment-proof. In making this order, the court must be satisfi ed that a prima facie case exists for making the orders sought. Examples of such orders are Mareva injunctions (freezing orders) and Anton Piller orders to preserve evidence. In cases of emergency, the orders can be made without notice to the defendant and, depending on the availability of a judge, shortly after the application is fi led. An injunction to prevent the dissipation of assets of a defendant can be granted in support of proceedings continuing in another jurisdiction or in support of arbitration proceedings. An injunction to prevent the dissipation of assets does not create any security over those assets in favour of the claimant. If the claimant is claiming a proprietary right in the asset in question, this right, if confi rmed by the judgment at trial, is preserved by the injunction. As a precondition to obtaining an interlocutory injunction, a claimant must give an undertaking to be responsible for any loss or damage to the defendant caused by the injunction, if the court subsequently decides that the injunction ought not to have been granted. The court can order a claimant who obtained an interim injunction to fortify his undertaking in damages by providing security for the undertaking. Interim orders are also available for the detention, custody or preservation of any property that is the subject of an action in the Commercial Court. The court can also order an inspection of the property in question, as well as samples of and experiments taken on the property.

Enforcement of judgments Local judgments Enforcement of a money judgment is by way of a writ of execution against the assets of the judgment debtor; for example, by seizure and sale through the Provost Marshall General (offi cer of the court responsible for the execution of judgments). Judgments that require the defendant to do or refrain from performing a certain act can be enforced by sequestration or committal proceedings. An application for sequestration or committal is appropriate in circumstances where a person who is required by a judgment or order to do an act within a time specifi ed refuses or neglects to do it; or disobeys a judgment or order requiring him to abstain from doing an act. An application for sequestration or committal must be made by notice of motion, which must be served personally on the respondent. The notice must be supported by an affi davit explaining the circumstances of the judgment and the failure of the respondent to comply with its terms. An order that requires the defendant to deliver a chattel to the claimant can be enforced by a writ of delivery. A writ of specifi c delivery is appropriate in circumstances where there is no option given to the defendant to retain the chattel and pay the assessed value of the item. Foreign judgments Only foreign judgments or arbitration awards for the payment of a sum of money can be enforced in Bermuda. Court judgments are enforced by registration under the Judgments (Reciprocal Enforcement) Act 1958. This is a relatively quick and simple process. However, the 1958 Act only applies to the territories listed in a schedule to the act (all of

GLI - Litigation & Dispute Resolution 2018, 7th Edition 20 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Cox Hallett Wilkinson Limited Bermuda which are British Commonwealth countries). Judgments from countries not covered by the act can be enforced by a common law action on the foreign judgment, in accordance with the principles established in Muhl (Superintendent of Insurance of the State of New York, as liquidator) of Nassau Insurance Co v Ardra Insurance Co Ltd [1997] Bda LR 36 (which in turn followed the principles of English private international law governing the recognition and enforcement of foreign judgments). At common law, the judgment creditor will be required to issue proceedings in Bermuda for the amount awarded by the foreign court. Thereafter, the judgment creditor must apply for summary judgment on the foreign judgment; this is the procedure set out in Young v Hodge [2001] Bda LR 70. If there is no dispute then, in practice, the application may result in a judgment without trial, since the application will usually not be contested; or summary judgment is granted if the application for a judgment without a trial is opposed. The grounds available for resisting the enforcement of a judgment at common law are strictly limited as follows: • want of jurisdiction of the foreign court in the international sense; • the judgment was obtained by fraud; • enforcement would be contrary to public policy; or • the proceedings in which the judgment was obtained were conducted in a manner contrary to natural justice. Arbitration awards are enforceable in accordance with the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which Bermuda is a party.

Cross-border litigation Governing law and jurisdictions clauses The Commercial Court generally respects the governing law of contracts. Certain matters relating to claims under the contract are treated as procedural and governed by Bermuda law if enforced in the Bermuda Commercial Court; for example, whether a claim under a contract is time-barred pursuant to the Limitation Act 1984. The Commercial Court will also enforce the choice of jurisdiction clause in a contract and will stay any proceedings brought in breach of an exclusive jurisdiction clause. The Commercial Court will not give leave to serve a defendant overseas in proceedings commenced in Bermuda in breach of an exclusive jurisdiction clause unless the claimant proves that it is just and proper to allow the proceedings to continue. An example of this is where there is a revolution in the foreign country and, as a result, the court which was agreed to have exclusive jurisdiction is a different court. Service Bermuda is a party to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. Service on a Bermuda incorporated company in Bermuda is effected by leaving the documents to be served at the company’s registered ofﬁ ce. In the case of a non-resident insurance undertaking, the documents must be left at the principal ofﬁ ce of the undertaking. Service of originating process on an individual is effected by handing the documents to the individual. Taking evidence Bermuda is not a party to the Hague Convention on the Taking Abroad of Evidence in Civil and Commercial Matters (Hague Convention). However, Bermuda allows the taking of

GLI - Litigation & Dispute Resolution 2018, 7th Edition 21 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Cox Hallett Wilkinson Limited Bermuda evidence in Bermuda for use in foreign proceedings in accordance with local legislation, which is broadly similar to the Hague Convention. The procedure requires an application to be made to the Supreme Court exhibiting a letter of request from the foreign court to the Supreme Court. The letter must request the attendance of the witness before a named examiner at a certain place at a certain time, or require the attendance of the custodian or records of a company whose documents are sought to be adduced in evidence. The application is made without notice. The order requiring the witness’s attendance usually contains a penal notice and is served personally on the individual. The commissioner appointed by the order records, certiﬁ es and transmits the evidence to the foreign court. Insolvency proceedings The Commercial Court will recognise a foreign liquidator’s ability to gather in assets in Bermuda. The Court will also ensure judicial cooperation in cross-border cases on a common law basis where the relief being sought is also available under the laws of the country in which the liquidation is proceeding; see Singularis Holdings Limited v PricewaterhouseCoopers [2014] UKPC 36. The Commercial Court, however, generally has no jurisdiction to wind up foreign companies; see PricewaterhouseCoopers v Saad Investments Company Limited [2014] UKPC 35.

International arbitration The main method of ADR in Bermuda for international commercial disputes is arbitration, in accordance with the Bermuda International Conciliation and Arbitration Act 1993. The 1993 Act provides for arbitration in accordance with the UNCITRAL Model Law (the Model Law appears as Schedule 2 to the Act). This form of ADR is used predominantly in the insurance and reinsurance sector. Approximately 90% of insurance and reinsurance disputes that are not settled are resolved in arbitration proceedings. Commercial contractual disputes usually contain arbitration clauses, with or without mediation as a precursor. ADR, however, does not form a part of court procedures. It only applies if the parties agree. If a clause in a contract requires ADR, the Commercial Court will enforce it by staying any court proceedings brought in breach of it; see DuPont Scandinavia AB (ARA-bolagen AB) v Coastal Bermuda [1987] Bda LR 74. The Commercial Court also has the power to act to appoint and/or remove arbitrators in certain circumstances; see Management Inc v Everest Capital Inc [1999] Bda LR 22. Evidence in arbitration proceedings can be oral or documentary, in whole or in part. The evidence adduced is confi dential and cannot be disclosed to third parties without the consent of the parties or where legally compellable. Documents disclosed and admissions made in mediation proceedings are usually the subject of written confi dentiality agreements. If not expressly agreed, a Bermuda court implies an obligation of confi dentiality to documents deployed and admissions made in mediation proceedings. The award of costs in commercial arbitrations is at the discretion of the arbitral tribunal. Its discretion is exercised in the same way as the court’s discretion as to costs in litigation; for example, the unsuccessful party is usually ordered to pay the successful party’s costs. These costs can include the costs of the arbitrators and the costs for the use of the venue. The Bermuda branch of the Chartered Institute of Arbitrators can act as an appointing authority, if required. The address and contact details of the Bermuda branch of the Chartered

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Institute of Arbitrators are as follows: The Chartered Institute of Arbitrators Bermuda Branch Clarendon House 2 Church Street Hamilton HM 11 Bermuda Tel: +1 441 295 1422 Fax: +1 441 292 4720

Mediation and ADR Domestic arbitrations are conducted in accordance with the Arbitration Act 1986, which is modelled on the Arbitration Acts 1950 and 1979 (UK). Mediation can also be used as a means to resolve disputes, but in practice it is not common in Bermuda. The exception is in respect of employment disputes, where mediation conducted by the Department of Workforce Development is a mandatory precursor to a referral to the Employment Tribunal.

Regulatory investigations The Bermuda Monetary Authority (BMA), established in 1969 as an independent statutory authority, regulates the principal business activities in fi nancial services operating in or from Bermuda. The areas covered include banking, insurance, investment business, trust business and mutual funds. The regulatory regime in these areas is not uniform, as the BMA’s powers are derived from sector-specifi c legislation such as the Insurance Act 1978 (for insurance and reinsurance companies), the Investment Business Act 2003 (for investment businesses) and the Trusts (Regulation of Trust Business) Act 2001 (for trust companies). The BMA has wide powers to carry out on-site visits, gather information and investigate suspected breaches. Enforcement powers include the power to impose restrictions on licences, to give directions, to take protective measures such as to obtain injunctions, to take disciplinary measures such as imposing civil penalties (fi nes), and a process of public ‘naming and shaming’. In terms of these disciplinary measures, under each statute there is generally a process which comprises the issue of a warning notice by the BMA, followed by an opportunity for the regulated entity to make written representations, and then a decision notice is issued by the BMA. Sector-specifi c statutory tribunals exist as an avenue of appeal but do not amount to a full rehearing. A further right of appeal, on points of law only, lies to the Supreme Court. This is a developing area of law and in 2015 and 2016, the Banking Appeal and Insurance Appeal Tribunals sat for the fi rst time. In general, regulation has been relatively ‘light touch’ and collaborative in nature in Bermuda. However, in March 2016, the BMA announced a toughened stance on enforcement action, and in particular announced a policy of publicising the details of breach and the identity of the regulated entity in each case; see www.royalgazette.com/business/article/20160324/ bma-to-go-public-on-enforcement-actions.

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David Kessaram Tel: +1 441 294 1504 / Email: [email protected] David is a leading member of CHW’s litigation team and a former Managing Partner of CHW. He has amassed 40 years’ experience at the Bermuda Bar and is ranked as a leading practitioner in both Chambers Global and The Legal 500 publications. Chambers Global commented that David is “an impressive attorney” who “has strong analytical skills and the respect of the court” and that “he has a good reputation in the market and is very good at taking on board what the client wants”. David is widely recognised for his expertise in commercial litigation, trust litigation, insurance and reinsurance arbitration and litigation and professional negligence matters. He is a Fellow of the Chartered Institute of Arbitrators, an honorary member of the Centre for International Legal Studies, a member of the Honourable Society of the Middle Temple, was appointed as an Assistant Supreme Court Judge in 2016 and is often approached to provide expert evidence on Bermuda law. David is the author of the Trust Litigation chapter of Offshore Commercial Law in Bermuda (Wildy, Simmonds & Hill, 2013), co-author of the Bermuda chapter of Offshore Financing: Security and Insolvency (Sweet & Maxwell, 1997) and author of the Bermuda chapter of International Execution Against Judgment Debtors (Sweet & Maxwell, 1993). Matthew Watson Tel: +1 441 294 1546 / Email: [email protected] Matthew is identifi ed by The Legal 500 as a “well regarded” Senior Associate who “provides painstaking attention to detail”. He services CHW’s clients with commercial, trust and estate litigation before the Bermuda Courts, often in a cross-border context. Matthew has acted on some of the largest trust cases of signifi cant complexity and quantum before the Bermuda Courts in the past year. This has included appearing as local Counsel on behalf of the benefi ciaries in the novel trust case of In the Matter of XYZ Trusts which concerned an application to bless a restructuring of the trust assets, part of which involved a contentious proposed amendment to permanently disqualify a family director; represented the trustees in the multi-faceted trust variation case of In the Matter of G Trusts; and acts for benefi ciaries in a number of other on-going high value and contentious trust cases. Sam Riihiluoma Tel: +1 441 294 1505 / Email: [email protected] Sam is an Associate and has been with CHW since pupillage in 2013. He is involved in a range of insolvency work including international restructurings and local liquidations. Sam recently acted for clients in two recent cases before the Court of Appeal which are both on appeal to the Privy Council, including advising a hedge fund defending winding-up proceedings in the Court of Appeal that raised novel issues regarding the court’s jurisdiction to wind up a solvent company on a just and equitable basis. Sam also has broad civil litigation experience (including employment, personal injury and property disputes) and a growing clinical negligence practice. Sam also works with David Kessaram on high-value contentious trusts and estate cases. Cox Hallett Wilkinson Limited Cumberland House, 9th fl oor, 1 Victoria Street, Hamilton, PO Box HM1561, Bermuda Tel: +1 441 295 4630 / Fax: +1 441 292 7880 / URL: www.chw.com

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Eduardo Perazza & Ariana Anfe Machado, Meyer, Sendacz e Opice Advogados

Effi ciency of process In recent years, despite all of the peculiarities and diffi culties arising from having a continental dimension, as well as the volume of judicial claims fi led every day as a result of its historically litigious culture, Brazil has sought to achieve greater effi ciency in terms of dispute resolution, mostly by reducing the time taken to reach a defi nitive and fair outcome for processes submitted to the judicial courts and offi cially embracing alternative dispute resolution methods. In this context, a commission of experts has gathered around the idea of a new Code of Civil Procedure, which the Brazilian Congress approved in 2015 and which entered into force in March 2016. Among all the innovations brought by the new Code of Civil Procedure, the following must be highlighted: (i) facilitation of parties’ participation in disputes processes; (ii) enhancement of the system of binding precedents; (iii) encouragement of parties to solve their disputes through alternative dispute resolution methods (mainly mediation and conciliation, along with the consolidation of arbitration); and (iv) modernisation of certain procedures with technology support. All of these innovations were carefully considered and implemented with the main goal of delivering fair and fi nal decisions in disputes processes in a much more reasonable time frame. The new Code of Civil Procedure establishes a set of rules that gives more fl exibility to the parties’ role in the proceedings. According to such rules, the parties are put at the centre of case management, together with the judge, so that they are now able to adapt certain procedures to their particular needs in a specifi c dispute (e.g., the parties may determine new ways of subpoena such as email, WhatsApp and others). This allows parties the possibility to contribute to case management, and for active collaboration with the judge in order to fi nd the best approach for each kind of dispute, a departure from the rule in the former legal framework, in which parties had few opportunities to discuss procedural rules because the judge would have a much more stringent approach in construing and applying such rules. Another innovation refers to the system of binding precedents. In spite of the fact that Brazil has a civil law-based legal system as opposed to a common law system, the new Code of Civil Procedure now formally recognises a system of binding precedents, which brings effi ciency to civil procedure. It is worth mentioning that, even before the enactment of the new Code of Civil Procedure, the lower courts were already bound to observe the so-called súmulas vinculantes issued by the Brazilian Supreme Court. The new Code of Civil Procedure enhances the system of binding precedents to the extent that, in addition to the súmulas vinculantes, decisions issued by higher courts, especially concerning repetitive cases, now may also have a binding effect. In this respect, the new Code of Civil Procedure

GLI - Litigation & Dispute Resolution 2018, 7th Edition 25 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Machado, Meyer, Sendacz e Opice Advogados Brazil provides for the so-called Incidente de Resolução de Demandas Repetitivas and Julgamento de Recursos Repetitivos, which basically allows the judgment of a particular case by higher courts that will infl uence the outcome of all lawsuits which have similar merits. Decisions by higher courts in such situations will apply to all cases dealing with the same controversy, therefore permitting the trial of thousands of cases at once. Moreover, it must be stressed that there have been efforts made in the new Code of Civil Procedure to promote conciliation between parties to a process. The new Code of Civil Procedure sets out certain rules to encourage the parties to reach a settlement before initiating a controversial procedure. Accordingly, it is also important to mention that investments have been made in the specialisation of judicial conciliators and mediators. Additionally, the modernisation of disputes proceedings through the development of the technology used has certainly sped up dispute resolution. Today, all interested parties, lawyers, judges and the main parties themselves process a considerable number of judicial lawsuits in Brazil electronically, which facilitates access to the case fi les. In this regard, the National Justice Board (“CNJ”) plays an important role in establishing guidelines and the structure of the Brazilian judiciary. The CNJ is also in charge of the standardisation of rules and systems adopted by the state courts, including those related to electronic proceedings. Finally, another initiative to be highlighted is the implementation of specialised courts for cases of insolvency and corporate law. Some states have highly specialised judges for frequently arising areas of work, bringing more quality and agility to court decisions. Notwithstanding the above, it must be said that the Brazilian Code of Civil Procedure has been in force for two years now, which means that legal professionals are still adapting to the new procedural rules. The trend is that civil procedure in Brazil is becoming more and more effi cient as people get used to the new rules and systems adopted by the new Code of Civil Procedure, and they increasingly understand the change of culture needed for such, which demands a shift to a less litigious culture or, at least, one which is more prone to conciliate fi rst and only litigate later if it is unavoidable.

Integrity of process The way the judicial system is implemented in Brazil curbs, or at least discourages, improper behaviour and wrongdoing in lawsuits. Therefore, in general, lack of integrity in dispute resolution should not be a concern in Brazil. First of all, it can be said that the vast majority of magistrates possess a good level of technical knowledge and are chosen after vigorous examination. Their career development occurs over a period of years, and judges are promoted to the Appellate Courts or Higher Courts according to specifi c criteria, including seniority and productivity. With regard to independence, there is a guarantee provided in the Federal Constitution, called the tenure rule, which prohibits magistrates from being fi red or moved from their position except by a judicial decision issued by a competent body, which ensures that magistrates have discretion to issue decisions according to the specifi c circumstances without feeling threatened by any external factors. In the same way, the Federal Constitution sets forth rules and principles that ensure impartiality in judgments. As Brazil is a civil law country, its judges are bound to apply the law (and to observe binding precedents, as provided in the new Code of Civil Procedure) when issuing decisions on judicial cases. In other words, the judges are not free to adjudicate a dispute based on equity or on rules of natural justice.

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Additionally, the CNJ, as mentioned above, is an administrative body that plays an important role in our judicial system, and monitors the performance of judges.

Privilege and disclosure The general rule is that lawsuits are public in Brazil. Therefore, any interested person can access the documents fi led along with a judicial claim. Of course, there are a few exceptions to this rule and, under specifi c circumstances, a lawsuit may be processed under secrecy of court; to wit: (i) cases that requires secrecy for public or social interest reasons; (ii) family disputes; (iii) lawsuits involving data and information that is protected by the constitutional right to privacy; and (iv) judicial claims dealing with arbitral matters. Apart from these situations that are provided in the law, the parties may request confi dential treatment for any specifi c document they consider to contain sensitive information. However, it is up to the discretion of the judge whether to grant it or not, depending on the specifi c situation. Regarding the rules of disclosure, it is important to clarify that Brazilian regulation is very superfi cial when compared to the systems of full disclosure and discovery adopted by other countries. However, the new Code of Civil Procedure does provide a specifi c procedure for requests for the disclosure of documents in the possession of third parties. Accordingly, anyone can fi le a lawsuit in order to obtain the forced disclosure of documents, provided that the purposes of such disclosure, and the facts and rights related to the requested documents, can be demonstrated and that the documents are in the defendant’s possession. The defendant, in turn, may oppose the request, citing that the document concerns its private life, the disclosure of the requested document infringes its duty of honour, or it publicises confi dential facts and information. The judge cannot allow the defendant’s refusal whenever (i) it has a legal obligation to disclose, (ii) it referred to the requested document as evidence, and/or (iii) the requested document is common to the parties. Apart from the above, it is worth mentioning that the new Code of Civil Procedure also sets forth a new procedure similar to the discovery system adopted by the United States, the so-called early production of evidence. Such procedure comprises the production of any kind of evidence, including the disclosure of documents, and its purpose is to provide the parties beforehand with evidence related to a specifi c matter, encouraging them to reach a settlement and avoid unnecessary disputes. The main difference introduced by this new procedure relates to the moment when evidence is shared between the parties. While in the United States, for example, discovery is a pre-judicial phase, in Brazil the early production of evidence is processed before the civil courts, giving the judge the decision on whether the evidence should be collected (in this case, whether a document should be disclosed by a party). Concerning client confi dentiality, both the Brazilian Federal Constitution and the Code of Ethics of the Brazilian Bar Association (Federal Law No. 8.906/1994) have specifi c provisions that ensure the attorney-client privileged relationship. Accordingly, counsels are entitled to protect and treat with confi dentiality any document and information received from their clients in the context of the provision of legal services. The privileged attorney- client relationship can only be broken under exceptional circumstances; to wit, if a lawyer infringes the law in collusion with his/her client.

Costs As a general rule, the claimant bears the initial costs required to initiate the proceedings. These costs are estimated in the range of 0.5% to 6% of the amount involved, depending on

GLI - Litigation & Dispute Resolution 2018, 7th Edition 27 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Machado, Meyer, Sendacz e Opice Advogados Brazil the State where the lawsuit is fi led. For instance, in São Paulo, initial costs amount to 1% of the amount being discussed in the case, limited to a cap that is updated annually. The payment of costs is also required when fi ling appeals to the higher courts. Depending on the State, such costs may vary from 1% to 5% of the amount involved in the lawsuit. It is worth mentioning that individuals who meet specifi c criteria of income may benefi t from the institute of free justice, so they are allowed to bring lawsuits and fi le appeals without incurring costs. Additionally, it is important to highlight that proceedings may also give rise to additional costs. For instance, whenever the case requires the production of specifi c evidence or the analysis of experts, generally, on such occasions, the party who has requested it will incur the costs related to the production of evidence. However, there are a few situations when the judge may determine that the non-requesting party should share the costs equally or even bear the costs by itself. This latter situation mostly applies in cases involving consumer relationships, as it is assumed that consumers are vulnerable and, therefore, are at a disadvantage against suppliers, but can also be applied in situations where the judge understands that the burden of proving something lies with the party who is in a better position to produce it, given the factual circumstances present in the particular case. When the dispute ends, the defeated party has the burden of loss, which means it is obliged to pay the winning party the costs and expenses of the proceedings, and an amount that can range from 10% to 20% of the value involved in the demand to the winning party’s lawyers. It is important to clarify that such amount aims to compensate the job performed by the attorney engaged by the winning party and should not be confused with the contractual fees negotiated between the winning party and its attorney. Lastly, foreign parties without residence and/or real estate assets in Brazil must post a bond when fi ling a lawsuit, according to Article 83 of the Code of Civil Procedure. This provision ensures the payment or reimbursement of all legal fees in case the foreign party is defeated in the proceedings.

Litigation funding Litigation funding is not regulated in Brazil. Although some companies and investment funds are willing to fund disputes, this practice is still embryonic in Brazil.

Interim relief The new Code of Civil Procedure has introduced important changes in the system of protective measures related to interim relief. Basically, there are two possibilities for obtaining interim reliefs: (i) tutela de urgênciai; and (ii) tutela de evidência. The ﬁ rst concept is based on urgency. As well as the likelihood of what it is claiming, the claimant should also demonstrate the risks of damage or a risk to the practical result of the proceeding. In other words, it should be clear that full satisfaction of the right pursued (or to be pursued) in the lawsuit may turn out to be ineffective if the interim remedy is not granted. The second concept, in turn, regarding evidence, is usually granted when the claimant succeeds in demonstrating the reasoning of the merits of the case (strong case), the defendant abuses its right of defence by using delaying tactics, or there is no controversy on the main matter regarding the judicial claim. The Brazilian courts are empowered to issue any type of interim remedies, including interim freezing injunctions or search orders. The Code of Civil Procedure eliminated the

GLI - Litigation & Dispute Resolution 2018, 7th Edition 28 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Machado, Meyer, Sendacz e Opice Advogados Brazil previous distinction between precautionary measures and injunctive relief and simplifi ed the mechanism of granting urgent remedies in order to guarantee the effi cacy of the proceedings. Specifi cally regarding the arbitration procedure, it is possible to plead for injunctions to the court judge. However, once the arbitral tribunal is constituted, such decisions may be reviewed, to ensure the integrity of the process, and new injunctions may be requested before the arbitral tribunal directly.

Enforcement of judgments Any judgment rendered by a foreign court depends on its homologation to be enforceable in Brazil. The Brazilian Superior Court of Justice does not review the merits of the judgment, nor does it modify the decision in any manner, but simply verifi es whether the judgment obtained abroad complies with certain requirements that Brazilian law deems to be indispensable. The Superior Court of Justice would not recognise and grant exequatur to any judgment considered offensive to national sovereignty, public policy or good morals. For instance, a judgment related to the collection of some account that imposes the imprisonment of the debtor will not be recognised in Brazil if it violates public policy. Moreover, only fi nal decisions are subject to homologation. Interlocutory decisions rendered by foreign courts during the course of a lawsuit may not be enforced in Brazil. Nevertheless, a partial decision issued in the course of a proceeding that decides on the merits of part of the case is enforceable, as long as it is fi nal and unappealable. In addition to such requirements, judgments obtained abroad must be: (i) issued by a court that has jurisdiction; (ii) preceded by due service of process to the defendant; and (iii) fi nal and unappealable. Once confi rmed by the Superior Court of Justice, the decision may be enforced in Brazil. A Lower Federal Court will conduct the enforcement procedure.

Cross-border litigation In recent decades, Brazil has been involved greatly in international cooperation. This involvement took place not only in the enforcement of foreign judgments (judicial or arbitral), but also in obtaining evidence and collaboration in corruption investigations. The Law of Introduction to the Rules of Brazilian Law (Decree-Law No. 4.657/1942) is the main source for determining the basic principles governing relations of cross-border litigation. With the exception of arbitral procedures, in which the parties have the freedom to choose the applicable law, the Law of Introduction to the Rules of Brazilian Law states that the law of the country in which it was entered into shall govern the contract. It is worth mentioning, however, that the new Brazilian Code of Civil Procedure gives the parties the opportunity to choose a speciﬁ c venue outside Brazil for the resolution of disputes involving international agreements. This was an innovation made clear by the new legislation.

International arbitration The Brazilian Arbitration Law (Law No. 9,307 of 1996, as amended by Law No. 13,129 of 2015) is based on several pieces of modern arbitration legislation and its main sources are the UNCITRAL Model on International Commercial Arbitration and the Spanish Arbitration Law of 1988. The texts of the New York Convention of 1958 and the Convention

GLI - Litigation & Dispute Resolution 2018, 7th Edition 29 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Machado, Meyer, Sendacz e Opice Advogados Brazil of Panama of 1975 were also important during the process that resulted in the enactment of the Brazilian Arbitration Law. The only restrictions imposed by the legislature on parties’ freedom to regulate and organise arbitral procedures are related to mandatory compliance with the adversarial principles, equal treatment of the parties, impartiality and freedom of decision of the arbitrator(s). The reliability of arbitration as an effective means of settling conﬂ icts has found growing support in the Brazilian judicial system. Court decisions are increasingly recognising the binding nature of arbitration clauses, leading the parties to arbitrate even when one of them tries to renege on its commitment to submit to arbitration. Likewise, the judiciary has guaranteed enforcement of awards rendered in Brazil and abroad. The challenge of an arbitral award in court is an exceptional measure that can only be sought when there is a serious procedural error in the decision that makes it null and void, as provided by Article 32 of the Brazilian Arbitration Law. During the arbitration, the only occasion on which a court may intervene is upon request by the arbitral tribunal seeking coercive enforcement of an arbitral order.

Mediation and ADR Mediation in Brazil is regulated by Law 13,140/2015. According to this law, mediation is binding if contractually established. This is important when dealing with multi-tiered dispute resolution clauses. If the parties do not reach a settlement regarding their dispute, any of the disclosed information and concessions cannot be used in subsequent litigation. Any settlement in mediation or negotiation is binding and enforceable before a judge. Mediation is in full growth, being adopted as a tool to assist parties in ﬁ nding creative solutions to their disputes. Parties are adopting mediation before arbitration and the judicial system. Brazil has specialised centres for mediation and negotiation, which enables parties to hire professionals to assist them in mediation.

Regulatory investigations Certain markets in Brazil are extremely regulated and protected by one or even more agencies and government bodies. For instance, one can point out the fi nancial and capital market, regulated by Banco Central do Brasil (the Brazilian Central Bank) and CVM (the Brazilian securities and exchange commission). Any player active in this market should comply with the regulations set forth by these authorities. Otherwise, the party can be investigated and suffer administrative sanctions. Government bodies also closely monitor matters involving competition and consumers. The Administrative Council of Economic Defense (“CADE”) is responsible for investigating and deciding, ultimately, on competition issues, as well as for fostering and promoting the culture of competition in Brazil. CADE’s job is increasingly gaining relevance after recent cases involving antitrust practices. It is worth mentioning the role of Public Prosecutor Offi ces in Brazil, which can independently investigate and fi le lawsuits about virtually any illegality that might involve public interests, even in parallel to investigations conducted by agencies and government authorities. Lastly, it is important to note that decisions issued by regulatory agencies are deemed to be very technical. Accordingly, although these decisions can be subject to judicial court review, judges usually focus analysis on formalities and legality issues, keeping the merits of the decision away from review in most cases.

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Eduardo Perazza Tel: +55 11 3150 7691 / Email: [email protected] Mr Perazza engages in several types of litigation, administrative and judicial procedures, arbitration and the provision of advisory services to prevent and settle confl icts. His practice encompasses actions against misconduct in public offi ce related to: bidding processes; civil actions of public interest concerning environmental matters, as well as competition and consumer law; and judicial procedures related to corporate litigations, civil liability, law of obligations, and rights of personality and media. He further engages in administrative procedures before the Brazilian Prosecution Offi ce, Securities Commission, Central Bank, National Financial System Appeal Council and before the Foundation for Consumer Protection and Defence. He has experience in managing crises and emergencies, assisting in the defi nition of action plans and judicial and extrajudicial performance strategies.

Ariana Anfe Tel: +55 11 3150 7734 / Email: [email protected] Ms Anfe is a specialist in civil litigation and arbitration with emphasis on corporate litigation. She also works in administrative proceedings related to the Brazilian Central Bank (Bacen) and the Securities and Exchange Commission of Brazil (CVM). The majority of her work concerns the conduct of civil proceedings and arbitrations, and the drafting of consultations and legal opinions. Her experience is also focused on areas of knowledge such as mining, aviation, automotive, banking, electronic commerce, electronics and food.

Machado, Meyer, Sendacz e Opice Advogados 3144, 11th ﬂ oor, Avenida Brigadeiro Faria Lima, 01451-000, São Paulo – SP, Brazil Tel: +55 11 3150 7000 / URL: www.machadomeyer.com.br

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Scott Cruickshank & Matthew Freeman Lennox Paton

Effi ciency of process The Territory of the Virgin Islands (as it is offi cially known) is a largely self-governing British Overseas Territory comprising several islands located approximately 60 miles due east of Puerto Rico at the north-eastern corner of the Caribbean Sea. The islands are referred to as the British Virgin Islands in order to distinguish them from their US neighbour. The principal islands of the British Virgin Islands (the “BVI”) are Tortola and Virgin Gorda, between them housing a population of around 30,000. The BVI has become one of the world’s leading fi nancial centres, with over 800,000 international business companies (“BVIBCs”) registered in the BVI, as well as signifi cant numbers of mutual and hedge funds, captive insurance and trust companies.

Integrity of process The Islands’ success rests largely upon an effi cient and modern legislative regime for corporate activity and insolvency, the absence of taxation on BVIBCs, and the existence of a politically stable climate, with an independent and incorruptible judiciary. It is common to speak of the “twin pillars” of its economy being fi nancial services and tourism. The BVI retains the Privy Council as its fi nal appellate court. The BVI has a common law system, based upon English law. It has its own legislative framework and has adopted some UK legislation (particularly with respect to the implementation of international treaties). English common law was extended to the BVI by the Common Law (Declaration of Application) Act (Cap 13). The result is that English authorities, whilst not strictly binding as precedents, are persuasive and, subject to there being any differing Eastern Caribbean Supreme Court authorities, are routinely relied upon by the BVI Court. Authorities of other Commonwealth or common law jurisdictions, such as Canada and Hong Kong, are also frequently cited. The Superior Court of Record for the BVI is the Eastern Caribbean Supreme Court (“ECSC”), which also serves as the Superior Court of Record for two other British Overseas Territories (Anguilla and Montserrat), and six independent Member States of the Organisation of Eastern Caribbean States (“OECS”) (Antigua and Barbuda, the Commonwealth of Dominica, Grenada, St Christopher and Nevis, Saint Lucia and St Vincent and the Grenadines). For some time, moves have been afoot to integrate the Magistracy within the ECSC court system. The ECSC consists of: 1. the High Court of Justice; and 2. the Court of Appeal.

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In 2009 the BVI became home to the new Commercial Division of the High Court of Justice, with its ﬁ rst judge being the highly regarded English silk, Mr Justice Edward Bannister Q.C. Since Justice Bannister retired a number of other prominent judges have sat in the Commercial Division in 2016: Hon. Sir Bernard Eder QC, Mr Justice Jules Sher QC, Mr Justice Gerhard Wallbank, Mr Justice Roger Kaye QC, Justice David Chivers QC, Justice Neville Adderley (Bahamian) and Gerard Farara. With the Commercial Court judge being a notable exception, the judges of the ECSC are drawn from the other Caribbean Islands. They are appointed by the Chief Justice, with the concurrence of the heads of every OECS State. To ensure their independence, a protocol has developed of judges being deployed in jurisdictions other than those in which they practised or were raised. From time to time, deputy judges of the ECSC will be appointed and they are usually drawn from the practising Bar; they too are required to sit in jurisdictions other than those in which they practise. The Court of Appeal is an itinerant court, whose sittings rotate between the nine members of the OECS. Typically, the Court of Appeal will sit three times a year in Tortola (BVI), in January, May and September, although more urgent matters may be dealt with when the Court is sitting in other places as the need arises.

Privilege and disclosure The CPR is loosely modelled on the civil procedure rules currently in force in England. The rules in relation to the disclosure of documents once proceedings have started are similar, but with important differences. Disclosure does not happen automatically as part of its case management functions; the courts control disclosure but will usually order the parties to provide “standard disclosure”. A party is required to disclose a document which is “directly relevant” to his claim. This means that the party with control of a document must disclose that document if: (1) he intends to rely on it; or (2) it tends to adversely affect that party’s case; or (3) it tends to support another party’s case. However, the rule known as the “rule in Peruvian Guano” does not apply. As in England and Wales, there is an obligation to produce a list of documents. The signatory must certify that he accepts responsibility for identifying any individuals who might be aware of any documents, and to list the individuals from whom directly relevant documents have been sought. However: 1. beyond identifying those individuals from whom documents have been sought, there is no express duty to conduct a search, as there is in England; and 2. the standard form list of documents contains none of the questions to be found on the English form in relation to electronic data. An order may also be made for “speciﬁ c disclosure”. This is an order which requires a party to do one or more of the following things: 1. disclose documents or classes of documents speciﬁ ed in the order; 2. carry out a search for documents to the extent stated in the order; and/or 3. disclose any document located as a result of that search. The position in relation to disclosure before proceedings have started is more complex. Subject to any argument that sections 7 or 11 of the Eastern Caribbean Supreme Court (Virgin Islands) Act, Cap 80 import jurisdiction from England, the BVI has no statutory provision which confers jurisdiction upon the court to order pre-action disclosure.

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However, the rule in Norwich Pharmacal v. Commissioners of Customs & Excise [1974] AC 133 is alive and well. It was relied upon extensively by JSC BTA Bank in its quest to recover the fruits of the fraud said to have been perpetrated by its former chairman, Mukhtar Ablyazov. In JSC BTA Bank v. Fidelity Corporate Services & others [2011] 2 JBVIC 2101, the Court of Appeal reversed a judgment of the Commercial Court judge which doubted whether Registered Agents had the necessary degree of participation to found jurisdiction to obtain relief against them. However, the BVI court will not permit a party to apply for a Norwich Pharmacal order simply to strengthen its own case, and will be less inclined to grant such relief if the applicant already knows of the location of assets, or the identity of a requisite party. The court will be especially slow to make such an order if the effect of it would be to pre-empt the disclosure that is likely to be given in the ordinary course under the CPR. These principles were espoused in Morgan & Morgan Trust Corporation Limited v. Fiona Trust & Holding Corporation [2006] ECSC J0403-5 and TSJ Engineering Consulting Limited v. (1) Al-Rushaid Petroleum Investment Company (2) Al-Rushaid Parker Drilling Limited [2010] ECSC J0727-3. The receivers appointed at the behest of JSC BTA Bank by the English Commercial Court over certain of the assets of Mukhtar Ablyazov, established before the Court of Appeal in Jeremy Outen et al v. Mukhtar Ablyazov [2011] ECSC J1110-1 in November 2011 that it was within the arsenal of the court, when recognising a foreign receivership order, to order a wide class of third parties to provide such unspeciﬁ ed information or documentation to the receivers as they might reasonably request. However, it is worth noting that in 2017 Bannister emphasised that it is not open for litigants in foreign proceedings to seek to obtain information from BVI entities about their assets which ought to be sought in the foreign jurisdiction where the main proceedings are under way (Bascuñan and others v. Elsaca and others BVIHC2015/0128 applying Osetinskaya v. Usilett Properties Inc BVIHC (Com) 2013/0037). CPR 28.14 provides that a person ordered to provide disclosure who claims a right to withhold inspection of documents, must make that claim within the list of documents. Into this category fall documents which are privileged from production. English common law, in relation to the entitlement to maintain a claim for privilege, is followed. Privilege attaches principally to those documents that have been prepared for the purpose of seeking or providing legal advice, and those documents prepared in contemplation of litigation (see The Canada Trust Company v. Royal Trust Corporation of Canada [1998] JBVIC 0801). Documents which were properly marked “without prejudice” or “without prejudice save as to costs” will generally also be exempted from the obligation to produce copies of them. This is a matter of public policy designed to protect genuine negotiations from being admissible in court.

Costs CPR 64.6(1) provides that the general rule is that the court must order the unsuccessful party to pay the costs of the successful party. Provisions similar to the Rule 44.2 of the English civil procedure rules appear in CPR 64.6(3) to (6) – permitting the court to make a percentage award and to have regard to the parties’ conduct during the course of the proceedings. The court has a wide discretion in relation to the application of these principles, which will not be lightly interfered with on appeal. The position is much the same with interlocutory applications. Where the interlocutory application is a “procedural application” of a type falling in CPR 65.11(3), the rules provide

GLI - Litigation & Dispute Resolution 2018, 7th Edition 34 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Lennox Paton British Virgin Islands that the court “must” order the applicant to pay the costs of the respondent, “unless there are special circumstances”. The specifi ed applications are: (a) applications to amend a statement of case; (b) an application for an extension of time; (c) an application for relief from sanctions; and (d) an application which could have been made at a case management conference (“CMC”). Similarities with the English model end at the point of quantifi cation. CPR 65.2 provides that: “if the Court has a discretion as to the amount of costs to be allowed to a party, the sum allowed is to be (a) the amount which the court deems to be reasonable were the work to be carried out by a legal practitioner of reasonable competence; and (b) which appears to the Court to be fair both to the person paying and the person receiving such costs.” The fairness criterion is an obvious departure from the English model. Leon J in Olive Group Capital Limited v. Gavin Mark Mayhew BVIHC (Com) 2015/115 provided an analysis of how the general principles for assessment of costs are to be applied. The CPR provides for no less than fi ve general categories of cost: 1. fi xed costs (CPR 65.4); 2. prescribed costs (CPR 65.5); 3. assessed costs on “procedural” applications (CPR 65.11); 4. assessed costs (CPR 65.12); and 5. costs in the Court of Appeal (CPR 65.13) (as amended by the ECSC Civil Procedure (Amendment) Rules 2011 (“the Amendment Rules”)). This leaves aside budgeted costs (CPR 65.8), which operate a little like a “costs cap” in England. Prescribed costs Except in relation to claims within the Commercial Division, the starting point is that where the fi xed costs rules do not apply (they apply only to claims for a sum of money in which judgment has been entered in default), the prescribed costs rules apply. CPR 65.5 speaks of it being “the general rule” that those costs should be calculated in accordance with the appendices against the appropriate value. Where the claim is not for a sum of money, the value by default is deemed to be US$50,000, which produces a maximum costs recovery of US$7,500 under the Amendment Rules. It would formerly have been US$14,000. The court is then invested with a discretion to determine the value of the claim. Such an application should usually be made at the CMC (see CPR 65.6(1)), but it seems that the court will be prepared to entertain such an application even after the conclusion of the proceedings, when the claim for costs comes to be assessed: Asiacorp v. Green Salt [2006] 5 JBVIC 3102. Prescribed costs in the Eastern Caribbean operate to cap the costs which may be recovered inter partes to a proportion of the value of the claim (if awarded to the defendant), or to the sum recovered (if awarded to the claimant). By way of example: • A claim worth US$50,000 will produce a costs recovery of US$7,500, assuming it concludes at trial, and only US$3,375 if it settles when the defence is served. • A US$1m claim will produce a costs recovery of US$70,000, assuming it concludes at trial.

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The position in the Commercial Division It can readily be seen that the application of the prescribed costs rules are apt to result in signifi cant under-recovery in relation to the question of costs. On 15 May 2009, new rules and practice directions governing procedure in the Commercial Division were gazetted, which abolished the application of CPR 65.4 to 65.11 (and in particular, the prescribed costs rules) to litigation in the Commercial Division. The Court of Appeal confi rmed in Westford Special Situations Fund v. Barefi eld Nominees BVICVAP 2010/014 that these changes also have the effect of altering the rules to the quantifi cation of costs in appeals from the Commercial Division. Instead, a simple mechanism to assess those costs was adopted. This development was widely welcomed: it had been a familiar refrain of the courts, in the BVI in particular, that: “the question of costs in big commercial cases in this Territory is sometimes more protracted and litigious as the cases themselves [sic]. The present application to assess costs is one such example. It took two days to be argued, whereas the application for an anti-suit injunction took one day” (Finecroft v. Lamane Trading Corp [2006] 8 JBVIC 3101). A similar complaint was made in Michael Wilson & Partners v. Tigerkhan [2008] ECSC J0620, where Charles J observed: “Some critics feel that the present costs rules are grossly inadequate for the British Virgin Islands and that large, complex, multi-jurisdictional commercial matters were not suffi ciently considered when the rules were drafted. Others consider the costs regime particularly prescribed a windfall. For my part, there appears to be one or two diffi culties with the Rules...” Until the changes brought into force by the new Commercial Practice Direction, the courts in the BVI had been at the forefront of seeking to construe the rules in a manner which met the justice of cases such as these. For instance, in Asiacorp, Charles J was prepared to work backwards and to fi x the value of the claim by reference to the level of costs which she considered to be fair and reasonable. The submission that she should do so was met with an excitable response from the respondent: it is “preposterous and makes a mockery of the court”, but it was plainly the only way in which substantial justice could be done to the receiving party. In Tigerkhan, Charles J was again persuaded to meet the justice of the case by holding that if she were wrong in her view that CPR 65.12 applied, she would, in any event, have disapplied the cap. Interestingly, in this context, she held that there was nothing in CPR 65.11 which required the court to limit the costs to between 10% and 100% of the prescribed costs. In an appropriate case, there could be no objection to costs of, say, 200% and 300% being awarded.

Litigation funding The BVI follows the English common law position in relation to the maintenance of litigation. Except to the extent that it has arguably been disapplied by the rules in relation to prescribed costs, the indemnity principle applies to litigation in the BVI. A litigant will, therefore, be able to recover from his opponent only to the extent that he was contractually liable to his solicitor. However, since the introduction of the Legal Professional Act 2015, the ability of a successful litigant to recover foreign lawyers’ fees which have been incurred in litigation was successfully challenged in Garkusha v. Yegiazaryan and Ors (BVIHCMAP 2015/0010).

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Statutory developments in England in relation to conditional fee and contingency agreements do not apply within the context of contentious business in the BVI, and as such the common law rules against maintenance currently prevent lawyers practising in the BVI from entering into such agreements. Insurers can and do indemnify their insured in relation to litigation costs, but there is a very limited market for after-the-event litigation products.

Interim relief Section 24 of the Eastern Caribbean Supreme Court (Virgin Islands) Act, Cap 80 provides that: “an injunction may be granted or a receiver appointed by an interlocutory order of the High Court or a judge thereof, in all cases in which it appears to the Court or judge to be just or convenient that the order should be made, and any such order may be made either unconditionally or upon such terms and conditions as the Court or judge directs.” CPR Part 17 provides that amongst the interim remedies that the court can grant are interim declarations, interim injunctions, orders directing a party to fi le and prepare accounts, and orders to deliver up goods. In practice, it is the power at CPR 17.1(j) to make a freezing order, which is encountered most frequently. There also exists a power to make search orders. These wide powers are qualifi ed by the common law rules which have developed in England. In relation to litigation proceedings before the Courts of the BVI, relief may be obtained where: 1. the applicant has a good, arguable case on the merits, meaning “one which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50 per cent chance of success” (see Ninemia Maritime Corporation v. Trave Shiffahrgesellschaft GmBH [1983] 2 Lloyd’s Rep 600); 2. the applicant can establish, with solid evidence, a real risk that the judgment or award may otherwise go unsatisfi ed; 3. the respondent has some assets, even if it cannot be proved that those assets are within the jurisdiction of the court; or 4. it is just and convenient to make the order. The court will always expect the applicant to provide an undertaking in damages, and it may require that the undertaking be fortifi ed with the provision of some form of security. A nuance particular to litigation offshore is that the courts of its various jurisdictions have taken different approaches to the application of the rule in The Siskina [1979] AC 20. The Siskina appeared to confi ne the availability of injunctive relief to cases where substantive proceedings could be tried and fi nally determined within the jurisdiction. In England, the effect of the decision has been whittled away – fi rst by legislation (see section 25 Civil Jurisdiction & Judgments Act 1982, subsequently extended by Order in Council to proceedings in other jurisdictions: the Civil Jurisdiction and Judgments Act 1982 (Interim Relief) Order 1997, SI 1997 No 302); and secondly, by case law. In Channel Tunnel Group v. Balfour Beatty Construction [1993] AC 334, the House of Lords was prepared to accept that the court did have jurisdiction to grant interlocutory relief in substantive proceedings brought in England, even if those proceedings had to be stayed to facilitate arbitral proceedings abroad.

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In Mercedes Benz v. Leiduck [1996] AC 284, the Privy Council held that the Hong Kong Court had no jurisdiction to grant a freezing injunction against a foreign defendant in aid of foreign proceedings, but left open the question as to whether or not such relief might be available where the defendant fell within the territorial jurisdiction of the court. More recently, the House of Lords clarifi ed in Fourie v. Le Roux [2007] UKHL 1 what was meant by “jurisdiction” in this context. Draft legislation has been circulated which would bring the position in the BVI more in line with that now prevailing in England, but there is no sign that it will be enacted soon. The position in the BVI had appeared to be that The Siskina was alive and well (see Alfa Telecom Turkey v. Telisonera [2009] ECSC J0928-1 and Sibir Energy Plc v. Gregory Trading SA [2005] 12 JBVIC 2001). Presumably for similar reasons, in Pacifi c International Sport Clubs Limited v. Comerco Commercial Limited [2005] ECSC J1223-1, Olivetti J observed: “without deciding the point, as it does not fall for determination, I also understand that the law governing Norwich Pharmacal orders is such that it does not permit an order to be made requiring anyone to disclose information for use in foreign proceedings (a different regime covers this) but in aid of suit in this jurisdiction”. However, in Black Swan Investment v. Harvest View [2010] 3 JBVIC 2301, the opportunity came before the Commercial Division judge to consider the issue afresh. Bannister J. decided in Black Swan that it would be “highly detrimental” to the interests of important offshore fi nancial centres such as the BVI not to have within its armoury the jurisdiction to grant injunctive relief in aid of foreign proceedings where appropriate. The judge held that it was open to him to resolve the question left open by the Privy Council in Mercedes Benz and to “fi ll it in this jurisdiction by respectfully adopting the [dissenting] reasoning of Lord Nicholls in Mercedes Benz”. The position of defendants not subject to the territorial jurisdiction of the BVI court did not directly arise on the facts. Black Swan was settled before an appeal in that case reached the Court of Appeal. However, in Yukos CIS Investments v. Yukos Hydrocarbons [2011] ECSC J0926-3, the Commercial Court judge refused to grant injunctive relief, on a number of grounds. The majority of the Court of Appeal upheld this refusal. Materially, he took the view that the Black Swan jurisdiction did not engage. Black Swan, he explained, “rests upon the willingness of the Court, in a case where the defendant to foreign proceedings had assets within its jurisdiction, to act in aid of the claimant’s prospective entitlement to a money judgment, if successful in the foreign proceedings. It depends upon the assumption that the foreign money judgment will be enforceable by registration or otherwise, in the court within whose jurisdiction the assets are situated. It is this last feature which founds the jurisdiction”. In Yukos, the position was different. Although a claim had been made in the alternative for a money judgment, upon which little or no reliance had been placed during the course of argument, Bannister J held that there was never likely to be any enforcement activity at all: “if Yukos CIS succeed in the Dutch proceedings, they will not be coming to this jurisdiction to register their judgment because there will be nothing to register. Wincanton will have become indirectly entitled to the shares in the defendants by virtue of its entitlement to the shares in FPH [one of the Dutch vehicles to which the BVI subsidiaries were transferred] and there will be neither need nor reason for it to trouble this court to assist it to obtain redress. For this reason alone, it seems to me that the Black Swan principle has no application to the present case.”

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In the Court of Appeal, the appellant argued that the judge had confi ned the Black Swan jurisdiction too narrowly, whilst the respondent argued that Black Swan was wrongly decided. The court decided that: 1. the BVI court plainly has territorial jurisdiction over the defendants, each of whom were BVI companies (this much was common ground); 2. the judge was wrong (per Kawaley, Redhead and Gordon JA) to the extent that he held that he had no jurisdictional (or subject matter) competence to grant interim relief in support of a foreign cause of action which was not designed to obtain a money judgment; 3. however, it did not follow from the preliminary fi nding that jurisdictional competence exists that it was right to grant interim relief in support of an anticipated foreign non- money judgment (Redhead JA dissenting); 4. Bannister J was right (Redhead JA dissenting) to go on to hold that there was an insuffi cient factual nexus between the appellant’s asserted rights of ownership over the shares of the Dutch parent and the asserted right to freeze and/or appoint a receiver over the assets of the BVI subsidiaries. The appellants claimed merely a right to indirect control of the respondents; the foreign cause of action did not give rise to potential BVI proceedings to enforce such a judgment; and 5. Bannister J was therefore right in substance to hold (Redhead JA dissenting) that the Black Swan decision was inapplicable. Indeed, since Black Swan relied for its validity upon the proposition of Lord Nicholls that injunctions were granted in aid of prospective judgments, not causes of action, a contrary fi nding would have been perverse. The decisions in the cases of Black Swan and Yukos were explored and followed in the recent case of Gold Seal Holdings Limited and others v. Paladin Limited and others [2014] Bda LR 81. Whilst this case was heard in the Supreme Court of Bermuda, the decision is of interest, as it related to a company that was resident in the BVI. The presiding judge (Kawaley CJ) summarised in his judgment the issues of jurisdiction (referring in particular to the principles set out in the case of Mercedes Benz AG v. Leiduck) and interlocutory relief (paying particular attention to the decisions in Black Swan and Yukos). Further guidance was recently given in 2016 in the cases of Bascuñan v. Elsaca BVIHC 2015/0128 and PT Ventures SGPA SA v. Tokeyna Management Limited BVIHC (Com) 2015/0134. In relation to interlocutory relief, the judge followed the principles set out above and assessed whether the applicant had a good arguable case, could demonstrate a risk that he would suffer damage which only an interim injunction could adequately prevent, and/or demonstrate that justice and convenience favoured granting the injunctive relief. The judge ultimately refused to grant interim relief and held that the second defendant’s imminent claim in the BVI did not disclose a good and arguable case and (perhaps more importantly) that the most appropriate forum in which to seek both interim and fi nal relief in connection with a dispute over who should control a BVI company is the BVI Court. The judgment highlights not only the importance of properly preparing evidence to support each claim, but is also a good guideline when considering in which jurisdiction to bring a claim and/or apply for interlocutory relief.

Enforcement of judgments Enforcement of local judgments The court has a wide armoury of powers which enable it to enforce local judgments. Writs of possession or execution are available, which enable the bailiff to be instructed to enforce

GLI - Litigation & Dispute Resolution 2018, 7th Edition 39 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Lennox Paton British Virgin Islands against land, or against goods, as the case may be. Attachments of debts or charging orders are also available, as are oral examinations, which permit the debtor to be examined in relation to their assets. In addition, the judgment summons procedure remains in wide use. However, the reality of international commercial practice is that it is very rare to see BVIBCs which are either controlled or have assets within the jurisdiction. Even where assets exist within the jurisdiction, they will commonly be limited to shareholdings in other BVIBCs. In such cases, a local judgment will enable the judgment creditor to take advantage of the provisions of Part 48 of the Eastern Caribbean Supreme Court Civil Procedure Rules (“CPR”). This provides the court with the power to grant charging orders (and associated stop notices). However, it is more common to see creditors making an application to appoint a liquidator over a defaulting BVIBC debtor in the alternative. It is open to a creditor to apply for appointment of a liquidator over a defaulting debtor company where the debt is not the subject of a bona fi de dispute on substantial grounds (Sparkasse Bregenz Bank v. Associated Capital Corporation [2003] ECSC JO618-5). In any case, where a judgment (local or foreign) has fi rst been obtained, this is usually easy to establish. It must be borne in mind that to proceed down this route, however, the debtor company must not have the benefi t of a counterclaim which would extinguish its own liability or reduce it to below the statutory minimum of US$2,000.00 (Rule 149 of the Insolvency Rules, 2005). Enforcement of foreign judgments Attempts to enforce foreign judgments and to convert them into judgments of the BVI Court have been relatively uncommon, but are increasing. Where it is desired to do so, perhaps in order to obtain a charging order, foreign judgments may be enforced in the BVI at common law, or in one of the limited instances provided for by statute. The statutory machinery is to be found in: 1. the Foreign Judgments (Reciprocal Enforcement) Act (Cap 27) 1964; and 2. the Reciprocal Enforcement of Judgments Act (Cap 65) 1922. • The Foreign Judgments (Reciprocal Enforcement) Act (Cap 27) 1964 Section 3 of the Foreign Judgments (Reciprocal Enforcement) Act (Cap 27) 1964 provides that the Governor in Council may nominate the High Courts of jurisdictions in which he is satisfi ed that “substantial reciprocity of treatment will be assured as respects the enforcement in that foreign country of judgments given in the High Court”. To those jurisdictions, the intention was that an application for registration of the foreign judgment might be made under section 4. Certain jurisdictions have purportedly been designated, but some doubt exists as to whether or not the designation exercise was carried out effectively. • The Reciprocal Enforcement of Judgments Act (Cap 65) 1922 No such doubts exist in relation to the earlier Reciprocal Enforcement of Judgments Act (Cap 65) 1922. However, as originally enacted, it applied only to judgments given in the High Court of England and Wales, Northern Ireland and the Court of Session in Scotland. It has since been extended to additional jurisdictions, but they are relatively few in number (currently the Bahamas, Barbados, Belize, Bermuda, Nigeria, Trinidad and Tobago, Guyana, St Lucia, St Vincent, Grenada, Jamaica and New South Wales, Australia). Section 3(1) provides that if an applicant, within 12 months of the date of the judgment, brings an application for the registration of the judgment, the court will make an order

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directing registration where it is just and convenient for the judgment to be enforced in the BVI. Section 3(2) of the Act excludes judgments from the system of registration where: they were obtained by fraud (section 3(2)(d)); an appeal is pending or the time for appealing has not expired (section 3(2)(e)); or it would be contrary to public policy to enforce the award. The BVI court would generally look to English decisions as to the types of conduct which may affront public policy; as a matter of policy, the courts of the BVI will not enforce, directly or indirectly, foreign tax claims. In JSC BTA Bank v. Mukhtar Ablyazov (2014), the Court of Appeal held that it was not open to a defendant to use the test of just and convenient in section 3(1) to challenge the underlying processes of the English Court where none of the excluding provisions set out section 3(2) had been met. In that case, the defendant wished to challenge the validity of the English judgment on the basis that he had fi led an appeal with the European Court of Human Rights (“ECHR”). The court rejected the defendant’s argument that his appeal to the ECHR represented an appeal of the English judgment and, in noting that none of the exceptions in section 3(2) had been met, held that the judge had been correct to refuse to consider the defendant’s case pursuant to a separate consideration of section 3(1). Section 3(2)(a) of the Act excludes from the system of registration judgments obtained where the original court lacked jurisdiction, or where: 1. in the case of a judgment debtor present within that jurisdiction, he was not served with the proceedings (section 3(2)(c)); or 2. in the case of a judgment debtor not ordinarily resident or carrying on business within the jurisdiction of the home court, he did not submit to the jurisdiction of the court. This takes a narrow view of jurisdiction. Many common law jurisdictions will assert jurisdiction over parties not present within the jurisdiction on the discretionary grounds that they are “necessary and proper” parties to ongoing litigation within that jurisdiction. However, in the BVI this does not apply and judgments obtained in the circumstances described above will be excluded from the system of registration. Where the Act does apply, it has the undoubted advantage of simplicity. All that is required before a judgment may be registered and enforced as if it were a judgment of the BVI court, is an application under Part 72 of the CPR. The application may be made without notice, but must be supported by evidence. The application must contain certain prescribed information and must exhibit: 1. a duly authenticated copy of the judgment; and 2. details of any interest which has become due under the law of the country in which judgment has been entered. The simplicity of the without-notice application is to be contrasted with the common law route, which is to sue on the judgment itself. The result is much the same, but it can take longer. Enforcement at common law At common law, the courts in the BVI will treat any fi nal and conclusive monetary judgment as being a cause of action in itself under the doctrine of obligation by action, irrespective of the jurisdiction in which the judgment was obtained. There is no requirement of reciprocity. The judgment creditor must: 1. prove the judgment; and 2. show that it is a fi nal and conclusive monetary judgment for a specifi ed sum.

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If those matters are established, a retrial of the issues in the action will not be necessary. The creditor may instead apply for summary judgment under CPR Part 15. Since the judgment creditor is proceeding by way of a fresh action, he will only be able to proceed in the BVI if he is able to serve the proceedings upon the judgment debtor by a means permitted by CPR Parts 5 and 7. It will still be possible to defeat an application for summary judgment, or indeed an action founded upon a foreign judgment, even one which is conclusive and made in respect of a specifi c sum, if: 1. the foreign court did not have jurisdiction in the matter (i.e. the judgment debtor either did not submit to the jurisdiction, or was resident or carrying on business within the jurisdiction and was not duly served with the process); 2. the foreign judgment includes penalties, taxes, fi nes or similar fi scal or revenue obligations; 3. the judgment was obtained by fraud; 4. recognition or enforcement of the judgment in the BVI would be contrary to public policy; or 5. the foreign proceedings were conducted in a manner which infringes the rules of natural justice. The position is more complex in relation to foreign judgments which are not for a specifi ed sum of money. In those circumstances, the common law doctrine will not strictly engage, but the creditor may instead seek to avoid a re-trial of the issues by relying upon the equitable principle of estoppel, in essence by arguing that it would be an abuse of the process of the court: 1. to re-litigate matters previously decided in a court of competent jurisdiction. Even where the judgment of the foreign court cannot be enforced at common law, it may nevertheless be possible to argue that the losing party should not re-litigate those issues that were decided by the foreign judgment; and 2. to litigate matters in subsequent proceedings which ought to have been advanced in the original proceedings. As a rule, the courts will expect a party to advance all of his case at the same time, so as to prevent the other party being vexed twice by the same matter (see the rule in Henderson v. Henderson 1843-60 All ER Rep 378). Enforcement of arbitral awards On 23 January 2014, the BVI passed the Arbitration Act 2013, which came into force on 1 October 2014. The 2013 Act repealed the previous legislation, the Arbitration Ordinance 1976. The BVI is a dependent territory of the United Kingdom, which is a party to the New York Convention, and the BVI acceded to the New York Convention on 25 May 2014. The 2013 Act sought to address a number of diffi culties which occurred under the previous legislation. The 1976 Ordinance was based on a mixture of old English statutes and was widely considered to be unsuitable to deal with modern commercial litigation. The 2013 Act is likely to have only a lesser impact on the enforceability of foreign arbitration awards from New York Convention states, as many of them were already capable of enforcement pursuant to the 1976 Ordinance. One important change is that the defi nition of a Convention State is now wide enough to include the United Kingdom, which will permit enforcement of awards from, for example, the London Court of International Arbitration which had been excluded from the former legislation. The 2013 Act also includes provision

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Cross-border litigation As set out above, the cases in the BVI often feature a foreign aspect or parties. The BVI court has shown a willingness to support foreign claims by granting interim relief in support of those proceedings (see the commentary on Black Swan, above). In addition, the BVI courts often assess whether claims are better determined by a foreign court. Challenges are regularly brought to set aside orders for permission to serve out of the territory, or to stay or strike out claims on the grounds of forum non conveniens. In OBM Limited v. LSJ LLC, Indra Hariprashad-Charles, J. cited the dicta of Farwell L.J. in The Hagen [1908] P 189 at page 201, holding that the “jurisdiction to subject a foreigner to the jurisdiction of the court has been described as extraordinary and should only be exercised with great care and it remains open to the court to stay a case on the basis of forum non conveniens”. Hariprashad-Charles, J. held that, in deciding the forum conveniens, the court will look ﬁ rst to see what factors there are which point in the direction of another forum. In that case, the court assessed a contract entered into by the parties. It was noted there was no exclusive jurisdiction clause but rather a choice of law clause. Nevertheless, the court declined jurisdiction, citing the dicta of Brandon, J., in The Eleftheria [1969] 1 Lloyd’s Rep 237 at page 246, where the court held: “It seems to be clear, however, that, in general and other things being equal, it is more satisfactory for the law of a foreign country to be decided by the courts of that country. That would be my view, as a matter of common sense, apart from authority.” From the above it can be seen that the BVI court is likely to demurr to the provisions of an exclusive jurisdiction clause agreed to by the parties to a contract – a recent application of this can be seen in Garkusha v. Yegiazaryan and Others BVIHCMAP 2015/0010. Subject to the general principle that agreements cannot be made to oust the jurisdiction of the court, the choice of jurisdiction agreed by contracting parties is, on the whole, respected. In appropriate cases, a choice of law clause may support an argument that the BVI is not the appropriate forum. Therefore the BVI Court has demonstrated time and again its awareness of its place in global disputes, and will give due consideration to linked claims that have been issued abroad. It is worth noting, however, that following the introduction of the Legal Professional Act 2015, the ability of a successful litigant to recover foreign lawyers’ fees incurred in litigation had been challenged. This point was discussed in the case of Garkusha v. Yegiazaryan and Others BVIHCMAP 2015/0010 and determined in Shrimpton and Pitcairn Limited v. Scriven and Others BVIHCMAP 2016/0031. At present, the BVI courts will not allow fees incurred by foreign lawyers to be recovered in BVI proceedings. This is worth considering when assessing global strategy generally.

International arbitration As set out above, the Arbitration Ordinance (Cap 6), 1976 was repealed and replaced by the Arbitration Act 2013, which came into force in October 2014. The 2013 Act introduced the UNCITRAL Model Law on Arbitration (as amended on 7 July 2006) to the territory with some minor exceptions. As the New York Convention had

GLI - Litigation & Dispute Resolution 2018, 7th Edition 43 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Lennox Paton British Virgin Islands not previously been extended to the territory, BVI arbitral awards prior to 25 May 2014 had been largely unenforceable outside of the jurisdiction. In the past, the BVI has rarely been the seat of arbitration hearings and the 2013 Act has sought to address this by the establishment of the BVI International Arbitration Centre (or the BVI IAC). Due to the infancy of the Act, there have been few authorities that illustrate how the courts will approach the new provisions. Perhaps one to note is Jinpeng Group Limited v. Peak Hotels and Resorts Limited BVIHCMAP 2014/0025 and 2015/0003, in which the Court of Appeal considered whether to stay a winding-up petition in favour of arbitration. In that case the court decided that where a debt was not disputed on genuine and substantial grounds but fell under the terms of an arbitration clause, the court has a wide discretion as to whether to stay or dismiss the originating application to allow for arbitration, or to proceed. The court held that the petitioner did not have to prove that exceptional circumstances existed in order for the court to exercise its discretion to make a winding-up order differing in approach from the English courts set out in Salford Estates (No 2) Ltd v. Altomart Ltd [2014] EWCA Civ 1575. In Sonera Holding B.V. v. Cukurova Holding S.A. BVIHC (Com) No. 119 of 2011, Bannister J did consider how the Act has affected the jurisdiction of the court when dealing with cases that have an arbitral element. In the case in question, Sonera had previously obtained a Convention award against Cukurova, and Cukurova had failed to pay as ordered. Sonera applied to the BVI court to enforce the award and duly obtained judgment. Cukurova applied to set aside the judgment on the principal ground that in making the award of damages, the First Tribunal had exceeded its jurisdiction. This argument was rejected by the BVI court and the Court of Appeal and Privy Council followed suit. Cukurova then sought to attack the decision of the First Tribunal by commencing further arbitral proceedings, and Sonera applied to the BVI court for an anti-arbitration injunction in an attempt to prevent Cukurova from undermining previous decisions. When considering the case, Bannister J noted that Section 3(2) of the Act conﬁ rmed that the court shall not interfere in the arbitration of a dispute, save as provided expressly in the Act. In his judgment, Bannister J gives full consideration to the provisions of the Act, noting that the general provisions (Sections 7-9 and 11-16) apply to domestic arbitrations only. He therefore found that these provisions are incapable of having extra-territorial effect. In short, Bannister J found that Section 10 of the Act has no application in relation to an arbitration with a foreign seat, and decided that the overriding nature of the prohibition contained in Section 3(2)(b) of the Act prevented him from interfering with the arbitration process at all, and he therefore dismissed the application. The case does give some indication as to the approach of the court. However, the appointment of a former arbitrator as the new commercial judge may lead to differing judgments in the future. At present, it is, in practice, virtually unheard of to encounter an arbitration clause within commercial contracts which provide for the BVI to be the seat of any arbitration. It is more common to encounter arbitration clauses which provide for a foreign seat of arbitration. In such an event, the foreign arbitral award may then subsequently be enforced or recognised within the BVI, in accordance with the principles and rules set out in the sections above.

Mediation and ADR The Courts of the Eastern Caribbean have long encouraged mediation and other forms of alternative dispute resolution. By Rule 27.7 of the CPR, the court may adjourn a case-

GLI - Litigation & Dispute Resolution 2018, 7th Edition 44 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Lennox Paton British Virgin Islands management conference to enable settlement discussions, or a form of ADR procedure to continue. A process of court-connected mediation was instituted by Practice Direction 1 of 2003 which created, in each ECSC territory, a national mediation committee. The Practice Direction confers upon the court jurisdiction to refer a dispute to mediation, and provides that the parties “will not be allowed to opt out of the referral order to mediation, except by order of the Master or Judge and upon adducing good and substantial reasons”. The BVI now has a growing number of qualiﬁ ed mediators. However, their services are infrequently (if ever) used in international commercial litigation.

Regulatory investigations The BVI recognises its place as a global business centre and has therefore embraced international regulatory provisions to provide transparency and accountability. Incorporations are dealt with by the BVI Financial Services Commission, and a person dissatisfi ed with decisions of the BVI Financial Services Commission may bring an appeal to be heard by the Financial Services Appeals Board. In addition to the above, the Financial Investigation Agency Act (“FIAA”) established the BVI Financial Investigation Agency. The Agency has been charged with assisting foreign governments to tackle international money laundering and tax evasion. This includes provisions for international cooperation between government departments that allow for the sharing of information. Section 5A of the FIAA states that the FIA has wide discretion when it comes to disclosure of information. However, the FIA can only disclose information to a foreign fi nancial intelligence authority. What is notable is that a spontaneous disclosure can take place if the FIA discovers or possesses information that evidences that some offence has taken place, or to assist in initiating an investigation into an offence. In addition to the above, the Criminal Justice (International Co-operation) Act 1993, provides measures that allow for co-operation between the BVI and other countries when it comes to investigating crimes. This includes requests made via the Governor’s offi ce to disclose information. The Financial Services (International Co-operation) Act, 2000 was passed on 21 December 2000. It enhances the ability of regulators to access information by providing an effective administrative procedure for obtaining information. This Act is essentially assistance- oriented and designed to provide assistance to recognised foreign regulatory authorities to obtain information in respect of persons in BVI in relation to any “regulatory function”. The Director of Financial Services is empowered to request, of any person, the production of information or documents with respect to any matter relevant to an inquiry to which a request under the Act relates. Failure to comply may lead the Director to apply to the court for an order of compliance against the subject person, or to have that person examined under oath. In order to ensure confi dentiality of information, the Act makes provisions for restricting the disclosure of information.

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Scott Cruickshank Tel: +1 284 494 6864 / Email: [email protected] Scott is the Managing Partner and Head of Litigation of the BVI offi ce. He has considerable experience in areas such as shareholder disputes, insolvency, fraud and asset-tracing, trust litigation, and corporate and commercial disputes generally. Prior to relocating to the BVI in 2008, Scott was a barrister at the Scottish Bar where he built up a sizeable and successful practice as a corporate and commercial litigator. Scott routinely works with large city law fi rms, fi nancial institutions and corporate and commercial clients based throughout the world with respect to large multi-jurisdictional disputes and transactions. He has considerable courtroom experience matched with an acute commercial acumen. Chambers Global has variously described Scott as being “very thorough and professional, and provides fantastic client care” (2013); that he has “extensive experience in insolvency and trust litigation” (2014); that he is “always on the ball, very thorough, very personable and very easy to work with” (2015); and that he is an “experienced practitioner who is well regarded, with sources highlighting his combination of detailed legal knowledge and good commercial judgment” (2016). Scott is a Fellow of INSOL International, being the fi rst BVI practitioner to have successfully completed the INSOL Global Insolvency Practice Course.

Matthew Freeman Tel: +1 284 494 6864 / Email: [email protected] Matthew is a Senior Associate in the Litigation Department of the BVI offi ce. He has considerable experience of corporate and commercial litigation including insolvency, shareholder disputes, trust litigation, fraud and asset tracing. Matthew also has a broad experience of ADR procedures including mediation and arbitration. He qualifi ed as a solicitor in England and Wales in 2007 (now non-practising), having completed a training contract with a reputable regional fi rm. In 2013 he moved to a niche practice and continued to advise corporate clients, partnerships and high-net-worth individuals, and partnerships in relation to a wide range of corporate and commercial disputes. He took up partnership in October 2014 before joining Lennox Paton in April 2015.

Lennox Paton 4th Floor, Flemming House, Wickhams Cay, Road Town, Tortola, British Virgin Islands T el: +1 284 494 6864 / Fax: +1 284 494 6839 / URL: www.lennoxpaton.com

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Ian Huskisson, Anna Peccarino & Neil McLarnon Travers Thorp Alberga

Effi ciency/integrity The Cayman Islands are a British Overseas Territory. The legal system is based on the English common law, as amended by domestic statute, with the Privy Council in London as the highest court of appeal. The legal structures, concepts, and approach are instantly recognisable to any English, US or other common law adviser. This backbone of legal similarity and political stability has proved crucial to the growth of the Islands. Over the last 20 to 30 years, the Cayman Islands have developed specifi c legislation to facilitate a wide range of international fi nancial transactions. In addition, the Cayman Islands have a broad and deep pool of accountants, bankers, lawyers and other service providers in order to offer service levels similar to those found in the leading onshore centres. Over 40 of the top 50 banks globally hold licences in the Cayman Islands. With approximately 11,000 registered investment funds, Cayman Islands fund vehicles are routinely used by institutional and independent asset managers. Cayman vehicles are considered, by a very wide margin, to be the market leader for offshore hedge funds. In terms of insurance, the Cayman Islands are one of the most attractive jurisdictions for captive vehicles, and continue to be the leading jurisdiction for healthcare captives. The administration of justice in the Cayman Islands is carried out on three levels: Summary Court, Grand Court and the Court of Appeal. In 2009, in response to the needs of the fi nancial services industry, the Financial Services Division of the Grand Court was established (the FSD). The FSD is modelled on the English commercial court and has highly experienced judges presiding over complex fi nancial services disputes. Appeals from the Grand Court lie to the Cayman Islands Court of Appeal, which sits regularly throughout the year. Appeals are heard by three judges, including Lord Justices of Appeal from the English Court of Appeal. In appropriate cases, further appeal may lie to the Judicial Committee of the Privy Council in London. Judgments of the Privy Council are persuasive in many jurisdictions. There have been numerous ground-breaking Privy Council decisions addressing issues arising out of the 2008 fi nancial crisis, especially concerning hedge funds. Examples include: Culross v Strategic Turnaround [2010] UKPC 33 (dealing with the alteration of an investor’s status from shareholder to creditor upon redemption of shares); DD Growth v RMF [2017] UKPC 36 (providing that unlawful distributions to an investor can only be clawed back by a liquidator upon evidence of knowledge of wrongdoing); and Pearson v Primeo [2017] UKPC 19 (dealing with priorities between different investors in a liquidation). Others include: Almazeidi v Penner [2018] UKPC 3, which addresses the requirements for

GLI - Litigation & Dispute Resolution 2018, 7th Edition 47 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Travers Thorp Alberga Cayman Islands judicial independence; and Crawford Adjusters and others v Sagicor General Insurance (Cayman) Limited [2013] UKPC 17, which extended the tort of malicious prosecution to civil as well as criminal cases.

Enforcement of judgments/awards In principle, foreign judgments and arbitral awards can be enforced in the Cayman Islands courts. At the time of writing (with the exception of Australian judgments), there is no system for registration and automatic enforcement of foreign judgments. However, it is intended that legislation will be passed extending the current registration system to most Commonwealth countries. Even after the new legislation is passed, judgments from other countries (most notably, the United States) will continue to be enforced by court under the common law system, as if they were based on a contractual right. The process for enforcement therefore involves the commencement of a fresh action in the Cayman Islands courts. Judgment is usually granted on a summary basis. Once granted, the judgment can be enforced by seizure of property or other means, as with any other local judgment. There are a number of well-established formal requirements which must be satisfi ed before the court will enforce a foreign judgment or arbitral award. These are as follows: • The foreign court or tribunal was competent to hear the claim. • The judgment or award involves a positive obligation, such as an obligation to pay a debt or perform a specifi ed task. • The judgment or award is fi nal and conclusive. • The judgment or award does not involve taxes, fi nes or penalties. The requirement that the foreign court was competent to hear the claim should be assessed with reference to the principles of Cayman Islands law, rather than the law of the country making the judgment. This important distinction was illustrated in the case of Banco Mercantil Del Norte SA v Cabal Peniche [2003] CILR 343, in which the Cayman Islands court declined to summarily enforce a judgment of the Mexican courts. It was argued that the defendant in that case had submitted to the jurisdiction of the Mexican court by voluntarily appearing in those proceedings. The appearance relied on what is known as Amparo proceedings in the Mexican courts. The aim of the Amparo proceedings was to obtain an order setting aside the deemed service of the proceedings. This would be considered a submission to the jurisdiction of the Mexican courts, but under Cayman Islands law it would not. Under Cayman Islands law, purely contesting the jurisdiction of the court does not amount to a voluntary submission to the jurisdiction. Accordingly, on the facts of this case, there was real doubt that the Mexican court had jurisdiction (applying Cayman Islands law), and the Cayman Islands judge declined to grant summary judgment on the enforcement application. The judge concluded: “I am of the view that this was a purely jurisdictional hearing on the face of the record. The threshold for a summary judgment is not met in my view.” Practitioners should be aware that there are circumstances in which the Cayman Islands courts will not recognise foreign trust laws or enforce judgments that are inconsistent with Cayman Islands trust law and practice. The Trusts Law (2018 Revision) will prevent the enforcement of a foreign judgment setting aside the transfer of property into a Cayman Islands trust in certain circumstances. For example, a trust might be established to prevent

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Cross-border litigation A very large part of the business of the Cayman Islands courts is cross-border in nature. The judges of the Cayman Islands courts regularly interact and cooperate with judges from other jurisdictions. The Cayman Islands courts are, in principle, receptive to requests for judicial assistance from other courts, including requests for the production of documents or the examination/deposition of witnesses located in the Cayman Islands. The Cayman Islands courts generally adopt the approach taken in the well-known English case of Rio Rinto Zinc v Westinghouse [1978] A.C 547, where it was said: “It is our duty and our pleasure to do all we can to assist that court, just as we would expect the [foreign court] to help us in the circumstances.” A good example of successful cooperation between the Cayman Islands and other courts is the collapse of the Bank of Credit and Commerce International (“BCCI”). BCCI’s worldwide operations were put into a coordinated liquidation process in 1991. The liquidation has since resulted in substantial recoveries for creditors. Central to the success of the liquidation was a plea-bargaining agreement struck between the Cayman Islands liquidators and the United States authorities. The following extracts from one of the overseas liquidator’s reports confi rm the extent of the co-operation involved. “In November and December of 1991, under the supervision of the Grand Court of the Cayman Islands, the District Court of Luxembourg, and the High Court in England, the BCCI liquidators negotiated an historic plea and co-operation agreement with the United States. The Agreement was presented to the Grand Court of the Cayman Islands and approved in December 1991. “In accepting this agreement, Judge Joyce Hens Green of the United States District Court for the District of Columbia stated: “The Plea Agreement now before the Court refl ects, on a truly global measure, extraordinary efforts and amazing co-operation of a multitude of signatories representing myriad jurisdictions, to fully settle actions against the corporate defendants, which had operated in 69 countries around the globe, and through the plea restitution, to locate and protect all realizable assets of BCCI for the ultimate benefi t of the depositors, creditors, United States fi nancial institutions, and other victims of BCCI. The promise of the Plea Agreement is that those extraordinary efforts, that amazing co-operation, should continue.”” Cross-border insolvencies have continued to generate ground-breaking decisions. The English Supreme Court decision in Rubin v Eurofi nance [2012] UKSC 46 is particularly relevant to offshore litigation. Here the English Supreme Court established that a judgment made in foreign insolvency proceedings would not be enforced against an English defendant, unless the defendant had been within the jurisdiction of the foreign court. It had previously been suggested that judgments made in insolvency proceedings in the country of an insolvent company’s incorporation or centre of main interests (including claims to set aside pre-insolvency transactions) should be enforced against defendants domiciled elsewhere, even where they had not submitted to the insolvency jurisdiction. The decision in Rubin is likely to be followed by the courts in the Cayman Islands and

GLI - Litigation & Dispute Resolution 2018, 7th Edition 49 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Travers Thorp Alberga Cayman Islands other offshore jurisdictions. It may lead to more claims having to be brought in offshore jurisdictions where asset holding companies are domiciled. The Rubin decision also brings the confl ict-of-laws position in international insolvencies more in line with applicable principles in commercial cases. An interesting variation on this theme was presented in the Cayman Islands case of Irving Picard and Bernard Madoff Investment Securities LLC (in Securities Investor Protection Act Liquidation) v Primeo Fund (In Offi cial Liquidation) [Court of Appeal, 16 April 2014]. In this case, applying Rubin, liquidating trustees appointed in the United States brought proceedings in the Cayman Islands to recover assets alleged to be due to the bankrupt Madoff estate. The proceedings had to be brought in the Cayman Islands because the defendants were not within the jurisdiction of the United States bankruptcy courts. However, the liquidating trustees sought to argue (amongst other things) that the Cayman Islands courts should apply the relevant United States bankruptcy laws rather than Cayman Islands law. It was argued that it was open to the Cayman Islands courts to apply foreign bankruptcy laws, based on sections of the Cayman Islands companies legislation that encourage cooperation with foreign offi ce-holders. The court found that any avoidance proceedings (e.g. proceedings to set aside suspect transactions) a foreign offi ce-holder wishes to bring in the Cayman Islands would have to be brought under the applicable Cayman Islands legislation. The strong, but not as yet overwhelming, trend in the Cayman Islands and other offshore cases (which are too numerous to mention here) involving Madoff and similar funds which have collapsed following the discovery of fraud is that (absent any unusual circumstances), investors who cash in prior to the collapse may keep their payments at the expense of the remaining investors. This approach is justifi ed in part on the need for commercial certainty in order for mutual funds to operate effi ciently, but contrasts sharply with that taken in the United States and other jurisdictions, where courts will generally allow clawback of payments made to investors who redeem their investments before the fraud is discovered.

Privilege and disclosure Cayman Islands law follows the traditional common law approach to both privilege and disclosure. Privilege will apply to legal advice generally and also to communications made in contemplation of litigation. During the course of litigation, all parties are under an automatic and strictly enforced obligation to disclose documents within their control that relate to the matters in issue. This includes documents that are adverse to their case and that may lead to a “train of enquiry”. Parties must also identify documents that were once but are no longer within their control, for example, if they have been lost or destroyed. One issue that must always be considered when litigating in the Cayman Islands is confi dentiality. Unlike the traditional common law approach, where disclosure obligations generally override confi dentiality, Cayman Islands law requires that the directions from the court be fi rst obtained before certain confi dential documents are disclosed. The Confi dential Information (Disclosure) Law (2016 Revision) (“CIDL”) defi nes confi dential information as information arising in or brought in to the Islands concerning any property of a principal to whom a duty of confi dence is owed. It is important to note that the CIDL is not a “secrecy law”. All it does is require a court application to be made before making any required disclosure. In all but the most extreme of cases, expect an order to be made permitting disclosure.

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Costs and funding Courts in the Cayman Islands follow the principle of “loser pays” in most situations. The winner generally has to wait until the conclusion of the case to receive payment, and only then after the amount has been assessed by the court, in a process called taxation. It is possible in some circumstances to require the provision of security for costs up front, and to make a payment into court which (if not beaten at trial) should result in a costs order in favour of the defendant from the deadline for acceptance onwards. It is also possible to ask the court to require third parties who have in fact been directing litigation behind the “cloak” of the named party to pay the winner’s costs, provided they have been put on notice of their cost risk. Contingency fees are not recoverable in the Cayman Islands, although there have been a number of recent cases in which liquidators of companies have been permitted to enter into conditional fee arrangements with local lawyers, or contingency arrangements with lawyers overseas. In December 2015, the Law Reform Commission released a draft bill and a discussion paper for public consultation on conditional and contingency fee agreements between clients and lawyers in civil action cases which, if passed into law, will pave the way for a no-win, no-fee regime. There have been several high-proﬁ le claims in recent times against directors of Cayman Islands companies for breach of duty, amongst other things. One particular feature of Cayman Islands’ company law (which differs from English law) is the availability of widely drawn exclusions of liability for directors. Cayman Islands law follows the traditional approach of the English common law in trust cases, where trustees may exclude liability very widely. It is not uncommon for the Articles of Association of Cayman Islands companies to also provide for a company pursuing claims against its directors to indemnify the directors for their costs of the proceedings. In the case of BTU Power Management Company v Abdul Hayat (Unreported, 1 June 2009), the Cayman Islands court enforced Articles which required a company to pay a director’s defence costs up front.

Interim relief Interim relief in the form of asset-freezing and other injunctions is available in the Cayman Islands. The Cayman Islands government has recently passed a law (the Grand Court Amendment Law 2014) for the purpose of clarifying the courts’ ability to grant injunctive relief in support of proceedings in other jurisdictions. This is a welcome development and assists claimants recover assets that may have been placed offshore in order to defeat claims. The Cayman Islands courts now have the power to grant a wide variety of injunctions in support of domestic and other proceedings. These include the freezing of assets, preservation of property, disclosure of assets, documents, etc. Unlike most European jurisdictions where conventions establish the relative priority of the different jurisdictions, in the Cayman Islands it is often necessary to seek the assistance of the court to prevent unlawful “forum shopping” by granting an anti-suit injunction. Anti- suit injunctions are normally aimed at preventing a party (who is subject to the jurisdiction of the Cayman Islands courts) from pursuing litigation in another country that should be litigated in the Cayman Islands. This will commonly be where there is an exclusive jurisdiction clause, or where a claim raises issues that can only be determined by the courts of the Cayman Islands. This last issue was raised in the case of Asia Paciﬁ c Online Limited v Marcus Watson and Others (Unreported, 25 April 2012), in which the Cayman Islands court granted an “anti- anti-suit injunction” to restrain intended anti-suit injunction proceedings about to be brought

GLI - Litigation & Dispute Resolution 2018, 7th Edition 51 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Travers Thorp Alberga Cayman Islands in the United States. The dispute related to Chapter 11 proceedings, in which it was alleged certain shares in a Cayman Islands company would be expropriated against their wishes through the Chapter 11 process. The court granted the injunction, on the basis that the US proceedings could amount to a repudiation of the constitution of a Cayman Islands company. In a similar vein, the Privy Council in London (the highest appellate court for the Cayman Islands) has recently determined that when a company is being wound up in the jurisdiction where it is incorporated, an anti-suit injunction was available to prevent a creditor or member from pursuing proceedings in another jurisdiction which are calculated to give him an unjustiﬁ able priority. A creditor (Shell) brought proceedings in the Netherlands against a company which was later wound up in the BVI. In those proceedings, Shell obtained an order attaching certain assets of the company. The effect of the attachments was that, if Shell succeeded in its claim in the Dutch courts, it would likely be able to satisfy its judgment debt in full, whereas other creditors who had claims in the liquidation could recover only a dividend. The purpose of the Dutch attachments was to obtain priority which Shell would not get in the liquidation. The liquidators applied for an anti-suit injunction to restrain Shell from taking steps to enforce the attachments. They lost at ﬁ rst instance but, on appeal, an injunction was granted. Shell appealed. The issue on appeal was whether Shell was, in principle, entitled to do what it had done, and, if not, whether an injunction could be issued to prevent it taking any steps to enforce the attachments. The court considered the fundamental principle applicable to all anti-suit injunctions, that the court does not purport to interfere with any foreign court, but may act personally upon a defendant by restraining him from commencing or continuing proceedings in a foreign court where the ends of justice require. On this basis, the court dismissed the appeal, upholding the injunction that had been granted (Stichting Shell Pensioenfonds v Krys and another [2014] UKPC 41).

International arbitration The principal benefi ts of arbitration, such as confi dentiality and potentially more limited discovery, are making arbitration more popular with the international business communities. Many parties selecting arbitration in the Cayman Islands for the resolution of international commercial disputes will expressly provide in their agreements for the arbitration to be governed by the rules of a particular organisation or arbitral body. A model ad hoc arbitration clause can be found in the Arbitration Law 2012. This replaced previous legislation which had been based on the English Arbitration Act of 1950. Under the new law, arbitration agreements may be in the form of either an arbitration clause in a contract, or a separate agreement. Whichever form it takes, with a couple of specifi c exceptions, an arbitration agreement must be in writing, and it must be contained in a document signed by the parties or in an exchange of letters, facsimile, telegrams, electronic or other communications which provide a written record of the agreement. Subject to certain mandatory rules, the parties may agree to adapt the arbitral process to suit their needs. In particular, the parties may agree on: the number and method of appointment of the arbitrators; their specifi c areas of expertise and qualifi cations; the language of the arbitration; whether the arbitration is to be conducted under institutional rules, and if so which arbitration boards to adopt; and whether to nominate an appointing authority to choose the members of the arbitral tribunal or to retain the power to choose the tribunal themselves. The enforcement of arbitration agreements, and of resulting arbitral awards made in countries which are parties to the 1958 New York Convention on the Recognition and

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Enforcement of Foreign Arbitral Awards (the NY Convention), is governed by the Foreign Arbitral Awards Enforcement Law, which was originally enacted in 1975 and later revised in 1977 (“the FAAEL”). The FAAEL incorporates the provisions of the NY Convention into Cayman Islands Law. A NY Convention Award will be enforced as if it were a judgment of the courts of the Cayman Islands, unless one of the limited circumstances for an award to be challenged under the NY Convention can be established. The Cayman Islands courts can be expected to adopt a robust approach to enforcement of NY Convention awards. In Globeop Financial Services LLC and others v Titan Capital Group and others (Unreported, 23 April 2014), the Chief Justice of the Cayman Islands summarily rejected allegations of impropriety and required the enforcement of a NY Convention award from the United States. In conclusion, the Cayman Islands courts are respectful of, and will readily enforce, arbitration awards from qualifying-convention and other countries. Where the parties have agreed that their disputes should be arbitrated, not litigated, then the Cayman Islands courts can be expected to enforce arbitration. Although a developing area of law, this is likely to extend to certain types of winding-up proceedings.

Mediation and ADR The Cayman Islands courts embrace, but do not require, the resolution of disputes by alternative methods of dispute resolution (“ADR”). The advantages of ADR include conﬁ dentiality, comparatively limited discovery and disclosure requirements, reduced costs, time-saving, and the preservation of business relations. All conventional forms of ADR are available in the Cayman Islands, and practitioners are familiar with them.

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Ian Huskisson Tel: +1 345 623 2367 / Email: [email protected] Ian is a commercial litigation partner with over 17 years’ post-qualifi cation experience gained in London and the Cayman Islands. His experience covers all aspects of company law, insolvency and other fi nancial services disputes. Ian qualifi ed as a solicitor advocate when practising in London and has also acted as an expert witness on the law of insolvency. Ian was part of Global Law Experts’ Alternative Dispute Resolution Team of the Year in 2014.

Anna Peccarino Tel: +1 345 623 2374 / Email: [email protected] Anna is an experienced litigation and alternative dispute resolution partner with over 20 years’ experience gained under the relevant legal systems of London, Paris, Rome, the Cayman Islands and Jersey, Channel Islands. Anna has conducted high-proﬁ le arbitrations and mediations under the auspices of the major ADR bodies, particularly the ICC, LME, LCIA and AAA, and has experience in drafting ADR agreements in accordance with the rules and regulations of those bodies. Anna has acted in a number of high-proﬁ le matters, notably representing the Italian government, the French, British and Belgian railways and multi-million dollar listed corporations. Anna was part of Global Law Experts’ Alternative Dispute Resolution Team of the Years 2013 and 2014.

Neil McLarnon Tel: +1 345 623 2378 / Email: [email protected] As sole Counsel, Neil has represented clients at every level of the English civil law Court structure, from tribunals and county courts, through the High Court, the Court of Appeal to the UK Supreme Court. He has represented clients in ICC, LCIA, DIAC and ad hoc arbitrations. He also regularly appears before the Dubai International Financial Centre Court. As Junior Counsel, he has worked alongside Senior Counsel for hearings and trials taking place before the High Court and the Courts of the Bahamas, the British Virgin Islands, the Cayman Islands, Guernsey and Jersey. Neil’s practice areas include arbitration, banking and ﬁ nance, civil fraud, commercial law, company law, directors’ duties, funds law, injunctions, insolvency law, partnership law, private international law and trusts and estates law. Neil is ranked in Citywealth as a leading trusts barrister.

Travers Thorp Alberga 103 South Church St., Harbour Place, PO Box 472, Grand Cayman KY1-1106, Cayman Islands Tel: +1 345 949 0699 / Fax: +1 345 949 8171 / URL: www.traversthorpalberga.com

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Cui Qiang & Li Qishi Commerce & Finance Law Offices

With a population of 1.3 billion, China is the second-largest economy in the world. Since the global ﬁ nancial crisis of 2008, China has been the largest contributor to the world growth. In 2017, China contributed ⅓ of the global economic growth, which amounts to the economic aggregate of the country ranking No. 14 in the world in 2016 – Australia. Along with its increasingly important and inﬂ uential role in development and in the global economy, China’s booming demand for dispute resolution has arisen from active economic transactions, requiring evolution in terms of legislation and the judicial system. Actually, the laws in China today are more sophisticated than ever before, and the judicial system has also evolved to be more transparent.

New laws adopted in 2017 General Rules of the Civil Law The fi rst section of the Civil Code has been adopted. In 2017, the National People’s Congress of China promulgated the General Rules of the Civil Law (“GRCL”), which took effect on October 1, 2017. GRCL are deemed to be the fi rst section of the Civil Code of China, which shall be fi nalised by 2020, according to the National People’s Congress of China. GRCL replace the old law, the General Principles of the Civil Law, which were implemented on January 1, 1987. China has not adopted the commercial code; GRCL and the unborn Civil Code do not intend to embrace those areas of law, but leave them to be regulated by individual legislations such as contract law, negotiable instrument law, trust law, securities law, etc. GRCL only deal with laws regarding civil rights, civil legal acts, the capacity and right of natural persons, legal persons, other originations, agents, and so on. One of the remarkable changes adopted by GRCL is that they extend the general limitation of action from two years to three years. A limitation of action shall run from the date when an obligee knows, or should have known, that his or her rights have been infringed and who the obligor is (Article 188). The extension has a major impact on general contractual disputes, with the PRC Law being the governing law. New judicial interpretations on Corporation Law The Supreme People’s Court of China (“SPC”) has promulgated an important judicial interpretation of the Corporation Law of China (“CLC”) – the CLC Interpretation IV. The CLC, and the four judicial interpretations promulgated by SPC, form the corporation act of China in a narrow sense. The judicial interpretations promulgated by SPC play a role as important as the law itself in Chinese judicial practice. The CLC interpretation IV embodies the judicial rules on shareholders’ rights to know, pre-emptive rights, rights to claim for profi t distribution, shareholders’ derivative actions, etc. Though provided in the CLC, the

GLI - Litigation & Dispute Resolution 2018, 7th Edition 55 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Commerce & Finance Law Offices China provisions are too general and wanting in detail; Chinese courts across the nation have adjudicated cases involving those issues with different constructions on the law provisions, which calls for unifi ed application of the law. Many areas of commercial law in China have evolved by this way, which effectively resolves the emerging issues with the pace of the rapidly growing economy and changing society. China also has special laws and regulations for foreign-invested companies (“FDI companies”), but the CLC and its interpretations apply to FDI companies; unless otherwise provided by the special laws and regulations for FDI companies, CLC are commonly applicable. New provisions on enforcement and bankruptcy procedures In February 2017, SPC issued the guiding opinions on issues concerning the transfer of enforcement cases for bankruptcy review, which provides that if certain conditions are satisfi ed, cases under enforcement procedure may be transferred to bankruptcy procedure. In February 2018, SPC promulgated three judicial interpretations, all concerning the provisions on enforcing court judgments and arbitration awards. The newly promulgated judicial interpretations, with the other laws and regulations, complete the laws of enforcement in China. Benefi ting from the property registration and investigation system, the credit reporting system and the enforcement command system, Chinese courts rely on the internet and take full advantage of technology to allocate resources and enhance the enforcement of judgments and awards.

Case law in China China is a vast country; it is important to understand how vast it is in order to understand China. The fi gures tell the story. China has more than 3,520 courts, more than 9,200 standing people’s tribunals and 39 dispatched maritime tribunals. It is reported that in the courts across the country, there are about 120,000 judges, from SPC in Beijing to the dispatched tribunals in remote ethnic minority communities. Therefore, the unifi ed application of laws is key to many problems in the Chinese court system. China is a statutory law country; judicial interpretations act as an effective mechanism of construction and supplements to laws. Also, China has established the guiding cases applicable rules. In 2010, SPC issued the Provisions on Guiding Cases. Until December 31, 2017, SPC issued 92 Guiding Cases in total. The Guiding Cases, according to SPC, are judgments which fi nd the facts clearly and apply the laws correctly, with suffi cient reasoning, and may provide general guidance as precedents to similar cases. The courts at all levels shall follow the reasoning of the Guiding Cases when adjudicating cases with similar facts and applicable laws. In 2013, SPC established an offi cial website for online publishing of judgments and rulings made by courts. After four years, China’s national database of legal documents, the biggest in the world, China Judgment Documents Website, has grown to include more than 45 million court judgments and rulings online, which are all accessible by the public for free. This has fundamentally changed the ways in which Chinese lawyers, judges and other practitioners work. On the other hand, the transparency promotes judicial fairness and has improved the judicial credibility of Chinese courts. In 2017, SPC issued a circular to courts at all levels across China, explicitly requiring judges to make use of the court platform, fi les system, China Judgment Documents Web and other databases, to research similar or relevant cases adjudicated by the same court. If any deviations occur, internal judges’ meetings and adjudication commissions shall decide

GLI - Litigation & Dispute Resolution 2018, 7th Edition 56 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Commerce & Finance Law Offices China which path should be taken. This is the ﬁ rst time that SPC has required Chinese courts to refer to cases other than the Guiding Cases published by SPC, which places the emphasis on precedent cases. Therefore, although China maintains membership of civil law countries, with statutory law being the main source of law, case law has played a more and more important role in litigations, which makes the laws more sophisticated. For commercial contracts governed by PRC laws, it generally means more certainty.

Smart Court System – key to modern administration for courts The workload for Chinese judges has become heavier and heavier during the last fi ve years. In the single year of 2017, about 12 million fi rst-instance civil and commercial cases were concluded at different courts nationwide. A judge concludes hundreds of cases per year, on average. In order to enhance effi ciency and justice, SPC endeavours to make progress in the use of big data and judicial data-sharing, streamlined online administration, making judicial information-processing open to the public and providing comprehensive intelligent services, relying on information technology. The Smart Court System is China’s court system intranet. According to SPC, at the end of 2017, the Smart Court System had been extended to 3,523 local courts and 9,277 tribunals across China. The system enables judges to manage all their work online, and also collects data from individual judges during the process. In 2017, China established the fi rst internet court in Hangzhou of East China’s Zhejiang province. The new system allows parties to register a lawsuit and submit legal documents online; some cases can be heard via an internet platform. It can be expected that, with the Smart Court System, the effi ciency of Chinese courts and the facilitation of the litigation process may be increased. The six-month time limit for fi rst instance, and three-month time limit for second instance, will be hit in more cases.

Interim orders Before the amendment of the Civil Procedural Law of China (“CPL”) in 2012, in general civil and commercial litigations, China only had the mechanism of so-called “Property Preservation”, having the effect of restricting the transfer, move, etc. of certain property. In some speciﬁ c areas, such as in maritime litigations and intellectual property litigations, there are the provisions regarding the so-called “Act Preservation”, which means the court orders the parties to conduct or omit to conduct some act. The 2012 amendment of CPL allows this interim order in relation to the act or omissions to be used in general civil and commercial cases. Article 100 of CPL provides: “In the event that the judgment on the case may become impossible to enforce or such judgment may cause damage to a party because of the conduct of the other party to the case or because of any other reason, the people’s court may, upon the request of the said party, order the preservation of the property of the other party, speciﬁ c performance or injunction; in the absence of such request, the people’s court may, where it deems necessary, may also order property preservation measures,” which makes the interim measures in China closer to the “injunction” under common law. In practice, more and more parties are seeking the interim relief of the “Act Preservation” under the new framework of law. For example, in August 2017, Beijing No. 4 Intermediate Court issued an injunction against a steel structure producer and stopped it from releasing waste gases from paint spraying. In February 2018, Shenzhen Futian Court ordered that a listed company must not deprive one of its shareholders of voting rights and shall count

GLI - Litigation & Dispute Resolution 2018, 7th Edition 57 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Commerce & Finance Law Offices China its votes in the shareholders’ meeting, just before the general meeting of the shareholders was held. Besides the frequently used property preservation measures, such as freezing bank accounts, shares in the company, attaching properties, stopping payment under a letter of credit or bank guarantees, etc., the Act Preservation gives more power to the court to make various types of orders to protect the parties’ interests and rights.

Enforcement of foreign judgments Article 282 of CPL states that Chinese courts will recognise and enforce foreign judgments or rulings whenever this is required by: (i) a multilateral or bilateral treaty concluded or acceded to by PRC; or (ii) the principle of reciprocity. In June 2017, a Chinese court recognised and enforced a judgment entered by California Superior Court for the County of Los Angeles, because the Chinese court held that since the Federal Court of California decided to recognise a Chinese court judgment in 2009, there has been a reciprocal relationship between China and the U.S. Thus the judgment shall be recognised by Chinese courts. The case, however, does not signal that the door to enforce foreign judgments, or at least U.S. court judgments, in China has been opened; the principle of reciprocity is fundamental, and it can be seen that there will be a case-by-case approach in the near future. Therefore, if judgments need to be enforced in China, arbitration is a preferable choice, especially when preservation measures are required.

Arbitration in China Independence and equal treatment have been codifi ed into Arbitration Law of China, and have been well integrated into Chinese arbitration practice. Major international arbitration institutions in China, such as China International Economic and Trade Arbitration Commission (“CIETAC”), China Maritime Arbitration Commission (“CMAC”), Beijing International Arbitration Center (“BIAC”), Shanghai International Arbitration Center (“SHIAC”), etc., have fully endorsed this core value of arbitration. A great proportion of cases accepted by Chinese international arbitration institutions are of an international fl avour. According to the statistics, about 2,300 cases were accepted by CIETAC in 2017, among which about 480 had foreign elements. There is not as great a difference in the winning rate between Chinese parties and foreign parties in those foreign- related cases, as evaluated by the arbitration institutions themselves. Low cost and effi ciency are mostly appraised in Chinese arbitration. According to a survey, the average cost of arbitration proceedings in China is signifi cantly lower than other major international arbitration institutions; arbitration in China only costs about 17%–50% in comparison to its foreign counterparts. It is reported that international cases in CIETAC have an average duration of 143 days, while those in BIAC have an average duration of 139 days. Another advantage of choosing Chinese arbitration institutions to solve disputes, especially China-related disputes, is that Chinese arbitration institutions enjoy the support of Chinese courts to implement interim relief. According to Civil Procedure Law and Arbitration Law of China, when a dispute is submitted for arbitration at Chinese arbitration institutions, the parties may apply for preservation measures before or during the arbitration proceedings, and the Chinese competent court may issue the interim orders. However, Chinese law is silent on whether Chinese courts have the power to issue interim orders for arbitration proceedings conducted outside mainland China, or to execute injunctions made by an arbitral tribunal at the seat abroad. Thus, Chinese courts do not accept such applications

GLI - Litigation & Dispute Resolution 2018, 7th Edition 58 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Commerce & Finance Law Offices China for preservation measures from foreign arbitration proceedings. There are few exceptions in practice; only a few maritime courts have ever issued interim orders for arbitrations conducted in Hong Kong.

Mediation in association with arbitration: Med-arbitration practice in China It is commonly accepted by the world that mediation or conciliation is an independent procedure to arbitration, which is different in terms of the approach and structure of procedure. However, Chinese arbitration has the rules and practice of mediation combined with arbitration. One may not jump to the conclusion that Chinese arbitration will end up as the ‘odd man out’ in the international arbitration community. More knowledge may remove prejudice and misunderstanding. As a fundamental principle, mediation and conciliation absolutely depend on the parties’ autonomy, i.e., the initiation of procedure must have the consent of the parties. The parties are also free to design the procedure of how to conduct the conciliation, by suspending the arbitration proceedings or not, with the arbitration tribunal’s involvement or not. Probably it is unique that the arbitral tribunal may act as the mediator or conciliator in the mediation and conciliation under Chinese arbitration rules. One may have concerns that the mediation or conciliation would not end up with a successful result, that if the arbitral tribunal is required to make the ﬁ nal award, they may have bias and could not act impartially if they know the cards in the parties’ hand. Actually in practice, problems seldom occur. Because if by its nature, the fact of the case and process of conciliation may give rise to such concerns, the parties would not enter into conciliation or choose to conciliate under a conciliator other than the arbitral tribunal. If the parties have reached a settlement agreement through conciliation and request a conciliation statement, the conciliation statement shall clearly set forth the claims of the parties and the terms of the settlement agreement. It shall be signed by the arbitrators, sealed by the arbitration institution, and served upon both parties, which have the same effect as the arbitral award in terms of enforceability.

Judicial review on arbitration awards Probably contrary to the impression of many overseas peers, China is among the most observant parties to the New York Convention. According to a survey conducted by SPC, during the years 2013–2015, only 0.14% of foreign-related arbitral awards, including awards made by Chinese arbitration institutions and foreign arbitration institutions which were applied for enforcement before Chinese courts, were refused enforcement. Arbitral awards made by Chinese international arbitration institutions also maintain good records of enforcement by courts, with extremely exceptional cases being set aside or refused enforcement in accordance with law. In December 2017, SPC issued two circulars of judicial interpretations, both concerning the judicial review of arbitration in China. They are deemed as a milestone, showing the supportive attitude by courts towards arbitration in China. They clearly demonstrate that China aims to continue to support the development of arbitration with a loose, balanced and modest judicial environment. After China joined the 1958 New York Convention, as early as in 1995, Chinese courts established an internal report mechanism for the recognition and enforcement of foreign arbitral awards. Time has shown that the mechanism is a very effective approach to unify the judicial review of foreign arbitral awards. The mechanism requires that if a court which has accepted an application for recognition and enforcement

GLI - Litigation & Dispute Resolution 2018, 7th Edition 59 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Commerce & Finance Law Offices China of a foreign arbitral award, is minded to reject, it shall report the case to its upper-level court, which shall make the further report with its own opinion to SPC, until SPC holds that the arbitral award shall not be recognised. In other words, only SPC has the ﬁ nal say on whether the foreign award shall be rejected or not. The mechanism has operated well during the past two decades; the newly promulgated judicial interpretations provide for more detail, such as the standard of examination, the functions of the lower and upper levels court, which have made the mechanism more practical and transparent.

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Cui Qiang, Partner Tel: +86 139 1145 7439 / Email: [email protected] As an experienced arbitration and litigation attorney, Cui Qiang has dealt with a large quantity of cases involving equity investment, real estate, construction and infrastructure, international trade, transport and logistics, intellectual property, antitrust as well as non-performing loans disposal. He has successfully represented many international investment institutions, multinational companies and large-scale domestic corporations for hundreds of cases relating to dispute resolution and arbitration before the Chinese courts as well as the China International Economic and Trade Arbitration Commission, the Beijing Arbitration Commission, the Hong Kong International Arbitration Center and Shanghai International Arbitration Center. Cui Qiang also sits as arbitrator of the China Maritime Arbitration Commission.

Li Qishi, Partner Tel: +86 138 1187 5733 / Email: [email protected] Li Qishi has a broad commercial practice with particular focus on international trade and trade fi nance, equity disputes, joint ventures, banking fi nance and insolvency. Li Qishi regularly appears in arbitration proceedings of various arbitration institutions in China and beyond, also in litigation before Chinese local courts at all levels. Li has extensive experience in cross-border disputed issues involving multi-jurisdictions. Li Qishi has been trained in London, and is frequently engaged by international law fi rms or enterprises to advise on matters under Chinese law, or to give legal opinions for the overseas arbitral tribunal or courts.

Commerce & Finance Law Ofﬁ ces F/6 NCI Tower, A12 Jianguomenwai Avenue Chaoyang District, Beijing 100022, P. R. China T el: +86 10 6569 3399 / Fax: +86 10 6569 3838 / URL: www.tongshang.com

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Michael Madden & Justin McClelland Winston & Strawn London LLP

Efﬁ ciency and integrity Relief against sanctions The ultimate penalty that the court may impose on a party to High Court proceedings for non-compliance with procedural rules or practice directions is to strike out its case. Such a penalty has existed in English procedural rules for well over 100 years and was retained by the Civil Procedural Rules (“CPR”) on their introduction in 1998. However, the attitude towards the use of the penalty has varied over time depending on the approach adopted by the court towards case management, its perceived role in the litigation process and its attitude towards non-compliance with procedural rules and orders. Under the Rules of the Supreme Court which were introduced in 1965, any failure to comply with the rules was generally treated as an irregularity and would rarely result in claims being struck out. The focus was on trying cases on their merits, as and when the parties got the case to trial. Defendants would not seek to have cases struck out for want of prosecution, out of concern that this might provoke the Claimant into making further progress with the claim, with any prior delay or default being readily forgiven. The policy of the court was non-interventionist; it was left to the parties to decide how to resolve their disputes. The introduction of the CPR, which included a duty on the courts to manage cases actively, together with a new duty imposed on the parties to assist the court in furthering the Overriding Objective, created an expectation of increased judicial intervention to prevent non-compliance with rules and timetables. However, notwithstanding that the Overriding Objective – of trying cases justly and at proportionate cost – expressly referred to enforcing compliance with rules, practice directions and orders, in practice, the courts continued to tolerate repeated non-compliance during the early years after the implantation of the CPR. This resulted in a proliferation of interim applications and appeals over the consequences of non-compliance, as parties sought guidance on the extent of the change in culture implemented by the CPR. Unless a fair trial was no longer possible, or there were repeated breaches amounting to a total disregard of court orders, cases were rarely struck out for procedural default. In 2009, Lord Justice Jackson was charged with conducting a review of litigation costs. In the course of his investigations, he recognised that the slack approach to compliance with procedural orders was one of the key causes of excessive litigation costs. The reforms introduced as a result of his review came into force on 1 April 2013. A key objective of the reforms was “to promote access to justice as a whole by making costs of litigation more proportionate”. It was recognised that a necessary ingredient to securing that objective was

GLI - Litigation & Dispute Resolution 2018, 7th Edition 62 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales to require judges to take a more robust and interventionist approach to case management and to make sure that timetables were observed. A key component to facilitate this approach was the replacement of CPR, r 3.9, which governed the circumstances in which the court should grant relief from sanctions. The new rule provides that on an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need (a) for litigation to be conducted effi ciently and at proportionate cost, and (b) to enforce compliance with rules, practice directions and orders. The Court of Appeal in Mitchell v News Group Newspapers Ltd [2013] sent out a clear message that the reforms of 2013 had brought in a newly robust approach to rule compliance. Rather than focusing on the interests of justice in the individual case, judges were required to have regard to the broader implications of allowing the consequences of non-compliance to infect the broader civil justice system. Judges had to recognise the time and resources aspects of administering civil justice, and consider the needs and interests of all court users when managing individual cases. Regrettably, the message contained in the Mitchell guidelines was received more by those seeking to take advantage of the new approach and who saw it as an opportunity to have their opponents’ cases struck out (or as in the case of Mitchell, made too expensive to fi ght due to cost-recovery penalties), and a tidal wave of satellite litigation fl ooded the courts, creating numerous decisions, many of which appeared contradictory and inconsistent. At that time the Judiciary and the architects of the Civil Procedural Rules should have recognised that the punishment metered out for non-compliance was inappropriate for the crimes concerned (in terms of breaches of procedural rules). Instead of simply penalising the offenders, the sanctions often gave one party either total victory or a signifi cant advantage in the litigation, irrespective of the merits of the parties’ respective cases. Some commentators consider that the judge’s role is to decide the substantive issues in dispute and that they should not be concerned with procedural issues. To many, there is something rather incongruous about judges seeking to create new lines of jurisprudence about what should be simple procedural rules. To others, there is something fundamentally wrong about judges denying parties access to justice due to technical breaches of bureaucratic procedural rules. Some would go so far as to say that to deny a party relief against sanctions for breach of procedural rules places the integrity of a system, fi ne-tuned to determine complex issues of law and fact, into jeopardy. If it is the current policy of the court actively to manage cases, to set the pace of the litigation and to specify required levels of compliance with rules and timetables then, instead of making issues of non-compliance matters between the parties to the litigation, these should be dealt with as issues between the defaulting party and the court’s case managers. In most cases, other parties to the proceedings should have no interest in the penalties meted out for non-compliance. Active case management should involve specialist case managers (not High Court Judges), ensuring compliance with the rules and timetables, and whose task would be to determine the reasons for non-compliance, and to penalise the culprit in a manner that does not jeopardise their prospects in the proceedings (or at least does not enhance their opponent’s prospects). For example, a system of fi nes imposed either on the defaulting party or its legal advisor for non-compliance, administered by a dedicated team of case managers, would soon gain the attention of the parties and their legal advisors. A by-product would be some much-needed increased revenue for the courts.

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Sadly, in 2014 the Court of Appeal failed to recognise the problem with the current system. It took a narrow view of the issue, namely that: (i) the court has these ultimate sanctions that it must use from time to time to ensure its orders are respected; (ii) however, how can it formulate a universally acceptable test to defi ne the circumstances in which the ultimate sanction should be imposed; and (iii) how can it apply this test consistently to ensure parties are treated fairly and predictably? In Denton v TH White Ltd and another, Decadent Vapours Ltd v Bevan and others and Utilise TDS Ltd v Davies and another [2014], the Court of Appeal agreed to hear three appeals together on the topic of relief from sanctions and invited intervention from the Law Society and the Bar Council, in order to clarify and amplify the Mitchell guidelines, which it said had been misunderstood and misapplied by some courts. In Denton, new guidance in the form of a three-stage test replaced the Mitchell guidelines. In future, on any application for relief against sanctions, the court must: (i) Identify and assess the seriousness of the non-compliance. Is the breach “serious or signifi cant”? (ii) If it is, consider why did the default occur? (iii) Consider all the circumstances of the case in order to deal with the application “justly”, including (a) the need for litigation to be conducted effi ciently and at proportionate cost, and (b) the need to enforce compliance with rules, directions and court orders. The Court of Appeal also issued a number of warnings to litigants and lawyers to cooperate and comply in order to: (i) agree requests for relief from sanctions where a failure is neither serious or signifi cant, there is good reason for it, or it is otherwise obvious that relief is appropriate. Contested applications for relief should be exceptional; (ii) agree limited but reasonable requests for time extensions of up to 28 days; and (iii) not take advantage of opponents’ mistakes to try and obtain an advantage. The court will more readily penalise opportunism with heavy costs sanctions. However, for many, the possibility of obtaining a swift and successful end to otherwise lengthy, uncertain and expensive litigation (especially where their case may be weak on the merits) still remains too good an opportunity to miss. Two cases in particular in 2017 may have given some encouragement to any parties in litigation proceedings with a diffi cult case and a disorganised opponent to take advantage of an opponent’s breach and to oppose the application for relief, or at least assist the court by presenting all the relevant cases, when it comes to consider the application. Lakhani v Mahmud [2017] In Lakhani, the High Court dismissed the Defendants’ appeal from the Central London County Court, rejecting their application for relief from sanctions for failing to comply with a case management order relating to the fi ling of costs budgets. This was a relatively minor property dispute. The parties were ordered to exchange costs budgets 21 days before the Case Management Conference (“CMC”). The Claimant served a budget on the last day of the 21-day period, claiming about £100,000. The Defendant prepared its own budget for £50,000 which was served the next day, although out of time such that CPR 3.14 applied. This provides that unless the court otherwise orders, any party which fails to fi le a budget despite being required to do so will be treated as having fi led a budget comprising only the applicable court fees. Effectively the party in breach is unable to recover any of its lawyer’s fees if successful at trial, unless the court grants relief against the sanction.

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Pending the CMC, the parties reached a measure of agreement on budgets – further, it was acknowledged that the Claimant had not been prejudiced by the Defendant’s conduct and had “ample time to consider and comment”. Signifi cant reductions were made to the Claimant’s budget at the CMC but, given the Defendant’s failure to comply with CPR 3.14, the court had to consider whether relief should be given to the Defendant. The 45-minute CMC turned into half a day of argument about relief from sanctions. The Defendant’s application for relief was made only the day prior to the hearing, presumably because the Claimant had apparently dropped its challenge to the breach of CPR 3.14. The three-stage test, established in Denton was discussed in order to assess the seriousness of the costs-budgeting breach, as well as the reasons for it and all other contextually relevant facts. In his judgment, the judge concluded that: “[T]his is not a trivial breach. It is a serious breach. It is a breach which has imperilled the proper conduct of this litigation. It has reduced the time available for these parties to conduct themselves in the way that is expected by the Rules to narrow the issues on the costs budget. It has further created an environment in which the attention of both parties, by the default of the Defendants, has been distracted onto a matter which is irrelevant to those costs budgeting issues.” The judge refused an application to grant the Defendant relief from sanctions, which was made just a day before the hearing: The Defendant appealed to the High Court, arguing that the failure was a “minor default” which did not signifi cantly affect the procedure, and that the County Court (i) erred in approach in its failure to take into account such matters in assessing the seriousness of the breach, and (ii) gave too little weight to the fact that there were innocent reasons for the breach. In considering whether the County Court decision was disproportionate, that judge noted that the “decision would operate to deprive the Defendant of its budgeted costs in the event that it succeeded at trial although, if the Claimant succeeded, the decision would have no direct fi nancial adverse impact on the Defendant. It just gave the Claimant the comfort that it could litigate without signifi cant risk of having to pay the Defendants’ costs. As such, the judgment was hard to criticise as disproportionate”. The judge recognised that a delay of one day for fi ling “might not be regarded as terribly serious”. However, the judge was conscious that time which “should have been devoted to agreeing costs” had been wasted in debating whether and to what extent the Defendant had been in breach of CPR 3.14. The High Court judge concluded that: “This seems to me a case on the borderline of suffi cient seriousness to warrant refusal of relief from sanctions.” When tackling the reasoning behind the Defendant’s tardiness, the judge described their budget preparation as “work undertaken at the last minute”, and concluded that: “In my judgment, the approach taken [by the County Court Judge] did not involve errors of principle and was not wrong on the facts. The conclusion was open to him in the exercise of his discretion and is of a kind which the Court of Appeal has recommended should normally be upheld. The decision was, perhaps, on the tougher end of the spectrum as to substance and on the leaner end of the spectrum as to analysis. But the Defendants have not been deprived of a trial altogether. Had that been the consequence, the situation would have merited more detailed scrutiny than the judge gave it.

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“Nor is this a case in which the Claimants were using the rules as a tripwire. The Claimants’ solicitors pointed out correctly and promptly following late service of the Defendants’ costs schedule that without an application for relief from sanctions the consequences of CPR 3.14 would follow. They were not obliged to consent in advance to an application for relief from sanctions which had not been made and which was not provided to them until the day of the hearing, giving them almost no opportunity to address it fully.” Redbourn Group Ltd v Fairgate Development Ltd [2017] In Redbourn the High Court dismissed the Defendant’s application to set aside a default judgment. Redbourn (“RGL”) had brought proceedings against Fairgate (“FDL”) for sums due under a contract and damages for wrongful repudiation. FDL did not ﬁ le its defence within the deadline and RGL obtained judgment in default. In this case, the High Court followed the decision of the Court of Appeal in Gentry v Miller [2016] which had held that the three-stage test for relief against sanctions also applied to applications under CPR 13.3 to set aside judgments in default of: (i) acknowledging service of a Claim Form; or (ii) serving a defence within the prescribed time, notwithstanding that CPR 13.3 provided its own test for setting aside default judgments.

CPR 13.3 provides that the court may set aside or vary a default judgment if: (a) the Defendant has a real prospect of successfully defending the claim; or (b) it appears to the court that there is some other good reason why: (i) the judgment should be set aside or varied; or (ii) the Defendant should be allowed to defend the claim. (c) Finally, in considering whether to set aside or vary a default judgment the court must consider whether the person seeking to set aside the judgment made the application promptly. In the High Court, the judge hearing the application had little doubt that the three stage test in Denton applied. In his view, the test was plainly relevant to any application to set aside: “…after all, there is no greater sanction than judgment being entered in default of defence, and no more important relief from sanction than being allowed to set aside that judgment.” In some respects, this is an odd decision as, when considered in isolation, CPR 13.3 provides a self-standing procedure for applications to set aside default judgments. A literal reading of the provision does not appear to give the judge a discretion to refuse relief if the Defendant has a real prospect of successfully defending the claim. However, CPR 3.9 does refer to an application for relief from any sanction, and it would be odd if different tests were applied to applications for relief from the various penalties that may be imposed under the CPR. A number of other applications for relief against sanctions in 2017 have been reported including: Mott v Long [2017] In Mott, the Defendants fi led their costs budget 10 days late and applied for relief from sanctions. In applying the three-stage Denton test, the court came to the following conclusions: (i) Serious or signifi cant breach? The Defendants submitted that the delay in service was minor because, although served 10 days late, the budget was fi led and served nine days ahead of the CMC hearing. The Defendants relied on the decisions of Wilfred Murray v BAE Systems plc [2016] and Azure East Midlands v Manchester Airport Group [2014] to contend that the minor

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delay in providing the budget had no material effect on the proceedings and had not prejudiced the Claimants in any material way. The court concluded that fi ling a costs budget 10 days late is not of the “same relatively modest order” as being a few hours, or even one or two days late. The degree of lateness in every case is to be construed in the context of the particular circumstances of that case. Serving a costs budget late can prejudice the “process of co-operation in the costs-budgeting process which the rules are designed to achieve”. In this case, the court considered that the 10-day delay “answers the description of being serious or signifi cant, perhaps with particular emphasis on the latter word”. (ii) Why did the default occur? The court was not satisfi ed that the Defendants had established a good reason for the default. That was not to say there may not have been such a reason, but the evidence was lacking in particularity as to the precise nature of the experienced “IT diffi culties”. For example, it was unclear whether the failure was human or system error, and there was no evidence from anyone with the appropriate IT expertise. (iii) The circumstances of the case The court set out the circumstances it considered material, including that the Defendants’ solicitors had served a costs budget nine days before the CMC (albeit, due to other matters, this only allowed one working day for its consideration). The Defendant had already demonstrated a disregard for such orders, having already failed to fi le a Case Management Information System (“CMIS”) and disclosure report, and having been three months late in paying a £285 costs order. However, the far more infl uential matter was the nature of the parties’ budgets and the signifi cant disparity between them due to their different approaches to the case, in particular as to the nature of expert evidence required and the trial length. The court acknowledged that while the “10 days could have been put to good use”, and the parties might have been able to agree some of the substantive matters in issue, it was possible that they might not have done and, in such circumstances, the issues would have become the subject of oral submissions at the CMC which the court would have to rule on. A party that fi led a costs budget refl ecting its own views was: “… likely to be ordered to fi le and serve a revised cost budget which refl ects the orders which the court has in fact made at the CMC, with a view to the parties discussing such revised budget, and in default of agreement a cost-management hearing would be listed…” Taking everything into account, the court came to the conclusion that, in light of the “substantive order for directions relating to expert opinion evidence and the estimated length of the forthcoming trial” that it had made at the CMC, and the need for the Defendants to fi le and serve a revised costs budget refl ecting that order, relief from sanctions should be granted: “The fact that the parties are now in precisely the same procedural position in which they would have been so far as the process of cost budgeting is concerned, had the Defendants served their cost budget in time, is a highly signifi cant circumstance in the case, and one to which the court should have proper regard.” ADVA Optical Networking & Anor v Rotronic Instruments [2017] In this case, the court was faced with a last-minute application for relief against sanctions from a Defendant whose “overall conduct” was poor. The Defendant just did not seem to

GLI - Litigation & Dispute Resolution 2018, 7th Edition 67 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales have engaged properly with its lawyers in response to the claim, such that a number of time limits had been breached and the Defendant was facing judgment in default as a result. The Court considered the breaches to be serious and that the Defendant had no good reasons for them. However, there were two factors which counter-balanced its negative assessment; namely that the delay had not had any real effect on the course of the proceedings, and any judgment in default would be contingent on certain other aspects of the proceedings (which involved the same issues) being argued before the court. As a result, the court concluded that the breaches could not have any signifi cant impact on the court timetable such that relief from sanctions would be granted. Freeborn v Marcal [2017] This case concerned a 14-day-late fi ling by the Defendant of its costs budget. The Defendant argued that it had relied on correspondence from the court to establish the due date. There was also a good deal of correspondence between both parties’ solicitors during those 14 days, although at no point did the Claimants’ solicitor complain about the delay. It was only following service of the Defendant’s costs budget that the claimants raised the matter. The Defendant promptly made a formal application for relief from sanctions, supported by witness evidence. The parties had received a letter from the court in which it specifi ed the date on which costs budgets had to be fi led, which departed from the deadline under CPR 3.13. The High Court considered that the court’s letter was the “best possible reason for delay”, and that an application for relief as such was not required in the fi rst place. Even if an application was required, the court held that there was still “no doubt” that the three-stage test in Denton would be met in any case: the breach was not serious given that, once the error had been identifi ed, the Defendant’s solicitor took immediate steps to discuss the costs budget and ensure that the delay had no consequence. In all the circumstances, the court found it was “just and reasonable” to grant relief as there was no deliberate breach, and that no prejudice had been caused to the Claimants. Each year, the Effi ciency and Integrity section of the England and Wales chapter of this review is dominated by commentary on the courts’ approach to applications for relief against sanctions. The fact that the courts are having to address this issue so often is about the only consistent aspect of the subject. It is not surprising that different judges have different views on the exercise of this power, which invariably involves very subjective considerations. There can be no doubt that the existence and the exercise of the power by the court to refuse relief resulted in the costs-budgeting aspects of the Jackson reforms being implemented and adopted much more swiftly than might otherwise have been the case. It may also be the case that over time a clearer pattern will emerge, which will provide some certainty to parties to litigation. However, there will always be a lingering concern that the effect of a refusal to grant relief against sanctions is to deny a party to litigation access to justice. An extension of fi xed recoverable costs On 31 July 2017, Lord Justice Jackson delivered recommendations in the form of a report entitled Review of Civil Litigation Costs: Supplemental Report – Fixed Recoverable Costs. The report supplements his January 2010 report on fi xed recoverable costs for fast-track cases and costs budgeting for multi-track cases. The recent report introduces a grid of fi xed recoverable costs for all fast-track cases, as well as a new intermediate track for certain claims valued between £25,000 and £100,000 which can be tried in three days or less, with no more than two expert witnesses giving oral evidence on each side. It would also have

GLI - Litigation & Dispute Resolution 2018, 7th Edition 68 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales streamlined procedures and a grid of fi xed recoverable costs. Claims for non-monetary relief could exceptionally fall under the track where the promotion of justice demands it. However, cases which bear more complexity or specifi cities, as well as cases which could potentially not be dealt with justly and proportionately under the proposed streamlined procedure, would not fall under the intermediate track. The intermediate track grid is divided into four categories or “bands”, graded by the complexity of and the estimated recoverability of costs in the case. The underlying reason for the grid and a new intermediate track is to further the efforts to reduce costs in litigation in England & Wales and to ensure that costs are proportionate for lower-value cases in the multi-track. A restructuring of the High Court Large commercial claims are currently heard in one of the two divisions of the High Court; the Queen’s Bench Division (“QBD”) and the Chancery Division. The QBD deals with a wide range of claims including contract, negligence, breach of statutory duty and defamation, and has specialist divisions namely: (i) the Commercial Court; (ii) the Admiralty Court; and (iii) the Technology and Construction Court (“TCC”). The Chancery Division deals with disputes relating to business, property, companies, insolvency, trusts, competition, patents and IP. It includes four specialist courts, namely: (i) the Companies Court; (ii) the Bankruptcy Court; (iii) the Patents Court; and (iv) the Intellectual Property Enterprise Court. The Financial List (which was created in 2015) sits across the Commercial Court and the Chancery Division. It covers claims for more than £50 million that principally relate to fi nancial products; claims that require particular expertise in the fi nancial markets; and claims that raise issues of general importance to the fi nancial markets. From July 2017, the specialist divisions of the High Court were renamed as the Business and Property Courts of England and Wales, and act as a single umbrella for the Commercial and Admiralty Courts, the TCC, the Financial List, and the Courts of the Chancery Division (which will be renamed according to the particular practice area, including the Business Courts, the Company & Insolvency List, and the Intellectual Property List). This restructuring, which was a further development of the initiative commenced in 2015, is aimed at ensuring that the best qualifi ed judge, in terms of experience and expertise, is available to deal with the different cases while allowing for more fl exible cross-deployment of judges.

Interim relief Worldwide Freezing Orders The High Court is often asked to grant what have come to be known as “Worldwide Freezing Orders”. In acceding to these requests, the court is not claiming the right to exercise its powers in foreign jurisdictions. A Worldwide Freezing Order operates “in person” against the Defendant. However, as is explained below, it can also bind third parties where a relevant connection between that third party and the jurisdiction can be established.

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The aim of a Worldwide Freezing Order is to restrain the Defendant concerned from taking action anywhere in the world which could have the effect of dissipating its assets and thereby frustrating the enforcement of any future order that the court may make in the proceedings. The English court is likely to issue a Worldwide Freezing Order in cases where the Defendant does not have suffi cient assets within the jurisdiction to cover the claim. The Claimant will also have to demonstrate that the preconditions to granting a domestic freezing order exist. A Worldwide Freezing Order issued by the English court will commence with a general order restraining the Defendant from disposing of assets (which would otherwise be available to satisfy any subsequent orders in the proceedings), whether they are in or outside England and Wales (subject to certain specifi ed exemptions, usually to enable the Defendant to fund his normal living expenses). Assets include any asset which the Defendant has the power, directly or indirectly, to dispose of or deal with as if it were his own. The Defendant is regarded as having such power if a third party holds or controls the asset in accordance with the Defendant’s direct or indirect instructions. Naturally, the preferred objective of any freezing order is to preserve suffi cient assets within the jurisdiction so that they may be easily enforced against, should the claim succeed, and the parties are not required to take the dispute to the courts of other jurisdictions. The Worldwide Freezing Order will therefore specify the amount in value of assets that should be retained in the jurisdiction of the English Court. The order dealing with the restriction on dealing with assets held outside the jurisdiction will then be expressed to apply only if and to the extent to which the value of the Defendant’s assets in the jurisdiction falls below the specifi ed amount. If insuffi cient sums are in the jurisdiction, such that the Claimant may need to enforce against assets outside the jurisdiction, the court may increase the “specifi ed amount” which should be preserved by the Defendant, to take account of the potential additional costs of enforcing against such foreign assets. A Worldwide Freezing Order may even require a Defendant to transfer assets into the jurisdiction up to the specifi ed amount. In formulating the terms of any Worldwide Freezing Order, the English court has made clear that, whilst the basic structure of such orders will be broadly similar, the precise terms of each order will be dependent on all the circumstances of the case. In that regard, the court must undertake a balancing act between, amongst other things, the strengths of the Claimant’s case, the perceived risks of dissipation of assets by the Defendant, and the impact that the order may have on the Defendant’s ability to live and work comfortably and reasonably, having regard to all the circumstances. A Worldwide Freezing Order will also apply to third parties who are notifi ed of the order and who thereafter knowingly assist in or permit a breach of the order, provided that such actions either take place within the jurisdiction or are committed outside the jurisdiction by persons who are either acting as the agent of the Defendant, or: (i) are subject to the jurisdiction of the English court; and (ii) have been given written notice of the order at their residence or place of business within the jurisdiction; and are able to prevent acts or omissions outside the jurisdiction which constitute or assist in a breach of the terms of the order. It is a contempt of court for any person notifi ed of a Worldwide Freezing Order knowingly to assist in or permit a breach of the order. Any person doing so who is subject to the jurisdiction of the English court may be imprisoned, fi ned or have its assets seized. However,

GLI - Litigation & Dispute Resolution 2018, 7th Edition 70 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales the order must provide that, in respect of assets located outside England and Wales, the order does not prevent any third party from complying with what it reasonably believes to be its obligations, contractual or otherwise, under the laws and obligations of the country in which those assets are situated, or under the proper law of any contract between itself and the Defendant and any orders of the court of that country, provided that reasonable notice of any application to the local court for such an order is given to the Claimant to enable it to contest it in that jurisdiction. Accordingly, compliance with the majority of Worldwide Freezing Orders is secured without the need to draw on any support from the courts of other jurisdictions, and is achieved by taking advantage of every connection the Defendant or anyone holding assets on its behalf may have with England and Wales. There are, however, often situations where the local courts will need to be involved. Most often, this will be because the assets are held in that jurisdiction by an institution which has no presence or connection with England & Wales such that there is no direct or indirect infl uence that the courts of England can bring to bear on the institution. Sometimes a local court order will be required to overcome any specifi c local laws (usually real estate laws) to realise and sell a specifi c asset. There may also be situations where many different assets are located within a particular foreign jurisdiction such that, due to the nature of the assets, an application may need to be made in the jurisdiction for an order mirroring the terms of the original freezing order. As a result, where a freezing order extends to overseas assets, the risk of oppression to the Defendant increases, as there is a prospect of it having to defend multiple proceedings across several jurisdictions. In order to minimise this risk, all Worldwide Freezing Orders issued by the English courts should state that the Claimant must ask the permission of the English court before enforcement is attempted in another jurisdiction. When permission is sought, the court will weigh up the benefi t to the Claimant against the cost and inconvenience to the Defendant of having to defend multiple claims. The order operates against anyone who may have a business, fi nancial or legal presence in England & Wales as the English court may enforce against any aspect of that presence in relation to breaches of the injunction committed elsewhere in the world. In granting such orders, the court is conscious of the limits of its powers and is keen to ensure that any order granted will be capable of enforcement, either directly by it or with the support of the courts of local jurisdictions where the assets have been identifi ed as located. It is naturally wary of any potential damage to its credibility and global respect if it were to be seen to be granting orders in the knowledge that they are likely to be left stagnating in a pool of similar orders while Claimants wait for the opportunity to use the order to attach to something within the jurisdiction. In that regard, it should always be remembered that freezing orders are not a fi nal remedy; they are a means to an end, the end being the preservation of assets pending the fi nal determination of a claim and any subsequent enforcement proceedings. The author learnt this lesson while still a very junior solicitor in the case of Town and Country Building Society v Daisystar Ltd and Another, The Times (16 October 1989, Court of Appeal), where it was held that once a Claimant has obtained a freezing order, it has a duty to prosecute the action to trial, and not simply to “rest content with the injunction”. Freezing injunctions have been described as the “nuclear weapons” of the litigator’s armoury due to their potentially destabilising effect on a Respondent. As a result, the court will grant a freezing injunction only where it is just and convenient to do so. In reaching that decision, the court will have to be satisfi ed that:

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(i) there is an existing cause of action (i.e. a claim or judgment to be enforced in substantive proceedings); (ii) the applicant must have a good arguable case (this means showing that the case is properly arguable and not fanciful); (iii) the respondent must have assets to which the order can apply; (iv) certain of the assets must be located within the jurisdiction; (v) there is a real risk of the Respondent’s assets being dissipated; and (vi) it is just and convenient to make the order. All of these criteria must be satisfi ed if a freezing injunction is to be granted, although fundamental to any such application is evidence of the risk of dissipation by the Respondent. In 2017, the Court of Appeal considered the ambit of two of those conditions in the case of Ras al Khaimah Investment Authority & Ors v Bestfort Development llp & Ors [2017], namely: 1. the threshold for establishing that there are assets to which the order can apply; and 2. the circumstances in which the risk of dissipation can be overcome. The applicant investment authority is responsible for investing the sovereign wealth of Ras al Khaimah (one of the United Arab Emirates) in projects in Georgia. It suspected one of its directors of breaching his fi duciary duties and brought proceedings against him in Georgia and the UAE. The authority also sought orders in the English High Court, freezing the assets of the LLPs which were owned by the director and registered in England and Wales. The judge held that the authority had a good arguable claim against the director and a good arguable case that, if the LLPs had assets, they were the assets of the director and were likely to be dissipated unless restrained. However, the judge considered that there was insuffi cient evidence to establish that the LLPs were “likely to have” assets somewhere in the world that could be caught by the injunction. The judge also held that the risk of dissipation was countered by the fact that the LLPs had complied with previous costs orders, and by the applicants’ two to three-year delay in applying for relief. The authority appealed, arguing that: 1. the judge had applied the wrong test for the existence of assets and should have asked herself whether there were grounds for believing that the LLPs were likely to have assets that could be caught by the order; 2. whatever the test, the LLPs had such assets; and 3. an established risk of dissipation could not be countered by compliance with costs orders or by any delay in applying for the freezing injunction. In relation to these three aspects of the appeal, the Court of Appeal decided as follows: Test for the existence of assets It was not enough for an applicant to assert that the respondent was apparently wealthy and must have assets somewhere. The applicant had to “satisfy” the court that there were grounds for belief that assets existed. The judge had been entitled to accept evidence that many of the LLPs had closed their accounts or had only insubstantial sums in them, such that the necessary grounds for belief did not exist. Absent such grounds, the court would be at risk of acting in vain in granting an injunction where there were no assets against which it would bite.

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Existence of assets in fact Even though the director controlled all of the LLPs, it would be wrong for the court to take a broad brush and not look at each legal personality individually. While the director’s ability to transfer assets from one LLP to another might be highly relevant to the risk of dissipation, it was not relevant to the prior question of whether there were grounds for believing that each had assets which could be caught by an injunction. The judge had been entitled to fi nd that there was insuffi cient evidence that some of the LLPs had assets that could be caught by an injunction. Risk of dissipation There was a risk of dissipation and the factors relied on by the judge did not exclude that risk. While a failure to obey court orders might invite the making of adverse inferences, it did not follow that compliance would negate a risk of dissipation. Furthermore, while delay in seeking relief may be relevant, the delay in the instant case was not suffi cient to suggest the applicant felt a lack of urgency or risk of dissipation. Interim declarations In addition to having a power to grant interim injunctions, the Civil Procedure Rules (more particularly, CPR 25.1(1)(b)), provide that the court shall have the power to grant interim declarations. While not encountered very often (and then usually in judicial review cases), in the case of N v Royal Bank of Scotland [2017] the Court of Appeal had to consider whether the judge at fi rst instance had been right to grant an interim declaration. The context was the regime created by Part 7 of the Proceeds of Crime Act 2002, which requires banks (and others) to refrain from dealing with property which is suspected as being the proceeds of crime and, where such suspicion exists, to make notifi cations to the National Crime Agency (“NCA”) seeking consent to any such dealing. In this case, RBS suspected that the credit balances on certain accounts in the name of N (its customer) constituted criminal property and, as a result, had frozen those accounts and made a report to the NCA. In response, N had sought: (1) a mandatory injunction requiring RBS to pay money from the frozen accounts to certain third parties; and (2) an interim declaration that the bank would not be committing any offence if it dealt with the money in that manner. One of the issues which the Court of Appeal had to consider was whether an interim declaration was appropriate in that situation. It had some sympathy with the bank given its dilemma, but noted that any declaration as to whether RBS would be acting lawfully or not in transferring funds would be “a fi nal rather than a temporary answer”. It therefore expressed unease at being asked to grant an interim declaration in such circumstances. In addressing the threshold for granting such a declaration on an interim basis, Lord Justice Hamblen stated: “Assuming, however, that such an [fi nal] answer can be given, it would be necessary to consider the degree of confi dence which the court must have in the applicant’s entitlement to a declaration before such relief could be granted. In my judgment the most appropriate evidential threshold in a case such as the present is the high degree of assurance which is generally required before mandatory injunctive relief will be granted. The need for a close consideration of the merits is particularly important in a case in which the grant of the interim declaratory relief is likely to be determinative of the issue, as in this case …” Such a threshold required considerable evidence, and certainly more than had been available before the judge at fi rst instance in this case.

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Disclosure and Privilege A new CPR for disclosure Despite Sir Rupert Jackson’s review in April 2013 of the rules of disclosure (“the Jackson Disclosure Reforms”), disclosure will be undergoing further changes following the report of the working group chaired by Lady Justice Gloster in November 2017, as disclosure and issues of privilege have continued to attract attention as the courts have performed a balancing act between the interests of justice and the rights of parties to privilege. A working group, chaired by Lady Justice Gloster, and comprising a wide range of judges, lawyers, experts and representatives of professional associations, was tasked in 2016 to identify the key defects in the current disclosure scheme and propose solutions to counter excessive costs, scale and complexity of disclosure. The working group’s proposals were submitted on 2 November 2017. Although the Jackson Disclosure Reforms had introduced a broader “menu” of disclosure options, the working group noted that neither the profession nor the judiciary had adequately utilised the range of options, and that standard disclosure still remained the default regime for most cases. The working group recommended that the Disclosure Rules and Practice Directions should be rewritten, reordered, and simpliﬁ ed into a single rule. The new proposals comprise a draft new CPR 31 and a Disclosure Review Document (“DRD”). Under the proposals, there would be mainly two types of disclosure: basic disclosure and extended disclosure, meaning standard disclosure would disappear in its current form. Basic disclosure would be given at the time of service of the particulars of claim or defence and include information on key documents relied upon by the disclosing party and documents necessary for other parties to understand the case. Basic disclosure could be opted out of by way of an agreement, and would not apply in certain situations. If a more extended disclosure is required, the parties would have to agree in writing. Under the proposals, the court would take a more proactive approach in identifying the appropriate model, and would not to accept without question the model proposed by the parties. Under the proposals, parties would complete a DRD prior to the ﬁ rst Case Management Conference. Its purpose would be: to determine the issues for disclosure; to set out proposals for the appropriate extended disclosure model; and to share information about the storage, search and review of the documents. Finally, the proposals also provide for a procedure which would allow parties to seek guidance from the court at a “disclosure guidance hearing”. Collateral use protection The common law principle that the parties to litigation are subject to an implied undertaking not to use a disclosed document for a purpose other than the proceedings in which it was disclosed has been embellished by CPR 31.22(1) which provides: “A party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except where: (a) the document has been read to or by the court, or referred to, at a hearing which has been held in public; (b) the court gives permission; or (c) the party who disclosed the document and the person to whom the document belongs agree.” The collapse of the Icelandic Kaupthing Bank HF in 2008 gave rise to numerous proceedings in various jurisdictions. In Robert Tchenguiz and Another v Grant Thornton UK LLP and

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Others [2017], allegations of conspiracy were made by the Claimants against the bank’s administrators. In response, the administrators wished to review and possibly rely on documents that had been disclosed in the course of the numerous sets of proceedings relating to the bank’s collapse. The Defendants sought declarations as to whether any of the following four amounted to a collateral use: (i) The Defendants reviewing documents and witness statements for relevance to the current proceedings. (ii) Listing that material to give disclosure to the claimants. (iii) Providing material to the claimants for inspection. (iv) Any of the parties reviewing the materials with a view to deciding whether to rely on or make use of them in the current proceedings. It was held that each of the steps was a collateral use. CPR 31.22 refers to “use for any purpose” other than the proceedings in which the documents were disclosed. Therefore, it could not be argued that using the documents for a purpose that was, for example, benign or “inspired by practicality” should not be prevented. A review of documents disclosed in litigation would be a use for a collateral purpose if the purpose of the review was to advise on whether other proceedings would be possible or further informed. If, however, the purpose of the review of documents disclosed in litigation was to advise on that litigation, but the review showed that other proceedings would be possible or further informed, then the review would not have been for a collateral purpose (although any further step would be a use for a collateral purpose), but the use of the document for the purpose of seeking permission or agreement to take that further step would be impliedly permitted. Grosvenor Chemicals Ltd v UPL Europe Ltd [2017] concerned an application under CPR 81.14(1) for permission to bring proceedings for committal for interference with the administration of justice. The interference relied on was the use of documents disclosed in an action for a collateral purpose, contrary to CPR 31.22. In its judgment, the High Court found that CPR 31.22 had been breached but denied the application to bring committal proceedings against UPL on the basis that the elements under CPR 81.14(1) were not met. A successful application under CPR 81.14(1) has to demonstrate that: (a) there has been a “deliberate or reckless breach” of CPR 31.22; (b) there is evidence of a strong prima facie case of contempt of court; and, (c) it is in the public interest and proportionate to bring contempt proceedings. The High Court found no evidence of a “deliberate reckless” breach of CPR 31.22 (Berry Pilling Systems v Sheer Products applied) which requires that the relevant persons “must have known” that the documents at issue were subject to the rule, and known that the acts complained of were a breach of that rule, or in either case were “reckless”. The High Court held that UPL was “entirely innocent” as it had no independent knowledge of the CPR or the relevant authorities, and had acted on the advice of its legal representative. The High Court also noted that UPL offered an apology and an undertaking that no further use of the disclosed documents can be made for any purpose other than the action. Additionally, the High Court found that there was no clear evidence of a deliberate attempt to breach the CPR and did not consider the Defendant to have been prejudiced in the underlying proceedings by the use of the disclosed documents. Investigations and litigation privilege In Director of the Serious Fraud Ofﬁ ce v Eurasian Natural Resource Corporation Ltd [2017], the Serious Fraud Ofﬁ ce (“SFO”) had, in the course of an investigation, requested the production of a number of documents which the Defendant opposed on grounds that they

GLI - Litigation & Dispute Resolution 2018, 7th Edition 75 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales were covered by legal advice privilege, litigation privilege, or both. The refusal concerned four categories of documents consisting of: (a) interview notes taken by lawyers in relation to evidence given to them by the Defendant; (b) accountants’ reports; (c) factual updates, mainly consisting of documents used by lawyers to present to committees and/or the board; and (d) communications with a legally qualifi ed businessman. Litigation privilege requires that litigation be contemplated in order to apply. The High Court found that the Defendant had not demonstrated that it was “aware” of the circumstances which rendered litigation a real likelihood rather than “a mere possibility”. The High Court considered that the Defendant did not contemplate a prosecution at the time of the production of the documents at issue, which could therefore not be covered by litigation privilege. Regardless of whether prosecution is in reasonable contemplation, the High Court found that most of the documents at issue were not created with the “dominant purpose” of being used in the framework of a litigation. Overall, the High Court held that fact-fi nding aimed at obtaining legal advice on how to avoid an investigation is not covered by litigation privilege. Privilege and communications with litigation funders Re. Edwardian Group [2017] concerned whether communications with litigation funders in relation to the terms of funding are covered by legal advice privilege. The respondents relied on Financial Services Compensation Scheme Ltd v Abbey National Treasury Services plc where it was held that privilege does not attach to a document which does not state the substance of the advice. However, the High Court ultimately chose to rely on two other cases: Lyell v Kennedy (No. 3), in which it was found that documents which would give away a “clue” as to the advice given were privileged; and Ventouris v Mountain, in which it was found that where the selection of documents “betrays the trend of the advice”, the document would be privileged. Referring to Three Rivers DC v Bank of England (No 5) at [19] and [21], the High Court recalled that legal advice privilege is not confi ned to the communications themselves, but also extends to other material which “evidences” the substance of such communications. This case shows that the substance of legal advice does not necessarily need to be expressly stated within a document in order for the document to be protected by privilege. Privilege may apply as such to documents which contain a “clue”, or where the substance of the advice may be inferred from the document. Mistaken disclosure of privileged documents The Court of Appeal provided clarifi cation as to the application of principles governing mistaken disclosure of privileged material under CPR 31.20. The rule requires to fi rst determine whether the document at issue was disclosed by accident, or whether privilege was deliberately waived. In Atlantisrealm Ltd v Intelligent Land Investments (Renewable Energy) Ltd [2017], the Defendants’ appeal against an interlocutory decision refusing to order the deletion of an email protected by legal professional privilege was granted. In its judgment, the Court of Appeal referred to the decision in Al-Fayed & Ors v The Commissioner of Police for the Metropolis & Ors which identifi ed a number of principles relevant for the application of CPR 31.20, in particular where the court may prevent a party from using a privileged document if disclosure was made as a result of an “obvious mistake”. According to Rawlinson & Hunter v Director of the SFO, the fact that a document is privileged does not necessarily make its disclosure an “obvious” mistake. As such, a mistake which may be considered “obvious”

GLI - Litigation & Dispute Resolution 2018, 7th Edition 76 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales is one where the inspecting solicitor appreciated that a mistake was made, or if it would be obvious to a reasonable solicitor placed in the same position. Following an assessment of the facts and circumstances of the case, the Court of Appeal was satisfi ed that the disclosure was a mistake on the basis of the “two solicitor situation”, which is an extension of the principles in Al-Fayed and Rawlinson under CPR 31.20 which targets situations where the “obvious mistake” is only identifi ed on the second-pass review. According to the principle, if the inspecting solicitor is unaware of the mistake, and a second solicitor realises it prior to use being made of the privileged document, it becomes an “obvious mistake” and the court has discretion to prohibit the use of such document. Another development is the case of Microgeneration Technologies Ltd v RAE Contracting Ltd & Ors [2017] EWHC 185, which concerned an injunction seeking to restrain Microgeneration from making use of legal advice disclosed by mistake to one of the Respondents’ witness statements. Microgeneration was notifi ed of the issue by correspondence, yet it fi led a witness statement referring to the privileged advice. The court applied the test of the reasonable solicitor placed in the same circumstances, and found that a reasonable solicitor would not have concluded that privilege had been waived by the Respondents. Without-prejudice communications EME Law LLP v Halborg [2017] was a judgment on appeal brought against an order for disclosure. The core issue related to the applicability of the without-prejudice rule. In its judgment, the High Court found that documents relating to negotiations in respect of the costs recoverable in litigation had to be disclosed to a third party who had an interest in the outcome of the negotiations. This ruling is an exception to the general rule which allows documents relating to negotiations to be withheld on the basis of the without-prejudice rule.

Costs and funding The development of litigation funding over the past 10 years has provided funds to those who would otherwise not have been able to afford litigation to bring or defend proceedings; litigants can now hedge their risks and commercial funders can invest in and, to a degree, speculate on the outcome of litigation. It is a wonder why it took so long for the litigation business to realise the opportunities that funding creates. The reason is to be found in the medieval doctrines of maintenance and champerty, which had been deeply embedded in western litigation culture, primarily to support judicial independence and prevent abuse of the legal process. Anything that introduced third-party interests in the outcome of litigation was frowned upon as undermining the integrity of the process. Maintenance is “the support by a person of litigation in which he has no legitimate concern without just cause or excuse”, while champerty “is an aggravated form of maintenance ... which occurs when the person maintaining another stipulates for a share of the proceeds of the action or suit ...” The case of Casehub Ltd v Wolf Cola Ltd [2017] provided a useful reminder of where the law now stands on these doctrines. The Claimant purchase-claimed against Wolf Cola Ltd, for monies that had allegedly been unlawfully charged. The Defendant provided ﬂ exible storage solutions to businesses and individuals, charging them a monthly subscription fee. However, a number of the Defendant’s customers were unable to access the service due to system problems and terminated their agreement within the ﬁ rst month, thereby incurring a cancellation fee. The Claimant took assignment from three such customers of their claims against the Defendant to recover their cancellation fees. One of the issues before the court was whether the assignments contained in the claim- purchase agreements offended the rules against maintenance and champerty. After examining

GLI - Litigation & Dispute Resolution 2018, 7th Edition 77 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales recent developments in this area, the judge concluded that the assignments effected under the claim-purchase agreements were enforceable. He considered that there were: “strong public policy grounds in favour of upholding the assignment”, noting that “the courts recognise the need for innovative but responsible ways of increasing access to justice for the impecunious”. The claimant thus had: “a legitimate and genuine commercial interest in being able to pursue the claims assigned to it in order to protect the liquidated sums it acquired under the claim purchase agreements” and had not breached the rules of maintenance and champerty. A risk to litigation funders is their exposure to orders for security for costs. The Civil Procedure Rules (specifi cally, 25.14) allow the court to exercise its discretion in granting Defendants security for costs against someone other than the Claimant. The court may exercise its discretion if, for example, the person has contributed or agreed to contribute to the Claimants’ costs in return for a share of any money or property which the Claimant may recover in the proceedings. In the long-running group litigation of re RBS Rights Issue Litigation [2017] EWHC 463 (Ch) (the privilege aspect of which we reported on last year), a further issue the High Court had to consider was whether information about the funders of the Claimants should be disclosed as a preliminary step to allow the Defendants to assess whether they should apply for security for costs, either against the funders (under CPR 25.14) or the Claimants. The court granted the disclosure application. Dismissing the Claimants’ argument that the application should be refused because an “order against non-parties would always be exceptional”, the court considered noted that in group litigation (which is often only likely to go ahead with the deep pockets of third-party funders, who stand to make high fi nancial returns if their case succeeds), they should expect liability for a costs order against them if the case does not succeed. While granting the disclosure application, the court sought not to encourage the Defendants to make an application for security for costs at this stage, noting that they faced considerable hurdles should they do so. Undeterred, the Defendants pursued their application, seeking security for costs pursuant to CPR 25.14(2)(b) against two third-party funders of the claimants. One of the third- party funders was a commercial litigation funder. The other was described by the court as being “closer to a ‘pure funder’ than a professional litigation funder”, given that litigation funding was neither their line of business nor their apparent primary motivation for providing funding. In fact, the court noted that its primary motive appeared to be to assist the Claimants in obtaining damages for their own benefi t as compensation for wrong done to them rather than fi nancial gain for themselves. The court ultimately granted the order for security for costs from the commercial funder - re RBS Rights Issue Litigation [2017]. The Defendant had shown that there was a suffi cient risk of non-recovery in the event of an adverse costs order, partly because the After-the- Event (“ATE”) insurance of certain of the remaining claimants was insuffi cient to cover an adverse costs order against them, and therefore a proportion of the total adverse costs liability would fall on individual retail Claimants without deep pockets. The court was not persuaded by the commercial funder’s argument that the security for costs applications should be dismissed on account of it having been made very late in the proceedings, which the funder said denied it any choice as to whether or not to proceed, having spent so much in the litigation already. While the court agreed that, on its face, the lateness seemed extreme

GLI - Litigation & Dispute Resolution 2018, 7th Edition 78 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales given that proceedings had been ongoing for four years, that did not necessarily equate to delay; the reasons for lateness and its prejudicial effects were also relevant considerations. The court was willing to accept the Defendants’ justifi cations as to delay, including that the Defendants had only recently learned about the insuffi ciency of the ATE coverage. The court commented that as a commercial litigation funder, it should have made it its business to be fully aware of the ATE coverage and any suffi ciency thereof. Interestingly, the court refused to make a security for costs order against the other funder, largely owing to the assessment that they were “closer to a pure funder”. The court’s handling of this application shows that the court will treat litigation funders very differently depending on the facts of each case. In the case of Premier Motorauctions Ltd v PricewaterhouseCoopers LLP [2017], the Court of Appeal considered the threshold for security for costs applications under CPR 25.13, which provided that security for costs could be ordered where “the claimant is a company ... and there is reason to believe that it will be unable to pay the Defendant’s costs if ordered to do so”. The case concerned the extent to which ATE insurance policies could be considered adequate security for costs. ATE insurance policies can be purchased before or after the proceedings have been issued, and are available to meet disbursements and some or all of the other side’s costs should the claim be unsuccessful. The ATE policies in question could be avoided for non-disclosure or misrepresentation and the insurer declined to provide a bank guarantee or a deed of indemnity requested by the Defendant to seek to overcome the risk of non-payment under the ATE insurance. In considering the threshold for making an order under CPR 25.13(2), Lord Justice Longmore considered that the court only needed a reason to believe that the Defendant would not be able to pay its costs; the court did not have to be satisfi ed on the balance of probabilities. His Lordship then considered the terms of the ATE insurance in question, examining a long list of avoidance provisions. Having acknowledged the tendency for judges at fi rst instance to accept that an ATE policy could stand as security for costs (where it had been “properly drafted” and “depending on the terms of the policy in question”), he noted that where the ATE policy contained provisions allowing for the policy to be avoided, there was a risk that could justify the making of an order. In the present case, given the existence of an avoidance provision (where the Insured makes any material non-disclosure or representation), an order for security for costs would be made. A further issue in relation to ATE insurance policies arose in Bailey v GlaxoSmithKline UK Ltd [2017]. Here the Claimants alleged in their claim that the anti-depressant drug manufactured by the Defendant was defective. The Defendant applied for security for costs against the Claimants’ litigation funder who was balance-sheet insolvent, had to rely on a shareholder for liquidity, and was not a member of the Association of Litigation Funders. The judge considered whether the ATE policy would override the need for security for costs. The claimants argued that any security should be reduced by the sum of £750,000, which was the whole of the sum covered by the ATE policy. Given the recently decided Premier Motorauctions (above), Fosket J observed that the ATE policy did not contain anti- avoidance provisions, which could have provided better assurances to the Defendant, but it did set out conditions precedent which, if not met, allowed the insurers to avoid the policy. He commented: “I consider that the risk of the ATE policy being avoided at some stage can be refl ected by deducting two-thirds of the sum of £750,000 (namely £500,000) from the amount of security

GLI - Litigation & Dispute Resolution 2018, 7th Edition 79 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales otherwise to be provided. This reﬂ ects my assessment that it is more likely that the policy will remain intact and remain available for the payment of part of the Defendant’s costs if the Defendant is successful, but that there is a more than minimal risk that it will not remain intact.” The judge therefore adopted a mathematical approach to the Premier Motorauctions decision by concluding that some of the ATE could be taken into account. One further feature of costs on which we have reported in recent years is the increase in the control exercised by judges on costs issues. In the case of Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017], the Court of Appeal dealt with the issue of Cost Management Orders (“CMOs”), a feature of the costs regime in the English courts which is intended to allow for greater control by judges. The issue which arose concerned whether it was possible to depart from the costs budget approved by the judge without “good reason”. The ‘losing’ party who was due to pay the costs in the case asserted that the costs budget acted as a cap on fees payable to the ‘winner’ such that the payment of an amount less than the budget could be justiﬁ ed without “good reason”, but that “good reason” was required in the event of any increase. The Court of Appeal decided that, taking the plain terms of the relevant CPR provision, any departure from a costs budget required “good reason”, whether that departure was to increase or decrease the amount payable. The expectation was therefore that the CMO would usually be followed.

Mediation and ADR The Republic of Ireland brought the Mediation Act 2017 into force in January 2018. The Act encourages the use of mediation which has the potential to: (i) achieve better outcomes for the parties; (ii) reduce costs and thereby improve access to justice; and (iii) ease strain on the courts system. The Act places on a statutory footing the obligation to consider mediation. This obligation brings with it the requirement for litigants to confi rm to the courts that they have considered mediation. The Act does not apply to arbitrations and certain disputes under tax and customs legislation. Section 14 of the Act requires “practicing solicitors”: (i) prior to issuing proceedings, to advise clients to consider mediation as a means of resolving their dispute and provide clients with information on mediation services and to make a statutory declaration which would accompany the originating document fi led at court confi rming compliance with such duties; and (ii) to provide their clients with information on mediation services and on the advantages and benefi ts of mediation, and to make a confi rmatory statement. The Act requires the parties and mediator to sign an agreement to mediate. This agreement sets out the formalities of the mediation including how the mediation is conducted, the location, confi dentiality, the issue of costs, the right to seek legal advice and other terms which the parties or mediator may agree. Signing of an agreement to mediate temporarily stops the clock from running under the Statute of Limitations for a specifi ed period, during which the mediation process is conducted. Under the Act, all communications and all notes and records relating to the mediation will

GLI - Litigation & Dispute Resolution 2018, 7th Edition 80 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales be confi dential and will not be disclosed in any proceedings before a court. However, this confi dentiality protection will not apply where disclosure is necessary in order to implement or enforce a mediation settlement. The Act defi nes the role of the mediator as to assist the parties to explore ways to resolve their dispute by agreement. It is the mediator’s responsibility to ensure the outcome of the mediation is determined by mutual agreement if possible, and the mediator may only advance his or her own proposals if all parties invite him or her to do so. A court may have regard to any “unreasonable refusal” or failure by a party to consider or attend mediation when considering an award of costs, meaning that a party ‘unreasonably refusing’ to engage with the mediation process runs the risk of having to discharge the costs incurred by the other side. Most of the provisions of the Act are already encouraged or enforced by the English courts, although the added bureaucracy of statutory declarations seems excessive. In England, the use of mediation continues to increase although, in the absence of any controls or generally accepted accreditation and training, the quality of mediators is normally transmitted by informal comments, and there is some concern that the process risks becoming overly formulaic and thereby just another step in the litigation process, as opposed to an alternative to it. Parties to mediation, including the mediator, need to be alert to the risks and open to the opportunities of using other forms of Alternative Dispute Resolution, either as part of, or instead of, mediation. That said, the true benefi t of mediation is that it gets senior decision- makers within the litigating organisations together for a period of time and very often, it is that dynamic alone that results in a settlement. The courts’ oversight of regulatory investigations The review in last year’s chapter considered deferred prosecution agreements (“DPAs”), notably the second DPA (involving the anonymised XYZ Ltd). DPAs are a recent addition to the UK’s Serious Fraud Offi ce (“SFO”) toolkit, with which to combat serious and complex economic crime. The SFO is the UK’s law enforcement agency and, since 2014, it has entered into four DPAs. A DPA is only available to a body corporate, a partnership or an unincorporated association for specifi c criminal offences (including false accounting, fraud and bribery) and, crucially, requires court approval. A court will approve a DPA if it considers: (1) the DPA to be in the interests of justice; and (2) its terms are fair, proportionate and equal. In 2017, the SFO entered into two high-profi le DPAs: one with Rolls-Royce Plc and Rolls- Royce Energy Systems Inc (together “Rolls-Royce”) on 17 January 2017, and the other with Tesco Stores Limited on 10 April 2017. The SFO’s extensive four-year investigation into Rolls-Royce culminated in a DPA under which Rolls-Royce is to pay penalties and costs exceeding £500 million. This represents the largest fi nancial penalties imposed by the SFO in any DPA so far (Serious Fraud Offi ce v. Rolls-Royce Plc and Rolls-Royce Energy Systems Inc. [2017]). It related to Rolls-Royce’s alleged criminal conduct over a period of 24 years in the sale of aero engines, energy systems and related services in seven jurisdictions and involved three of Rolls-Royce’s business sectors. The criminal charges included six counts of conspiracy to corrupt, fi ve counts of failure to prevent bribery, and one count of false accounting. Specifi cally, the criminal allegations included: • agreements to make corrupt payments to agents in connection with the sale of Trent aero engines for civil aircraft in Indonesia and Thailand between 1989 and 2006;

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• the concealment or obfuscation of the use of intermediaries involved in its defence business in India between 2005 and 2009 when the use of intermediaries was restricted; • an agreement to make a corrupt payment in 2006/2007 to recover a list of intermediaries that had been taken by a tax inspector from Rolls-Royce in India; • an agreement to make corrupt payments to agents in connection with the supply of gas compression equipment in Russia between January 2008 and December 2009; • failure to prevent bribery by employees or intermediaries in conducting its energy business in Nigeria and Indonesia between 2011 and 2013, with similar failures in relation to its civil business in Indonesia; and, • failure to prevent the provision by Rolls-Royce employees of inducements which constituted bribery in its civil business in China and Malaysia between 2011 and 2013. The key conditions of the DPA required Rolls-Royce to: • agree to disgorgement of profi ts in the sum of £258,170,000; • pay a fi nancial penalty of £239,082,645 (this fi gure being the result of a 50% discount after taking into account Rolls Royce’s “extraordinary cooperation”); • reimburse the SFO’s costs of £12,960,754; • acknowledge no tax benefi t could be sought for the above three payments; • cooperate with all relevant authorities in relation to any investigation or prosecution of current or former offi cers, directors, employees, agents or other third parties; and, • conduct an independent compliance review. A theme which emerged from the previous DPAs (the fi rst being Standard Bank Plc and the second being XYZ Ltd), was that an offer of a DPA appeared dependent on the entity self-reporting its discovery of unlawful conduct, coupled with signifi cant cooperation with the SFO during its investigation. It is striking that Rolls-Royce did not self-report what Levison LJ described as “egregious criminality over decades”. However, the judge was struck by Rolls Royce’s “full and extraordinary cooperation” which it provided to the SFO, which included: • providing reports to the SFO in respect of its internal investigations into its energy, defence, civil and marine businesses; • deferring interviews until the SFO had fi rst completed its interviews; • disclosing all interview memoranda and waiving any claim for legal professional privilege on a limited basis; • allowing the SFO access to over 30 million documents; • consulting with the SFO regarding developments in media coverage; and, • seeking the SFO’s permission before the winding-up of companies that may have been implicated in the SFO’s investigation. In particular, Levison LJ acknowledged: “The fact that an investigation was not triggered by a self-report would usually be highly relevant in the balance but the nature and extent of the co-operation provided by Rolls-Royce in this case has persuaded the SFO not only to use the word “extraordinary” to describe it but also to advance the argument that, in the particular circumstances of this case, I should not distinguish between its assistance and that of those who have self-reported from the outset. Given that what has been reported has clearly been far more extensive (and of a different order) than is may have been exposed without the co-operation provided, I am prepared to accede to that submission.”

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The Rolls-Royce DPA confi rms that a failure by an entity to pro-actively self-report is not in itself an impediment to securing a DPA so long as the entity subsequently provides substantial cooperation to the SFO. The use of DPAs is likely to increase in future so, hopefully, the court will provide further guidance regarding the nature of the co-operation required to approve a DPA and explain how the level of co-operation correlates with the discount on the fi nancial penalty. The SFO’s fourth DPA (with Tesco Stores Ltd (“Tesco”)) was the fi rst to relate exclusively to false accounting offences. In short, profi ts were alleged to have been grossly overstated. The fi nancial penalty imposed on Tesco was £128,992,500 plus the reimbursement of the SFO’s costs. Usually, the terms of DPAs are made public, along with the judge’s decision and the accompanying statement of facts. However, the publication of these materials for the Tesco DPA has been postponed to avoid the risk of prejudice to the SFO’s prosecution of three former executives of Tesco for fraud and false accounting. The trial against those Defendants commenced in September 2017 but the judge dismissed the jury in February 2018 following one of the Defendants falling ill. The SFO has sought a retrial and a date for the next hearing is due to be set. Consequently, the publication of the materials regarding the Tesco DPA continues to be postponed. A striking feature of the Tesco DPA was the effective co-ordination between the SFO in settling its criminal investigation and the UK’s Financial Conduct Authority’s (“FCA”) in settling its regulatory investigation. On 28 March 2017, the FCA issued a Final Notice against both Tesco plc and Tesco for fi ndings of market abuse in relation to its profi t misstatement. Unlike the SFO, the FCA did not impose a fi nancial penalty but required Tesco Plc and Tesco to compensate certain net purchasers of Tesco Plc ordinary shares and certain listed bonds who purchased those securities and still held on to them during a prescribed period. The estimated cost of this restitution was approximately £85 million (excluding interest). We would expect that this will encourage more instances of prosecutor and regulator collaboration to achieve all-encompassing justice by means of imposing a deterrent fi nancial penalty and seeking restitution for victims. The Criminal Finances Act 2017 came into force on 30 September 2017 and introduced new strict liability corporate criminal offences of failing to prevent the facilitation of UK or foreign tax evasion. These new offences adopt the model of section 7 of the Bribery Act 2010 (being the failure to prevent bribery). There is a defence where “B [the entity] had in place such prevention procedures as it was reasonable in all the circumstances to expect B to have in place or it was not reasonable in all the circumstances to expect to have any prevention procedures in place”. This echoes the defence of adequate procedures under the Bribery Act 2010. Signifi cantly, DPAs also are available for these tax evasion offences. The introduction of these tax evasion offences refl ects signifi cant pressure from the SFO for offences which overcome the hurdles under English law to the establishment of corporate criminal liability. Broadening the scope of DPAs to include these offences could be perceived as Parliament’s endorsement of the DPA as a successful alternative to corporate prosecution. Time will tell as to whether the SFO’s appetite to offer DPAs extends to tax evasion offences. Last year (2017) saw the introduction by the FCA of signifi cant changes to its enforcement decision-making process. These changes take the form of guidance and are not binding rules. The key changes related to settlement and the introduction of partly contested cases.

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Settlement can be reached at any stage of the FCA’s enforcement action. Prior to 1 March 2017, there was an early settlement scheme which provided for graduated reductions in penalty depending on what stage full settlement was reached with the FCA, namely: • Stage 1 penalty discount of 30%: for settlement after service of the draft warning notice. • Stage 2 penalty discount of 20%: for settlement prior to the expiry of the deadline for making written representations to the Regulatory Decisions Committee (“RDC”) regarding the warning notice. • Stage 3 penalty discount of 10%: for settlement prior to the issue of the decision notice. Pursuant to the guidance, the FCA abolished stages 2 and 3 discounts. The FCA considered that demarcating, at an early stage, between those cases which could be settled at stage 1, and those which would be contested would increase transparency. Another signifi cant change has been the introduction of focused resolution agreements (“FRAs”), which allow the FCA, or the party subject to enforcement, to narrow the issues in dispute between them by identifying the areas of agreement and dispute. The process involves the FCA issuing a warning notice and setting out an agreed position on one or more, but not all, of the issues relevant to a proposed enforcement action. Such FRAs are with the discretion of the FCA but should streamline enforcement action by narrowing the issues to be addressed by the RDC. As a further incentive, penalty discounts are available for FRAs at stage 1, but the level of discount depends on how much is agreed with the FCA: • Penalty discount of 30%: full agreement to all relevant facts and breaches (but disputing the penalty size). • Penalty discount of 15%–30%: full agreement to all relevant facts (but disputing the breaches or the penalty size). • Penalty discount of 0%–30%: limited scope of agreement to one or more relevant issues (remaining issues to be resolved by the RDC). It will be interesting to see the risk appetite of fi rms and individuals who enter into FRAs for full agreement of all facts and breaches but challenge the penalty size in hopes of reaching a smaller penalty fi gure and thereafter enjoying a further reduction via the 30% penalty discount, versus accepting a full settlement at stage 1 with a 30% reduction on a non- disputed penalty. The procedure for fi nalising Decision Notices was considered in FCA v Macris [2017] UKSC 19, in which the Supreme Court examined the meaning of “identifi es” for the purposes of section 393 of the Financial Services and Markets Act 2000 (“FSMA”). Briefl y, section 393 of FSMA provides that where a warning notice or decision notice “identifi es” a third party and, in the opinion of the FCA, is “prejudicial” to that person, then he must be given a copy of that notice, have an opportunity to make representations in response to it, and also to refer the matter before the Upper Tribunal of the Tax and Chancery Chamber. In 2012, Mr Macris was the International Chief Investment Offi cer of JP Morgan Chase Bank NA and the head of the bank’s Chief Investment Offi ce. Following the FCA’s investigation into the “London Whale” trades which caused the bank losses of US$6.2 billion, the bank agreed a regulatory settlement under which it paid a fi nancial penalty of £137,610,000. The FCA served its warning notice, decision notice and fi nal notice on the bank on 18 September 2013. The next day, the FCA published its decision notice and fi nal notice. The warning and decision notices did not identify Mr Macris by name or job title but there were multiple references to conduct by “CIO London management”. The FCA did not consider Mr Macris was identifi ed in these notices and so he was not provided with copies.

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Mr Macris complained to the Upper Tribunal that statements made in the notices about “CIO London management” identifi ed him, were prejudicial to him and he was entitled to be notifi ed. The Upper Tribunal and Court of Appeal upheld Mr Macris’s complaint. There was no question that if Mr Macris was identifi ed in the warning and decision notices, then statements contained therein were prejudicial to him. The issue for the Supreme Court turned on whether Mr Macris was “identifi ed” for the purposes of section 393 of the FSMA. By a majority of four to one, the Supreme Court concluded that Mr Macris had not been identifi ed. Lord Sumption (with whom Lord Neuberger and Lord Hodge agreed) considered: “… a person is identifi ed in a notice under section 393 if he is identifi ed by name or by a synonym for him, such as his offi ce or job title. In the case of a synonym, it must be apparent from the notice itself that it could apply to only one person and that person must be identifi able from information which is either in the notice or publicly available elsewhere. However, resort to information publicly available elsewhere is permissible only where it enables one to interpret (as opposed to supplementing) the language of the notice ... What is not permissible is to resort to additional facts about the person so described so that if those facts and the notice are placed side by side it becomes apparent that they refer to the same person.” This judgment reveals the competing interests of the FCA, fi rms and third parties. While the FCA and the fi rm may agree to settle a matter, the third party may want to challenge unfair allegations, so as to reduce the adverse effect such statements contained in those notices may have to his reputation and employment prospects. Time will tell whether the narrow interpretation of “identifi es” strikes a fair balance between individuals and regulators.

Cross-border issues Unsurprisingly with London’s role as a global fi nancial hub, fi nancial transactions continue to generate signifi cant cross-border litigation issues. This is often caused by the numerous related agreements, sometimes involving the same but often additional parties, which comprise the totality of the transaction concerned. Where the jurisdiction clauses in those agreements confl ict, the court’s task is to decide whether to treat each agreement and its jurisdiction clause separately, with the risk that different aspects of the overall dispute will be tried in different jurisdictions, or whether to take a holistic view and identify the commercial centre of the transaction and apply the jurisdiction clause most applicable to the transaction as a whole. In 2017 the English courts handed down a number of judgments on governing law and jurisdiction in cross-border fi nancial transactions. With some of the cases being appealed to the Court of Appeal and more cases to come in 2018, it will be some while before anything close to defi nitive guidance emerges on such issues, and the same can be said in relation to the operation of Article 3 (3) of the Rome Convention, which precludes parties selecting a foreign choice of law and jurisdiction, to escape mandatory domestic legislation where every other aspect of the agreement is domestic. These judgments demonstrate the complex procedural issues that fi nancial institutions face before they can even begin to engage with the substance of their disputes. Deutsche Bank AG v Comune di Savona [2017] Deutsche Bank AG (“Deutsche Bank”) v Comune di Savona (“Savona”) [2017] concerned interest rate swaps (the “Swaps”) entered into by the parties in June 2007 under an International Swaps and Derivatives Association (“ISDA”) Master Agreement dated 6 June 2007 (the “Master Agreement”). The Master Agreement was governed by English law and contained an exclusive English jurisdiction clause in the ISDA standard form. Prior

GLI - Litigation & Dispute Resolution 2018, 7th Edition 85 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales to the Master Agreement, Deutsche Bank and Savona had concluded a written advisory agreement (the “Advisory Agreement” ) in March 2007 under which Deutsche Bank agreed to provide, for no consideration, certain advice and assistance concerning Savona’s existing derivative commitments and a possible restructuring of its present debts. The Convention was governed by Italian law and contained an exclusive jurisdiction clause in favour of the Court of Milan. In June 2016, in light of rumoured legal action by Savona, Deutsche Bank issued a claim in the English High Court against Savona and sought 12 negative declarations concerning the validity and interpretation of the Swaps. In December that year, Savona challenged the English Court’s jurisdiction in relation to six of the 12 declarations pursuant to Article 25 of the Recast Brussels Regulation 1215/2012 (Article 25), on the basis that they were subject to the Italian jurisdiction clause. Savona subsequently conceded that the English court did have jurisdiction over declarations concerning the terms of the Master Agreement but retained its challenges relating to the nature and extent of advice provided by Deutsche Bank and Savona’s understanding of the Swaps. In March 2017, Savona commenced proceedings in Milan against Deutsche Bank for breaches of the Advisory Agreement relating to advice given by Deutsche Bank concerning the Swaps. The High Court upheld Savona’s remaining jurisdiction challenges, which related to matters arising from the Advisory Agreement and so fell within the exclusive jurisdiction of the Italian courts. In reaching this conclusion, the High Court held that, given two competing jurisdiction clauses, it had to construe each, as far as possible, as having mutually exclusive scope. The High Court noted that the Advisory Agreement concerned Deutsche Bank’s advisory role and in the Master Agreement Deutsche Bank was a counterparty, therefore, any dispute which essentially concerned Deutsche Bank’s role as adviser fell more naturally within the Advisory Agreement’s jurisdiction clause. The judge rejected the argument that the English clause, because it was contained in ISDA market-standard terms, had to be given a universally consistent interpretation which should in some way override the clause in the Advisory Agreement. That argument ignored the fact that the Advisory Agreement was already in existence by the time the Master Agreement was concluded and, as it was not amended or qualiﬁ ed by the Master Agreement, it was relevant in construing the Master Agreement’s jurisdiction clause. The High Court’s decision is currently subject to an appeal. Dexia Crediop S.p.A. v Comune di Prato [2017] In Dexia Crediop S.p.A. v Comune di Prato [2017], one of the main questions facing the Court of Appeal was asked to consider whether a swap under a 1992 English law ISDA Master Agreement was invalid or unenforceable under mandatory provisions of Italian ﬁ nancial services law. Comune di Prato argued that the mandatory rules applied pursuant to Article 3(3) of the Rome Convention on the basis that, apart from the choice of English governing law, “all other elements relevant to the situation at the time” were connected to Italy. Article 3(3) of the Rome Convention states: “Where all other elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen, the choice of the parties shall not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement.” The Court of Appeal reversed an earlier High Court decision and found that Article 3(3) did not apply as there was an “international and relevant element in the situation”, which made it impossible to say that “all elements” were located in a country other than England. Such

GLI - Litigation & Dispute Resolution 2018, 7th Edition 86 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales elements included: (i) the choice of an international standard form agreement; (ii) the fact the contract envisaged the use of more than one currency and the involvement of more than one country; and (iii) Dexia’s “back-to-back” swaps with banks outside of Italy. The Court of Appeal held that “Once an international element comes into the picture, Article 3(3) with its reference to mandatory rules should have no application.” The Court of Appeal followed Banco Santander Totta SA v Companhia Carris De Ferro De Lisboa SA [2016], in which the Defendants argued that pursuant to Article 3(3) of the Rome Convention, as all the relevant elements of a Swaps agreement were connected with Portugal, the mandatory Portuguese rules applied to the Swaps. These rules affected capacity to enter into the Swaps and entitled termination of them in the event of “abnormal change of circumstances”. The Court of Appeal held that Article 3(3) of the Rome Convention did not displace a contractual choice of English law with any mandatory rules of Portuguese law even where both contracting parties were Portuguese. In the leading judgement, Sir Terence Etherton, MR held that the elements relevant to the situation at the time are “not confi ned to factors connecting the contract to a particular country in a confl ict of laws sense”, and that the choice of law agreed by the parties could be displaced only pursuant to Article 3(3) where the “the situation is purely domestic.” Commerzbank Aktiengesellschaft v Pauline Shipping and Liquimar Tankers Management Inc. [2017] EWHC 161 (Comm) Commerzbank Aktiengesellschaft v Pauline Shipping and Liquimar Tankers Management Inc. [2017] concerned asymmetric or hybrid jurisdiction clauses and whether they confer exclusive jurisdiction on the English courts for the purposes of Article 31(2) of the Brussels I Recast, which states that where there is an exclusive jurisdiction clause, the court of another Member State shall stay the proceedings until the court given jurisdiction under the agreement declares that it has no jurisdiction. In this case, an asymmetric jurisdiction clause was agreed pursuant to a loan agreement between Commerzbank Aktiengesellschaft (“Commerzbank”) and a ship management company, Liquimar Tankers Management Inc (“Liquimar”) which confi ned Liquimar to commence proceedings in England only. Following a default under the loan agreement, Liquimar commenced proceedings against Commerzbank in Greece. Commerzbank later commenced parallel proceedings in the English court. As a result, Liquimar applied for a stay of Commerzbank’s claim under Article 29(1) of Brussels 1 Recast until the Greek proceedings had been heard, on the basis that Article 31(2) did not apply. Before the High Court, Liquimar argued that: (i) Asymmetric jurisdiction clauses generally do not qualify as exclusive jurisdiction clauses within Article 31(2) of Brussels 1 Recast as they expressly permit one party to bring proceedings in any court of competent jurisdiction. (ii) Further, even if the asymmetric jurisdiction clause in question comes within Article 31(2), the court must apply Article 29(1) and stay the proceedings until the fi rst seized court determines whether it has jurisdiction (i.e. the Greek court). (iii) Asymmetric jurisdiction clauses are not compatible with Article 25 of Brussels 1 Recast, which requires parties to identify the jurisdiction under which a putative Defendant can expect to be sued, and so such clauses cannot trigger Article 31(2). The High Court dismissed Liquimar’s stay application and held that the English court was able to hear and determine the dispute in question without having to defer to the Greek courts which had fi rst seized the case. In this case, the judge held that the reference in the Brussels I Recast Regulation to “an agreement [which] confers exclusive jurisdiction” includes asymmetric jurisdiction clauses such as those in the present case: “where a clause confers

GLI - Litigation & Dispute Resolution 2018, 7th Edition 87 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales exclusive jurisdiction on the court or courts of a Member State when one party sues, the clause will still be an exclusive jurisdiction clause for the purposes of [the Recast Regulation] even where, if the other party to the clause sues, the clause shows the parties to have agreed that jurisdiction is to be conferred differently, or allowed to engage differently.” Furthermore, the judge said that the conclusion that an asymmetric jurisdiction clause was exclusive was consistent with the aims of the Brussels I Recast Regulation, which were enacted to enhance the effectiveness of exclusive jurisdiction clauses and to avoid abusive tactics. The Law Debenture Trust Corporation v Ukraine [2017] The Law Debenture Trust Corporation v Ukraine [2017] concerned a US$3 billion Eurobond note issued by the state of Ukraine with Russia as the sole subscriber. After refusing to sign an Association Agreement with the European Union in 2013, Ukraine stated that Russia exerted “massive, unlawful and illegitimate” economic and political pressure in forcing the Ukraine administration into accepting Russian fi nancial support. The Eurobond agreements were governed by English law, with the Law Debenture Trust Corporation appointed as trustee (representing the interests of the sole noteholder, Russia). In 2014, Russia invaded Crimea, severely impeding Ukraine's ability to meet its obligations under the Eurobond notes at maturity. Consequently, the Trustee (acting on the direction of Russia) commenced proceedings in the English Commercial Court for summary judgment for non-payment under the Eurobond notes, contending that the debt was a simple English law obligation. In its defence, Ukraine made four arguments which are set out below with the judge’s fi ndings No capacity and authority to enter into Eurobond notes The Eurobond transaction is void pursuant to Ukrainian law. Under Ukrainian law, Ukraine had no capacity to enter into it due to restrictions in its constitution and budget laws, and importantly, the Minister of Finance had no actual authority to sign the various agreements and issue the Eurobond notes. Held: This was the fi rst case in which English courts had to consider the question of a state’s capacity to contract and the judge held that the law of the contract must be used to determine that issue and not the law of the state in question, derived. As a result, once the state was recognised as sovereign under international law, it would have the ability to contract under English law, regardless of any local law restrictions. Therefore, after having established that Ukraine had the capacity to contract and to borrow, the judge also held that the Ukrainian fi nance minister had the usual authority to sign the various transaction documents on the basis that he had previously signed 31 similar transactions and also had “ostensible” authority, having been held out by the Ukrainian Cabinet as someone with the authority to contract. Breach of implied terms Russia, by invading Crimea, was in breach of implied terms, including a term not to demand repayment if it unlawfully deprived Ukraine of the benefi t of the loan, and by its acts deliberately interfered with Ukraine's capacity to repay. Held: There was no room to imply the terms as argued by Ukraine because that would render the notes untradeable and unworkable thus contradicting their express terms. Lastly, the issue of whether Ukraine was entitled to refuse payments under international public law as a countermeasure to Russia’s invasion of Crimea was not justiciable before the English courts. Duress Wrongful and illegitimate acts by Russia amount to duress under English law, such that the transaction documents in relation to Eurobond notes were void. Held: This defence failed because such matters were acts of foreign states which lay on the plane of international law and so were not justiciable by the English courts.

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Public international law Ukraine was entitled to refuse payments under international public law as a counter-measure to Russia’s invasion of Crimea. Held: This issue was not justiciable before the English courts. Deutsche Bank v CIMB Bank Berhad [2017] EWHC 81 (Comm) Deutsche Bank v CIMB Bank Berhad [2017] EWHC 81 (Comm) concerned a dispute between the London branch of Deutsche Bank as the confi rming bank under a series of letters of credit, and the Singapore branch of the Malaysian issuing bank, CIMB Bank Berhad. Before the English Courts, Deutsche Bank commenced proceedings to recover from CIMB Bank Berhad, as the issuer of the letter of credit, €10m which Deutsche Bank paid out to the seller of the underlying goods. In its defence, CIMB Bank Berhad argued that the documents presented to Deutsche Bank were non-conformant and hence did not admit that Deutsche Bank made the payments in question. CIMB Bank Berhad issued various proceedings in Singapore against Deutsche Bank and its customer and associates, alleging a conspiracy to defraud and seeking declarations that the customer was liable to indemnify CIMB Bank Berhad and that CIMB Bank Berhad was not liable to pay Deutsche Bank under the letters of credit. CIMB sought a stay of the English proceedings. In this case, the judge held that the confi rming bank was obliged to prove that it had, in fact, made the payment to the benefi ciary. As a result, Deutsche Bank was ordered to plead a response to CIMB Bank Berhad’s Request for Further Information of how Deutsche Bank had made those payments. The High Court refused CIMB Bank Berhad’s stay application and held that the risk of inconsistent decisions did not point to either court being more appropriate, and it was CIMB Bank Berhad’s decision to issue proceedings in Singapore that created the risk. Either court could determine the compliance of the documents equally well. The crucial enquiry regarding the fraud was whether Deutsche Bank had suffi cient knowledge that the documents were forged and that evidence was in London. The court also noted that both proceedings were in their early stages and, although all relevant parties were involved in the Singapore proceedings, this was not decisive. It held that it was inappropriate to stay Deutsche Bank’s action so that it could be decided along with CIMB Bank Berhad’s claims against other parties, which were of no concern to Deutsche Bank’s.

Enforcement of judgment and awards Midtown Acquisitions LP v Essar Global Fund Limited [2017] EWHC 519 (Comm) considered the enforcement of a Judgment by Confession (similar to an English consent judgment) obtained in New York. The High Court rejected the Defendant’s challenge to enforcement, holding that a New York Judgment by Confession can be considered a judgment under English law and that there is no requirement for action (or lis) under English law. The Defendant challenged the Judgment by Confession on jurisdictional grounds and sought summary judgment. It was argued by the Defendant that an action is necessary for a judgment, meaning that the Judgment by Confession could only be enforced by the English courts following an action. However, despite there being no action in New York, the Judgment by Confession is described as a judgment, looks like a judgment, and was issued by the New York court which ordinarily issues judgments. Additionally, there is a comparable procedure in the CPR.

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The judge was not persuaded that the absence of action must inevitably mean that the Judgment by Confession is not a judgment capable of enforcement under English law. On whether the Judgment by Confession was fi nal and binding, despite being capable of being appealed and challenged like other judgments, the judge agreed with the claimants that it cannot be disregarded. On the basis that the Judgment by Confession was fi nal, the court assessed whether it was decided “on the merits”. As the Judgment by Confession was entered because there was proof that the Defendant confessed its liability to a specifi c sum and authorised the entry of judgment, held that the merits had been considered. Therefore, the judge held that the Claimant had established a good arguable case and that the Judgement by Confession could be considered a judgment under English law. On the Claimant’s application for summary judgment, the test was whether the Defendant had no real prospect of defending the claim. To resist this, the Defendant argued that the Judgment by Confession was obtained by fraud and in breach of natural justice. For fraud, the judge considered that there had to be conscious and deliberate dishonesty to impeach an English or foreign judgment. As the Defendant disavowed any allegation of dishonesty against the Claimant’s conduct in New York, the judge held that reliance on the fraud exception has no prospect of success. On the alleged breach of natural justice, the Judge held that as the Judgment by Confession was obtained under an established procedure in a sophisticated jurisdiction, this argument was weak. This was strengthened by the fact that challenges to the procedure have failed in the US as they are based on the debtor waiving their right to due process in a knowing, intelligent, and voluntary way. The Judge held that the English court has jurisdiction and granted summary judgment against the Defendant on the basis that there was no realistic prospect of its success at trial. The Judge granted a stay of execution.

The English courts’ supervision of international arbitration Ordering security pursuant to section 103(5) of the Arbitration Act In IPCO (Nigeria) Limited (respondent) v Nigerian National Petroleum Corporation (appellant) [2017], the Supreme Court made clear that security may not be required from an award debtor as a condition to permitting any challenge to the recognition or enforcement of an arbitration award by the English court. Sections 103(2) and 103(3) of the Arbitration Act set out the grounds upon which enforcement of an arbitration award might be refused. Section 103(5) of the Arbitration Act provides that the English court may adjourn enforcement proceedings where an application to set aside or suspend an award has been made at the seat of the arbitration. Section 103(5) is then followed by a stand-alone sentence which states: “It [the Court] may also on the application of the party claiming recognition or enforcement of the award order the other party to give suitable security.” The power to order security has been an important tool applied by the English courts to discourage an award debtor from bringing frivolous challenges at the seat of the arbitration. That is, under S103(5) of the Arbitration Act, if the judgment debtor challenges the award in the jurisdiction comprising the seat of the arbitration and seeks to have the enforcement of the award adjourned in England pending the outcome of that challenge, the Court may require the award debtor to provide security as a condition to having the enforcement proceedings put on hold. However, in the present case the Supreme Court was being asked to consider whether security could be required from an award debtor who wishes to

GLI - Litigation & Dispute Resolution 2018, 7th Edition 90 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales challenge the enforcement of an award in England & Wales. In the case of IPCO, security had been ordered earlier in the proceedings pursuant to section 103(5) in an amount of US $80 million, to be paid by Nigerian National Petroleum Corporation (“NNPC”) pending challenge to the arbitration award in the Nigerian courts. Several years later, in 2012, the award creditor IPCO brought a new application in the English court that the proceedings should be remitted to the Commercial Court to determine whether the award should be enforced, or whether grounds of public policy or fraud existed for refusing enforcement (section 103(3) of the Arbitration Act). The Court of Appeal ordered that this issue should be remitted to the Commercial Court, and that as a condition of the continued adjournment of enforcement, NNPC should pay a further US $100 million by way of security. The Supreme Court considered that this was an incorrect application of section 103(5), and that security is only payable as the price for adjournment to allow for the progress of foreign proceedings at the seat of the arbitration. Security is not payable pursuant to section 103(5), in order to allow for adjournment of enforcement pending determination in the English courts of a challenge under section 103(2) or 103(3). The Supreme Court also held that CPR 3.1(3) (permitting the court to make any order subject to conditions) did not apply here, as sections 103(2), 103(3) and 103(5) of the Arbitration Act are intended to give effect to Articles V and VI of the New York Convention, and as such constitute a code which is intended to refl ect a common international approach. Re-imposing confi dentiality of an award following challenge proceedings In UMS Holdings Ltd v Great Station Properties SA [2017] EWHC 2473 (Comm), the Commercial Court had to determine: (i) whether an arbitration award was deemed to have entered the public domain following a section 68 challenge process in the English courts which was held in public; and perhaps more uniquely (ii) whether the English court had jurisdiction to order that the award return to a confi dential state even if the award or portions of it had entered the public domain in the course of section 68 proceedings. The court had no diffi culty in determining that the arbitration award had entered the public domain. The court considered as relevant that: (i) the section 68 application and related proceedings took place in public; (ii) prior to the section 68 hearing the court was asked to read the entirety of the award; (iii) over the course of the hearing parts of the award were read out and the court was invited to read other parts of the award itself; and (iv) detailed submissions were made in open court concerning the content of the award; and the judgment quoted parts of the award and referred to other parts. On the basis of all these facts, the court had “no doubt” that the arbitration award had entered the public domain. It followed that the contractual obligation to keep the award confi dential (as embodied, in that case, in Article 30 of the LCIA Rules) no longer existed However, the judge concluded that the court had an inherent jurisdiction to regulate the consequences of its order that the section 68 challenge be heard in public, noting the parallel power of the court pursuant to CPR 31.22(2), which provides that the court may restrict the use of a document which has been disclosed in proceedings even when it has been read out in a public hearing. The scope of the arbitration clause In Autoridad del Canal de Panama v Sacyr SA and others [2017] the Court considered the meaning of a “matter” under section 9 of the Arbitration Act 1996, and whether English

GLI - Litigation & Dispute Resolution 2018, 7th Edition 91 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales proceedings brought under a number of guarantees concerned a “matter” which the parties had agreed to refer to arbitration under the underlying main contract and one other related guarantee. The case concerned a signifi cant engineering project enlarging the Panama Canal in which the Claimant, Autoridad del Canal de Panama, employed contractor Grupo Unidos por el Canal, a Panamanian company, to carry out the work. This arrangement was made under a 2010 process of assignment which provided for a number of advance payments and eventual repayment guaranteed by Sacyr SA and other shareholders in the contractor, the Defendants in the English proceedings. Although the initial guarantees were subject to English law and exclusive jurisdiction of the English courts, the main contract and a further guarantee provided for ICC arbitration in Miami, Florida. The Commercial Court therefore needed to decide whether the English proceedings should be stayed in favour of arbitration pursuant to section 9 of the Arbitration Act 1996 on the basis that they had been brought in respect of a “matter” agreed to be referred to arbitration. In this case, the judge accepted that there may be overlap between the issues under the guarantees and the issues in the defences raised in the arbitration pursuant to the main contract, but ultimately concluded that the “matter” at the centre of the proceedings was the English law guarantees, not the question of default of the contractor. This decision indicates that the English court will primarily consider the substance and context of the issues between the parties as opposed to the form they take when considering the application of the term “matter” for the purposes of section 9 of the Arbitration Act 1996. Glencore Agriculture BV v Conqueror Holdings Ltd [2017] involved the chartering of a vessel to carry corn between Ukraine and Egypt pursuant to a standard form agreement which provided for arbitration in accordance with LMAA terms 1997. A dispute arose over certain delays and the charterer sought to commence an arbitration. However, the charterer sent the letter before action and certain other correspondence to the business email address of a junior Glencore employee who, it transpired, had left the business. As a result, none of the communications were seen by Glencore’s chartering or legal departments. Only once the arbitration award was issued in favour of the charterer and distributed by post did Glencore become aware of the arbitration. Accordingly, Glencore sought to set aside the award via section 72 of the Arbitration Act 1996. In the circumstances and applying agency principles, Popplewell J held that the junior employee did not have actual or implied authority to accept service on behalf of Glencore given that he had merely represented the operational branch of the organisation in connection with the contract. As a result, the initial notice of arbitration and subsequent communications had not been effectively served. The decision serves as a salutary reminder to ensure that the appropriate contact details are used and individuals notifi ed when commencing arbitration proceedings, and that a claimant should be particularly cognisant of this in the event that a respondent does not participate in the arbitration proceedings. The decision in Sino Channel Asia Ltd v Dana Shipping & Trading PTE Singapore and another [2017] also concerns authority to accept service of a notice of arbitration. In that case, a ship owner entered a contract of affreightment with a charterer who negotiated through an agent. It was agreed that the agent would sign on behalf of the charterer and take the profi t from the contracts, aside from certain entitlements. The ship owner only ever communicated through the agent or an agreed broking channel and accordingly the ship owner believed that the agent was part of the charterer’s company. Subsequently, a dispute

GLI - Litigation & Dispute Resolution 2018, 7th Edition 92 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Winston & Strawn London LLP England & Wales arose and the ship owner gave a notice of arbitration to the agent. The charterer only learnt of the arbitration once an award had been issued, and the charterer sought relief under section 72 of the Arbitration Act 1996 by challenging the authority of the agent. On appeal, the Commercial Court’s judgment was overturned. The Court of Appeal held that service of a notice of arbitration could be served on an agent with implied and ostensible actual authority to accept service and that therefore the arbitration award was valid and binding. However, in analogous cases on this issue, it was recommended that it be closely scrutinised by the court. Additionally, Gross LJ emphasised that this case was based on a rare fact pattern and it was important to concentrate on the actual circumstances of the relationship between agent and principal.

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Michael Madden Tel: +44 20 7011 8763 / Email: [email protected] Michael Madden is a partner who leads the fi rm’s commercial litigation presence in London. Mr. Madden advises clients on commercial real estate disputes involving joint ventures, fi nance, and landlord and tenant disputes. His wide-ranging disputes practice includes international and domestic contracts, fi nance transactions, real estate, tax, defamation, professional negligence, and insolvency issues. He has extensive experience as the lead partner in disputes involving corporate acquisitions, divestitures, and joint ventures in various industries. Mr Madden is a member of the Law Society, a fellow of the Royal Institute of Arbitration and the Chartered Institute of Arbitrators, and an accredited Mediator. He holds an LL.B. Hons from the University of London (London School of Economics).

Justin McClelland Tel: +44 20 7011 8736 / Email: [email protected] Justin McClelland is a solicitor advocate in the fi rm’s London offi ce who focuses his practice on cross-jurisdictional disputes and contentious regulatory matters. Mr McClelland has advised and represented clients across a number of sectors, including fi nancial services, transport, construction, pharmaceuticals and energy. His broad experience includes: contentious regulatory investigations; high-value litigation; high-value tax litigation; sensitive corporate investigations; fraud and related advisory matters; and the creation and implementation of compliance procedures.

Winston & Strawn London LLP CityPoint, 1 Ropemaker Street, London EC2Y 9AW, United Kingdom Tel: +44 20 7011 8700 / Fax: +44 207 011 8800 / URL: www.winston.com

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Markus Kokko & Niki J. Welling Borenius Attorneys Ltd

Effi ciency of process In Finland, disputes are primarily resolved in state courts. Arbitration is common in business-to-business disputes, although it remains the dispute-resolution mechanism of choice for large businesses. Businesses that are involved in cross-border trade also usually opt for arbitration as a dispute-resolution mechanism, due inter alia to the international enforceability of the award. Other alternative dispute-resolution methods such as mediation are not very common, although mediation has won ground in academic discussion, and even among practising lawyers. There are three instances of state courts: the District Courts; the Courts of Appeal; and the Supreme Court. Only a limited number of cases reach the Supreme Court, as a case usually has to be valuable as a precedent in order to qualify for leave to appeal before the Supreme Court. There are also some specialist courts which handle business-related disputes, such as the Market Court (e.g. IPR and Public Procurement), the Insurance Court and the Labour Court (applicability of collective bargaining agreements). The Average Adjuster, an offi cial appointed by the Ministry of Trade and Industry, issues rulings on maritime insurance cases in the event of an average. Finland also has a parallel court system for administrative disputes which consists of the Administrative Courts as a fi rst instance, and the Supreme Administrative Court as the second and last. The Administrative Courts resolve issues concerning, e.g., taxation, land use and customs, as well as competition law issues such as public enforcement of cartel prohibition and merger control. Court proceedings are not burdened by common law concepts such as juries or pre-trial discovery proceedings. Legal codifi cation is abundant, as is the norm for civil law legal systems, and is fairly understandable to laymen. Legal precedent is also quite easily retrievable and so does not burden the parties’ legal costs unreasonably, as might be the case in some common law jurisdictions. Prolonged hearings due to deliberation on procedural issues are also quite uncommon, as deliberate obstruction by advocacy is quite rare. Most submissions and almost all correspondence with the courts, including documentary evidence, can be fi led electronically and with the support of the Ministry of Justice, the courts have made signifi cant progress in striving for paperless proceedings. A business dispute takes on average a year in the District Court and another year in the Court of Appeal, although averages vary locally, and one should not be surprised if a dispute takes up to three years to resolve in a state court. Arbitration proceedings usually take roughly a year from the formal initiation of arbitration.

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The Ministry of Justice continuously examines various means by which the procedure in the courts can be streamlined and expedited in response to the continuous calls for effi ciency and expedience. Lately reforms have concentrated on streamlining the appeals proceedings to avoid a de facto re-trial in the Court of Appeal. If court proceedings take an exceptionally long time to conclude, a party may seek compensation from the state. With respect to time spent on proceedings, Finland is, compared to other European jurisdictions, not ineffi cient but can hardly be considered effi cient either. Judges and courts have nevertheless taken a special interest in expediency and judges have, in recent years, been noticeably more proactive in facilitating the examination of cases in order to minimise the total amount of time spent on the proceedings. In civil cases, courts will inquire into the parties’ willingness to engage in judge-led mediation and, if both parties agree, a judge will mediate between the parties with the objective of reaching a settlement. Lately, judge-led mediation has also produced results in business-to-business disputes.

Integrity of process Judges are impartial and their independence is reasonably protected by law. Judges are not formally bound by precedent or doctrine, only by law. In practice, judges will nevertheless apply precedent, established doctrine and other sources of law as well, unless there are grounds for deviating from them based on the facts of the case. The concept of natural justice is not accepted by the Finnish legal system, although courts have a certain tendency to strive for fair and equitable outcomes. The legal conclusions reached by the courts are therefore predictable as a general rule, and uncertainty is usually based on the parties’ abilities or inabilities to present evidence in support of their claims. The state court system is generally considered to have integrity, and is considered fair and impartial with regard to foreign parties as well. Corruption and bribery are relatively unheard of with regard to judges in the Finnish court system. State courts do lack business and industry experience; to that extent, they might not always be aware of the impact of special circumstances in the case at hand. The adjudication has, nevertheless, generally been considered fair and on a par with fact by practising lawyers and academics alike. Practising attorneys often recommend arbitration as a dispute-resolution mechanism for business-to-business, high-value and complex disputes involving industry- speciﬁ c circumstances, due to the possibility of arbitrator selection by either of the parties or the appointing institute, in addition to the other advantages of arbitration.

Privilege and disclosure Finland is considered a civil law country and does not have extensive discovery or disclosure proceedings concerning evidence in civil law disputes. The court may nevertheless order a party to present a document or another piece of evidence which may be relevant as evidence in the dispute when petitioned by a party. Refusal may be sanctioned with a ﬁ ne, and the court may also order an executive ofﬁ cer (bailiff) to execute the order. A party to an arbitration may, if the arbitral tribunal considers it appropriate, petition a court to order the production of documents for the purpose of the arbitration, in which case the court will apply the Code of Judicial Procedure on the matter. The main rule is that a party must be able to present its own evidence in support of its claims. The Code of Judicial Procedure is based on the notion that the requested evidence must

GLI - Litigation & Dispute Resolution 2018, 7th Edition 96 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Borenius Attorneys Ltd Finland be specifi ed and relevant as evidence in the case. Usually, the requirement of specifi city is quite strictly interpreted. A petition concerning a narrow category of documents may nevertheless be successful, as courts have been somewhat more fl exible during the last decade. However, as a rule of thumb, it may be stated that the petition and the subsequent order to produce should be specifi c enough for an executive offi cer to be able to enforce the order by executing it himself. The court may order a third party to produce the evidence as well. Adverse inferences may be drawn by the court and by arbitral tribunals alike if a party refuses to produce the requested evidence (drawing adverse inferences is naturally beset by its own set of problems concerning the conclusions one might be able to draw). The rules on privilege in the production of documents are for the most part similar to the exemptions of giving testimony in the main hearing. Some information and documentation (such as business and trade secrets) are protected by law and can therefore not be subject to an order. A public offi cial, physician, pharmacist or midwife, or the assistant of such a person, an attorney or counsel, a court-appointed mediator or auxiliary mediator, or priest, may not present a document if it can be assumed that the document contains something on which he or she may not be heard as a witness. In addition, a witness may refuse to give a statement which would reveal a business or professional secret, unless very important reasons require that the witness be heard on the subject matter. Similarly, a party may refuse to provide a document containing this kind of information. The court will examine the grounds for refusal prior to deciding on the issue. Partial production of a document may also be ordered. There is an exception to the confi dentiality obligation and right of an attorney. An attorney could be ordered to testify and produce documents if he has not acted for the client in court proceedings (i.e. only acted in an advisory role). In-house counsel are considered regular employees of a company and as such, do not enjoy any special confi dentiality rights or obligations. Settlement negotiations are protected by customary confi dentiality agreements to the fact. Finnish law does not provide any special protection in this respect. An attorney is nevertheless not allowed to invoke a settlement offer in court, due to the Ethical Rules of the Finnish Bar Association (unless the offering party invokes it fi rst or allows it). Electronic production of documents has not surfaced as a real problem, due to a restrictive view on document production in general. At the moment, no steps are being taken to prepare for possible problems concerning electronic production that might surface in the future.

Costs and litigation funding Costs consist of attorneys’ fees, witness fees and other miscellaneous costs. The courts charge a nominal amount for initiating proceedings. The basic principle in the Code of Judicial Procedure is that the loser pays the reasonable and necessary costs of the winning party. What is considered reasonable is evaluated in casu. In business-to-business disputes, most of the costs are usually retrievable. The evaluation of whether legal costs have been reasonable is accentuated in proceedings involving private individuals, and the evaluation usually takes into account the complexity and value of the case at hand.

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The costs shall be claimed alongside the substantial claims of the case, and the courts will decide on the allocation of costs in their judgments. When the judgment is fi nal, the costs may be retrieved when enforcing the actual judgment. Attorneys usually work based on hourly rates, and the costs are usually invoiced regularly. Conditional fees are not prohibited per se, but they are quite rare, as they are somewhat diffi cult to reconcile with the system and traditions in place. Fee caps are very rare in litigation assignments, but are sometimes employed in the appeals stage of court proceedings, as costs are signifi cantly easier to predict at that stage. Cost issues in arbitration follow the same principles, although arbitration tribunals tend to be somewhat more tolerant of the amount of legal costs claimed. Third-party funding is possible, and the most common way in which this is realised is by way of insurance. Other third-party funding is quite uncommon, although not unheard of, and has been used in landmark cases which concern entire industries or cases with multiple claimants.

Interim relief The courts may grant interim relief based on the Code of Judicial Procedure. Usually, the party petitioning for interim relief must post security for the potential damage an injunction may cause the other party. The court may order the seizure of property if the petitioner establishes its receivable to be likely, and there is a danger that the other party hides or otherwise acts in a manner that endangers the receivable. If the petitioner establishes likelihood of him having some other enforceable right, and there is a danger that the other party, by doing or neglecting to do something, endangers or otherwise diminishes the right from being realised, the court may: (i) under the threat of a fi ne, order the other party to refrain from doing something; (ii) under the threat of a fi ne, order the other party to do something; (iii) entitle the petitioner to do something or have something done; (iv) order the property of the other party to be set into the custody of an agent (trustee); or (v) order any other measure which is necessary to safeguard the right which needs to be protected. The order must be proportional to the right which is to be safeguarded, and may not cause unreasonable harm to the other party. The system for interim relief is quite fl exible in that it recognises different kinds of rights and the need to protect them, and has, for instance, successfully been employed to prevent strikes by labour unions. Proceedings for interim relief are usually quite fast and effective and are handled as priority cases if so requested by the applicant. After the ruling on the interim relief, the order must be enforced by an Executive Offi cer, which will require security for possible damage that the order can cause. One can expect the application and enforcement of an urgent interim relief to take approximately three to fi ve days. It should be noted that a plaintiff applying for interim relief in Finland faces the risk of liability for damages if the interim relief is later found to be groundless and to have caused the subject of the order damage. The claim for damages shall be pursued in regular court proceedings.

Enforcement of judgments A domestic judgment is enforced by the local executive ofﬁ cers. Enforcement may be initiated even though there is a pending appeals process ongoing. A judgment will also

GLI - Litigation & Dispute Resolution 2018, 7th Edition 98 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Borenius Attorneys Ltd Finland include a decision on legal costs, if costs have been claimed by either party. If an applicant requests enforcement before a fi nal judgment from the Court of Appeals, it must post security for the eventuality that an appeals court changes the judgment. Foreign court judgments cannot be enforced without an international convention or a national provision forming the basis of the enforcement action. Enforcement procedures vary depending on the international rules applicable. For example, if a judgment has been rendered by a court in a Member State of the European Union, the recognition and enforcement is performed in accordance with the rules set out in Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast). In addition, there are conventions allowing for the enforcement of judgments within specifi c fi elds depending on the subject matter, such as the Luxembourg Convention on Recognition and Enforcement of Decisions concerning Custody of Children and on Restoration of Custody of Children. The enforcement of arbitral awards is decided on by the state courts. As a rule, the state court will apply the in favorem pro validitate rule on its deliberation, and the threshold for setting the award aside is quite high. However, as most arbitral proceedings take place in Helsinki, other District Courts might not be as familiar with arbitral law, in which case it is recommended to seat the arbitration in Helsinki. Finland has ratifi ed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and foreign arbitral awards are therefore enforceable in Finland. An arbitral award can be set aside by the court on the basis of either invalidity or nullity. The award is considered invalid if: (i) the case was inarbitrable; (ii) the award contradicts the foundations of the judicial system (ordre public); (iii) the award is so unclear and incoherent it cannot serve as a basis for enforcement; or (iv) the award has not been signed by the arbitrators (majority suffi ces, but an explanation must be provided for why the minority has not signed the award). The award is considered null if: (i) the arbitrators have exceeded their powers; (ii) the arbitrators have been appointed in the wrong manner; (iii) an arbitrator has been incompetent due to bias; or (iv) the arbitral tribunal has not afforded a party a suffi cient opportunity to present its case. Enforcement of a foreign arbitral award can be denied by the court if: (i) the arbitration agreement has been invalid (due to certain grounds); (ii) a party has not been informed of the proceedings or has otherwise been inhibited or unable to present its case; (iii) the arbitral tribunal has exceeded its powers; (iv) the composition of the arbitral tribunal or the arbitration itself has signifi cantly deviated from the arbitration agreement; or (v) the arbitral award has not yet become binding in the country in which it was given, or if it has been set aside in that country. The arbitral award may not be enforced to the extent that the arbitral award contradicts the foundations of the Finnish legal system (ordre public). The party enforcing the award or the judgment always bears the risk for the other party’s insolvency. If the execution is unsuccessful due to lack of assets, the party enforcing the award will have to pay its own legal costs, in addition to not being able to retrieve the claimed amount.

Cross-border litigation As Finland is a Member State of the European Union, Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial

GLI - Litigation & Dispute Resolution 2018, 7th Edition 99 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Borenius Attorneys Ltd Finland matters is applied in Finland, and may be considered one of the main instruments for international procedural law. In addition to this regulation, Finland is obviously also bound by other applicable regulations such as EC No 1206/2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters. With regard to notices and evidence, Finland applies the Hague convention(s), although common law discovery or disclosure proceedings are not permissible. Enforcement of a foreign judgment must always be based on a convention or national provision.

International arbitration Arbitration is governed by the Finnish Arbitration Act of 1992. The enactment was largely “inspired” by the UNCITRAL Model Law in place at the time. Only minor amendments have been made since its enactment. The main institutional body in arbitration is the Arbitration Institute of the Finland Chamber of Commerce. The Arbitration Rules of the Institute have been updated to conform to international best practice. The Rules address issues such as expediency and cost effi ciency, multi-party administration, arbitrator-ordered interim relief and increased confi dentiality. The Institute has a good reputation internationally, and both domestic and international disputes are regularly arbitrated under the auspices of its Rules. The Board of Directors includes highly recognised international practitioners, whose expertise benefi ts the institution. The judiciary’s attitude towards arbitration is quite positive, and attorneys also tend to recommend arbitration in business-to-business disputes due to the advantages afforded by arbitration. The fact that state courts often lack knowledge of industry realities, despite otherwise being quite competent, also plays a role in attorneys’ positive attitude towards arbitration. Finland is party to, and has ratifi ed, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. As a general rule, if a civil law case may be settled outside of court, the case is arbitrable. The exception is that consumers are not bound by arbitration agreements concluded before the dispute has arisen. Arbitration is not applicable to non-discretionary (indispositive) matters. The arbitral award may not be appealed, although it can be set aside based on the set of grounds elaborated above. Although it has not been stated expressis verbis in the Arbitration Act, arbitrators are generally considered to have the power to estimate damages when a party is unable to bear its burden of proof to the full extent. Guidance on the powers of the arbitrators may, to this extent, be found in the Code of Judicial Procedure. Arbitration proceedings are supported by the state courts if necessary. Although the majority of proceedings are institutional, some proceedings are ad hoc, and therefore may need court assistance to a greater extent, although even in these cases, court assistance is quite uncommon. A party may petition a state court to appoint one or more arbitrators to the tribunal. Correspondingly, a court may relieve an arbitrator when requested to do so by the parties. A court may also enforce the production of evidence (including witness testimony) if it is considered necessary by the arbitral tribunal. Notwithstanding the lis pendens rule applicable to the relationship between the arbitration proceedings and court proceedings, a state court may grant interim relief when petitioned to do so by a party. The Code of Judicial Procedure is applicable to the application for interim relief.

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Mediation is not very common in business-to-business disputes, although it has at least garnered some academic enthusiasm by practitioners. The Act on Conciliation in Civil Disputes in General Courts governs some civil law disputes.

Mediation and ADR State court judges are obligated to inquire into the parties’ willingness to settle cases, and a case may also be referred to judge-led mediation proceedings if both parties agree to it. Judge-led mediation has garnered some success in low-value disputes, but has yet to become a major method of dispute resolution. Mediation has not evolved into a noteworthy method of dispute resolution in Finland. Some industries such as the construction industry have developed dispute-resolution mechanisms similar to mediation, but these are rarely agreed on in advance and usually deal with low- value disputes and single issues at once. The advantages of mediation have been recognised among practising jurists and academics alike. Training is also offered by inter alia the Finnish Bar Association. The University of Helsinki has also founded a Conﬂ ict Management Institute aiming to research and develop alternative dispute-resolution methods. Mediation and ADR has nevertheless not succeeded in making a breakthrough in Finland. Parties usually try to resolve their disputes amicably before retaining counsel. Due to the cooperative business climate in Finland, parties often succeed in their efforts and disputes subsequently are not referred to outside counsel until negotiations have deadlocked. State courts and arbitration still lead the ﬁ eld when parties are unwilling to settle on their own, and the popularity of arbitration has increased in recent years − as indicated by the statistics of the main arbitration institute in Finland, the Arbitration Institute of the Central Chamber of Commerce.

Regulatory investigations In Finland, regulations are often supported by criminal statutes and many criminal offences only require negligence (as opposed to intent) by the offender. These kinds of criminal statutes may be found in regulations covering, inter alia, the fi nancial sector, work safety, tax and environmental issues. In recent years, authorities have concentrated especially on environmental cases and transfer pricing (tax), while investigations into the fi nancial sector and other sectors have evened out to a steady stream of relatively standard cases. The authorities are usually quite cooperative in their environmental supervision and the objective has been to minimise the impact of industry on the environment. Environmental permits are issued once the authorities are satisfi ed that all reasonable efforts are made to minimise the impact on the environment. The number of environmental prosecutions has nevertheless grown during recent years and this development has culminated in the largest environmental criminal case in Finnish history, concerning a nickel mine in northern Finland. In that case, it was evident that cooperation between the industry, the supervising authorities, non-governmental organisations and the courts in charge had presented a challenge to everyone involved. Governmental bodies have been afforded rather broad powers of discretion by law with regard to their supervision of industry sectors, and they are in principle supported by the courts. It is therefore advisable to retain external counsel in the early stages of business operations in order to ensure that all regulations are taken into account and that business

GLI - Litigation & Dispute Resolution 2018, 7th Edition 101 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Borenius Attorneys Ltd Finland operations continuously monitor their regulatory obligations. External counsels have also proven themselves very useful when conﬂ icts between businesses and regulatory bodies have surfaced. It is recommended that regular compliance reviews are performed of the business operations covered by extensive regulations in order to minimise the effects of any regulatory violations.

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Markus Kokko Tel: +358 20 713 3482 / Email: [email protected] Markus regularly advises major domestic and international clients on dispute resolution and corporate crime cases. Markus has in-depth experience of domestic and international corporate and commercial disputes and he has acted as lead counsel in numerous extensive cases. His fi eld of experience encompasses cases related to a wide variety of business sectors, such as the chemicals industry, fi nancial markets, international trade, retail and wholesale, mining, services and consultancy. Markus also has an exceptional track record in handling a broad range of litigation and arbitration cases, including ad hoc proceedings as well as proceedings governed by ICC Rules, SCC Rules and the Arbitration Rules of the Finland Chamber of Commerce. In addition, Markus frequently advises companies and executives in relation to complex corporate crime cases and criminal investigations regarding, inter alia, insider trading, environmental violations, corruption, imports and exports and tax. Markus’ effi cient and client-oriented approach has earned him an excellent reputation which has been recognised by rankings in Chambers Global, Chambers Europe, The Legal 500 and Best Lawyers. Furthermore, Markus also serves as an arbitrator and he has written many articles on litigation and arbitration. Markus heads the fi rm’s Litigation & Arbitration and Corporate Crime teams.

Niki J. Welling Tel: +358 20 713 3483 / Email: [email protected] Niki is specialised in questions related to dispute resolution. In addition to both domestic and international litigation and arbitration, Niki also advises clients on general corporate and commercial law as well as employment law. Niki frequently represents clients in both arbitration (ICC, SCC, FAI) and court proceedings relating to e.g. sale of goods, construction and real estate, joint venture projects, corporate conﬂ icts and insolvency. Niki has also gained experience in corporate crime-related work and Administrative Court proceedings.

Borenius Attorneys Ltd Eteläesplanadi 2, FI-00130, Helsinki, Finland Te l: +358 20 713 33 / Fax: + 358 20 713 3499 / URL: www.borenius.com

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Olivier Laude, Victor Champey & Olivier Guillaud Laude Esquier Champey

Effi ciency of process French legal and judiciary system The French legal system belongs to the civil law tradition. It is another peculiarity of French law that it is divided into two major branches: private law and public law. Although this structure may trigger uncertainty about the respective jurisdictions of the administrative courts and the courts overseeing private law matters, the boundaries of each judicial branch are now quite stable. This chapter mainly focuses on private law. It should be emphasised that public law governs questions involving administrative bodies (e.g. State, local authorities, administrative agencies) and their relationships with private individuals. The scope of public law, and the administrative courts’ correlative jurisdiction, is quite wide, in a country where the administration infuses many aspects of private and economic life. Accordingly, most claims for damages involving a public authority must be brought before an administrative court. The local administrative courts, the administrative Courts of appeal and the Conseil d’Etat form the three-tier system of the administrative judicial system.1 By contrast, private law encompasses purely commercial and civil matters, i.e. all matters that are not ruled by public law. The civil judicial system is structured as a three-tier pyramid. 1. The courts of fi rst instance, which together form the fi rst tier or fi rst degree of jurisdiction, include four major2 kinds of courts: • The Courts of common pleas (Tribunaux d’instance): such courts have jurisdiction over any private dispute, provided that: (i) the disputed amount is lower than €10,000; and (ii) the law has not expressly conferred jurisdiction to another court. These courts also have exclusive jurisdiction over several matters (whatever the disputed amount), such as tenant disputes. As from July 1, 2017, these courts are entitled to hear cases formerly brought before the lay judges who had jurisdiction over matters where the disputed amount was lower than €4,000. In 2017, there were 307 Courts of common pleas. • The Superior courts (Tribunaux de grande instance): such courts have jurisdiction over any private dispute, provided that: (i) the disputed amount is in excess of €10,000; and (ii) the law has not expressly conferred jurisdiction to another court. These courts also have exclusive jurisdiction over several matters (whatever the disputed amount), such as intellectual property, real estate or family law. In 2017, there were 164 Superior courts.

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• The Commercial courts (Tribunaux de commerce): such courts have exclusive jurisdiction over commercial matters, including insolvency proceedings. They are run by non-professional judges elected from members of the commercial community (retired or active in-house counsels, professionals from the industry, fi nance, consulting sectors, etc.). In 2017, there were 134 Commercial courts. • The Labour courts (Conseils de prud’hommes): such courts have exclusive jurisdiction over employment disputes. They are run by non-professional judges elected in equal number by and among employers and employees. In 2017, there were 210 Labour courts. • The criminal courts (Tribunaux correctionnels): such courts have jurisdiction over criminal matters. French proceedings enable victims of criminal offences to be awarded civil damages. Under such circumstances, the criminal courts rule on the civil liability of the defendant. This procedural route is favourable to the victim, considering the duty and extended powers of the public prosecutor in collecting and presenting proofs to the court. 2. The second tier is comprised of the Courts of appeal that hear appeals fi led against all decisions rendered by the civil Courts of fi rst instance. Any fi rst-instance decision can be appealed, except judgments for less than €4,000, for which an appeal can only be fi led on issues of law directly before the Court of Cassation. In 2017, there were 36 Courts of appeal. The proceedings before the Courts of appeal have recently been modifi ed by a decree issued on May 6, 2017, entered into force on September 1, 2017 (Decree No. 2017-891). One of the main aspects of the reform is that the appellant now has the obligation to precisely indicate the scope of the appeal and the parts of the decision rendered by the fi rst-degree jurisdiction that are criticised. 3. The third tier of the civil court system is the Court of cassation (Cour de cassation). This court exercises fi nal control over decisions issued by the Courts of appeal. The Court of cassation is divided into four sections (civil section, commercial and fi nancial section, employment section and criminal section). It should be highlighted that the Court of cassation does not hear arguments on the facts, and only focuses on points of law. Should the Court of cassation quash a decision issued by a Court of appeal, the case will generally be sent back, for a rehearing of both fact and law, to a Court of appeal other than the one which issued the quashed decision. The civil procedure landscape in France is likely to change drastically within a few months as a new bill (“Projet de loi de programmation de la justice”) is currently being debated in Parliament, and appears to include several important changes. The exact import of the bill, though, is still quite uncertain. The main measures set out in this bill are: • simplifi cation of the civil proceedings: to this day, the proceedings include fi ve ways to bring a suit before the courts (mainly depending on the adversarial, unilateral or joint character of the suit). The bill aims at creating a single deed to do so; • the further development of ADR; • the dematerialisation of the simplest disputes (especially those brought before the courts of common pleas); and • the creation of a unique court for payment injunctions. Several other reforms are currently in preparation in important fi elds of French law. The government has been habilitated to take ordinances in order to reform securities law in June 2018 within a 24-month delay. A reform of civil liability law will also soon be

GLI - Litigation & Dispute Resolution 2018, 7th Edition 105 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Laude Esquier Champey France discussed and was open to public consultation up until April 2018. French contract law has been reformed in 2016. Ordinance No. 2016-131 dated February 10, 2016, has introduced several notable changes, among which:3 • the enforceability of promises to contract (new Civil code, Art. 1124); • the courts’ ability to adjust a contract to restore its fi nancial equilibrium in the face of unexpected or uncontrollable events (new Civil code, Art. 1195);4 and • the possibility to unilaterally terminate a contract (new Civil code, Art. 1226).5 As regards class action, such mechanism exists in France but differs from class actions as they are known in the US. French class action (“action de groupe”) has a limited scope: protection of consumers, public health, discrimination practices, environment and digital personal data. Class actions may only be brought by recognised associations that have been registered for at least fi ve years, and whose statutory purpose involves the defence of the interests at stake in the class action. If the class action proceedings aim at stopping a misconduct, the courts may order the defendant, if necessary under penalty, to put an end to it. If the class action proceedings rather seek compensation in the form of damages, the procedure consists of three stages: the judge shall rule on the responsibility of the defendant; defi ne the group of individuals likely to benefi t from the class action outcome; and set the deadlines by which any victim can join the group to benefi t from the judgment on liability. Case management As far as practical monitoring of cases by national courts is concerned, the time required for a case to be handled is often diffi cult to predict, but is rarely faster than one year. Appellate proceedings before the Courts of appeal or the Court of cassation often require 18 months. Case management is the duty of the courts, and parties have no direct infl uence on it – although they may generate delays when applying for continuances or time extensions to fi le briefs. A judge in charge of overseeing the proceedings and the procedural timetable is designated before the Superior courts, the Commercial courts and the Courts of appeal. However, it should be noted that interim proceedings exist before most of the courts, when the claimant is able to demonstrate the emergency of the case or its obviousness (see below). The use of electronic communications has been encouraged over the past years to facilitate the management of cases handled by courts: procedural documents can and must now be sent to the Superior courts and the Courts of appeal through an electronic interface. If not, judges must declare them inadmissible. A similar obligation exists in administrative proceedings. A bill currently under discussion should also create, when passed into law, new online portals for several procedures such as payment injunctions, common pleas under a certain amount, and civil indemnifi cation claims in criminal cases.

Integrity of process Under French law, judicial trials held before all domestic courts are subject to the rules of due process. Both the French Constitution (adopted in 1958) and international instruments provide guarantees in this regard. The most relevant source is the European Convention on Human Rights (ECHR), which was incorporated into French law in 1974, hence its direct effect on domestic proceedings.

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Article 6 of the ECHR implements fundamental requirements, such as the neutrality of the courts, the reasonable duration of the proceedings, and the public nature of hearings. As for criminal law, core rules include the presumption of innocence, the right to legal assistance, the right to effectively prepare one’s defence and, more generally, the right to a fair trial. French law also ensures that exceptional and emergency proceedings, as well as ADR mechanisms, comply with due process. In this respect, ex parte proceedings may take place only in circumstances justifying the absence of an adversarial debate, and arbitral tribunals have the duty to ensure that the parties are treated equally, and to uphold the principle of due process.6

Privilege and disclosure As a core principle, all correspondence between French lawyers, and between clients and their lawyers, are strictly confi dential and privileged. By contrast, confi dentiality does not attach to correspondence with or between in-house lawyers. Lawyers, in their correspondence with other lawyers, are entitled to waive confi dentiality by specifying that a document is “offi cial” or “not confi dential”. When no specifi c mention has been added to the correspondence, it is deemed confi dential. The possibility to waive confi dentiality does not extend to correspondence containing information that is confi dential by nature. As regards correspondence between French lawyers and their foreign counterparts, no general rule is applicable. As a general guideline, the European Code of Conduct is deprived of legal force. The rules applying to correspondence between French and non-French lawyers must be analysed on an ad hoc basis. If no statutory privilege is applicable, a contractual framework may safeguard the confi dentiality of the parties’ exchanges, although it is not certain such contractual arrangement will be suffi cient to protect all relevant interests. Parties at trial have to prove the facts they rely on to support their case, and judgments are solely based on evidence disclosed during the proceedings. Facts and evidence may be disclosed either spontaneously, or under the supervision of the court. Parties are free to disclose facts or not, in order to best support their case. Under French law, no duty of disclosure or discovery is applicable. Nevertheless, a judge can order or facilitate the production of evidence, via two distinct mechanisms: • before a trial has commenced, a party may be allowed by a judicial order to seek and seize evidence at another party’s premises. To obtain such an order, the seeking party would need to prove that the evidence would be necessary to bring its suit, and that it is at risk of disappearance; and • during trial, if a party relies on evidence that is not under its control, the judge can order the other party or a third party to provide such evidence. Failure to cooperate may be sanctioned by the payment of a fi ne determined by the judge, except if a lawful impediment is admitted.7 Materials related to pending civil proceedings (such as briefs and evidence) are not public. Access to such documents and information is only granted to parties and their respective counsels. By contrast, judicial decisions are public as a general rule, although no open, systematic archive system is made available to the public (except at the level of the Court of cassation). Copies of judgments can always be obtained upon demand before the relevant court. In recent years, commercial databases have also notably developed and offer adequate access to judicial decisions.

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Litigation funding Since Law No. 2015-990 dated August 6, 2015, fee arrangements are mandatory and must be put in writing (as a leading principle). Fees must be fi xed, at least partially. Contingency fees, if agreed to between lawyer and client, cannot represent 100% of the legal fees. Disputes over fees are brought before the head of the local Bar, whose decision can be appealed within one month before the Court of appeal with territorial jurisdiction over the case. In general, the losing party bears the dépens8 i.e. the costs incurred during the proceedings (e.g. court’s fees, translation fees, expert’s fees – but not attorney’s fees). The losing party can also be ordered to pay a portion of the frais irrépétibles, which mostly consist of attorney’s fees.9 It is worth noting that low amounts are usually awarded by courts for the frais irrépétibles, and that most of the time a large part of attorney’s fees remain irrecoverable. A mechanism of State legal assistance exists. It is granted depending on the level of resources of the applicant. Only French residents can benefi t from it (non-residents can benefi t only if such an option is covered by an international treaty). Corporations cannot benefi t from legal aid. If granted, the head of the local Bar appoints a counsel to the aided party. The Counsel would then receive a fi xed fee from the State, and court fees and costs related to the enforcement of judgments will be borne by legal aid. Third-party funding is not prohibited per se by ethical and professional rules of conduct. However, its development is moderated by anti-laundering regulations, which require lawyers to control the identity of their clients as well as the reasons their expertise is being sought (any suspicion shall be deferred to the head of the local Bar, who may decide to transfer the case to the competent government body). As a fi nal note, it should be highlighted that the practice of ordering security for costs is not common in France.

Interim relief French law offers a variety of interim reliefs, governed by different proceedings and addressing diverse situations. Parties may seek judicial authorisation to gather and/or protect evidence before a trial starts.10 The request must be submitted before the court that would have jurisdiction over the proceedings on the merits, and the seeking party must demonstrate that the documentary evidence at stake could determine the outcome of the future trial, and is at risk of disappearance. This pre-trial mechanism is particularly useful, as the proceedings can be held ex parte, and the scope and nature of data covered by the judicial order can be quite wide (notwithstanding the fact that they would need to be suffi ciently identifi ed in the order). Moreover, summary proceedings enable parties to obtain protective or urgent court orders. Such orders, which are immediately enforceable,11 are always inter partes and do not terminate the dispute as regards the merits of the case.12 Parties can use this procedural route: • when seeking urgent measures that do not encounter any serious challenge or which the existence of the dispute justifi es;13 • to avoid an imminent damage or to abate a manifestly illegal damage (even where confronted with a serious challenge from the other party);14 or

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• to obtain an interim payment from a party, provided the merit of such payment is sufﬁ ciently obvious.15 French law also provides for the following conservatory measures that can be awarded ex parte: • Protective attachments (“saisies conservatoires”): the requesting party shall: (i) produce the legal ground enabling the attachments (such ground must show a prima facie case on the merits); and (ii) specify the amount of the requested security, and demonstrate that disappearance of the defendant’s assets is likely to occur. The claimant must initiate proceedings related to the claim at stake within three months after the date of the order, failing which the order will lapse (anyone affected by an attachment can challenge it). • Judicial mortgages (“sûretés judiciaires”): courts have the power to direct the provisional registration of a charge over properties, shares or stocks, or business owned by the defendant (attachments of earnings can also be contemplated).

Enforcement of judgments A prevailing party must retrieve an original of the judgment from the court, and serve it (via a bailiff) to the losing party within six months in case of default judgment, and 30 years in case of adversarial proceedings. Other mandatory delays exist and need to be assessed on a case-by-case basis. As regards enforcement within the European Union (EU), Regulation No. 1215/2012 dated December 12, 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, is applicable to proceedings initiated after January 10, 2015. This regulation allows the direct enforcement of a judgment issued by a domestic court of one Member State in another Member State. The prevailing party must obtain from the court that originally issued the judgment a certiﬁ cate stating that said judgment is enforceable in the Member State where it has been issued. From then on, only a few limited grounds are open to the losing party to challenge the enforcement of said judgment – e.g. violation of public policy or due process. As regards enforcement of judgments issued in a non-EU Member State and in the absence of a bilateral enforcement treaty, the Superior court must evaluate whether: (i) the foreign court had jurisdiction over the case under French rules of jurisdiction; (ii) the judgment was obtained by fraud; and (iii) the requested enforcement would breach French international public policy. Enforcement proceedings are initiated by a summons and are adversarial. Since Law No. 2016-1691 dated December 9, 2016, measures relating to assets belonging to a foreign State can only be enforced by virtue of a prior judicial authorisation and only under the following cumulative conditions: • the foreign State expressly agrees to the enforcement of such a measure; • the foreign State reserved or allocated such assets to satisfy the claim; and • the assets at stake (i) are speciﬁ cally used for non-public purposes by the foreign State, and (ii) are linked to the State entity involved in the considered judicial or arbitral proceedings. In any case, provisional or enforcement measures may not be applied to assets assigned to diplomatic missions.

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International arbitration General framework of French law on arbitration As a signatory of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (that came into force in France on September 24, 1959), France has developed an arbitration-friendly regime that was clarifi ed on January 13, 2011, when a Decree implemented new rules in support of arbitration. Today, French arbitration law is mostly contained in Book IV16 of the French Civil Procedure Code (“CPC”), although several principles can be found in the French Civil Code.17 The fact that the seat of International Chamber of Commerce is based in Paris also contributes to the development of international arbitration in France. French law makes a fundamental distinction between domestic and international arbitration. This distinction pervades the entire legal framework for arbitration in France, and allows international arbitration to be governed by more fl exible and permissive principles than those applying to domestic arbitration. The relevant criterion for the distinction between domestic and international arbitration is economic, and is based on the nature of the underlying transaction, as provided for in Article 1504 CPC:18 an arbitration is to be considered “international” if the dispute involves the fl ow of goods, services or currency over international borders, “irrespective of parties’ nationality, law applicable on procedure or merits, or seat of arbitral tribunal”. An award that results from international arbitration will be treated as an international award even if rendered in France. Arbitration agreement The CPC expressly provides that “an arbitration agreement shall not be subject to any requirements as to its form”,19 and the courts also recognise that an arbitration agreement can be incorporated by reference to another document – even if the latter was not signed by a party – if that party’s consent can be proved by other means.20 Case law considers that the existence and effectiveness of the arbitration agreement is assessed in accordance with the common intention of the parties. Since there is no requirement of formal consent to an arbitration agreement under French law, an arbitration agreement may bind non-signatories in some circumstances. Third parties can be bound by an arbitration clause in circumstances where they have participated in the negotiation, performance or termination of an agreement containing an arbitration clause.21 French case law also admits that when the arbitration agreement is transmitted, for example in case of claim or contract assignment, third parties can be bound by an arbitration clause.22 In application of the principle of compétence-compétence, if the dispute is submitted to a court before the constitution of the arbitral tribunal, the court will refer the parties to arbitration unless it fi nds that the arbitration agreement is manifestly void and not applicable. In contrast, if the dispute is submitted to a court after the constitution of the arbitration tribunal, such court will always decline jurisdiction.23 While only professional parties were traditionally entitled to agree on arbitration clauses under French law, Law no. 2016-1547 dated November 18, 2016 has reversed such principle by amending article 2061 of the French Civil Code: non-professional parties can now enter into arbitration agreements. Nevertheless, the performance of an arbitration clause cannot be imposed on a non-professional party (who therefore benefi ts from the option to bring its case either before the arbitral tribunal designated by the clause, or a State judge).

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Arbitral proceedings An arbitration clause may designate the arbitrator(s), or provide a specifi c appointment procedure, either directly or by reference to arbitral or procedural rules.24 French law on international arbitration provides general procedural rules applicable in the absence of a specifi c agreement of the parties. The Tribunal can also defi ne applicable procedure if it is needed.25 In the absence of a choice of law clause, arbitrators may, for instance, determine the applicable law directly, without following a confl ict of law approach. In all cases, the arbitrator shall take trade usages into account.26 Broadly speaking, parties and the arbitral tribunal enjoy wide freedom to organise the arbitration proceedings, the only true limits being due process and respect of the principles of French international public policy, even if this last category is very restricted and usually not invoked in purely commercial matters but rather in domestic areas of law such as family law or labour law, for example. It is worth highlighting that the principle of confi dentiality of arbitral proceedings is expressly recognised in domestic arbitration27 but not in international arbitration.28 In the latter case, the parties are advised to agree on confi dentiality at the outset of the arbitral proceedings. The grounds for challenging arbitrators have been identifi ed by the courts and are not identifi ed in the CPC. A challenge will be successful if the challenging party can show that an arbitrator lacks the qualities expected from any judge (including independence and impartiality), or does not possess the qualities or skills required by the parties in their arbitration agreement. Where there is no unanimous consent of parties to remove an arbitrator,29 the issue shall be resolved by the person responsible for administering the arbitration or, where there is no such person, by the judge acting in support of arbitration. Arbitrators’ failure to comply with their duty of disclosure30 could lead to the setting-aside of the award.31 Decree No 2011-48 dated January 13, 2011 has enhanced the powers of the arbitral tribunal. In particular: • The tribunal can “take all necessary steps concerning evidentiary and procedural matters including summoning “any person” (witness cannot be sworn in). If a party is in possession of an item of evidence, the arbitral tribunal may enjoin that party to produce it, determine the manner in which it is to be produced and, if necessary, attach penalties to such injunction”.32 • The arbitral tribunal may order any conservatory or provisional measures that it deems appropriate, set conditions for such measures and, if necessary, attach penalties to the order.33 However, only courts may order conservatory attachments and judicial security. Supporting role of domestic courts Domestic courts may only interfere with arbitral proceedings under exceptional circumstances. In particular, the judge acting in support of the arbitration (the juge d’appui)34 is entitled to rule on requests relating to: (i) any dispute relating to the constitution of the tribunal;35 (ii) challenges, incapacity or resignation of arbitrators;36 or (iii) extension of statutory or contractual time limit of arbitral proceedings.37 Domestic courts may also intervene in other circumstances: • when a party seeks a provisional measure before the constitution of the arbitral tribunal

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– domestic courts have jurisdiction despite the existence of an arbitration agreement;38 • they may order conservatory attachments and judicial security – an arbitral tribunal being deprived of such powers;39 and • upon request of the arbitral tribunal, the President of the Tribunal de grande instance, that has territorial jurisdiction, may summon a third party to provide a copy or to produce any offi cial or private deed that a party to the arbitral proceedings intends to rely on.40 Lastly, domestic courts play a procedural role as regards: (i) actions to enforce arbitral awards; and (ii) actions to set aside arbitral awards. Arbitral awards Although arbitrators must act diligently and in good faith in the conduct of the proceedings (Article 1464(3) CPC), there are no provisions regarding time limits for the making of an international award (as opposed to an extendable six-month period applicable to domestic arbitration).41 An arbitral award may only be enforced by virtue of an enforcement order (Exequatur) issued by the Tribunal de grande instance of the place where the award was rendered in France, or by the Tribunal de grande instance of Paris if the award was rendered abroad.42 Exequatur proceedings are not adversarial. While parties may agree on their ability to lodge an appeal against a domestic arbitration award,43 an international arbitration award cannot be subject to appeal proceedings.44 Nevertheless, different recourses are open to the parties against an international award depending on whether it was rendered in France or abroad: • International awards rendered in France may be challenged: (i) either by an action to set aside the award within one month of service of the award,45 if parties have not waived this right46 (the limited grounds being listed in Article 1520 CPC); or (ii) by way of an appeal against the order ruling on the exequatur proceedings47 (such an appeal is possible only if enforcement of the award is denied48 – if enforcement is granted, no appeal is practicable, unless parties have waived their right to set aside the award).49 In any case, the courts will never review the merits of the award or set it aside for wrong application of the law (Article 1520 CPC for international arbitration), and an appeal against the exequatur does not stay enforcement proceedings.50 • The only recourse against international awards issued abroad is a challenge against the order granting their recognition,51 under applicable grounds set forth at Article 1520. ADR ADR52 has been increasingly promoted in recent years as a cost-effective way to settle disputes. It is actually being further promoted through a new bill which should be adopted in the coming months (see above). Apart from arbitration, the CPC envisions several mechanisms of ADR, among them mediation, conciliation, and participatory procedure (procédure participative). Despite the fact that they refer to the same mechanism (settling an agreement with the assistance of a third person) and can either be extra-judicial or judicial,53 mediation and conciliation have specifi c features: • Mediation is conducted by an extra-judicial mediator, who is not required to demonstrate any academic or curricular experience in mediation, as long as he or she is qualifi ed to understand the nature and object of the dispute.

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• By contrast, conciliation is conducted by a judicial conciliator. Conciliators are unpaid offi cers of the courts, who must have had at least three years of legal experience. • If the parties reach an agreement through a mediation or conciliation process, they can request the court to homologate it. Such agreement would benefi t from the same legal force as a judgment – and may be enforced in all Member States of the EU under specifi c conditions. As a general trend, ADR mechanisms tend to gain mandatory force as regards procedural rules: • The CPC imposes a compulsory conciliation or mediation for specifi c litigation (notably in family and labour law). • Pursuant to Articles 56 and 58 of the CPC, as amended by Decree No. 2015-282 dated March 11, 2015, the claimant has to describe in the summons which action she or he has taken to try to amicably resolve the dispute prior to initiating court proceedings. • Law 2016-1547 of November 18, 2016 has also widened the scope of the participatory procedure (a negotiation mechanism implemented by both parties’ lawyers) by allowing it even after a court is seized. It should also be noted that ICC Mediation Rules came into force in 2014, and deal with the running of the mediation process (either before or after the outset of a dispute). One of the expected developments of ADR in the near future in France is the generalisation of the obligation to attempt to amicably settle a dispute before any judicial proceedings can be brought.

Regulatory investigation With the development of international sanctions taken against global corporations on the grounds of the US Offi ce of Foreign Assets Control (OFAC)54 or the Foreign Corrupt Practices Act (FCPA),55 compliance and business ethics have become increasing fi elds of legal development. Beyond regulatory constraints deriving from foreign norms, corporations operating in France need to develop an increasing focus on internal regulations. Law No. 2016-1691 (the so-called “loi Sapin 2”) was passed on December 9, 2016 and seeks to align French law with foreign anti-bribery frameworks. Notably, this law has enacted sanctions against: Unfair trade practices:56 courts may order civil penalties sanctioning abusive commercial practice up to €5 million (vs. €2 million before). Alternatively, such penalty may reach up to three times the amount of unfair gains or, in proportion to unfair benefi ts gained from the breach, 5% of the turnover, excluding French taxes. Any judgment that sanctions an unfair trade practice must now be published (such penalty was previously only an option). Market abuses: the Financial Markets Authority (AMF) can now sanction market abuses with fi nes capped at €100 million, or 10 times the benefi t gained from the breach if it can be determined. Alternatively the monetary penalty may reach up to 15% of the total annual turnover in the event of a failure to comply with several European Regulations. Any order issued by the AMF must now be published if the market abuse relates to: (i) a breach of the obligation to declare the crossing of a threshold; (ii) the publishing of the total number of voting rights and shares in a company; or (iii) the publishing of the semi-annual and annual fi nancial reports.

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Endnotes 1. Quasi-judicial bodies have authority over matters relating to specifi c fi elds of law, such as the Autorité de la Concurrence or the Autorité des Marchés Financiers, as regards competition law and securities law, respectively. 2. Several specialised courts have subject-matter jurisdiction within the civil judicial system – such as the farm leases tribunal or the pensions tribunal (among others). 3. For an in-depth review of the reform, see Pr. B. MERCADAL, Réforme du droit des contrats, Editions Francis Lefebvre, May 2016. 4. Such innovation within the Civil Code results from case law. 5. Such innovation within the Civil Code results from case law. 6. Article 1510 CPC. 7. Articles 138-142 CPC. 8. Article 696 CPC. 9. Article 700 CPC. 10. Article 145 CPC. 11. Article 489 CPC. 12. Article 488 CPC. 13. Articles 808 & 872 CPC. 14. Articles 809 & 873 CPC. 15. Articles 809 & 873 CPC. 16. Articles 1442 et seq. CPC. 17. Especially in Articles 2059, 2060 and 2061, which deal with arbitration agreements. 18. “An arbitration is international when international trade interests are at stake” (Article 1504 CPC). 19. “An arbitration agreement shall not be subject to any requirements as to its form” (Article 1507 CPC). 20. Court of cassation, October 11, 1989, Bomar Oil NV. 21. Decision in the Dow Chemicals arbitration – ICC Case No. 4131. 22. This doctrine has been validated by case law, and has now been codifi ed in the new version of article 2061 of the Civil Code. 23. An arbitration agreement does not prevent parties from seeking support from domestic courts, when such option is applicable (see below). 24. “An arbitration agreement may designate the arbitrator(s) or provide for the procedure for their appointment, directly or by reference to arbitration rules or to procedural rules” (Article 1508 CPC). 25. “An arbitration agreement may defi ne the procedure to be followed in the arbitral proceedings, directly or by reference to arbitration rules or to procedural rules. Unless the arbitration agreement provides otherwise, the arbitral tribunal shall defi ne the procedure as required, either directly or by reference to arbitration rules or to procedural rules” (Article 1509 CPC). 26. “The arbitral tribunal shall decide the dispute in accordance with the rules of law chosen by the parties or, where no such choice has been made, in accordance with the

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rules of law it considers appropriate. In either case, the arbitral tribunal shall take trade usages into account” (Article 1511 CPC). 27. “Subject to legal requirements and unless the parties decide otherwise, arbitral proceedings are subject to the principle of conﬁ dentiality” (Article 1464(4) CPC). 28. “Unless the parties have agreed otherwise, and subject to the provisions of the present Title, the following Articles shall apply to international arbitration: (3) 1462, 1463 (paragraph 2), 1464 (paragraph 3), 1465 through 1470 and 1472 regarding arbitral proceedings” (Article 1506 CPC). 29. “An arbitrator may only be removed with the unanimous consent of the parties” (Article 1458 CPC). 30. “Before accepting a mandate, an arbitrator shall disclose any circumstance that may affect his or her independence or impartiality. He or she also shall disclose promptly any such circumstance that may arise after accepting the mandate” (Article 1456(2) CPC). 31. E.g. Civ. 1, October 20, 2010, n°09-68.997 and 09-68.131; Paris, September 9, 2010, n°09/16182. 32. “If a party is in possession of an item of evidence, the arbitral tribunal may enjoin that party to produce it, determine the manner in which it is to be produced and, if necessary, attach penalties to such injunction” (Article 1467(3) CPC). 33. “The arbitral tribunal may order upon the parties any conservatory or provisional measures that it deems appropriate, set conditions for such measures and, if necessary, attach penalties to such order. However, only courts may order conservatory attachments and judicial security. The arbitral tribunal has the power to amend or add to any provisional or conservatory measure that it has granted” (Article 1468 CPC). 34. The juge d’appui, i.e. the President of the Superior court (Article 1459 CPC as regards domestic arbitration; Article 1505 CPC as regards international arbitration). 35. “If the parties have not agreed on the procedure for appointing the arbitrator(s): (1) Where there is to be a sole arbitrator and if the parties fail to agree on the arbitrator, he or she shall be appointed by the person responsible for administering the arbitration or, where there is no such person, by the judge acting in support of the arbitration; (2) Where there are to be three arbitrators, each party shall appoint an arbitrator and the two arbitrators so appointed shall appoint a third arbitrator. If a party fails to appoint an arbitrator within one month following receipt of a request to that effect by the other party, or if the two arbitrators fail to agree on the third arbitrator within one month of having accepted their mandate, the person responsible for administering the arbitration or, where there is no such person, the judge acting in support of the arbitration, shall appoint the third arbitrator”. “If there are more than two parties to the dispute and they fail to agree on the procedure for constituting the arbitral tribunal, the person responsible for administering the arbitration or, where there is no such person, the judge acting in support of the arbitration, shall appoint the arbitrator(s)”. “Any other dispute relating to the constitution of an arbitral tribunal shall be resolved, if the parties cannot agree, by the person responsible for administering the arbitration or, where there is no such person, by the judge acting in support of the arbitration” (Articles 1452–1454 CPC). 36. “The constitution of an arbitral tribunal shall be complete upon the arbitrators’ acceptance of their mandate. As of that date, the tribunal is seized of the dispute.

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Before accepting a mandate, an arbitrator shall disclose any circumstance that may affect his or her independence or impartiality. He or she also shall disclose promptly any such circumstance that may arise after accepting the mandate. If the parties cannot agree on the removal of an arbitrator, the issue shall be resolved by the person responsible for administering the arbitration or, where there is no such person, by the judge acting in support of the arbitration to whom application must be made within one month following the disclosure or the discovery of the fact at issue”. “Arbitrators shall carry out their mandate until it is completed, unless they are legally incapacitated or there is a legitimate reason for them to refuse to act or to resign. If there is disagreement as to the materiality of the reason invoked, the matter shall be resolved by the person responsible for administering the arbitration or, 5 where there is no such person, by the judge acting in support of the arbitration to whom application must be made within one month following such incapacity, refusal to act or resignation” (Articles 1456 and 1457 CPC). 37. “If the arbitration agreement does not specify a time limit, the arbitral tribunal’s mandate is limited to a six-month period from its referral. The statutory or contractual time limit may be extended by agreement between the parties or, where there is no such agreement, by the judge acting in support of the arbitration” (Article 1463 CPC). 38. “If there is a legitimate reason to preserve or to establish, before any legal process, the evidence of the facts upon which the resolution of the dispute depends, legally permissible preparatory inquiries may be ordered at the request of any interested party, by way of a petition or by way of a summary procedure” (Article 145 CPC). 39. “The arbitral tribunal may order upon the parties any conservatory or provisional measures that it deems appropriate, set conditions for such measures and, if necessary, attach penalties to such order. However, only courts may order conservatory attachments and judicial security. The arbitral tribunal has the power to amend or add to any provisional or conservatory measure that it has granted” (Article 1468 CPC). 40. “If one of the parties to arbitral proceedings intends to rely on an ofﬁ cial or private deed to which it was not a party, or on evidence held by a third party, it may, upon leave of the arbitral tribunal, have that third party summoned before the President of the Tribunal de grande instance for the purpose of obtaining a copy thereof or the production of the deed or item of evidence. Articles 42 through 48 shall determine which Tribunal de grande instance has territorial jurisdiction in this regard. Application shall be made, heard and decided as for expedited proceedings. If the president considers the application well-founded, he or she shall order that the relevant original, copy or extract of the deed or item of evidence be issued or produced, under such conditions and guarantees as he or she determines, and, if necessary, attach penalties to such order. Such order is not readily enforceable. It may be appealed within ﬁ fteen days following service of the order” (Article 1469 CPC). 41. “If the arbitration agreement does not specify a time limit, the arbitral tribunal’s mandate is limited to a six-month period from its referral. The statutory or contractual time limit may be extended by agreement between the parties or, where there is no such agreement, by the judge acting in support of the arbitration” (Article 1463 CPC). 42. “The existence of an arbitral award shall be proven by producing the original award, together with the arbitration agreement, or duly authenticated copies of such documents. If such documents are in a language other than French, the party applying for recognition or enforcement shall produce a translation. The applicant may be

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requested to provide a translation by a translator whose name appears on a list of court experts or a translator accredited by the administrative or judicial authorities of another Member State of the European Union, a Contracting Party to the European Economic Area Agreement or the Swiss Confederation.” “An arbitral award may only be enforced by virtue of an enforcement order issued by the Tribunal de grande instance of the place where the award was made or by the Tribunal de grande instance of Paris if the award was made abroad. Exequatur proceedings shall not be adversarial. Application for exequatur shall be fi led by the most diligent party with the Court Registrar, together with the original award and arbitration agreement, or duly authenticated copies of such documents” (Articles 1515 and 1516 CPC). 43. “The award shall not be subject to appeal unless otherwise agreed by the parties” (Article 1489 CPC). 44. “The only means of recourse against an award made in France in an international arbitration is an action to set aside” (Article 1518 CPC). 45. “An action to set aside shall be brought before the Court of Appeal of the place where the award was made. Such recourse can be had as soon as the award is rendered. If no application is made within one month following notifi cation of the award, recourse shall no longer be admissible. The award shall be notifi ed by service, unless otherwise agreed by the parties. “An award may only be set aside where: (1) the arbitral tribunal wrongly upheld or declined jurisdiction; or (2) the arbitral tribunal was not properly constituted; or (3) the arbitral tribunal ruled without complying with the mandate conferred upon it; or (4) due process was violated; or (5) recognition or enforcement of the award is contrary to international public policy” (Articles 1518–1520 CPC). 46. “By way of a specifi c agreement the parties may, at any time, expressly waive their right to bring an action to set aside. Where such right has been waived, the parties nonetheless retain their right to appeal an enforcement order on one of the grounds set forth in Article 1520. Such appeal shall be brought within one month following notifi cation of the award bearing the enforcement order. The award bearing the enforcement order shall be notifi ed by service, unless otherwise agreed by the parties” (Article 1522 CPC). 47. “An order denying recognition or enforcement of an international arbitral award made in France may be appealed. The appeal shall be brought within one month following service of the order. If the order is appealed, and if one of the parties so requests, the Court of Appeal shall rule on an action to set aside unless the parties have waived the right to bring such action or the time limit to bring such action has expired” (Article 1523 CPC). 48. Article 1523 CPC. 49. “No recourse may be had against an order granting enforcement of an award, except as provided in Article 1522, paragraph 2. However, an action to set aside an award shall be deemed to constitute recourse against the order of the judge having ruled on enforcement or shall bring an end to said judge’s jurisdiction, as regards the parts of the award which are challenged” (Article 1524 CPC). 50. “Neither an action to set aside an award nor an appeal against an enforcement order shall suspend enforcement of an award. However, the fi rst president ruling in expedited

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proceedings or, once the matter is referred to him or her, the judge assigned to the matter, may stay or set conditions for enforcement of an award where enforcement could severely prejudice the rights of one of the parties” (Article 1526 CPC). 51. “An order granting or denying recognition or enforcement of an arbitral award made abroad may be appealed. The appeal shall be brought within one month following service of the order. However, the parties may agree on other means of notifi cation when an appeal is brought against an award bearing an enforcement order. The Court of Appeal may only deny recognition or enforcement of an arbitral award on the grounds listed in Article 1520” (Article 1525 CPC). 52. As regards arbitration, see above. 53. Mediation or conciliation can occur during a judicial proceeding, at the initiative of the judge or of the parties. Judicial and extra-judicial mediation and conciliation are mostly governed by the same rules – but in a judicial conciliation, the judge is not obligated to appoint a conciliator, since she or he could conduct the process. The mediator or conciliator must inform the court of any diffi culty encountered. Moreover, the judge can still grant interim reliefs and bring an end to the amicable process if its success is jeopardised. 54. E.g. the banks BNP (US$ 8.9 billion) or Crédit Agricole (US$ 787 million) in 2014– 2015. 55. E.g. total (US$ 398 million) or Alstom (US$ 772 million) in 2013–2014. 56. It can be emphasised that ordinance No. 2017-303 dated March 9, 2017 reinforces the parties’ ability to seek civil compensation for anti-competition practices, parallel to proceedings led by French and European competition authorities. The procedural innovations cover the computation of the fi ve-years’ time limitation to initiate proceedings, the liability of co-authors and the evidentiary regime (e.g. irrefutable presumption of infringements when sanctions have been handed down by competition authorities, potential fi nes to force the disclosure of evidence, the courts’ ability to seek support from competition authorities).

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Olivier Laude Tel: +33 1 75 44 47 00 / Email: [email protected] A founding partner at Laude Esquier Champey, Olivier Laude has a wide litigation expertise which spans business litigation, media and IP, white collar crime, insolvency and international arbitration. While advising several key players in the Internet, IT sector and press groups, Mr Laude is also involved in major white collar crime cases, as well as international arbitration cases. “Clients praise his original approach in handling their cases and describe him as ‘very reactive and sharp’.” (Chambers & Partners Europe). He graduated from HEC Business School and holds a Bachelor’s degree in philosophy. He studied law at the University of Paris I where he received a DEA degree in business law and at the Criminology Institute of the University of Paris II Panthéon-Assas. A French native speaker, Mr Laude speaks fl uent English and Spanish. Victor Champey Tel: +33 1 75 44 47 00 / Email: [email protected] Victor Champey is a founding partner at Laude Esquier Champey with “‘excellent technical skills’ and ‘an excellent business sense’” (Legal 500 Paris (2011/2012)). Thanks to his strong expertise in general business law and his extensive experience of procedural tools, he represents all kind of clients’ interests, whether plaintiffs or defendants, at all stages of disputes. Regularly involved in breach of contract matters and disputes between shareholders (transfer, liability guarantees), Mr Champey is also a real estate litigation attorney (construction, commercial leasing), and handles complex inheritance matters involving corporate issues (approval clauses, joint ownership, corporate governance). He has also developed specifi c skills in the fi eld of Internet litigation (identifi cation of Internet users, libel, liability of webhosts). Mr Champey holds an LL.M. from Cornell University, a DEA degree in business law from the University of Paris X Nanterre and a Master’s degree in history from the University of Paris IV La Sorbonne. He speaks fl uent French and English. Olivier Guillaud Tel: +33 1 75 44 47 00 / Email: [email protected] Olivier Guillaud focuses his practice on contentious and non-contentious matters in all aspects of commercial and corporate law as well as white- collar crimes. He has developed legal skills in multi-jurisdictional litigation, arbitration and restructuring, with a focus on breach of contract matters, attachment proceedings and disputes between shareholders. Prior to joining Laude Esquier Champey, Mr. Guillaud worked in the litigation & arbitration departments of prominent French and American law fi rms in Paris. He joined the Paris Bar with an international business background gained through several years’ experience in France, Switzerland and the Netherlands. A former student of the Ecole Normale Supérieure de Lettres et Sciences Humaines, Olivier Guillaud is a graduate of Sciences Po Paris, ESSEC business school and the University of Paris II Panthéon-Assas. He speaks fl uent French and English. Laude Esquier Champey 4, rue Quentin Bauchart, 75008 Paris, France Tel: +33 1 75 44 47 00 / Fax: +33 1 75 44 47 01 / URL: www.lecspartners.com

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Dr Thomas Nebel & Thomas Weimann Herbert Smith Freehills Germany LLP

General The German judiciary relies on rules and codes that have been effective for almost 140 years and which have proven to provide independent, fair and effi cient litigation at fair and predictable costs. Those rules and codes have been amended from time to time to refl ect technical, social, commercial or legal developments. The latest project is introducing English as a court language to foster access of international businesses to German courts. Since 2010, courts in Cologne, Bonn and Aachen and, from January 2018, the court in Frankfurt have offered to conduct the oral hearing in English if agreed by all parties. However, any written submission, the judgment and appellate proceedings are still in German. The German Ministry of Justice also publishes English translations of many German statutes on its website at https://www.gesetze-im-internet.de/Teilliste_translations. html. Most important translations available include the German Civil Code, Code of Civil Procedure, Commercial Code, Insolvency Act or the Act on Limited Liability Companies. The German court system for civil law proceedings is three-tiered. In general, any court decision is subject to two rounds of appeal to a higher court. The fi rst round of appeal can be based on correcting facts and questions of law, whereas the second round of appeal is limited to questions of law. The court of fi rst instance (i.e. the court where the action has to fi led) depends on the amount in dispute: Smaller claims with an amount in dispute of €5,000 or less have to be fi led with a Local Court (Amtsgericht). Larger claims with an amount in dispute exceeding €5,000 have to be fi led with a Regional Court (Landgericht). Local Court decisions can be appealed to Regional Courts. Regional Court decisions can be appealed to the Higher Regional Court (Oberlandesgericht). Appellate decisions of both Regional Courts and Higher Regional Courts can be further appealed to the Federal Court of Justice (Bundesgerichtshof). German courts are organised decentrally. Regional Courts are available in larger cities; Local Courts also in smaller cities. As a general principle under German civil procedural rules, litigation has to be initiated before a court in whose district the defendant has the place of residency. Exceptions are available especially for corporate, lease and tort disputes. For instance, claims based on tort may be brought before a court in whose district the damaging event occurred or the damage has been incurred, irrespective of the defendant’s place of residency. It is also possible to agree to submit disputes to courts at a certain venue if the parties to such an agreement are businesses, not consumers. Venue or jurisdiction clauses in large contracts often submit disputes to the courts at fi nancial centres and hubs, such as Frankfurt, Munich or Dusseldorf. These courts have particular expertise and also capacities to deal with complex litigation.

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The basic principles of German civil court proceedings are: 1. Principle of disposition: the parties decide on the beginning and end of litigation, and its subject matter. Scope and duration of any litigation in Germany are fully dependent on the parties’ decisions. 2. Principle of production: the parties have to present all their facts and produce their evidence to establish their claim or defence. The court may only rely on facts and evidence so presented. 3. Principle of oral hearing: save for urgent interim relief, a judgment may only be issued after an oral hearing. 4. Principle of directness: the oral hearing and taking of evidence have to be conducted before the judge(s) issuing the judgment. 5. Principle of publicity: The oral hearing and announcement of the judgment are public and may be attended by anyone. Many court decisions are also published online, although sensitive data like names of the parties are redacted before. It is also noteworthy that the German civil procedural rules do not allow class actions.

Effi ciency and integrity of process German courts are recognised internationally for cost-effi cient and time-effi cient proceedings as well as their integrity. The World Justice Project’s Rule of Law Index 2016 ranks Germany 6 out of 113 countries, ahead of favourable jurisdictions such as the United States or the United Kingdom. The adherence to the rule of law ensures, among other things, accountability, respect for fundamental rights or access to justice. Litigants in Germany can rely on independence of the judiciary, because German judges are appointed for life and cannot be instructed to decide in a certain way. Judges are only bound by the law. Time-effi ciency of German litigation is evidenced by statistics: fi rst instance proceedings take, on average, fi ve months at Local Courts and 10 months at Regional Courts. Appellate proceedings have average durations of seven months at Regional Courts and 10 months at Higher Regional Courts. Therefore, fi rst and second instance proceedings are, on average, concluded after 12 to 20 months. Of course, litigation may take considerably longer in some cases, especially in cases of complex international litigation. A contributor to the rather quick proceedings is that German law does, in principle, not recognise any form of disclosure or discovery. Any dispute is decided upon carefully balanced rules of evidence as well as the facts presented and evidence produced by the parties. The rules of evidence say, in principle, that each party bears the burden of proof for any facts necessary to establish their case or their defence. The burden of proof may shift to the other party if a document necessary to establish the case or defence is in the possession of that other party, or where certain internal knowledge of that other party is relevant. Germany’s civil procedural rules aim at resolving the dispute, rather than fi nding out the “truth”. That said, German courts do not distinguish between “true” and “wrong” facts but between “undisputed” and “disputed” facts. Facts that are presented unanimously by both parties or presented by either party and not contested by the other part are considered “undisputed”. Facts presented by either party and challenged by the other party are considered “disputed” facts. This principle is supplemented by each party’s obligation to tell the truth. Thus, the defendant must not challenge facts presented by the claimant if the defendant knows that that fact is true and challenging it would be wrong. German civil

GLI - Litigation & Dispute Resolution 2018, 7th Edition 121 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Herbert Smith Freehills Germany LLP Germany courts do, in principle, not take evidence on undisputed facts, even if they were not “true”. Taking of evidence is limited to disputed facts that are legally relevant for the case at hand. German courts actively manage, supervise and expedite litigation to avoid overly und unreasonably long proceedings. To do so, German courts have several means and approaches. First, the court sets deadlines for written submissions. Missing those deadlines can result in submissions being disregarded and the case being lost. Second, the court presents its (preliminary) view on the case in written advisory opinions and discusses its view with the parties during the oral hearing. Consequently, the parties can focus any subsequent submissions and offer evidence on the issues pointed out by the court. This avoids lengthy submissions which raise any point the parties deem relevant but the court does not. Third, the oral hearing is led by the presiding judge and focuses on relevant facts and questions of law. The parties can present their views and discuss them with the court but there are no (lengthy) pleas or monologues from lawyers. Taking of evidence is also led by the court. For instance, witnesses are examined thoroughly directly by the court. After that, both parties’ lawyers may ask additional questions to the witness but without a full-scale cross-examination. Fourth, German courts try, at any stage of the litigation, to fi nd an amicable settlement. Given that the court guides the parties with its views on the factual and legal issues of the case, the court enables the parties to assess whether they want to continue the proceedings or if a settlement is preferable in light of an unclear outcome, e.g. because it is unclear what a witness may say. A settlement concluded before the court is directly enforceable like a fi nal and binding judgment. Another means of ensuring that the defendant does not obstruct the proceedings by not responding is a default judgment. Courts can issue a default judgment if a defendant fails to notify the court about their intention to defend against the claim, or if a party does not appear or plead at the oral hearing. Although default judgments are subject to appeal, they may be immediately enforced, even if an appeal is pending. Apart from means available to the court, the claimant may choose special forms of fast-track litigation. If a payment claim is (likely) undisputed, the claimant may apply for a payment order. The payment order procedure is quicker and cheaper than ordinary litigation because it is fully automated and handled electronically. If the defendant does not object to the payment order within two weeks, the claimant gets an enforceable payment order which has the same effect as a default judgment. In case of objections against the payment order or the enforceable payment order, the case will be referred to the competent court of fi rst instance and continued as ordinary litigation. If the claimant and defendant are EU citizens or entities in different EU member states (except for Denmark), the claimant may also apply for a European payment order which is enforceable in the defendant’s country. Another form of fast-track litigation is available for payment and certain delivery claims which can be established by documentary evidence. In such proceedings, both claimant and defendant may present documentary evidence only to establish their case or defence. Other forms of evidence, in particular witness or expert evidence, is not available. If the defendant cannot challenge the claim without hearing a witness or an expert, the court will issue a preliminary (but enforceable) judgment and hear the defendant’s witness or expert in a second stage of the proceedings. In case the defendant is successful, the court issues a fi nal judgment, setting aside the preliminary judgment and dismissing the claim. A current project of the German judiciary to enhance effi ciency of litigation is the introduction of electronic case fi ling and handling. Although scheduled to commence in January 2018, the project has been delayed.

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Privilege and disclosure Until the recent implementation of the European Directive on Antitrust Damages Actions, German law had not recognised disclosure or discovery to parties of litigation. Under the directive, which was transposed into German law, both claimants and defendants of antitrust follow-on damage claims may seek disclosure of evidence necessary for their case or their defence. Disclosure may be sought from the other party but also from third parties. It remains to be seen how and to what extent courts will give effect to this – from a German perspective – new legislation. Apart from disclosure for follow-on damage claims which was introduced by mandatory EU law, German law does not provide for disclosure or discovery proceedings. However, it should be noted that German courts may consider evidence obtained abroad by way of discovery or disclosure. In recent years, a few litigants have tried to obtain discovery in the United States under 28 U.S.C. § 1782 (assistance to foreign and international tribunals and to litigants before such tribunals) to collect evidence for use in German litigation, in particular in connection with IP infringements. German law guarantees the attorney-client privilege. Lawyers are legally bound by confi dentiality obligations. A lawyer disclosing confi dential client information may commit a criminal offence. Since German law does not recognise disclosure or discovery proceedings, the attorney- client privilege does not play a signifi cant role in civil litigation. Litigants cannot be compelled to disclose attorney work products to the opponent party. If a lawyer is called as a witness, he or she has the right to refuse giving testimony unless the client accepts. The attorney-client privilege is more important in criminal proceedings and investigations. A recent example was the public prosecutor’s seizure of client-related information and documents at a law fi rm advising Volkswagen in the diesel scandal. Ultimately, the German Constitutional Court enforced the attorney-client privilege of Volkswagen and the law fi rm. The court held that the prosecutor must not review the seized fi les in their investigation. Rather, all seized fi les had to be deposited at the Local Court in Munich.

Costs and funding Under Germany’s civil procedural rules, the losing party has to bear all costs, i.e. lawyers’ fees of the succeeding party or parties and court fees. If the claimant succeeds only partially, costs will be split in accordance with the success ratio. One of the big advantages of German litigation is that the cost risk is predictable. Calculation of reimbursable lawyers’ and court fees is regulated by law. Fees are dependent on the amount in dispute: the higher the amount in dispute, the higher the fees. However, fees rise degressively, i.e. if the amount in dispute is doubled, the fees are less than double. To avoid excessive costs, calculation of fees is capped at an amount in dispute of €30 million per claimant, even if several claims are pursued in a single action or if the defendant fi les a counter action. Therefore, litigation (action plus counter action, if any) with an actual amount in dispute of €500 million, causes the same fees as litigation with an amount in dispute of €30 million. The cap for the amount in dispute may rise up to €100 million in exceptional cases where one law fi rm represents more than one party but the claims pursued by or against these parties are different. As an example: an action with one claimant and one defendant and with an amount in dispute of €500,000 will result in court fees (fi rst instance only) of some €10,500 and

GLI - Litigation & Dispute Resolution 2018, 7th Edition 123 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Herbert Smith Freehills Germany LLP Germany lawyers’ fees of some €9,500. That means that, if the case is lost, the losing party would have to pay some €20,000 to the court and the winning party, and also bear its own lawyers’ fees. If the own lawyer charges statutory rates, the total costs exposure for fi rst instance proceedings would amount to €29,500. Another example: If the amount in dispute was €10 million, court fees (fi rst instance only) would be €113,000 and lawyers’ fees €94,000 per party. The total cost exposure for fi rst instance proceedings would thus be €301,000 (if the own lawyer charges statutory fees). Bigger law fi rms usually do not charge statutory fees, but an hourly rate. In those cases, actual lawyers’ fees may exceed the statutory fees by far. However, the winning party may request reimbursement of statutory fees only, and has to bear any excess. The losing party has always to bear its own lawyers’ fees, irrespective of whether the lawyer charges statutory fees or on an hourly basis. If the judgment of the court of fi rst instance is overturned by the appellate court, then the winning party may request reimbursement of its lawyers’ fees for both court instances. Fee arrangements other than statutory fees or hourly rate are allowed only in exceptional cases. Therefore, especially in international commercial litigation, German lawyers may not enter into any success fee, contingency fee or damages-based agreement. The strict limitations to fee arrangements do not apply to commercial litigation funders. Therefore, litigation funding is available from legal protection insurance, as well as national or international litigation investment fi rms. Funding through those litigation investment fi rms is becoming more and more popular in Germany. Litigation funders request, on average, 30–35% of the sums awarded. Litigation funding support is also available from the court itself if the claimant or defendant has insuffi cient funds and/or personal income to pay for their own legal costs. Such funding support is even available to companies if both the company and its benefi cial owners lack suffi cient funds. Another main prerequisite for such court funding support is that the claim or defence has suffi cient prospects.

Interim relief German courts provide interim relief in urgent cases. Interim relief is granted by the court which would be competent to hear the case in main litigation proceedings. The most important means of interim relief include asset freezes and preliminary injunctions. An asset freeze is possible if there is reason to believe that a later judgment may not be fully enforced, e.g. because the defendant is about to move all their assets abroad. An asset freeze may also be granted if the judgment would have to be enforced in a foreign jurisdiction that has no arrangement for reciprocity. It is in the court’s discretion to grant the asset freeze directly upon application or only after an oral hearing. The court may also ask the applicant to provide security for potential disadvantages of the opponent. Preliminary injunctions are available either to safeguard individual legal rights or to have a preliminary ruling on a disputed legal relationship until a judgment is issued. For example, in a preliminary injunction the court may deprive the opponent temporarily of property to safeguard a claim for handing-over such property. Another example is that the court may order that a contract has to be temporarily fulﬁ lled until the court issues a judgment about validity of the termination of that contract. The court may decide upon the injunction, with or without prior hearing of the opponent. Depending on the urgency and complexity of the case, preliminary injunctions may be issued on the same day.

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Given the urgent and preliminary nature of asset freezes and injunctions, the rules of evidence in preliminary proceedings are less strict than in the main proceedings ending with a judgment. Therefore, facts may not only be established by documents, witnesses or experts but also by afﬁ davits. Decisions to grant or not to grant interim relief are fully subject to appeal by the losing party. Asset freezes and preliminary injunctions are immediately enforceable. Enforcement has to commence within one month. If this one-month period is exceeded, asset freezes and preliminary injunctions become unenforceable. If the court holds that enforcement is subject to provision of security (usually a bank guarantee), such security has to be paid before enforcement can be commenced. Further, the enforcing party is strictly liable for damages caused to the party against which the asset freeze or injunction is enforced if the asset freeze or injunction is lifted upon appeal or if the enforcing party does not prevail in the main proceedings.

Enforcement of judgments Enforcement of judgments and other enforceable awards is done by bailiffs and the court of fi rst instance. Bailiffs are responsible to seize movable assets including cash. The court is responsible to enforce into immovable assets including bank accounts and real estate. Judgments issued by German courts are immediately enforceable, even before they have become fi nal and binding and also even if an appeal has been fi led. Such immediate enforcement is subject to provision of security (in particular, a bank guarantee). If the enforced judgment is overturned in appellate proceedings, the enforcing party has to repay collected money and is strictly liable for any damage caused to the other party. Judgments issued by courts of a member state of the European Union are directly enforceable under the EU Brussels I Regulation (recast). Under this regulation, which has been incorporated into the German civil procedural rules, a judgment given and enforceable in an EU member state shall be enforced in another EU member state without any declaration of enforceability being required. The party against which the judgment from another EU member state is enforced has only limited defence arguments, e.g. that enforcement violates the ordre public or that the foreign judgment was obtained in violation of the right to be heard. Some non-EU countries have entered into bilateral agreements with Germany providing for either direct enforcement of judgments from those countries, or simplifi ed enforcement proceedings. However, there is still a considerable number of countries without any bilateral agreement, including the United States, Canada, South Africa, Asian countries and non-EU Eastern European countries. Enforcement of judgments from those countries requires an exequatur, i.e. a judgment of the court of fi rst instance that the decision issued by the foreign judicial body is enforceable in Germany. The defendant of an exequatur procedure, i.e. the party against which the foreign judgment is to be enforced, can raise several objections, e.g. that the courts of the state to which the foreign court belongs do not have jurisdiction according to German law, or that the foreign proceedings violated the right to be heard, or that reciprocity has not been granted.

Cross-border litigation Both under EU law and international treaties, Germany actively supports cross-border litigation, in particular, service of documents and taking of evidence.

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As a member state of the EU, Germany is subject to European regulations governing cross- border litigation in the EU. The most important regulations are: (i) the EU regulation on the service of judicial and extrajudicial documents in civil or commercial matters providing for service of foreign court documents in Germany and German court documents in other EU member states; (ii) the EU regulation on cooperation between the courts of the member states in the taking of evidence in civil or commercial matters providing for taking evidence abroad, such as witness examination by a foreign court; (iii) EU regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast Brussels Regulation); and (iv) the EU regulations on the applicable law to contractual and non-contractual obligations (Rome I and Rome II Regulation). Germany has also signed several international treaties, such as: (i) the Hague Service Convention providing for a simplifi ed service of foreign judicial and extrajudicial documents in civil or commercial matters; (ii) the Hague Evidence Convention providing for taking of evidence abroad in civil or commercial matters; and (iii) the Hague Choice of Court Convention providing for recognition of exclusive choice of court agreements between parties on civil law issues. Enforcement of foreign asset-freezing orders in Germany is rarely used. Enforcement of asset-freezing orders issued in an EU member state takes considerably longer than enforcing an asset freeze given by a German court. In particular, before accepting enforcement of foreign orders, the person against whom enforcement is sought will be heard. The person against whom enforcement is sought may also fi le an application for refusal of enforcement. Enforcement of asset-freezing orders issued by a non-EU court is possible only if such order has the same legal quality as a fi nal and binding judgment rather than the quality of an interim relief measure. And even if such order has the same legal quality as a judgment, enforcement requires exequatur proceedings. As a result, the assets to be frozen may be gone before the foreign asset-freezing order becomes enforceable. German law does not acknowledge asset-tracing claims, i.e. there is basically no claim for information on available assets of a person or entity. However, if enforcement against a person or company residing in Germany is not successful and the bailiff cannot seize any movable assets, the bailiff may request the debtor or legal representative of the debtor to provide a full overview of assets and liabilities.

International arbitration Germany is a very arbitration-friendly jurisdiction. Use of arbitration as a dispute-resolution mechanism has a long-standing tradition. In most areas of business and commerce, institutional and ad hoc arbitration is commonly and successfully used. German courts give full effect to arbitration clauses. German arbitration law is part of the German Code of Civil Procedure and based on the UNCITRAL Model Law on International Commercial Arbitration of 1985. Therefore, users will ﬁ nd it particularly easy and predictable to apply. Germany is a signatory state of the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention). Recognition and enforcement of foreign arbitral awards is governed by the New York Convention. Upon application, German courts look into certain arbitration-related matters, such as appointment and challenge of arbitrators, setting aside and enforcement of (foreign) awards, orders for interim measures, or declaring arbitration proceedings admissible. Any

GLI - Litigation & Dispute Resolution 2018, 7th Edition 126 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Herbert Smith Freehills Germany LLP Germany arbitration-related matters are decided upon by Higher Regional Courts (appellate courts). This ensures usually consistent, quick and arbitration-friendly decisions. Court decisions can be appealed to the German Federal Court of Justice, though only based on violation of laws, not facts. The most well-known arbitration institution in Germany is the German Arbitration Institute (Deutsche Institution für Schiedsgerichtsbarkeit – DIS). The DIS administers national and international arbitration proceedings under the DIS arbitration rules of 2018. Unlike other international arbitration institutions, the new 2018 rules include “Supplementary Rules for Expedited Proceedings”. Further to the DIS, there are a number of industry-focused arbitration institutions in Germany, e.g. German Maritime Arbitration Association (GMAA) or arbitration institutions with stock and commodity exchanges. The Chinese European Arbitration Centre (CEAC) administers international Asia-related arbitration proceedings.

Mediation and ADR German law encourages parties to settle their disputes out of court. The most important ADR proceedings in Germany are conciliation, mediation and expert determination. All forms of ADR aim at providing a cost- and time-effi cient, mutual solution. Another benefi t of out-of-court negotiations over the existence of a claim is that the limitation is suspended from the beginning and beyond the end of such negotiations. Conciliation is available from governmental conciliation bodies as well as private conciliators. A conciliator tries to fi nd a mutual settlement together with the parties in confi dential meetings. If no such settlement can be reached, the conciliator will issue a non-binding decision. Mediation is defi ned as a confi dential and structured process in which the parties strive, on a voluntary basis and autonomously, to achieve an amicable resolution of their confl ict with the assistance of one or more mediators. The German mediation rules are based on the EU Mediation Directive to support settlement of civil and commercial cross-border disputes out of court. The German Arbitration Institute also enacted the DIS Mediation Rules in 2010. The mediator is an independent and impartial person without any decision-making power who guides the parties through the mediation. Persons who are specially trained in negotiation and communication techniques and confl ict competence can become a certifi ed mediator. Any settlement concluded in mediation proceedings is non-binding. Expert determination is based on an agreement between the parties that any dispute about factual or legal questions needs to be evaluated by an independent expert. Like conciliation and mediation, expert determination proceedings are confi dential. The parties may agree that the expert determination is binding or non-binding on them. However, if the expert determination is not honoured by either party, subsequent litigation or arbitration is required to enforce the underlying claim. In Germany, multi-step dispute resolution clauses are becoming more and more popular. For instance, the parties may agree to fi rst mediate any dispute and, if that is not successful, to initiate litigation or arbitration. The wording of such multi-step dispute resolution clauses needs to be carefully drafted in order to avoid a later dispute as to when arbitration or litigation proceedings are admissible. Also, if multi-step dispute resolution clauses are introduced in general terms and conditions, they may be found invalid by a court if they effectively deprive the other party of the opportunity to pursue their claims properly.

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If the parties wish to enforce a settlement agreement that has been entered into after out-of- court negotiations, they can sign an enforceable deed in front of a German notary. Notary fees are usually lower than court fees. The notarial deed can be enforced like a ﬁ nal and binding judgment.

Regulatory investigations Germany has several federal agencies that have authority to conduct regulatory investigations within their jurisdiction. Those German agencies are, in some fi elds of law, complemented by European agencies with equal powers. The most important German agencies include the Federal Cartel Offi ce to supervise competition, the Federal Financial Supervisory Authority, and the Federal Network Agency supervising electricity, gas, telecommunications, post and railways. Regulators’ powers include requesting production of documents, hearing witnesses and, most of all, conducting (dawn) raids both at business premises and private residences. Regulatory investigations are usually confi dential until a fi nal decision is issued. Then, regulators often publish press releases summarising their investigation and its outcome. However, if an investigation starts with comprehensive (dawn) raids, this may attract media attention. If an infringement is found, regulators can impose substantial fi nes on businesses and individuals. Actions taken by and orders from regulators are subject to review by the courts. If a regulator’s decision is appealed to the courts, the court will review both the verdict and the fi ne and apply its own discretion. Thus, the court may lift or uphold the regulator’s decision and/or decrease or increase the imposed fi ne. Just recently, a court increased a fi ne imposed by the Federal Cartel Offi ce by six times because the court was of the view that the fi ne was inappropriately low. This court decision has been further appealed and is pending at the Federal Court of Justice.

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Dr Thomas Nebel Tel: +49 211 975 59134 / Email: [email protected] Thomas Nebel is a senior associate in the German disputes practice of Herbert Smith Freehills. He joined the ﬁ rm in 2016 after working for another leading law ﬁ rm in Dusseldorf, London and Frankfurt. Thomas advises domestic and international corporations, management and supervisory boards and individuals in civil and commercial disputes. He regularly acts as counsel in both national and international litigation, arbitration and internal investigations. Thomas has particular technical expertise and focuses on disputes in the industrial, automotive, energy and infrastructure sectors.

Thomas Weimann Tel: +49 211 975 59131 / Email: [email protected] Thomas Weimann is the co-head of Herbert Smith Freehills’ Disputes practice in Germany. Before joining HSF, he was a partner at Clifford Chance for many years and head of that ﬁ rm’s Düsseldorf arbitration and litigation practice. Thomas enjoys a practice that spans a wide range of litigation and arbitration work with a special focus on high-value construction-related disputes including plant construction, industrial engineering and civil construction projects. He has been counsel in more than 60 major construction disputes with a regional focus on Germany, the Arab region, the US and Russia. As the President of the Chinese European Legal Association (CELA) and one of the founders of the Chinese-European Arbitration Centre (CEAC) seated in Hamburg, he has well developed links with China. Thomas speaks frequently at seminars and conferences, in particular in Greater China. Furthermore, he speaks at international conferences and is a lecturer at the Düsseldorf International Arbitration School.

Herbert Smith Freehills Germany LLP Breite Str. 29-31, 40213 Dusseldorf, Germany Tel: +49 211 975 59000 / Fax: +49 211 975 59099 / URL: www.herbertsmithfreehills.com

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Spyros G. Alexandris & Eirini Panopoulou Bahas, Gramatidis & Partners

Effi ciency of process According to a survey by the European Commission (Justice Scoreboard 2017), Greece shows considerable delays in the time it takes to complete litigation before the competent courts of law compared with other European countries. The Greek justice administration system, especially in civil proceedings, has shown considerable delays, mainly due to the great number of actions and legal remedies and aids fi led before the Civil Courts, a fact that has in turn led to delays in delivering court judgments. Law 4335/2015, which entered into force on 1st January 2016, brought signifi cant amendments to the Greek Code of Civil Procedure (GCCP) in the direction of speeding up the administration of justice, yet without sacrifi cing the equally worthy goal of protecting the need for correct and fair judgments. The essential changes which came in with the new Code of Civil Procedure concern mainly the ordinary proceedings before the fi rst instance courts, as well as enforcement. The most signifi cant innovation introduced is the replacement of the ordinary proceedings at fi rst instance, which until recently were partly oral, with more fl exible and expeditious written proceedings. On the basis of these new articles, ordinary proceedings are in principle written and based on the written pleadings and the fi ling of all evidentiary means, including up to fi ve affi davits, while the hearing before court audience is formal, without it being necessary for the litigant parties or the lawyers acting for them to attend and participate therein. The new process provides for the following stages: a) Service of the action within 30 days as from fi ling for residents of Greece and 60 days for non-residents; b) Filing of pleadings within 100 days as from fi ling of the action for residents and 130 days for non- residents; c) Filing of replication within 15 days as from the deadline set for the fi ling of pleadings; and d) Appointment of judges and court composition within 15 days, and fi xing the hearing day within 30 days after the expiry of the 15-day term. Adjournment of the hearing is allowed only once and for signifi cant reason (see especially articles 237, 241 GCCP). It is notable that if the court needs further clarifi cation it may, by a simple act, call at a subsequent time the witnesses that rendered the affi davit for hearing. The decision of the court should be issued and published within eight (8) months from the court hearing (article 237 para 5 and 307 para 2 GCCP). In the fi eld of compulsory enforcement, two improvements have occurred: the fi rst improvement limited the number of legal remedies; while the second limited the time required for the completion of the actual implementation of the enforceable titles (articles 237, 241 GCCP). It is noted that the outcome of the recent reforms is not refl ected yet in any numerical data; it is expected, however, that the time for the administration of justice will be improved.

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Integrity of process Fundamental to judicial independence is its operational and organisational distinction from the other directions of the State authority. The jurisdictional operation of the State authority is exercised by the courts of law which are composed of ordinary judges who enjoy operational and personal independence (articles 26 § 3 and 87 § 1 of the Constitution). Personal independence of judges is ensured, in the fi rst stage, by being appointed after having successfully passed the admission competition in which they are evaluated, under guarantees of irreproachable judgment, both in terms of qualifi cations and merits, and after having completed attendance at a special School of Judges. Thereafter it is intended to ensure the personal independence of the judge by subordinating their promotion and transfer to the Supreme Judicial Council. Basic fi nancial independence is seen as the key to personal independence, and the Constitution binds the Ministry of Finance to make sure that the remuneration of judges is proportional to their offi ce (article 88 § 2 of the Constitution). The second considerable institutional guarantee of neutrality is the clear distinction of the court from the other participants of the litigation process, namely from the litigant parties, but also from other persons involved in the procedure, such as the witnesses. Besides the operational and personal independence of judges, judicial authority is also upheld by other mechanisms such as: (a) the review of court judgments by means of legal remedies; (b) the challenge of judges on the grounds of mere suspicion of partiality; (c) penal and civil liability of judges; (d) a more active disciplinary liability of judges, either following complaints or within the framework of the inspection provided for in article 87 § 3 of the Constitution; and further (e) the publicity of court proceedings and hearings, but mainly of the court judgments (article 93 §§ 2 and 3 of the Constitution).

Privilege and disclosure Lawyer’s privilege, as a more specifi c expression of professional secrecy, constitutes a particularly important aspect of the lawyer’s practice, with constitutional and legislative grounds, and therefore it has always enjoyed special protection under Greek Law. It should be noted that in contrast with other secrecies, such as banking secrecy, tax secrecy, secrecy of communications, etc., which have already been compromised mainly for the purpose of repressing serious fi nancial crime and at the recommendation of the European Union, lawyer’s privilege remains strong and may only be relaxed under very strict conditions. In particular, lawyer’s privilege is established both in the Penal Code and the Code of Penal Procedure. More specifi cally, under article 371 PC, lawyers and any assistants who disclose confi dential information with which they have been entrusted, or which has come to their knowledge by reason of their profession or capacity, are punished with a pecuniary penalty or imprisonment of no more than one year. In addition, under article 212 GCPP a prohibition of examination as witnesses is imposed on defence lawyers both in the preliminary and main proceedings in connection with the information entrusted to them by their clients. The said prohibition is also ensured by the provisions of articles 261 and 262 of the Code of Penal Procedure which prohibit the seizure of documents of the persons indicated therein.

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Besides these articles, lawyer’s privilege is established also in article 38 of the Lawyers’ Code (Law 4194/2013), while article 39 § 1 of the aforesaid Code has enhanced the protection of lawyer’s privilege, providing that: “It is prohibited to conduct investigation for seeking documents or other evidences or the electronic storage media thereof, as well as to seize such documents or evidences or storage media for as long as these are in the lawyer’s possession for a case that is handled by the latter.” Furthermore, lawyer’s privilege is guaranteed in article 400 GCCP, which prohibits the examination of the lawyer in civil proceedings in connection with facts covered by the lawyer’s privilege.

Costs As a rule, the party that causes or undertakes a proceeding (fi ling of action, legal remedy, speeding-up of enforcement, etc.) pays the costs and dues of such proceeding in advance. The document proving advance payment of costs and dues (court stamp duty is also included), as well as the fee of the lawyer acting for the party (Lawyer’s Fee Collection Receipt issued by the competent Bar Association), must be adduced to the court not later than the day of the case hearing. However, as regards the fi nal allocation of legal costs, it remains completely irrelevant who has paid the above costs in advance. The essential rule of costs allocation is the principle that the losing party must bear the costs. The losing party is ordered to pay the necessary costs of the entire proceedings, and thus also the costs paid in advance by the counterparty. The court, however, may offset all costs or any part thereof in two cases: a) in disputes between spouses or relations by blood up to the second degree; and b) in any trial where the construction of the applicable rule of law has been particularly diffi cult. Moreover, the court, based on article 58 para. 5-a’ of the Lawyers’ Code, may determine by force of offi ce the increase of the lawyer’s fee, depending on the scientifi c work, the value of the subject matter and the kind of case, the amount of time required, the out-of-offi ce services, the importance of the dispute, the particular circumstances, and any kind of judicial or extrajudicial acts. Independently of the minimum lawyer’s fee provided for in the Lawyers’ Code (Law 4194/2013), the fee may be freely determined by a written agreement between the lawyer and the principal or the principal’s agent. Ιn Greek law, there is no prohibition on derogation from the minimum legal fees and contractual derogation therefrom is freely allowed. The said fees are only applicable in the event that no written agreement has been concluded between the lawyer and the principal on a different fee. The fees include the conduct of either the entire trial or any part or specifi c proceedings thereof or any other legal work of any nature, both judicial and extrajudicial. The method of remuneration is freely chosen by the parties among the following methods: time-based charge system (article 58 of the Lawyers’ Code); success fee contract (article 92 para. 3-5 of the Lawyers’ Code); lump sum fee (articles 100-166 of the Lawyers’ Code); and salaried services system (articles 63 para. 4-5, 63Α, 63Β, 92Α, 94 of the Lawyers’ Code). The provision of lawyers’ services free of charge is strictly prohibited (article 82 para. 1 of the Lawyers’ Code), unless such services are provided to family members or trainee lawyers or retired lawyers and concern a personal case. The Court of Justice of the European Union (CJEU), with its judgment of 5 December 2006 (Federico Cipolla vs. Rosaria Portolese C-94/04 and Stefano Macrino and Claudia Capoparte vs. Roberto Meloni C-202/04), ruled that setting mandatory minimum fees

GLI - Litigation & Dispute Resolution 2018, 7th Edition 132 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Bahas, Gramatidis & Partners Greece constitutes a restriction on freedom of establishment in principle and on the freedom to provide services – that could be justiﬁ ed, though, by the existence of overriding reasons relating to the public interest, insofar as such restrictions are compatible with the proportionality principle. The matter concerned also the Greek Council of State which, in its judgment no. 3154/2014, adopted the position that setting a scale of minimum lawyers’ fees comes within the regulatory power of the State and therefore the regulation thereof by means of a regulatory administrative act does not prejudice the EU provisions on competition and freedom to provide services. The fees differ depending on the type of legal service and whether the subject matter in dispute is economic (articles 73 to 82 of the Lawyers’ Code). When the subject matter in dispute is pecuniary, the fee brackets are calculated cumulatively by applying progressively declining rates to the price of the economic subject matter in dispute (the rates start from 2% going down to 0.05% for economic subject matters ranging from €200,000.00 to €25,000,001.00); e.g. for a subject matter amounting to €1,000,000.00 the attributable fee amounts to €14,750.00 [(€200,000.00 * 2%) + (€549,999.00 * 1.5%) + (€250,001.00 * 1%) = €4,000.00 + €8,249.99 + €2,500.01]. Legal work without a speciﬁ c economic subject matter is regulated by special Annexes to the Lawyers’ Code and depends on the kind of the legal work, the court before which the dispute is brought, and the amount of time dedicated to the case.

Litigation funding Law 3226/2004 on the “supply of legal assistance to low-income citizens” and the GCCP contain certain arrangements which aim to address economic poverty, that do not make it possible for all people to conduct costly and time-consuming legal proceedings, ensuring in this way the principle of free access to justice (article 20 of the Constitution), the principle of procedural equality (article 4 of the Constitution, article 110 para. 1 GCCP) and the principle of the social rule of law (article 25 of the Constitution). The costs for such benefi ts to the most vulnerable social groups are paid from the State budget. In particular, based on Law 3226/2004, the benefi ciaries are the low-income citizens of a Member State of the European Union, low-income citizens of a third State and stateless persons, if they have legal domicile or habitual residence in the European Union. Low-income citizens and legal assistance benefi ciaries are those whose annual family income does not exceed two-thirds of the minimum annual individual remuneration as published in the National General Collective Labour Agreement or in the law providing for the minimum fees. Legal assistance is only supplied upon application, whereto all necessary supporting documents evidencing the fi nancial situation of the applicant, as well as his domicile or residence in the case of a third-State national, are attached. The application examination procedure is carried out by the duty President of the Court, with the attendance of a lawyer not being mandatory; it is simple and rapid, and any rejection thereof must be justifi ed. It is clarifi ed that legal assistance aims to discharge the benefi ciary of proceedings costs that may be incurred by the latter, but has no effect on his obligation to pay the costs to the counterparty in case of defeat or set-off of costs. Subject to certain conditions, legal assistance may also be provided to legal entities (articles 194 and 204 GCCP), namely public utilities or non-profi t legal entities, associations of persons and unlimited or limited partnerships and cooperatives. As applicable under the Law 3226/2004, the fact that the benefi t of indigence has been

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Interim relief Provisory and conservative measures and generally injunction measures (articles 682-738 Α GCCP) are interim provisions of judicial protection, as accessory to the main diagnostic trial, which may be either pending or about to start soon. Such interim provision of judicial protection aims to secure the future satisfaction of the claim to be diagnosed in the main trial. Injunction measures are the following: granting a guarantee; registration of future mortgage; conservative seizure; sequestration; temporary adjudication of claims; preventive injunction; apposition and removal of seals; inventory and public deposit; and possessory injunction. The court orders injunctions in case of emergency, or to prevent an imminent danger and provided that the right to be safeguarded and for which the injunction measure is sought, is likely to exist. The validity of injunctions ceases when the ﬁ nal judgment on the main case is given, in the event of conciliation for the main case, upon expiry of 30 days as from completion or cancellation in other way of the trial, if the judgment is revoked or reformed due to the emergence of new facts, or if the main action is not ﬁ led within the deadline eventually set by the judgment granting the injunction. It should be noted that the injunction order, aiming to prevent the occurrence of irreparable or hard-to-reverse situations, does not lead to full satisfaction of the right to be safeguarded (article 692 IV GCCP), is subject to revocation or reform (articles 696–698, 702 ΙΙ 2 GCCP) and has a temporary validity, without affecting the main trial (article 695 GCCP). Prior to giving the judgment granting an injunction, the court may issue an interim order (article 691 ΙΙ GCCP) in order to comply with an emergency or imminent danger. Thus an interim order operates as a guarantee that ensures the content of the injunction judgment.

Enforcement of judgments Enforcement in Greece may be effected only by way of an enforceable title, as set forth in articles 904 and 905 GCCP. Enforceable titles are the ﬁ nal judgments, as well as the judgments of any Greek court of law that have been declared provisory enforceable, foreign judgments, records of conciliation, etc. The provisions on the recognition and enforceability of foreign judgments coming from a third State (outside the EU) are set forth in the GCCP (article 905, in conjunction with article 323). In particular, article 323 of the GCCP provides the requirements for the recognition of a foreign judgment by a Greek court. It is strictly required that the foreign judgment be, pursuant to the law of the place of issuance, of such procedural maturity as to have the force of res judicata and not be contrary to the public order. According to the GCCP (article 321), the ﬁ nal court judgments, namely those that cannot be contested by ordinary legal remedies, have force of res judicata. On the other hand, in case of a judgment from a Member State of the European Union, the Regulations of the European Parliament and of the Council No. 1215/2012 “on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters”, No. 2201/2003 “concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility” are applicable, as well as Regulation No. 1896/2006 creating a European order for payment procedure.

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Under the Regulations, the recognition of every foreign judgment is allowed regardless of procedural maturity and provided that it is enforceable. The recognition of foreign judgments, when it is governed by the Regulations, is effected by operation of law. This means that in order for a foreign judgment to be recognised in Greece it is not necessary to follow a speciﬁ c procedure but, on the contrary, it may be invoked against any and all persons (including the State) in any contracting Member State producing the legal effects thereof, as if given in that State. The Regulations use the term recognition “by operation of law” of the foreign judgment. The reasons for which a foreign judgment may not be recognised by a Member State are exhaustively indicated in the Regulations, namely: if such recognition is manifestly contrary to public policy; if the defendant was not served with the document which instituted the proceedings where the judgment was given in default of appearance; if the judgment is irreconcilable with a judgment given between the same parties in Greece; or if the judgment is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties.

Cross-border litigation Judicial cooperation in civil matters includes improvement and simplifi cation of the cross- border service or notifi cation of judicial and extrajudicial documents, of cooperation in the taking of evidence, and of the recognition and enforcement of judgments in civil and commercial matters. In this case, the Ministry of Justice, Transparency and Human Rights acts as the Central Authority for cooperation with the counterpart authorities of other countries, for the purpose of exchanging information in the fi eld of civil law (substantive and procedural), and for facilitating the introduction and conduct of court or administrative proceedings. Further, it operates as mediating authority for the provision of legal assistance by the judicial authorities of the State to the counterpart authorities of the contracting States and vice-versa; examination of witnesses, experts; transmission and service of documents, etc. Greece has acceded to international and European treaties on cross-border cooperation between the countries. In particular, the Hague Convention (1965), which was ratifi ed with the Law 1334/1983 and entered into effect as of 18 September 1983, is in force for the States (outside the EU) that have acceded thereto. Greece has expressed a reservation only about article 10 concerning service by post. Service or notifi cation in Greece is allowed only if the documents are compiled or translated in Greek language and have been duly apostilled (Hague Convention of 5 October 1961). In the European Union, the applicable enactment is Regulation No. 1393/2007 (except Denmark) on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents), by establishing a simple and short service procedure, as also Regulation No. 1206/2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters. In the case of countries not having acceded to any bilateral or multilateral treaty or to which the aforesaid Regulation No.1393/2007 is not applicable, the service is effected pursuant to article 134 GCCP, and the document to be served is consigned to the Prosecutor to the competent court. The Prosecutor must forward such document, without culpable delay, to the recipient of the service, through the Ministry of Foreign Affairs. Moreover, pursuant to article 137 GCCP, the service abroad may be effected in compliance with the formalities of the foreign law by the organs provided for therein.

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International arbitration Greece transposed early in the national legal order the clause on arbitration in the Geneva Protocol (1923) that was ratifi ed with the L.D 4/1926, as also the Geneva Convention (1927) on the enforcement of foreign arbitration awards which was ratifi ed with the Law 5013/1931. These legislative instruments were abolished by L.D 4220/1961 which ratifi ed the New York (1958) Convention on the recognition and enforcement of foreign arbitration awards. Moreover, with the Emergency Law 608/1968, Greece has ratifi ed the Washington Convention (1965) on the settlement of investment disputes. As generally known, this Convention provides that arbitration proceedings are to be conducted (International Centre for Settlements of Investment Disputes – ICSID) on “investment disputes”. By means of Law 2735/1999, Greece has adopted the UNCITRAL model law on international commercial arbitration. Insofar as any of the requirements of Law 2735/1999 are fulfi lled, the arbitration is international and commercial. On the contrary, if all elements of the arbitration are identifi ed in one legal order and in particular in the Greek legal order, the arbitration is internal and articles 867 et seq. GCCP are applied thereto. In order for an arbitration clause to be effective, it must be laid down in writing. The differences between the provisions in these two legislative instruments (GCCP & Law 2735/1999) are not many in number and mostly are of minor importance. Still, the difference in the fees of arbitrators for conducting internal and international commercial arbitration is remarkable. More specifi cally, pursuant to article 882 GCCP, in internal arbitration, fi xed amounts are determined as a fee for the arbitrators, while, pursuant to article 32 para. 4 of Law 2735/1999, the arbitrator may freely determine the amount of the arbitration cost which includes, of course, his own fee. Another signifi cant difference concerns the injunction measures. In particular, article 889 GCCP explicitly provides that in internal arbitration, the arbitration court does not have the power to order injunction measures. On the contrary, article 17 of Law 2735/1999 clearly provides that the arbitration court may order injunction measures, unless otherwise agreed by the parties, and actually the said measures may even be foreign, namely outside the Greek legal order, provided, of course, they are not contrary to the public policy thereof. Certainly, both in internal and international commercial arbitration, it is not excluded that injunctions may be requested from the State court even if the dispute is subject to arbitration (article 889 para. 2 GCCP and article 9 of Law 2735/1999, respectively).

Mediation and ADR ADR Within the context of Alternative Dispute Resolution (ADR), as already known, four major categories are identiﬁ ed: (a) Νegotiation, (b) Μediation, (c) Conciliation, and (d) Arbitration, of which mention has been made above. The European Union objectives, with which also Greece is in line, are to obtain alternative ways of resolving disputes (ADR) with the aim to facilitate and improve access to justice. The wider concept of ADR forms includes provisions of the GCCP which are intended to facilitate the court settlement or amicable settlement of the dispute with court intervention, but also the provisions governing arbitration. Respectively, ADR includes also “extrajudicial” mediation in civil and commercial matters, which has been instituted with the Law 3898/2010 which transposed into Greek law the Directive 2008/52/EC of the

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European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters of cross-border disputes. Many Member States, among them also Greece, have regulated not only cross-border mediation but have extended the legal regulations to mere internal disputes. The ADR process is not a novelty for the Greek judge, since in the Law of Civil Procedure there are plenty of provisions that in one way or another provide for the reconciling/ intermediating intervention of the judge. In particular: (a) The category of negotiation includes also the attempt to resolve the dispute pursuant to article 214Α GCCP, namely the extrajudicial amicable settlement of the dispute. In the extrajudicial amicable settlement of the dispute, the parties may compromise after the occurrence of pendency until the giving of fi nal judgment and without having a hearing of the trial, by signing a private deed of settlement that may also be ratifi ed by the court, if the parties wish to do so. It is worth noting that the mandatory attempt of dispute resolution between the parties, that was provided for in article 214A GCCP before being amended by article 19 of Law 3994/2011, did not yield any results. The rate of the settlements achieved by means of this procedure was extremely low (1–2% on the total cases); even zero in certain court districts. (b) In the second ADR category, namely in Court Mediation (article 214Β GCCP) as also in Mediation, besides the litigant parties and the lawyers acting for the parties, also a neutral third Judge Mediator participates in the procedure, who assists the parties to negotiate, proposes solutions and eases the stress so that parties may arrive by themselves at an agreement for the resolution of their dispute and at a mutually accepted and viable solution. (c) The third ADR category includes Conciliation, which means the procedure in which a neutral third party, usually of high prestige, ex offi cio attempts to recommend to the parties his own solution in order to resolve the dispute or obtain a settlement (articles 209–214 GCCP). In Greece, the reconciling intervention is made by the competent Justice of the Peace. (d) Conclusively, the fourth category includes the institution of arbitration, which has been addressed above. Court Mediation & Extrajudicial Mediation The two institutions of: (a) Court Mediation (article 214Β GCCP); and (b) Extrajudicial Mediation (Law 3898/2010) present several similarities in total, especially those set forth in articles 9 (substantial effects), 10 (secrecy) and 11 (enforceability of the agreement). The two enactments present some differences too: in the GCCP the mediation is carried out by a third party having the capacity of judge, who proposes solutions and addresses to the parties non-binding proposals for the resolution of the dispute at his will. On the contrary, in the private mediation provided for in Law 3898/2010, the mediator is not a judge and acts exclusively as a catalyst between the interested parties, while the authority to make decisions rests exclusively with the interested parties. Further, according to the initial regulation, recourse to private mediation required that the relevant agreement between both parties come before their mutual decision on the appointment of the mediator. Now by contrast, as regards court mediation, it is enough that one party wishes to have recourse to it, and then, addressed to the judge, the said party fi les the petition, and the judge invites the counterparty to take part in the procedure.

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Private mediation is a formal procedure that follows speciﬁ c stages, almost strictly prescribed. The mediator must master these stages and be specially trained in them. In court mediation, the Judge Mediator acts with greater freedom and tries to individualise the problem and investigate personally, along with the interested parties, the way in which he should approach the case at issue. Already, pursuant to article 182 of Law 4512/2018 that entered in force on 17 January 2018, recourse to mediation became mandatory (from optional), before having recourse to the competent court in civil and commercial matters (disputes arising from infringement of trade marks, patents, industrial designs or models). It is notable that the aforesaid article 182 of Law 4512/2018 which provides for the mandatory reference of private disputes to mediation procedure, was found unconstitutional by the Judgment No. 34/2018 of the Supreme Court in plenary session since, according to the judgment, the constitutionally safeguarded core of the right of access to justice is offended because of the high cost that the private mediation requires from the average citizen in the midst of the economic crisis.

Regulatory investigations In Greece, Independent Administrative Authorities comprise national collective state bodies with autonomous administrative infrastructure and budget, the members of which enjoy personal and operational independence, and have as their role the dominant monitoring of sensitive ﬁ elds of political, economic and social life by exercising regulatory, consultative, arbitration and auditing competences. The most important independent administrative authorities are: • The Competition Commission, which in collaboration with the competition authorities of other countries, examines the operation of commercial enterprises, distribution networks, the regulations regarding commercial prices, monopolies, issues regarding free establishment of businesses, etc. • The Regulatory Authority for Energy (which cooperates closely with the Competition Commission to address breaches of the Competition Law) for electricity and natural gas, having as its main competence to monitor the domestic energy market in all its sectors. • The National Council for Radio and Television, which controls the contents of radio and television broadcasts to safeguard the observance of the equal-time rule for news broadcast and ensure the quality level of programmes. • The Data Protection Authority, which monitors also the application and observance of the new Data Protection Regulation No. 676/2016 of the European Parliament and of the Council on the protection of natural persons with regard to the processing of personal data and on the free movement of such data.

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Spyros G. Alexandris Tel: +30 210 331 8170 / Email: [email protected] Spyros G. Alexandris, LL.M., Partner of the ﬁ rm Bahas, Gramatidis and Partners, leads its Commercial Litigation, Arbitration & ADR practice. Further to that, his expertise spans almost all ﬁ elds of Commercial Law as well as Financial Criminal Law. He has a great experience in both national and international litigation and dispute resolution projects. Throughout his career, he has lodged and/or fought cases before all of the ECHR, the Court of Justice of the European Union (former ECJ) and the ICSID. Further to his active practice, Spyros also has tens of publications in both Greek and international legal journals, and has also served as a member of the law-drafting committee for the legislative framework governing Partnerships (Section 7 of Law 4072/2012). Spyros is member of the Athens Bar Association as of 1983, member of the BoD and General Secretary of the Association of Greek Commercialists and member of the Editorial Board of the legal journal Nomiko Vima (NoB). He is a Lecturer in Commercial Law in the seminars for trainee lawyers and key speaker at a number of conferences.

Eirini Panopoulou Tel: +30 210 331 8170 / Email: [email protected] Eirini Panopoulou is a Junior Associate of the ﬁ rm Bahas, Gramatidis and Partners, focusing on consulting and litigation in civil, corporate and commercial law. She has been a member of the Piraeus Bar Association since 2014. She is a graduate of the LL.M. in Civil Procedural Law at the Law School of the National and Kapodistrian University of Athens.

Bahas, Gramatidis & Partners 26 Filellinon Str. Athens 10558, Greece T el: +30 210 381 8170 / Fax: +30 210 381 8170 / URL: www.bahagram.com

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Rishi Agarwala & Vishnu Tallapragada Agarwal Law Associates

Introduction The Indian legal system is a common law regime which runs on an adversarial model and follows the doctrine of stare decisis. The Constitution of India holds supreme to all laws of the land, and serves as a basic tenet against which all laws in India are scrutinised and evaluated. While India has adopted the Westminster model of government, the Indian Judiciary is an independent branch and serves as a crucial cog in our evolving democracy. The Indian Judiciary is led by the Supreme Court of India – and as declared under Article 141 of the Constitution of India – serves as the court of precedence for all courts and judicial/quasi-judicial fora in India. The second tier comprises of the High Courts of the various States and their binding authority and superintendence is limited to the jurisdiction of each State. The last tier is completed by the District Courts, who serve their respective districts in each State. The appeal process is singular and runs from the third tier to the fi rst. India also has specialised Tribunals which have been statutorily constituted for subject- specifi c disputes. These specialised fora consist of Judicial Members and Industry-Expert Members. The chain of appeal is usually spelt out in the statute. Appeals against the judgments of the Tribunals are usually provided statutorily direct to the Supreme Court of India. The Supreme Court of India and the High Courts of the State are also the Constitutional Courts of India, and accordingly constitutional rights through prerogative writs are always protected de hors statutory remedies. The Indian legal system is broadly bifurcated into Civil and Criminal Courts. The basic right of due process and natural process is the edifi ce on which both kind of courts are established and operate. The procedural aspects of both these areas of law are codifi ed in the Code of Civil Procedure of 1908 and the Code of Criminal Procedure of 1973, respectively. The Parliament has recently enacted the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, which prescribes a particular procedure and designates certain courts as Commercial Courts to hear commercial disputes of a specifi c value. This has improved the disposal rate in respect of commercial disputes, since every aspect of the proceeding is time-limited.

Efﬁ ciency of process Litigation in India has been known to have a slow pace. However, this looming concern has met with some resolve from Government and the Judiciary. The establishment of Commercial Courts is one such effort. Due to advent of technology, the Civil and Criminal courts have also been equipped with computers and electronic ﬁ ling mechanisms to

GLI - Litigation & Dispute Resolution 2018, 7th Edition 140 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Agarwal Law Associates India expedite disposal. Specialised Tribunals are equipped with Technical Members to assist the decision-making process in the right manner. Tribunals are independent from government interference; no appeal lies on the fi ndings of fact reached in such Tribunals, and only issues of law are taken in appeal. Alternative dispute resolution, and more particularly arbitration, have also gained speed as an effective alternative mode of adjudication. The legislature amended the Arbitration and Conciliation Act of 1996 on December 31st, 2015 by way of the Arbitration and Conciliation (Amendment) Act of 2015, to increase the effi cacy of arbitration. The Act is aimed to bring Indian arbitration laws at par with global standards and provide an effective mechanism for resolving disputes with minimum court interference. The impact of the amendment was comprehensively dealt in the judgment of BCCI v. Kochi Cricket Pvt. Ltd. [(2018) SCC OnLine SC 232]. The Judiciary has also made notable strides in digitising the process of administering a case, notably through the National Policy and Action Plan for Implementation of Information and Communication Technology in Indian Judiciary, and the eCourts Integrated Mission Mode Project, wherein litigants, and even the public, can easily access information concerning each case and verify their status. The websites of the respective courts allow parties to access all orders of each case. Courts have also endeavoured to maximise the utilisation of technology in the administration of justice. Recently, the Delhi High Court allowed notice to be issued by way of WhatsApp, SMS and email, so as to afford a more expedient trial. For administering criminal cases, the Crime and Criminal Tracking Network & Systems, as introduced in 2017 by the Ministry of Home Affairs, has been a pivotal step in strengthening the criminal justice system. It not only equips investigative agencies with information of all criminal activity in India, but also allows victims to fi le and track criminal complaints online.

Integrity of process An independent Judiciary is a sacrosanct virtue which emanates from the principles of our constitutional values. The 13-judge landmark case of Keshavananda Bharati v. State of Kerala [(1973) 4 SCC 225] has categorically held that an independent judiciary is part of the Basic Structure of the Constitution and cannot be interfered with by the other branches. This, as a series of cases have held, includes the appointment of judges, as reafﬁ rmed in the case of Supreme Court Advocate-on-Record Association & Anr. v. Union of India [(2016) 5 SCC 1]. To this extent, the majority of litigants in India have developed faith in the system, and have found little to no interference from political entities. Furthermore, the adversarial process adopted in India follows the principles of natural justice and due process. Each party is required to be heard, and only upon completion of pleadings, can a matter ultimately be decided by the court. Lack of opportunity to be heard, or a biased trial, are serious grounds for challenge, based on which courts in India have always directed for a retrial.

Privilege and disclosure Privilege Privilege in India has been afforded to all professional communications, whether written or oral, between the client and his legal advisor. The Indian Evidence Act of 1872, under Section 126-129, provides this broad and binding protection.

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The said provisions not only protect the legal adviser from disclosing communications made to him by his client when interrogated as a witness, but also bind him from disclosing any evidence without the express consent of his client. The nature of communication includes oral and exchange of any document. The protection also does not allow anyone to compel the client to disclose any such information, unless he himself offers to testify as a witness. This protection is also afforded in the Bar Council of India Rules, wherein Rule 17 reaffi rms the obligation on the advocate not to breach attorney-client privilege; breach of which will also lead to violation of the Bar Council Rules and be cause for disbarment. Interestingly, while the Evidence Act widens this scope of protection to include interpreters, clerks and servants of the legal advisor, Indian courts have held that the privilege does not usually extend to in-house counsels. Even though the Supreme Court on occasion has held that there is no requirement for only litigious practice to be covered under the said privilege – as the Evidence Act is wide enough to include an “legal professional advisor” – the Court held in the judgment of Satish Kumar Sharma v. Bar Council of Himachal Pradesh [(2001) 2 SCC 365] that where an in-house counsel is found to be a full-time employee of the company, he ceases to be an advocate under the Advocates Act and attorney-client relationship cannot be extended in such circumstances. The provisions of the Evidence Act, it must be noted, do provide certain exceptions to the privilege. For example, it does not allow the said protection on communication made in furtherance of a criminal activity, or on any fact that a crime or fraud has been committed after the commencement of the attorney-client relationship. Disclosure Rules of disclosure under the Code of Civil Procedure of 1908 require all parties of a civil dispute to disclose documents which they deem necessary for the adjudication of trial. Evidence must be provided not only to the court, but to all parties. The court in such circumstances also has the power to direct either party – or on an application to any third party – to disclose any document it deems necessary for interrogation and cross-examination. Deliberate non-disclosure/non-production of a document can lead to an adverse inference against that party. Directions of disclosure, however, cannot be made on privileged communications and correspondence. Confi dential communication between a client and his legal advisor, and government records which relate to affairs of the State, are examples to this effect. Upon the enactment of the Commercial Courts Act of 2015, the rules on disclosure have become even more stringent in commercial disputes. The parties are directed to disclose any and all evidence relating to the dispute in question, and upon submission are required to submit a Statement of Truth attesting to this effect. At the time of fi ling, the party is required to provide the nature of each document and whose custody the original was in, so as to certify its authenticity.

Costs Cost of litigation in India is determined by various factors. Court fees, for example, as determined by the Court Fees Act of 1870, are usually paid based on the valuation and nature of the decree sought. Each State prescribes its own court fee valuation and has amended its rules accordingly. When it comes to costs imposed by the courts in each case, Section 35 of the the Code of Civil Procedure grants discretion to the court, “to determine by whom or out of what

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Litigation funding While there is no law explicitly allowing litigation funding in India, judgments of the Supreme Court have recognised their legal validity. In 1955, the Court noted that the rigid English rules of champerty and maintenance do not apply to an agreement that does not involve a lawyer. This year, in the judgment of Bar Council of India v. A.K. Balaji & Ors. [(2018) AIR SC 1382], the Court held that while funding of litigation in India cannot be sponsored by advocates, in view of provisions under the Bar Council of India Rules, there is no restriction on third parties (non-lawyers) funding litigation and getting repaid after the outcome of the litigation. This has also opened the door for the possibility of third-party funding in arbitration proceedings. With unrealistic costs associated with arbitration, cost-sharing mechanisms can assist small-time businessmen in ﬁ ghting commercial disputes against multinational corporations.

Interim relief Courts in India have wide powers to grant interim relief as a measure to preserve and protect the rights of the parties pending the fi nal disposal of a suit. The court usually ascertains the requirement of an interim relief under the following circumstances: whether, (i) there is a prima facie case in favour of the party seeking the relief; (ii) irreparable harm would be caused and the suit itself would be rendered infructuous if the relief sought is not granted immediately; and (iii) that the balance of convenience in rendering the order lies with the party requesting the order. In situations of dire need, such orders may be even passed ex parte without having to issue notice or hear the other parties. Furthermore, injunctions and stay are granted under the principle of equity. The court has complete discretion to condition its interim order in a manner that the requesting party does not take any undue advantage of it. Injunctions issued by the court may be either in the form of a directive or a negative covenant. In particular circumstances, Section 42 of the Specifi c Relief Act allows the court to grant an injunction to restrict someone from performing an act even where specifi c performance of the affi rmative covenant may not be enforced. In cases of arbitration, the Arbitration and Conciliation Act of 1996 allows for a party to approach court for interim relief even before the invocation of the arbitration agreement. Measures to be taken include, inter alia: preservation or sale of any goods which were the subject matter of the arbitration agreement; securing an amount in dispute; detention;

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Enforcement of judgments/awards and cross-border litigation The recognition and enforcement of foreign judgments and decrees in India are governed by Section 44-A, read with Section 13, of the Code of Civil Procedure. The Code recognises certain agreements between India and reciprocating countries, and directs for a judgment passed in such countries to be executed as if it was passed by an Indian court. Currently, the countries notifi ed under Section 44-A of the Code include Malaysia, Colony of Aden, New Zealand, Myanmar, United Kingdom of Great Britain and Northern Ireland, Colony of Fiji, Hong Kong, Singapore, Trinidad & Tobago, Papua New Guinea, Bangladesh and Canada. In the event the judgment is not from a reciprocating territory, a fresh suit would have to be fi led in the Indian court of competent jurisdiction, in which the foreign judgment can be treated as a form of evidence. Section 13 of the Code lays down the test upon which a foreign judgment is made enforceable in India. One of the most important factors is that the foreign judgment is conclusive to the matter being directly adjudicated upon. Among others, the provision requires that it was pronounced by a court of competent jurisdiction, has decided the merits of the case, is not opposed to the basic principles of natural justice, has interpreted international law correctly (when applicable), has not been obtained by fraud and, most importantly, is not in direct breach of any law in force in India. Arbitration awards, whether domestic or foreign, are enforced in the same manner as a decree in an Indian court. While the enforcement and execution of a domestic award are governed by the provisions under Part I of the Arbitration and Conciliation Act of 1996, enforcement of foreign awards would be governed by part of the Act. When it comes to jurisdiction, the Supreme Court held in Sundaram Finance Ltd. v. Abdul Samad & Anr. (2018) 3 SCC 622, that an award-holder may initiate execution proceedings before any court in India where assets are located. In case the subject matter of the arbitration is of specifi c value, the court established under the Commercial Courts Act of 2015 would have jurisdiction to enforce. Enforcement may be rejected in the event it is found to be against public policy or in contravention to any law in force in India, as held in the case of Venture Global Engineering LLC v. Tech Mahindra Ltd. & Anr. [(2018) 1 SCC 656]. The Court recently recognised the enforceability of interim orders in India as well [Alka Chandewar v. Shamshul Ishar Khan [(2017) SCC OnLine SC 768]. India is also party to various international conventions such as the Convention on the Recognition of Enforcement of Foreign Arbitral Awards of 1958, the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927, Hague Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of 1965, and Hague Convention on Taking of Evidence Abroad in Civil or Commercial Matters of 1970.

International arbitration Arbitration in India is governed by the Arbitration and Conciliation Act of 1996. The Act has been trifurcated into three signiﬁ cant parts: Part I of the Act deals with arbitrations seated in India, (‘Domestic and International Arbitrations’); Part II deals with foreign awards and arbitrations seated outside India (‘Foreign Arbitration’) and their enforcement under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards,

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1958 and the Convention on the Execution of Foreign Arbitral Awards, 1927; and lastly Part III, which embodies various conciliation provisions. The object of the Act is to provide a speedy and cost-effective dispute resolution mechanism. Recently, the amendments made to the Arbitration and Conciliation Act in 2015 endeavoured to fulfi l this goal by providing strict timelines for completion of the arbitral proceedings. The procedure has also been streamlined to provide a fast-track mechanism for resolving disputes. The process also prescribes for expeditious disposal of applications along with indicative timelines for fi ling arbitration applications before courts in relation to appointment of arbitrators, interim relief, etc. Disposal of challenges of arbitral awards under Section 34 of the Act have also been given a timeframe of one year, so that the fi nality of the award is not delayed due to any prolonged litigation. Further, upon fi ling any challenge, the execution and enforcement of the award is not automatically stayed, unless expressly passed otherwise by a court of law. In October of 2016, in collaboration with the Maharashtra Government, India saw the establishment of the Mumbai Center for International Arbitration (MCIA). The hub, opened in line with international arbitration centres in Hong Kong, Singapore, New York and London, has become pivotal in allaying the fear of a prolonged and protracted legal dispute in India in relation to international arbitration disputes. Many have lauded it to be a major improvement from the previous attempt in the Nani Palkhivala Arbitration Centre, primarily due to the new Rules adopted by the International Centre. The newly made MCIA Rules have brought the institution at par with most other leading institutions by incorporating only the best of the rules, and borrowing from previous mistakes and experiences. With these newly formed rules, India has sought to catch up with institutional best practice by drawing inspiration from investor-state arbitrations, as well as other institutional rules, to tailor them to meet the complexities of international commercial arbitration. The Supreme Court has also been proactive in promoting this institutional set-up, wherein earlier this year, the Court invoked Section 11(6) of the Arbitration and Conciliation Act and recognised the MCIA as the appointing authority for an arbitrator in global disputes. Further amendments have also been proposed and tabled before the Parliament this year, and include the formation of the Arbitration Council of India (ACI), which will form an independent body to accredit and grade arbitral institutions. It has also been proposed that arbitral appointments would be made by arbitral institutions, as recognised by the ACI, and it therefore would not be required to approach a court for such appointments. New provisions with respect to confi dentiality of the arbitral proceedings and immunity to arbitrators are also being introduced. Lastly, the timelines of international arbitrations would also change, and the 12-month timeline to complete the entire arbitration would start from the date of completion of pleadings, as opposed to the date of constitution of the tribunal.

Mediation and ADR Apart from arbitration, India also recognises other modes of dispute resolution. Section 89 of the CPC provides discretion to the court to refer a dispute for arbitration, conciliation, judicial settlement through Lok Adalat or mediation, in the event that it appears to the court that there exists some form of settlement agreeable to all the parties. Lok Adalat, or “people’s court”, is regulated by the Legal Services Authorities Act of 1987. Awards/settlements of the Lok Adalat are binding on the parties and deemed to have the value of a decree passed by a civil court. Under Section 20 of the said Act, a matter may be

GLI - Litigation & Dispute Resolution 2018, 7th Edition 145 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Agarwal Law Associates India referred to the Lok Adalat with the consent of all parties and on an application made before court. Further amendments to the Legal Services Authorities Act, which allow for reference to the said forum before litigation, have even been initiated in court. Mediation and conciliation have also been an important alternative mechanism delineated within various industry-speciﬁ c enactments. Section 442 of the Companies Act of 2013 provides for the constitution of a Mediation and Conciliation Panel and a panel of experts to be maintained by the Central Government for mediation between parties during the pendency of any proceedings before the Central Government, National Company Law Tribunal or National Company Law Appellate Tribunal. Recently, the Government also promulgated the Companies (Mediation and Conciliation) Rules of 2016, which mechanises the Panel to follow a particular process to facilitate a voluntary resolution of a dispute between the parties. Conciliation has also been provided for in the Arbitration and Conciliation Act of 1996. In line with the United Nations Commission on International Trade Law (UNCITRAL) Conciliation Rules of 1980, the Act allows an Arbitral Tribunal to refer a dispute to mediation or conciliation to encourage settlement, even if that arbitration agreement does not prescribe for such reference.

Regulatory investigations Regulatory bodies formulated under industry-speciﬁ c enactments serve not only as quasi- judicial bodies, but also as authorities empowered to formulate guidelines and regulate the market. For example, the Securities and Exchange Board of India, constituted under its eponymous enactment, acts as a body which drafts regulations, conducts investigations and passes rulings and orders. Other statutory bodies with similar roles include, inter alia, the Telecom Regulatory Authority of India and the Competition Commission of India.

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Rishi Agarwala Tel: +91 98 1018 8705 / Email: [email protected] Rishi Agarwala is a Partner in the Firm and leads matters primarily in the High Court of Delhi and the Supreme Court of India. His areas of expertise include civil litigation dealing with commercial disputes in infrastructure law, intellectual property law, insolvency and bankruptcy law, etc. He has led some of the largest commercial litigations and arbitrations in the Delhi High Court and the Supreme Court of India. His work has also challenged various parliamentary enactments for their constitutional validity and has succeeded.

Vishnu Tallapragada Tel: +91 97 4861 1212 / Email: [email protected] Vishnu is currently an Associate at the Firm and his work is primarily based in Delhi. Vishnu has had experience in a number of criminal law and commercial law matters. Prior to working in this Law Firm, he worked with Mr. Pramod Kumar Dubey, a criminal trial court lawyer based in Delhi, and later clerked for Hon’ble Mr. Justice Madan B. Lokur of the Supreme Court of India. Vishnu has worked on a wide variety of matters, from criminal trials to cases before the Supreme Court, challenging the constitutional validity of Parliamentary enactments. He has also been instrumental in handling litigations and arbitrations involving intellectual property law, infrastructure law, defamation law, government tenders and general commercial law.

Agarwal Law Associates 19 Babar Road (Litigation Ofﬁ ce) / 34 Babar Lane (Corporate Ofﬁ ce), Bengali Market, New Delhi 110001, India Tel: +91 11 4220 0000 / URL: www.aglaw.in

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Micael Montinari & Filippo Frigerio Portolano Cavallo

Effi ciency of process The Italian civil judicial system is governed by the Italian Constitution, the Code of Civil Procedure (“CCP”) and by several special laws on various matters. Thanks to recent reforms, the entire civil judicial process is managed electronically. A party can lodge a claim either by fi ling a hard copy of the petition or an electronic one. Except for the statement of defence, any other parties’ submission can be validly lodged only via the electronic system managed by the Ministry of Justice. As soon as the law clerk uploads the submission on to the proceedings folder, briefs and exhibits are immediately available for all the other parties and for the Judge. This system has recently been extended to administrative proceedings as well. Together with other recent interventions of the Italian legislator, it is aimed at increasing the effi ciency of the Italian legal system. The fi rst result of this effort is the decrease in the average length of proceedings. The Minister of Justice estimates that today, fi rst-degree proceedings last for around one year on average, against an average of 487 days in 2014. Other independent studies concerning the year 2017 seem to confi rm this trend. In addition to the above, Italian procedural rules also provide for fast-track proceedings in case of credits supported by written evidence and certain in their amount. In such cases, the creditor can apply for a summary payment order (decreto ingiuntivo) instead of using ordinary proceedings. Typically, these orders are issued within a month from the time of the application, subject to variations depending on the Court’s workload at any given time. If the application is upheld, the Court orders the debtor to pay in the context of ex parte summary proceedings, i.e. without the appearance of the defendant. The order is then served by the applicant on the debtor. The latter has up to 40 days to challenge the order. Further to such opposition, an ordinary proceeding on the merits commences. Under certain circumstances, or if the order is not challenged wholly or partially, the same order can become enforceable, even if proceedings on the merits are still pending. Given the length of civil proceedings, some statistics released by the Ministry of Justice show that people are relying more and more on ADR mechanisms. As we will see infra, assisted negotiation and mediation in some cases are mandatory, and a party cannot start judicial proceedings without fi rst having attempted to resolve the dispute extra-judicially.

Integrity of process Principles and high-level rules concerning the Italian judicial system can be retrieved in the Italian Constitution.

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• Article 24 Const. grants everyone the right to bring cases before a Court of law. It further states that everyone – irrespective of their economic condition – is entitled to be defended before any Court. Further, Article 25 Const. enshrines the principle that no case may be removed from a Court established under the law. It further provides for the principle nullum crimen, nulla poena sine lege, i.e. no one can be punished if the relevant fact was not criminally relevant when it was committed. • Article 101 Const. grants the independence of the Judiciary: Judges are subject only to the law. • Article 111 Const. sets the principle of due process of law. It states that all parties shall be entitled to equal conditions before an impartial, third-party Judge. To guarantee the full manifestation of this principle, the Constitution states that all judicial decisions shall include their reasoning. Additionally, the same article provides that any party can appeal to the Supreme Court of Cassation – the highest Italian Court – in case of violations of law. The Italian legal system is organised into three main levels. Except for peculiar and limited cases, the petitioner can ﬁ le an ordinary litigation before Ordinary Courts or the Justice of the Peace. The latter has exclusive competence for claims concerning movable assets whose value is lower than €5,000 or claims concerning vehicle circulation, whose value is lower than €20,000. In all other cases, Courts are competent. Appeals against ﬁ rst-instance decisions can be brought before Courts of Appeals, in case the appealed decision has been issued by an Ordinary Court, or before an Ordinary Court, to appeal a decision of the Justice of Peace. Eventually, the losing party can appeal to the Supreme Court of Cassation only for violations of law on the grounds enlisted in Section 360 CCP.

Privilege and disclosure Disclosure Italian civil procedure is not based on the concept of disclosure, so compulsory disclosure mechanisms do not exist, and parties are, in general, free to fi le only the documents that support their claims and arguments. As set out under Sections 210–213 of the CCP, a party may request the Judge to order the other or a third party to disclose certain documents, provided that the documents are specifi cally identifi ed by the applicant party, and their disclosure is essential for the decision of the case. The Judge examines the party’s application and can issue an order granting the application. If the order is addressed to a third party, the Judge may summon the third party, who in turn has the chance to fi le an opposition to the order and thus intervene in the proceedings. The CCP provides for no pecuniary sanction against a party who does not comply with the order. However, if the non-compliance is without a legitimate reason, the Judge may negatively consider such conduct when deciding the case. In addition, if documents are not disclosed, it is debated whether the applicant party may apply for the documents to be seized further to an order of the Judge (Section 670, paragraph 2 CCP, sequestro probatorio or precautionary seizure). Moreover, the Judge, even without a specifi c request by one of the parties, may always request from public administration bodies information or documents which are necessary for the decision of the case.

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The same rules apply to arbitration proceedings. Privilege As explained above, there are no general disclosure obligations in Italian civil proceedings; thus, a party cannot be forced to disclose documents they do not wish to produce during the proceedings, except in the case described above. There are, however, certain provisions which protect conﬁ dentiality: (i) a party may legitimately refuse disclosure if it results in a violation of professional secrecy (which applies, inter alia, to clergy, external lawyers, doctors, accountants, etc.), civil service secrecy (i.e. in relation to civil servants with reference to facts learned during their service) and government secrecy; (ii) Section 249 of the CCP which allows lawyers (only external lawyers and not in-house counsel) to refuse to give oral witness testimonies in relation to facts they have learned by reason of their profession; and (iii) the Code of Conduct for Italian lawyers which prohibits lawyers in civil proceedings from producing communications between lawyers marked as “conﬁ dential”, or communications related to settlement negotiations. The same rules apply to arbitration proceedings.

Costs Pursuant to Section 91 CCP, the Judge usually orders the losing party to pay the legal fees and expenses of the winning party. The counsels can submit to the Court a statement of their costs, but the fi nal determination is left to the sole discretion of the Judge. Using his/her discretion, the latter awards the fees on the basis of tables periodically published and updated by the Ministry of Justice with its decree. The last update is the Ministerial Decree no. 37 of 2018. The rule has two main exceptions. The legal fees and expenses can be offset – wholly or partially – in case: (a) there is no clear winning party; (b) the issue brought before the Court was new and innovative; (c) the law has recently changed; and/or (d) there is a brand-new case law trend. Notably, Section 96 CCP empowers the Court to issue a separate order in case one party failed to act in good faith in the proceedings or started it with mala fi de. This is not intended to reimburse legal fees, but to sanction a party for his/her behaviour during the proceedings. Specifi c sanctions, also for breach of ethics, are provided for counsels. Indeed, the Judge has the power to report unethical behaviours to the competent divisions of the local bar.

Litigation funding Litigation funding and pactum de quota litis In Italy, as well as in other civil-law countries, litigation funding is not common and, according to authors, can be said to be underdeveloped considering that there are no rules or standards on the point. Several Italian law journals are currently dealing with this issue. Authors report that there is an increasing interest of international players, which are exploring funding litigation in Italy. In particular, funders are showing interest in ﬁ nancing suits concerning private enforcement in competition claims. It shall be considered that, as in many other European countries, Italian lawyers are prohibited from applying pactum de quota litis to their clients; however, considering that,

GLI - Litigation & Dispute Resolution 2018, 7th Edition 150 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Portolano Cavallo Italy in litigation funding, lawyers would always be paid by funders, there would not reasonably be a breach of this rule. Legal Expenses Insurance Legal Expenses Insurance is dealt with by Sections 173 and 174 of the Code of private insurance. It is also rather underdeveloped in Italy. Legal aid Legal aid is known as Patrocinio a spese dello Stato in Italy and is set out by Presidential Decree 30 May 2002, no. 115 (and following amendments). This implemented Article 24 of the Italian Constitution, to ensure effective access to the justice system also for those unable to independently retain a lawyer due to their inability to pay his/her fees. Legal aid is available in civil, administrative and criminal proceedings, and the requesting party must have a yearly income below €11,493.82.

Interim relief These proceedings follow the general rules provided by CCP (Sections 669-bis to 700 CCP). The interested party may fi le a petition with the competent Judge. The latter will then issue a decree scheduling the hearing, in which the parties will discuss the case. When particular reasons of urgency exist, upon the petitioner’s request, the Court may issue the requested ex parte measure before the fi rst hearing. Then, the petitioner shall serve the decree and the petition on the defendant to allow the latter to properly prepare their defence. Unless the case presents complexities or there is any need to carry out summary preliminary activities (e.g. hearing witnesses), the decision – in the form of an “order” – can be issued immediately after the hearing. Interim reliefs can be granted only if two conditions are met: (i) when the application is likely to be successful on the merits (so-called, fumus boni iuris), and (ii) there is danger of any delay (so-called, periculum in mora). In accordance with Section 669-ter CCP, if a dispute is not subject to Italian jurisdiction, the competent Court for the issuance of the interim measure is the one where the measure shall be concretely executed or enforced. Under the CCP, the remedies available on an interim basis are: • judicial seizure, aimed at securing goods whose ownership is being challenged; • precautionary seizure, aimed at securing assets when the alleged creditor fears that the debtor might dispose of them so that the guarantee on the credit might be lost; • reporting of new works or of potential damages to avoid damage taking place as a consequence of new work being started or of other goods placing a claimant’s property or possessions in danger; • preliminary investigation proceedings, aimed at securing evidence to be used in ordinary proceedings when there is the risk that such evidence will be lost; • in all other cases, the Judge may issue any kind of measure deemed the most appropriate under the circumstances (Section 700 CCP). In case a Judge issues measures pursuant to Section 700 CCP, these will be stand-alone proceedings, i.e. they do not require the party to start proceedings on the merits for their confi rmation.

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Given the urgent nature of these proceedings, the measures obtainable are aimed at repairing contingent situations, in particular when they are of such a damaging nature that they cannot wait to be rectiﬁ ed until the end of full proceedings on the merits. Via interim proceedings, the petitioner, in fact, cannot seek damages from the opposite party. (S)he may only request speciﬁ c performance to stop the damaging action(s).

Enforcement of judgments/awards Enforcement proceedings: general overview As soon as a party gets an enforcement order (titolo esecutivo), they are entitled to start enforcement proceedings aimed at obtaining goods/money/etc. from the other side, even without the latter’s cooperation. The enforcing party shall serve the enforcement order and the writ of enforcement (atto di precetto). No sooner than 10 days from service – and provided that the debtor has not by that time performed the payment– the creditor may fi le an application with the bailiff to: (i) seize the debtor’s movable assets; (ii) serve a writ of execution (atto di pignoramento immobiliare) to seize real estate; and/or (iii) serve a writ of execution to third parties (atto di pignoramento presso terzi) that may owe money/goods to the debtor. Normally, this is the most common modality and the recipients of the writ of execution are banks. In all the above cases, the bailiff will create the enforcement proceedings folder, including all the originals, and (s)he will provide it to the enforcement Judge. Irrespective of the type of enforcement chosen, the Judge will in any case hold the hearings, instruct the bailiff to perform activities, and order that the amounts/goods seized be assigned to the creditor. As soon as the creditor is fully satisfi ed or if the debtor does not have any additional goods that can be used to pay the creditor, the Judge will declare the enforcement proceedings closed. Enforcement of foreign judgments Foreign judgments Enforcement of judgments issued by foreign Courts is regulated by the Italian Law on Private International Law (Law no. 218 of 1995). Article 64 provides that foreign judgments are fully recognised and enforceable in Italy, provided that certain conditions exist. In particular, the judgment shall not be contrary to Italian public policy. See below for more details in relation to the concept of public policy. Pursuant to the EU Regulation no. 1215 of 2012, judgments issued by Courts of Member States of the European Union are automatically recognised throughout the EU without the need for formal recognition. Considering the EU framework, Italian private international law rules only apply when a judgment of a non-EU country needs to be enforced in Italy. Additional provisions may be provided by multilateral treaties with third countries. Enforcement of awards Domestic awards In relation to domestic awards, a party seeking to enforce an award shall follow the steps set out by Section 825 CCP. It shall fi le an application with the competent Court for the place where the arbitration is seated, attaching the original or a certifi ed copy of the award, together with the original or a certifi ed copy of the arbitration agreement.

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The Court verifi es the formal compliance of the award and issues an order which renders the award enforceable (the so-called “exequatur”). The order may be appealed to the Court of Appeal within 30 days. Foreign awards The procedure for the recognition and enforcement of foreign arbitral awards is set out by Sections 839 and 840 of the CCP. Pursuant to these provisions, the party wishing to enforce a foreign award must fi le an application with the Court of Appeal of the place where the other party is domiciled. If the other party is domiciled abroad, the Court of Appeal of Rome will be the competent Court. The applicant must fi le the original of the award or a certifi ed copy, a certifi ed translation if the award was not rendered in Italian, and the arbitration agreement. The President of the Court of Appeal verifi es the formal compliance of the application and of the attached documents and issues an order which renders the award enforceable in Italy, unless: (a) the dispute could not have been decided by arbitration according to Italian law; or (b) the award is in contrast with Italian public policy. Pursuant to Section 840 of the CCP, the order of the President of the Court of Appeals can be challenged before the Court of Appeals within 30 days. The Court of Appeal will refuse recognition of the award for the reasons set out in the New York Convention as well as for the reasons mentioned above. Public policy The standard applied by Courts of Appeal to refuse enforcement of foreign judgments and awards on the grounds of public policy has so far been a restrictive one, aimed at allowing the international circulation of awards. Public policy is usually interpreted as including only domestic public policy and not also international public policy. Legal authors defi ne domestic public policy as the core of fundamental principles which shape the ethical and social structure of the national community in a certain period. In practice, Court precedents have interpreted the concept of domestic public policy as incorporating provisions and principles of the Constitution, principles deriving from criminal law, and fundamental principles of EU law, including competition principles. According to some authors, Courts of Appeal should also consider violations of procedural public policy, including violations of the principle of due process or the contrast of the award with a previous fi nal award or judgment between the parties. Given the nature of the elements, however, such violations are more likely to be ascertained in the challenge phase, where the other party will have the chance to allege them. In a historical change of perspective, in July 2017 the Supreme Court of Cassation issued a landmark decision stating that punitive damages are not per se incompatible with public policy. As a result of the Court of Cassation’s reasoning, a condemnation for punitive damages issued by a foreign Court may be enforced in Italy on certain conditions (among which is the need that such measure be explicitly provided in the foreign country in specifi c situations, so that the damaging party may know in advance that it may face punitive damages for its conduct).

Cross-border litigation Taking of evidence abroad In relation to the taking of evidence abroad, the rules applicable depend on whether the states involved are members of the European Union or not.

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For members of the EU, the taking of evidence abroad is governed by EU Regulation 1206/2001, which fully applies in Italy. Italy is also a party to the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters – more commonly referred to as the Hague Evidence Convention – of 18 March 1970; thus, this Convention applies when an Italian Court requests the taking of evidence in a non-EU state or when a non-EU state requests the taking of evidence in Italy. When an Italian Court requests the taking of evidence from a state which is not party to any international convention, Section 204 of the CCP shall apply, according to which the Judge shall request the taking of evidence through a letter rogatory addressed to the foreign Authority, and transmit the letter through diplomatic channels. In addition, Italian private international law rules (Articles 69 and 70 of Law 218/1995) set out that when a request is issued by a foreign (non-EU) state, the taking of the evidence is carried out pursuant to Italian procedure rules; however, Italian authorities may follow the instructions given by the requesting states, as long as they are compatible with Italian principles. Enforcing interim or freezing orders Italian Courts can assist EU member states in relation to interim or freezing orders, as per the rules set out by the Recast Brussels Regulation (Reg. 1215/2012). In particular: • interim measures ordered by the Courts of a member state can freely circulate and be enforced in other EU countries; indeed, the Regulation includes provisional, including protective measures in the concept of “decisions”; the only measures excluded from circulation are those taken without the defendant being summoned to appear; • applications for provisional, including protective, measures may be made to the Courts of a state even if another member state has jurisdiction over the substance of the matter (Article 35). According to authors, this means that interim relief can be sought in the EU state (including Italy) in which the interim measure is to be enforced. In other words, if a party wishes to apply for a freezing order to be enforced in Italy, Italian Courts will have jurisdiction even if another state has jurisdiction to hear the merits of the case. Interim measures issued by a Court which does not have jurisdiction on the matter cannot, however, circulate in other EU countries and are only effective in the country of issuance. Italian Courts may also assist non-EU countries in relation to interim or freezing orders. Indeed, according to Section 669-ter of the CCP, Italian Courts also have jurisdiction to hear applications for interim measures if the substance of the matter falls within the jurisdiction of a foreign state, provided that the measure is to be enforced in Italy. However, Italian private international law rules do not allow recognition and enforcement of interim measures issued by a non-EU member state, as they are not ﬁ nal within the meaning of Article 64 of Law 218/1995.

International arbitration Arbitration is governed by Sections 806 to 840 of the CCP. Further to the arbitration reform of 2006, Italian law no longer makes a distinction between domestic and international arbitration. The only criterion which is still in place is that of the seat of the arbitration. If the arbitration is seated in Italy, Italian law (i.e. the relevant Sections of the CCP) applies. This is the case even if the arbitration has international elements in relation to the nationality of the parties or of the arbitrators, the law applicable to the case,

GLI - Litigation & Dispute Resolution 2018, 7th Edition 154 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Portolano Cavallo Italy or the language of the proceedings. Thus, even if international elements are present, the arbitration will be considered a domestic, Italian arbitration, if the seat is in Italy. Concerning the judicial support or interference in relation to international arbitrations seated in Italy, it must ﬁ rst be noted that Italian law fully adopts the Kompetenz-Kompetenz principle. Indeed, only arbitral tribunals can rule on their jurisdiction and competence, not national Courts. There are, however, certain cases where national Courts intervene with arbitrations pending in Italy. The competent national Courts retain the power to grant preliminary or interim relief even when arbitration proceedings are pending. However, as said, they cannot rule on the jurisdiction of the arbitral tribunal. Indeed, pursuant to Section 818 of the CCP, Italian arbitrators are prohibited from issuing seizures and any other interim or precautionary measures. The only exception to this rule is provided for by the rules on corporate arbitration, which allows arbitrators to stay a resolution adopted by the company’s shareholders’ meeting. National Courts may also be called to intervene in relation to the appointment of the arbitrators. In particular: (i) if the parties have indicated an even number of arbitrators and have not otherwise come to an agreement, a further arbitrator is appointed by the President of the Court where the arbitration has its seat, upon an application of the claimant; (ii) if the parties have not agreed upon the number or appointment method of the arbitrators, the arbitrators are three and are appointed by the President of the Court where the arbitration has its seat; and lastly, (iii) if the claimant has served a statement of commencement of an arbitration and appointed an arbitrator, requesting the defendant to do the same, if the defendant does not proceed to do so within 20 days, the claimant may apply to the President of the Court where the arbitration has its seat to request the appointment. • Under Section 816-ter of the CCP, if a witness refuses to appear before the arbitral tribunal, the latter, if deemed opportune, may request the President of the Court where the arbitration is seated to order the appearance of the witness. • When challenges against awards are possible, they are decided upon by the Court of Appeal competent for the place where the arbitration was seated; the parties may then appeal the judgment of the Court of Appeal to the Supreme Court only on points of law in relation to the decision of the Court of Appeal. According to Section 832 of the CCP, the parties may also opt for an institutional arbitration (instead of an ad hoc one) and thus rely on the rules set out by the relevant institution. In Italy, there are several arbitration institutions, the most prominent being the Milan Chamber of Arbitration, which is run by the Milan Chamber of Commerce and runs the largest number of institutional arbitrations in Italy.

Mediation and ADR In recent years, Italian lawmakers have passed several bills aimed at enhancing the use of ADR in order to settle the dispute without relying on the Court system. Assisted negotiation This is a procedure ﬁ rst introduced by Law Decree no. 132 of 2014, passed into Law no. 162 of 2014.

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Before starting a lawsuit, the claimant must invite the other side to enter into an agreement (a so-called Convenzione di negoziazione assistita). The latter aims to amicably settle the dispute in good faith, with the mandatory assistance of the parties’ counsels, before fi ling a claim with the Court. In general, for claims regarding damages arising from circulation of vehicles and for all matters not already included in the mandatory mediation, where one party demands payment of a sum not exceeding €50,000.00, the offer to conclude such an agreement is mandatory. This means that at the fi rst hearing the Judge can autonomously investigate whether the process was ever started, and order the claimant to invite the other side to conclude such an agreement. The process can last from a minimum of one month to a maximum of three months. Where the parties are able to settle the dispute, the fi nal agreement, duly signed by them and by the assisting counsels, is considered an enforcement order and can be used to start enforcement proceedings. It is a breach of professional ethics for a lawyer who signed the agreement to appeal it. Mediation This instrument was fi rst introduced by Legislative Decree no. 28 of 2010 and later amended by Legislative Decree no. 69 of 2013. Similarly to the assisted negotiation, in certain cases, before fi ling a suit the claimant shall fi rst seek an amicable solution via a mediation process. The mediation is mandatory for matters concerning, e.g., condominium, rights in rem, damages compensation for medical liability, libel committed via press or any other public means, insurance, banking and fi nancial agreements, etc. The mediation can last for a maximum of three months, starting from the date the mediation claim was submitted. If an agreement is reached, duly signed by the parties and their counsels, it has the same force as an enforcement order.

Regulatory investigations In relation to consumer protection, Italian law is shaped in accordance with EU law and its principles. There is no regulatory agency in charge of overseeing the matter, except for some powers of the Italian Competition Authority. The matter falls within the competence of the Ministry of Economic Development (Ministero dello Sviluppo Economico), which includes departments dealing with consumer protection, also with the assistance of the National Council of Consumers and Users (Consiglio nazionale dei consumatori e degli utenti), which is a public body representing Italian consumer organisations. In relation to business affairs, in Italy there are different independent regulatory agencies (autorità amministrative indipendenti), with investigative, regulatory and sanctioning powers in their relevant areas of competence. These bodies are independent, which means that they do not report to either the government or its branches. These authorities have investigative powers, often also with the help of police bodies, and – further to sanctioning proceedings in which the entities involved have the chance to defend themselves – they can issue administrative sanctions. These include monetary fi nes, injunctions, disqualifi cations, confi scations, in accordance with the powers granted to each authority. Appeals against the sanctions of Italian regulatory agencies are heard by the Courts. There are 11 of these agencies, the most prominent being:

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• Banca d’Italia (Bank of Italy), the Italian Central Bank, which has regulatory and sanctioning powers in relation to banks and fi nancial intermediaries under its supervision in the fi elds of transparency in the ownership structures and management, corporate governance and internal control systems, compliance with rules and regulations, also from a contractual perspective. In addition, the Unità di Informazione Finanziaria, Italy’s Financial Intelligence Unit, is a division of the Bank of Italy responsible for investigating money laundering and terrorist fi nancing. • CONSOB, the Italian fi nancial markets regulator, which has regulatory and sanctioning powers in relation to insider trading and market manipulation cases. In addition, CONSOB has regulatory powers to ensure transparency of ownership, accounting documents of listed companies, appeals for public investment (IPOs, takeover bids and equity swaps). • Autorità garante della concorrenza e del mercato, the Italian Competition Authority, which has powers in relation to market dominance abuses, cartels and other anti- competitive practices, mergers/takeovers and market concentration, the repression of unfair commercial practices, misleading and unlawful comparative advertising, and the application of confl ict-of-interests laws to government offi ce-holders. • Autorità per le garanzie nelle comunicazioni, the Italian Communications Authority, which is the regulatory and competition authority for the broadcasting, telecommunications, publishing and postal sectors. • Garante per la protezione dei dati personali, the Italian Data Protection Authority, which has powers in relation to the protection of fundamental rights and freedoms in connection with the processing of personal data.

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Micael Montinari Tel: +39 06 696 661 / Email: [email protected] Micael Montinari focuses on litigation; his clients include retail chains, fashion houses and brands, media/digital players. He heads the dispute resolution team (which has been ranked by The Legal 500 since 2006). His experience includes a broad range of matters, including commercial and business and intellectual property disputes as well as arbitration, often with a signiﬁ cant cross-border element. He is also ranked by The Legal 500, and he was recognised as a Client Choice International Awards 2017 winner in the Litigation practice area. Micael has 20 years of experience in all forms of commercial and corporate litigation (contractual disputes, corporate-related matters, unfair competition, passing-off, advertising issues, etc.), interim and injunctive proceedings, proceedings before the competition and consumers’ authority and other Italian agencies (Communications Authority, Data Protection authority, etc.), arbitration proceedings (including ad hoc and managed arbitration) serving as counsel and arbitrator, and mediation.

Filippo Frigerio Tel: +39 06 696 661 / Email: [email protected] Filippo Frigerio joined Portolano Cavallo in 2015, under the terms of an intern work agreement secured through Bocconi University, becoming later in the year, upon earning his Law degree from the Luigi Bocconi Commercial University, one of the fi rm’s attorneys-at-law. While completing his university studies, Filippo attended courses at the Law School of the University of Minnesota, Minneapolis, USA, for a period of fi ve months. Filippo lends his expertise to both Italian and foreign clients in matters of disputes and arbitration on civil and commercial matters, as well as of new technologies, digital media, and Italian and European legislation concerning the protection of personal data and the e-commerce fi eld. Furthermore, he provides legal assistance to operators in the broad life sciences fi eld. Filippo is also an active member of several national and international associations such as AIJA, YoungICCA and LES Italy. He has published several articles on the “Medialaws” Law review.

Portolano Cavallo via Rasella, 155 – 00187 Roma || piazza Borromeo, 12 – 20123 Milano, Italy T el: +39 06 696 661 / Fax: +39 06 696 66544 / U RL: www.portolano.it

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Shinya Tago, Takuya Uenishi & Landry Guesdon Iwata Godo

Effi ciency of process Japan is a civil law jurisdiction and there are fundamental differences between the civil law and the common law litigation practices. In contrast with the adversarial system, the inquisitorial approach of the Japanese civil law procedural system means that the judge largely controls the process and the collection of factual information, and the decision- making process proceeds through a series of oral hearings. In 1996, the former Code of Civil Procedure was replaced by a new Code of Civil Procedure (Law No. 109 of 26 June 1996 (CCP)). One of the key objectives of the reform was to speed up the course of trials. This goal was further emphasised through the enactment of the Law on the Expediting of Trials, Law No. 107 of 16 July 2003, which provides that the objective of expediting trials is to conclude the fi rst instance proceedings as swiftly as possible, within a period of two years of their commencement. First instance proceedings can last eight months on average, but complex cases can take longer to resolve. The courts typically schedule the initial hearing within 1 to 1.5 months after the plaintiff has submitted a statement of claims, and require the defendant to submit an answer about a week before the hearing. Generally speaking, the courts have succeeded in increasing the pace of the litigation process. Information technology plays a role in the CCP: telephone conferencing was made possible under Article 170-3 for parties residing in remote areas; videoconferencing was introduced for the long-distance examination of witnesses under Article 204; as was the electronic processing of claims for payment demands under Article 397. A technical adviser asked by the court to participate in proceedings who resides in a distant location can be heard by audio conferencing under Article 92-3, and an expert also living in a remote area may be heard using teleconference or videoconference services under Article 215-3. There are no general fast-track proceedings, but for monetary claims not exceeding JPY600,000, special proceedings called “petty claim actions” are available under Article 368 of the CCP. Cases must generally be concluded at the fi rst hearing and the judge delivers a judgment immediately after the hearing. The defendant may object and request ordinary civil proceedings to be held before the court.

Integrity of process Integrity of process underpins the general acceptance of Japanese courts as a safe and reliable forum for commercial dispute resolution, sometimes in stark contrast with the situation prevailing in certain Asian jurisdictions. The professionalism, effectiveness, integrity, accountability and transparency of the courts are highly rated. The operation of Japanese justice relies on the existence of a highly trained, professional and independent

GLI - Litigation & Dispute Resolution 2018, 7th Edition 159 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Iwata Godo Japan judiciary. Japanese courts have been very successful in upholding integrity and judgments impartially refl ect the evidence, the arguments and the laws. Judges do not depart from the law and do not act from personal or political motives. Japan is a society governed by the Rule of Law. The judicial system provides parties to a dispute with a reasonable opportunity to obtain relief when justifi ed, and a reasonable opportunity to defend against unjustifi ed, spurious, or malicious claims. The Japanese system attempts to implement these ideals through Constitutional provisions guaranteeing the accused defendant in criminal cases the right to counsel, the privilege against self- incrimination, and a right to a speedy trial before an impartial tribunal (Constitution of Japan, Articles 37 and 38). The civil justice system provides the parties with a reliable means of resolving legal disputes by being reasonably quick; reasonably available (cost benefi t analysis generally does not weigh in favour of not using the system, although cost is still an issue); provides a neutral forum; and offers a procedure for resolving disputes that gives a righteous plaintiff a reasonable opportunity to be adequately compensated. Other factors, in addition to access to justice and the relative timeliness of justice delivery, include: the quality of justice delivery; the independence, impartiality and fairness of the judiciary; public trust in the judiciary; the absence of corruption; the stability and consistency of laws and regulations and their interpretation (even in the absence of doctrine of binding precedent, decisions of the Supreme Court are generally consistently followed by the lower courts to the extent that is equitable); as well as the relative ease of retrieving past judgments and extracting data from court records.

Privilege and disclosure Privilege There is no concept of attorney-client privilege under Japanese law. Attorneys, doctors and other professionals and experts to whom confi dential information has been disclosed may refuse to testify and give evidence (Item 2, Paragraph 1, Art. 197 of the CCP) or refuse to submit documents (Art. 220 of the CCP) regarding facts that have come to their knowledge in the performance of their duties. However, Item 2, Paragraph 1, Art. 197 of the CCP does not apply where the witness is released from his or her professional duty of secrecy under Paragraph 2 of Art. 197. The obligation lying on attorneys to keep secret information obtained in confi dence in the course of their professional duties is also stated under Article 23 of the Lawyers’ Law (Law No. 205 of 10 June 1949). Disclosure Under Japanese law, there is no disclosure obligation or extensive discovery process, in contrast with common law jurisdictions. Documents submitted as evidence by the parties are typically collected by the parties through their own efforts. Accordingly, for instance, in a product liability case, if a manufacturer is not cooperating, critical evidence may be concealed from the plaintiff, which is both relevant and admissible in a product liability case, including, but not limited to, notice to the manufacturer of the existence of a defect in one or more of its products, causation, the existence of a defect, and the feasibility of safer alternate designs. It is nonetheless possible to petition a court to issue an order to submit documents after an action has commenced by providing valid reasons to compel the counterparty, or a third party keeping certain documents listed in Article 220 of the CCP in his possession, to submit said documents (Article 221 of the CCP). The person fi ling a motion must indicate (insofar as possible) the document, the identity of the person holding it, its signifi cance, what needs to

GLI - Litigation & Dispute Resolution 2018, 7th Edition 160 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Iwata Godo Japan be proven with it and the reasons why it is necessary. The obligation to produce documents has been recognised in the following situations: (i) documents a party has referred to for the purpose of presentation or assertion of proof; (ii) documents that a party submitting evidence has the right to require delivery or inspection of while in the possession of another person; (iii) documents showing legal relation which support the rights or legal position of the person fi ling a motion, or documents showing a legal relation between the person fi ling a motion and the holder of the documents; or (iv) documents that are not excluded. Excluded documents include documents exclusively prepared for use by their possessor; documents that contain confi dential technical or professional information (e.g., confi dential information held by professionals such as lawyers and doctors); and (v) public offi cials’ documents, disclosure of which would cause harm to the public (Article 220, Paragraph 4 of the CCP). If the other party fails to comply with the court order to produce a document, the court may fi nd the applicant’s allegations concerning said document to be true (Article 224, Paragraph 1). Before fi ling an action, if the future plaintiff has given advance notice of the fi ling to the future defendant, the plaintiff or recipient of the notice may, within four months of the date of the notice, make inquiries to the other party on matters necessary to substantiate his allegations or collect evidence (Article 132-2 of the CCP). In addition, the court may order the submission of documents and the commissioning of examinations when a motion is fi led by a party and it is diffi cult for that party to collect documentary evidence from the other side that would be clearly necessary to prove his case (Article 132-4). The absence of extensive discovery may to some extent inhibit litigation in Japan. The Japanese legal system has a fact-pleading requirement that obliges a plaintiff to plead facts suffi cient to be successful at the start of the case. The means for compelling the production of facts before the initiation of a lawsuit described above are relatively limited and ineffi cient and plaintiffs also have little opportunity to obtain meaningful factual discovery even after the suit has begun.

Costs The general rule is that court costs are borne by the losing party (court costs consist of court ﬁ ling fees, the costs associated with service of process, documentary fees (preparation and submission of documents, including petitions, briefs, copy of evidence, translation of documents), the costs incurred for the examination of evidence, accommodation and travel expenses and daily allowances paid to witnesses and interpreters and the remuneration of experts, as provided for under the Law on Costs of Civil Procedure (Law No. 40 of 1971)). Court costs do not include legal fees (attorneys’ fees) which are borne by each party respectively in the absence of an attorneys’ fees clause. Apart from these court costs, the general rule is that litigation costs are borne by the party incurring the expense, even if the party prevails in the dispute. In the context of tort claims, the court may nonetheless award a usually small part of the prevailing party’s attorneys’ fees as part of the damages when there is a reasonable causal nexus between a tort and the fees. The allocation of court costs is ordered as part of the court’s decision. Attorneys’ fees may be freely agreed upon between attorneys and clients, and lawyers are allowed to charge part of their fees on a contingency basis under Bar Association rules. Many law ﬁ rms continue to determine their fees based on a combination of retainer fees and success fees based on the now repealed legal fee table of the Japanese Federation of Bar Associations. The Japan Legal Support Center, an independent public institution, provides civil legal aid services including free legal consultations and loans for attorneys’ fees for people who

GLI - Litigation & Dispute Resolution 2018, 7th Edition 161 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Iwata Godo Japan require the assistance of legal experts but who, for economic reasons, are unable to pay for attorneys’ fees and court costs although, in practice, this is largely irrelevant for international commercial disputes. To obtain public funding, the applicant must have ﬁ nancial resources below a certain amount, have some reasonable chance of success, and pursue aims consistent with the purposes of legal aid. Criminal matters are excluded from the scheme.

Litigation funding Third-party funding is not yet common in the Japanese litigation practice. Its lawfulness is still a moot point, although it does not appear to be prohibited ‘per se’. The assignment of claims or causes of action is generally permitted but the entrustment of a claim for litigation purposes is prohibited under the Trust Law (Law No. 108 of 2006). Depending on circumstances, there is still a risk that third-party funding could be regarded as a criminal act under the Lawyers’ Law which prohibits any person who is not an attorney from engaging in legal business (including lawsuits, arbitration and conciliation) and also prohibits them from “acting as an intermediary in such matters” (i.e., referring cases to attorneys to obtain compensation for their business activities) (Article 72 of the Lawyers’ Law). Confi rmation that third party funding schemes are lawful could be welcomed by some in Japan as litigation before the courts can be very costly. For example, the Japanese legal system’s practice (no longer a requirement) of paying a substantial part of lawyers’ fees upfront, inhibits litigation. The now defunct Bar Association courts’ fi ling fee system, which for most cases has a graduated fee that increases with the size of damages sought regardless of the actual work completed by the attorney, increases the cost of getting one’s case before the court. Legal fees are generally borne by each party respectively, as explained above. Also, under rules applicable to security for costs, the parties must pay litigation expenses in advance to cover the cost of handling the case to be incurred by a court, as well as a ‘per diem’ expense allowance and transportation costs needed for witnesses, experts and interpreters, etc. Those persons benefi ting from legal aid who would have fi nancial diffi culties to pay such costs can be exempted (Article 82, Paragraph 1 of the CCP). A party seeking interim measures may also have to pay a security deposit. There are currently no US-style class actions in Japan, but making access to justice easier and more affordable through collective/mass actions was the main thrust behind the special procedure known as the Japanese class action system. The Act on Special Provisions of Civil Procedure for Collective Recovery of Property Damage suffered by Consumers (Law No. 96 of 2013) introduced a system which provides for a two-tier opt-in procedure. During the fi rst stage, a qualifi ed consumer organisation fi les a lawsuit requesting the court to confi rm the liability of a business operator for a common obligation arising under a consumer contract on behalf of potential consumer claimants. If the action is confi rmed, the quantum of damages will be determined based on individual claims fi led by consumers having elected to opt in. However, the scope of claims under this Act is limited and only covers claims arising from consumer contracts and to certain categories of property damage: claims for performance based on contractual obligations, for unjust enrichment, breach of contract, warranty against defects, and claim for damages arising out of unlawful acts; however, damage to property other than the subject matter of the consumer contract, lost profi ts, personal injury, and pain and suffering are expressly excluded by the Act. There is also the so-called “appointed party” mechanism under Article 30 of the CCP, which allows certain plaintiffs (or defendants) appointed by other claimants (or defendants) to act on their behalf in pursuing (or defending) civil actions. Appointments can be made when there are enough claimants/defendants

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Interim relief The following forms of interim relief are available under the Civil Provisional Remedies Law (Law No. 91 of 22 December 1989). Where a dispute involves a monetary claim, obligees/potential plaintiffs may apply for a provisional attachment order (kari sashiosae) to ensure that any future monetary judgment will be enforced under said Law (Article 20). The effect of the attachment is to freeze the obligor’s/potential defendant’s assets to keep the defendant from disposing of his movables (most often money on bank accounts) or immovables and secure the future collection of their claims. It does not entitle the obligee to convert the seized property into money and have his obligation satisfi ed therewith. Where a dispute involves certain categories of non-monetary claims, potential plaintiffs may apply for a provisional disposition order (kari shobun) to preserve their rights with respect to the subject matter in dispute (Article 23). Unlike a provisional attachment which only concerns monetary claims, provisional disposition may take different forms due to the variety of subject matters in dispute. Provisional orders establishing a provisional legal relationship between the parties (e.g., labour relationship between an employer and a dismissed employee: the employee would fi le a motion requesting the court to issue a provisional order confi rming the employee’s status as employee pending a resolution of the dispute on the merits and receive salary without having to report to work) are available to avoid substantial detriment or imminent danger caused by disputed legal relationships. To be granted an order, the claimant has to demonstrate: (i) its substantive right to be protected; and (ii) the exercise of its rights will most likely be impossible or extremely diffi cult without such provisional attachment or disposition. For provisional dispositions establishing a provisional legal relationship between certain parties, the claimant must establish the prima facie existence of a legal relationship that the other party is disputing, and the need for interim relief to avoid substantial detriment or imminent danger to the claimant.

Enforcement of judgments Domestic judgments A local judgment may be enforced by submitting to the execution court or to a bailiff an original of the judgment and a certifi cate of enforceability issued by a court clerk of the judgment court (Articles 25 and 26 of the Civil Execution Law, Law No. 4 of 30 March 1979 (CEL)). The court or bailiff handles the enforcement of judgments. Enforcement differs for a monetary and a non-monetary judgment. Pursuant to Article 22 of the CEL, compulsory execution may be carried out based on (inter alia) the following “obligation- titles” (saimu meigi) (also covering foreign judgments discussed in the next paragraph): a fi nal and binding judgment; a judgment with a declaration of provisional execution; an order of compensation of damages with a declaration of provisional execution; a demand for payment with a declaration of provisional execution; a notarial deed prepared by a notary with regard to a claim for payment of a certain amount of money or any other fungible chattel or a certain amount of securities, which contains a statement to the effect that the obligor will accept compulsory execution; a judgment of a foreign court for which an execution judgment has become fi nal and binding; an arbitral award for which an execution order has become fi nal and binding, etc.

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Compulsory execution may be commenced only when an authenticated copy or a transcript of an obligation-title or a judicial decision that is to become an obligation-title when it becomes fi nal and binding has been served upon the obligor in advance or simultaneously. Means of compulsory execution of obligation-titles include the following: • For the enforcement of a monetary claim, the CEL allows for compulsory execution and the debtor’s general properties (real properties, ships, moveable properties, claims and other property rights) can be attached and sold in a public auction sale, and the sales proceeds are then used for the satisfaction of the monetary claim (Section 2 of Chapter 2 of the CEL). • For the enforcement of an obligation to deliver real property, a request for the surrender or delivery of real estate property, etc. (i.e., real property in which a person resides) may be made under Articles 168 and 169 of the CEL and an indirect compulsory execution method is also available under Articles 173 and 172 of the CEL. • For the enforcement of an obligor’s performance obligation, execution may be made by a third-party substitute (Article 414(2) of the Civil Code and Article 171 of the CEL) or through an indirect compulsory execution method under Article 172 of the CEL (monetary sanction: the execution court orders the obligor to pay the obligee a certain amount deemed reasonable to secure performance of the obligation by reference to the period of delay, or immediately if the obligor fails to perform the obligation within a reasonable period). • For the enforcement of an obligor’s obligation not to do something, a petition may be fi led with the court to remove the results of the obligor’s actions at the expense of the obligor or impose any other reasonable disposition for the future (Paragraph 3 of Article 414 of the Civil Code and Article 171 of the CEL). In addition, indirect compulsion is available under Article 172 of the CEL. No direct enforcement by specifi c performance is allowed if the nature of the obligation does not permit enforcement (Article 414(1) of the Civil Code). Foreign judgments Japan is not party to any bilateral or multilateral treaty for the recognition and enforcement of foreign judgments. To enforce a foreign judgment, the party enforcing the judgment of the foreign court must obtain an execution judgment from a competent court in Japan declaring such enforcement (Article 24, Paragraph 4 of the CEL). The requirements for the recognition of a foreign judgment are set forth in Article 118 of the CCP. The petitioner must establish that the judgment is fi nal. In addition, the judgment must satisfy the following requirements: (i) the jurisdiction of the foreign court which rendered the judgment in accordance with or under laws or regulations or conventions or treaties; (ii) the losing party has received proper service of summons or orders required to commence the proceedings (excluding service through notice by publication), or has appeared without being so served; (iii) the content of the judgment and the proceedings of the lawsuit are not contrary to public policy in Japan; and (iv) reciprocity exists (the courts of the relevant foreign country provide reciprocal recognition of Japanese judgments). If these requirements are satisfi ed, the foreign judgment will be effective and enforceable in Japan and the court issuing an execution judgment must not retry the whole case or review the case on its merits regardless of whether or not the foreign judicial decision was erroneous (Article 24, Paragraph 2 of the CEL). With respect to (iii) above, a Supreme Court judgment of 1997 denied the enforceability of punitive damages in a judgment of a state court of California as a violation of Japan’s public policy.

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Cross-border litigation Jurisdiction The jurisdiction of the Japanese courts in cross-border disputes is governed by the CCP (Chapter 2, Section 1, Articles 3-2 et seq.) which lays down international jurisdiction rules applicable to litigation in the Japanese courts. Jurisdiction over a dispute primarily depends on the classifi cation of the dispute, as per the examples below: • Jurisdiction based on the defendant’s domicile (Article 3-2 of the CCP): the defendant’s domicile or residence in Japan; the principal place of business or business offi ce of the defendant’s legal entity. • Jurisdiction over an action involving a contractual obligation (Article 3-3): for an action based on a claim for performance of a contractual obligation; on a claim for damages due to non-performance of a contractual obligation; or on any other claim involving a contractual obligation: the place of performance of the obligation (Article 3-3, Item 1 of the CCP). • A tortious action: the place of the tortious act (Article 3-3, Item 8 of the CCP). A tortious act is deemed to happen where the tortious act was committed (including the place where the product has been manufactured in product liability cases) or where the results have occurred (unless the occurrence in Japan of the results of a wrongful act committed abroad was unforeseeable). • Jurisdiction over actions involving consumer contracts and labour relations: • Article 3-4 (1): Consumer dispute commenced by a consumer whose domicile is located in Japan at the time the action is fi led or at the time the consumer contract is concluded. • Article 3-4 (2): An action involving a dispute over a civil matter that arises between an individual worker and that worker’s employer with regard to the existence of a labour contract or any other particulars of their labour relations may be fi led with the Japanese courts if the place where the labour is to be supplied is within Japan. • Article 3-5 (3): Intellectual property (IP) dispute related to the registration of an IP right in Japan, or about the existence or validity of certain IP rights registered in Japan. • Agreement on Jurisdiction: Article 3-7 (1): Parties’ agreement to international jurisdiction. • Article 3-8: Jurisdiction by appearance. • Under Article 3-9 of the CCP, even if one of the foregoing grounds is found, the court may dismiss the case if it fi nds that there exist special circumstances under which a trial and judicial decision by the courts of Japan would harm equity between the parties or impede the well-organised progress of court proceeding. Proceedings, etc. Court proceedings are conducted in Japanese only. Interpretation or translation in Japanese is required for testimonies or submission of documents in a foreign language. Legal representation by an attorney is not required before all courts, especially the lower courts. In court proceedings, the basic rule is that only a Bengoshi (attorney-at-law registered in Japan) may act as a procedural attorney. A Gaikokuho Jimu Bengoshi (foreign attorney registered with the Ministry of Justice) is not able to act as a procedural attorney in a court of law in Japan. With respect to the application of a foreign law in the Japanese courts

GLI - Litigation & Dispute Resolution 2018, 7th Edition 165 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Iwata Godo Japan where a foreign law was selected or determined to be the governing law, the foreign law is seen as the norm on which the judgment should be predicated. In principle, the duty of the court is to ascertain the law and its substance and in doing so, the court may make enquiries to the Supreme Court, the Ministry of Justice, universities, the foreign country’s embassy or consulate. An expert witness can be appointed by the court. The court may also ask the parties to assist and produce legal opinions from foreign lawyers or scholars (and in practice, the court very often ends up relying on the submissions of the parties). Service of summons • Service to a Japanese party Service of summons is important especially if a foreign judgment needs to be enforced in Japan at a later stage. Under Item 2 of Article 118 of the CCP, the defeated defendant must have received proper service of summons or order necessary for the commencement of the lawsuit (or have appeared without service). It also provides that service by publication does not suffi ce. According to a Supreme Court judgment of 28 April 1998, service of summons or order does not need to be done in accordance with Japanese laws but it must notify the defendant of the commencement of the lawsuit and must not impair the defendant’s defence rights. If there is any treaty on the service method to be used between the State where the judgment is entered and Japan, service must be made accordingly. Japan is a signatory to both the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters of 1965 (the Service Convention) and the Hague Convention on Civil Procedure. The Service Convention provides for the channels of transmission to be used when a judicial or extrajudicial document is to be transmitted from one State party to the Convention to another State party, for service of the latter. The Convention deals primarily with the transmission of documents; it does not address or comprise substantive rules relating to the actual service of process. The Service Convention does not preclude a party from exercising its authority to serve directly by post unless the contracting State declares that it refuses such service. Although Japan has not made such a declaration, service directly made by post is considered not to meet the requirements of Item 2 of Article 118 of the CCP. In addition, a Tokyo High Court judgment of 18 September 1997 requires the service of summons or order to include a Japanese translation if the defendant is a Japanese national, regardless of his language skills. The document to be served under the Service Convention is fi rst sent to the Ministry of Foreign Affairs which reviews it to determine whether the document satisfi es procedural requirements (for example, whether the request and the summary of the document are properly fi lled in and whether the complaint is translated). If the requirements are satisfi ed, the Ministry sends the document to the Supreme Court of Japan. Following its own review, the Supreme Court sends the document to the District Court having jurisdiction over the addressee of the document. The District Court then serves the document on the addressee by special mail service. Once this is done, the District Court issues a certifi cate of service which is sent to the Ministry through the Supreme Court. • Service to a foreign party Service outside Japan is performed by service as commissioned by the court to the competent government agency of the foreign country or to a Japanese ambassador or consul stationed in the relevant foreign country (Article 108 of the CCP). Even if the foreign country were also a party to the Service Convention and central authority

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service were allowed, it normally takes between six months and more than a year to complete service. Service by a consul may normally be achieved within six months; however, if a person on whom documents are served refuses to accept them, service cannot be effected. If there is no diplomatic relationship between Japan and the foreign country and service under Article 108 of the CCP may not be performed, or if the competent authority of the foreign country fails to send a report of service for more than six months, documents may be served by publication (Article 110) although, in practice, this is seldom the case.

International arbitration Arbitration is not a popular method of resolving domestic disputes between Japanese companies. The number of cases handled by the main institute, the Japan Commercial Arbitration Association (JCAA), is nominal compared with the number of litigations handled by domestic courts or the caseload of competing institutions in Singapore or Hong Kong. Japanese companies typically rely on Japanese courts for domestic matters and would only favour arbitration for their cross-border activity: in this context, they tend to select major internationally recognised arbitration centres such as the International Chamber of Commerce (ICC) or the Singapore International Arbitration Centre (SIAC). The Arbitration Law, Law No. 138 of 1 August 2003 (JAL) is applicable to arbitral proceedings whose place of arbitration is in Japan. The JAL is based on the UNCITRAL Model Law, although there are a limited number of deviations from the Model Law. In addition, the Supreme Court Rules on Procedures of Arbitration Related Cases (Supreme Court Rules No. 27 of 26 November 2003) prescribe procedural rules for court cases relating to arbitration. No distinction is drawn between domestic and international arbitration. The JAL sets out procedural rules, but should the parties speciﬁ cally agree on other procedural rules (for example, JCAA’s Commercial Arbitration Rules or the ICC arbitration rules), these rules will override the JAL which will only ﬁ ll the gaps. The arbitration agreement must be in writing (Article 13(2) of the JAL). Documents signed by all the parties or letters exchanged between the parties, including documents exchanged by fax or other communication devices, and other written instruments, are acceptable. The agreement is valid only when the subject matter relates to a civil dispute (excluding divorce, etc.) that can be resolved by settlement between the parties (Article 13(1)). Arbitrability of a dispute is broadly construed in Japan to cover a variety of civil and commercial disputes. A number of matters are generally considered not to be arbitrable, including insolvency, antitrust matters, the validity of intellectual property rights granted by the government; shareholders’ lawsuits against shareholders’ general meeting resolutions. Japanese courts generally take a pro-arbitration approach towards the enforcement of agreements to arbitrate. Article 14(1) compels Japanese courts, upon a petition by the defendant, to dismiss a claim related to a civil dispute that is subject to an arbitration agreement (save in limited circumstances, including when the arbitration agreement is null and void, cancelled or invalidated for other reasons). A consumer may unilaterally terminate an arbitration agreement with a business operator to arbitrate disputes that may arise in the future, and an agreement with respect to labour disputes that may arise in the future between an individual employee and his employer is null and void (JAL Supplementary Provisions, Articles 3 and 4). The tribunal itself may rule on its own jurisdiction (i.e., the authority to conduct arbitral proceedings and make an award). Article 23(1) of the JAL expressly provides the principle of competence-competence in the same manner as the Model Law. The tribunal may rule

GLI - Litigation & Dispute Resolution 2018, 7th Edition 167 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Iwata Godo Japan on assertions made on the existence or validity of an arbitration agreement or its own jurisdiction. If such an objection is made, the tribunal shall issue a preliminary independent ruling or an arbitral award when it considers it has jurisdiction, and when it deems otherwise, issue a ruling to terminate the arbitral proceedings (Article 23(4)). Article 36 provides that unless the parties have agreed on the rules of law applicable to the substance of the matter, the arbitral tribunal will apply the substantive law of the State with which the dispute subject to the arbitral proceedings is most closely connected. Unless otherwise agreed by the parties, the tribunal may order a party to take such interim protection measures as the tribunal deems fi t with respect to the subject matter of the dispute and order a party to provide appropriate security in connection with such measure (Article 24(1) and (2)). Because interim measures decided by arbitrators are not immediately enforceable, Article 15 provides that, notwithstanding the existence of an arbitration agreement, a party may request an interim protection measure from a court before or during arbitration proceedings, and that the court may grant such measure in respect of a dispute which is the subject of the arbitration agreement. Pursuant to Article 39, the award must be in writing, dated and signed by the arbitrators and should, unless agreed otherwise by the parties, state the reasons for the award. If the arbitral tribunal is a panel, it is suffi cient for the award to be signed by a majority of arbitrators. Copies of the award must be served on the parties. The grounds for the setting-aside of an award by the court under Article 44(1) are substantially similar to those entrenched in the Model Law. Article 45 provides that an arbitral award (irrespective of whether or not the place of arbitration is in Japan) shall have the same effect as a fi nal and conclusive judgment. Japan is a party to the New York Convention and the Washington Convention. The JAL also adopts the provisions of the Model Law on the recognition and enforcement of foreign awards. For the enforcement of an arbitral award made in a foreign country, the applicant needs to fi le a petition with the court to get an enforcement order, together with a certifi ed copy of the award and a translation into Japanese (Article 46 of the JAL). The costs of arbitration are apportioned between the parties in accordance with the parties’ agreement (Article 49(1)). If there is no agreement (or applicable rules such as JCAA’s Commercial Arbitration Rules), each party bears the costs it has disbursed with respect to the proceedings (Article 49(2)). The JAL does not provide that the losing party should systematically bear the costs.

Mediation and ADR There is no obligation to pursue alternatives to litigation (except for court-annexed mediation, which is mandatory at ﬁ rst instance for family disputes and certain rent disputes but rarely used for large commercial disputes). Japanese people and corporates typically prefer amicable settlement of disputes through negotiation over court litigation. Even then, a negotiated settlement (wakai) can be made at any time before or during the court proceedings. ADR is available on a voluntary basis in the form of civil mediation under the Law Concerning the Promotion of the Use of Alternative Dispute Resolution Procedures (Law No. 151 of 1 December 2004 (ADR Law)). The ADR Law has introduced an accreditation system for private dispute resolution services, but this is not mandatory. If the parties can reach an agreement, this agreement is put on record by the court and becomes enforceable in the same manner as a ﬁ nal judgment. Civil mediation procedures are simple and cost-

GLI - Litigation & Dispute Resolution 2018, 7th Edition 168 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Iwata Godo Japan effective (costs are fi xed) and proceedings are confi dential. The relative success of mediation is due to the increasing costs and sophistication of modern litigation and the recognition that existing commercial relationships had better be preserved insofar as possible. Civil litigants can also agree to refer their dispute to civil conciliation (chotei) under the Civil Conciliation Law (Law No. 222 of 9 June 1951 (CCL)). Conciliation under the CCL is conducted by a conciliation committee composed of one judge and two or more civil conciliation commissioners appointed from amongst knowledgeable and experienced citizens. The committee assists the parties in fi nding an amicable settlement and usually submits a settlement plan to the parties. If the parties can reach an agreement, this agreement is put on record by the court and has the same effect as a court judgment and can be enforced accordingly. If the parties are unable to reach an agreement, the plaintiff must fi le a suit before the ordinary courts to pursue their claims. Arbitration (chusai) is the most frequently used ADR mechanism to resolve large commercial disputes. The main thrust behind the new Arbitration Law (JAL) based on the UNCITRAL Model Law discussed above was to encourage the use of arbitration. Although commercial arbitration has not been used very actively as a means of resolving domestic disputes in Japan, it has gradually become an important option, especially in an international context. The major alternative dispute resolution institutions in Japan include, with respect to arbitration, the Japan Commercial Arbitration Association (JCAA), the Japan Intellectual Property Arbitration Centre, and the Tokyo Maritime Arbitration Commission (TOMAC) of the Japan Shipping Exchange. For mediation, there are a number of institutions including the Courts, the Financial Instruments Mediation Assistance Centre (FINMAC) and the Japan Bankers’ Association. A number of domestic construction disputes are also resolved through the Med-Arb process before the Construction Dispute Review Boards established pursuant to the Construction Business Act. A number of industry-associated (product- specifi c) trade associations have established permanent dispute-resolution organisations in the wake of the enactment of the Product Liability Law (Law No. 85 of 1 July 1994): the Federation of Pharmaceutical Manufacturers Associations of Japan; the Japan Chemical Industry Association; the Association for Electric Home Appliances; the Japan Automobile Manufacturers Association, Inc.; the Center for Housing Renovation and Dispute Settlement Support; the Consumer Product Safety Association; the Japan General Merchandise Promotion Center; the Japan Cosmetic Industry Association; the Fire Equipment and Safety Center of Japan; the Japan Toy Association; the Japan Construction Material & Housing Equipment Industries Federation, etc. The Japanese government is proposing to establish a new, dedicated dispute-resolution centre in Tokyo. This project, which was fi rst announced in May 2017, is moving slowly. The Cabinet Offi ce has just set up a committee to explore what the options are. The Foreign Ministry, Ministry of Justice and Ministry of Economy, Trade and Industry may oversee and provide institutional support to the new centre. Various dispute-resolution bodies such as the JCAA (which has a credibility issue and has largely missed out on the boom in international commercial arbitration across Asia over the last 15 years) could be brought under the same umbrella in a more internationally focused environment, at a time when there is a noticeable uptick in the number of disputes involving Japanese companies and claim value. One would expect this centre to operate with multi-lingual staff and an international board, and to accommodate a variety of arbitral bodies and rules. The centre could be operated by lawyer groups, companies and other private sector players, and the JCAA could use its facilities to handle international trade disputes.

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In addition, Doshisha University and the Japan Association for Arbitrators will open an international mediation centre in Kyoto later this year, in collaboration with the Singapore International Mediation Centre (SIMC). The new mediation centre will be headquartered at Doshisha University. A system similar to the Arb-Med-Arb, which is in place between the Singapore International Arbitration Center and the SIMC in Singapore, which gives parties the opportunity to resolve disputes referred to arbitration through mediation ﬁ rst, would be established.

Regulatory investigations There is a variety of regulatory investigations that cannot be summarised here (and as many watchdogs). The main Japanese regulatory authorities are as follows: • The Public Prosecutor’s Ofﬁ ce: investigates and prosecutes criminal matters in general (assisted by the police). • The Ministry of Justice has supervisory responsibility for matters regulated by the Companies Act (Law No. 86 of 26 July 2005), the Commercial Code and Civil Code. • The Ministry of Economy, Trade and Industry (METI) for various economic violations including under the Unfair Competition Prevention Law (Law No. 47 of 19 May 1993). • The Ministry of Finance (MOF): in charge of matters regulated by the Foreign Exchange and Foreign Trade Law. • The Ministry of Health Labour and Welfare, in relation to regulatory matters concerning pharmaceuticals and medical devices. • The Financial Services Agency (FSA) and the Securities and Exchange Surveillance Commission (SESC) deal with violations of the Financial Instruments and Exchange Law (Law No. 25 of 13 April 1948). • The Japan Fair Trade Commission, for antitrust violations including unfair practices and cartels under the Law on Prohibition of Private Monopolisation and Maintenance of Fair Trade, Law No. 54 of 14 April 1947), and violations of the Law against Delays in Payment of Subcontract Proceeds, Etc. to Subcontractors. • Japan Financial Intelligence Centre (JAFIC) within the National Police Agency dealing with money laundering investigations and terrorism. • The Personal Information Protection Commission for the supervision and handling of data protection issues under the Protection of Personal Information Law, Law No. 57 of 30 May 2003. The relevant authorities can use various investigation methods, including voluntary and compulsory information requests. They can also apply to a court for a search warrant in serious cases. Where an investigative authority concludes that a crime has been committed, it can refer the matter to the police and/or the public prosecutor.

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Shinya Tago Tel: +81 3 3214 6205 / Email: [email protected] Shinya Tago is a Japanese attorney-at-law, admitted to the New York State Bar Association, partner and Head of the International Practice Committee of Iwata Godo. His practice encompasses a broad range of litigation that in recent years has included: general commercial litigation; securities litigation; shareholder derivative litigation; arbitration (domestic and international), conciliation and mediation; and tort claims (including product liability disputes). Shinya Tago has particular expertise representing foreign clients in a wide variety of litigations in Japanese courts. He has extensive experience dealing with complicated cross-border issues that can arise involving Japanese and non-Japanese defendants.

Takuya Uenishi Tel: +81 3 3214 6205 / Email: [email protected] Takuya Uenishi is an associate at Iwata Godo. He has vast experience representing ﬁ nancial institutions (Japanese mega-banks, regional banks, trust banks, etc.) in litigations and cross-border transactions. He also has extensive experience as a litigator involved in corporate-related lawsuits, damages suits, competition law-related disputes, and labour disputes. He was seconded to the legal department of a Japanese mega-bank from 2014 to 2016. Takuya Uenishi graduated from the University of Tokyo (LL.B., 2008) and the University of Tokyo School of Law (LL.M., 2010).

Landry Guesdon Tel: +81 3 3214 6205 / Email: [email protected] Landry Guesdon is a Registered Foreign Attorney, member of the International Practice Committee of Iwata Godo. In Japan since 1997, he has extensive experience in mergers and acquisitions, joint ventures and general corporate matters and antitrust spanning numerous industries (pharmaceuticals and medical devices, cosmetics, defence and aerospace, food and agriculture, consumer and retail, general industrials, energy and utilities). Landry Guesdon has received a B.A. in law from the University of Kent in Canterbury and an LL.M. degree from the University of Paris.

Iwata Godo Marunouchi Bldg. 10th ﬂ oor, 2-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-6310, Japan Tel: +81 3 3214 6205 / Fax: +81 3 3214 6209 / URL: www.iwatagodo.com

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Thomas Nigg, Eva-Maria Rhomberg & Domenik Vogt GASSER PARTNER Attorneys at Law

Effi ciency of process In general, Liechtenstein has a very effi cient court system. Located between Switzerland and Austria, Liechtenstein is not a common law but a civil law country. Case law does exist, but it does not play as important a role as it does in Anglo-Saxon jurisdictions. In light of Liechtenstein’s history, which has always been closely related to Austria’s, it does not come as a surprise that both the legal system and the organisation of Liechtenstein’s courts depend heavily on Austrian law. Nonetheless, Swiss law has also left signifi cant traces on the legal system. Liechtenstein law is a hybrid of Austrian and Swiss Law. The most common, and thus fatal, error committed by lawyers regularly dealing exclusively with either Austrian or Swiss law is to ignore Liechtenstein specifi cs, at least as far as procedural law is concerned. Furthermore, Liechtenstein has its own specialities because it was the fi rst and only country in continental Europe to adopt the legal institution of trusts. However, litigation in Liechtenstein is not always the fi rst choice either for foreign parties or their legal advisors. Most parties wish to seek justice in their home country, being unaware of the effi ciency and competence of Liechtenstein lawyers and courts. Compared with other jurisdictions, Liechtenstein justice is considerably swift. There is no rule requiring criminal cases to be granted priority. Once the relevant documents are fi led, a hearing is scheduled within weeks. The median time from commencement of a lawsuit to judgment is 12 months. It may take longer if the case is complex or international, if foreign courts or foreign law must be applied, or if witnesses who live abroad must be heard in court. In the vast majority of civil cases, a fi nal decision can be obtained within two or three years.

Integrity of process In both civil and criminal matters, judicial powers are vested in and exercised by the courts in Vaduz. Historically, judges were selected and appointed by the parliament (the Landtag). Nowadays, under the amended Constitution of the Principality of Liechtenstein, the reigning Prince and the parliament employ a joint commission for the selection of judges, chaired by the Prince, who has the casting vote. The government appoints its own member responsible for supervising the administration of justice. The commission may recommend candidates to the parliament only with the Prince’s assent. If the parliament chooses the recommended candidate, he or she is appointed a judge by the Prince. Due to limited human resources, there is a long-standing tradition under which judges are “recruited” from both Austrian and Swiss courts. The circumstances under which a judge may be challenged on the grounds of partiality are determined in the Law relating to the Organisation of the Courts (Gerichtsorganisationsgesetz,

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GOG). The GOG guarantees, among other principles, the impartiality and independence of the court. As in many other jurisdictions, a judge may not hear a case if that judge, or a person with whom that judge has a close relationship, is a party to that specifi c dispute. A judge must also withdraw whenever there is reason to believe that their impartiality may be questioned, specifi cally if they have either a friendly or a hostile attitude toward a party to the dispute. In the Liechtenstein legal system, questions of both fact and law are decided by a judge. Juries as formed in other (especially common law) jurisdictions are alien to Liechtenstein. However, Liechtenstein has the concept of lay assessors. The Superior Court (Obergericht) and the Supreme Court (Oberster Gerichtshof) may be composed of both judges and lay assessors. The various instances guarantee a maximum of judicial security. Proceedings before the District Court (Landgericht) are conducted by a single judge, whereas the Superior Court consists of three judges, one of whom may be a lay assessor; and the Supreme Court consists of fi ve judges, two of whom may be lay assessors. So-called Willkürbeschwerden (appeals on arbitrariness) may be brought to the Liechtenstein Constitutional Court (Staatsgerichtshof, StGH). This could prolong the average duration of a proceeding for another year. Nevertheless, this “last frontline in defending the law” guarantees that severe procedural errors or gross negligence regarding the principles of law result in the lifting of court decisions.

Privilege and disclosure Documents Compulsory pre-trial discovery, as known in common law countries, does not exist and there is no comparable provision under Liechtenstein law. However, it is possible to obtain an order that forces the other party to produce certain types of documents in the course of a civil law procedure. This order is inter alia limited to cases in which the document is in the possession of a party which had previously referred to it. Nonetheless, there are no strong means to force the opposing party to produce relevant documents. A refusal to cooperate could be weighed and considered accordingly by the court only within its free evaluation of the evidence. Such disobedience may lead to the unprovability of important facts. Under Liechtenstein law, there is no deposition without the court’s lead, which means that parties cannot compel a witness to appear at a pre-trial deposition and answer questions under the penalty of perjury. The same applies for pre-trial interrogatories, which are also not to be found within Liechtenstein’s jurisdiction. Privilege Attorneys must respect client confi dentiality concerning issues entrusted to them. Non- compliance with this rule could have severe consequences for lawyers – up to the loss of their licence and criminal proceedings. Under Liechtenstein law, a client may release a lawyer from the obligation of confi dentiality. The lawyer’s duty of professional secrecy is stated in Article 15 of the Law on the Legal Profession (Rechtsanwaltsgesetz, RAG) and refl ected in § 321 of the Civil Procedure Code, ZPO, which together authorise lawyers to refuse the disclosure of privileged information. In addition, lawyers are allowed to refuse to testify in criminal proceedings (see § 108 Criminal Procedure Code, StPO). Client confi dentiality may confl ict with the reporting obligations of Liechtenstein professionals which were created by the implementation of the European Anti-Money Laundering Directives. In these cases, lawyers could face punishment for non-compliance with the Due Diligence Act or, in more severe cases, for aiding and abetting. According to

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Article 3 para. 1 (m) of the Liechtenstein Due Diligence Act, DDA (Sorgfaltspfl ichtgesetz), lawyers and law fi rms entered in the lists of lawyers or lists of law fi rms under the RAG are subject to various due diligence obligations to the extent that they assist in the planning or execution of fi nancial or real estate transactions for their clients in cases set forth in the aforementioned article. However, along with some other professionals, lawyers are not required to report to the Financial Intelligence Unit (FIU) if they have received notifi able information from or about a client in the course of ascertaining the legal position for their client or when performing their task of defending or representing that client in or concerning judicial proceedings, including advice on instituting or avoiding proceedings, whether such information is received before, during or after such proceedings (see Article 17 para. 2 DDA). Under Liechtenstein law, a confl ict of interest arises when a lawyer is acting for both parties involved in the same case. It may also arise if the lawyer acts for a party after having represented the counterparty in the same or in a connected case (see Article 17 para. 1 RAG). In the same way, there may be a confl ict of interest if the lawyer acts for one party in one case and for the counterparty in another, pending case.

Costs When it comes to trial, one must always bear in mind the risk of losing a case and the risk associated with its costs. All necessary and appropriate costs caused by litigation are considered as legal costs. As a general rule, each party bears all their own costs. Nonetheless, a party may seek legal aid if he or she is unable to fund legal costs and lawyers’ fees without putting their “daily needs” in danger (see §§ 63 et seq. Civil Procedure Code, ZPO). Lawyers’ fees are regulated by a statutory tariff. This tariff is applicable on a party-to-party basis and determines which costs have to be reimbursed to the other party. Apart from that, lawyers may freely agree on their fees in relation to each client. The complexity of the case, the kind of services involved and the degree of liability linked to the case determine the calculation of the fees, which are usually calculated on an hourly basis. The amounts expended – costs and legal fees – are generally recoverable from the losing party in proportion to the extent to which the plaintiff or defendant has succeeded with his or her claim or defence. Should the plaintiff prevail with only 50% of his or her claim, the costs are considered compensated and each party is responsible for any costs incurred by him or herself. It is important to note that should the other party fail to pay within the required time, an order for the payment of costs is enforceable. The danger that a plaintiff might sue for no good cause and might lose against a Liechtenstein resident is the reason why there are laws to the effect that a plaintiff who neither has a residence in Liechtenstein, nor owns land or receivables which are secured on such land, has to pay security in the amount of the defendant’s estimated and presumed court and lawyers’ fees (see §§ 57 et seq. ZPO).

Litigation funding Court proceedings in Liechtenstein are usually funded by the parties themselves. However, as mentioned above, a party may seek legal aid if he or she is unable to fund legal costs without putting his or her “daily needs” in danger. According to § 64 ZPO, legal aid can include a temporary exemption from – inter alia – paying court fees, paying an advance on costs for witnesses or ofﬁ cial experts or interpreters, and providing security. Legal aid is available for natural persons as well as legal entities under the conditions set forth in § 63 ZPO. In Liechtenstein, lawyers are not allowed to assert a contingency fee, and they are further

GLI - Litigation & Dispute Resolution 2018, 7th Edition 174 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London GASSER PARTNER Attorneys at Law Liechtenstein not allowed to purchase a client’s claim which is the object of current proceedings (see § 879 ABGB). In the case of successful litigation, only a surcharge to the fees may be agreed. Under Liechtenstein law, there are no speciﬁ c provisions with respect to third-party funding. However, litigation funding by an independent third party is possible in Liechtenstein. It is up to the parties how they fund court proceedings.

Interim relief The success of court actions often depends on the effectiveness of provisional remedies, conservatory measures or summary judgments taken before or in lieu of the main proceedings. Generally, interim measures are obtained from a court exclusively upon application by a party for the purpose of preventing (irreparable) injuries to the petitioner. During the pendency of extra-judicial proceedings, interlocutory injunctions may be rendered ex offi cio (see Article 270 (3) EO). The Liechtenstein Enforcement Act of 24th November 1971 (Exekutionsordnung, “EO”) deals with interim relief, and particularly with such injunctions as described in the following. Interlocutory injunctions or interim relief – prior to the commencement of a lawsuit and during litigation – may either take the form of a security restraining order (Sicherungsbot) or an offi cial order (Amtsbefehl), the choice of which generally depends on the nature of the claim. Whilst security restraining orders aim exclusively at securing pecuniary claims, offi cial orders deal with claims other than those of a pecuniary nature. (a) Security restraining orders As long as the party may issue enforcement on the alleged debtor’s assets to achieve the same results, injunctions are inadmissible. If the petitioner is already suffi ciently secured, either by a right of lien or retention, or the court views him or her as suffi ciently protected, an injunction may be denied. To be granted an injunction by a court, one has to fulfi l two major conditions. Besides certifying the claim that warrants such a legally far-reaching measure, it is necessary to establish reasonable security reasons. The applicant must furnish (prima facie) evidence that he is going to face a subjective or an objective risk. In some cases, it is suffi cient to certify that the opposing party is a “domiciliary company” (objective reason), i.e. a company which is not engaged in business in Liechtenstein because its purpose is limited to managing funds or holding participations or equity interests. As security for pecuniary claims, the court may order different injunctions such as the seizure, custody and compulsory administration of movable tangible property and the deposit of funds in court, an injunction by order of the court on the sale or seizure of movable tangible property to the effect that the sale or seizure is rendered invalid, or an injunction addressed to a third party in which the alleged debtor has to fi le a pecuniary claim against that third party. (b) Offi cial orders According to Article 276 EO, an offi cial order may be issued if it is otherwise likely that the prosecution or realisation of a claim may be rendered impossible or substantially more diffi cult. Even if there is no particular endangerment or defeat of prosecution, the court can grant such an injunction in order to settle the relation of the parties to the subject of controversy, more precisely to settle the ownership, or maintain the real condition of the tangible property or legal relationship, if such measures are necessary. An offi cial order is a remedy for the temporary regulation of a specifi c situation.

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As security for such claims, the court may order, among others, a deposit in court of movable, tangible property in the alleged debtor’s custody, or the compulsory administration of the movable tangible property or immovable tangible property or rights or, depending on the claim, an order addressed to the alleged debtor (or opposing party) to perform specifi c acts necessary to maintain either the movable or immovable tangible property. In urgent cases, an applicant may make a preliminary request to the competent authorities (the mayor, members of the local council, the court usher, police offi cers, or the bailiff of the court, who are responsible for the alleged debtor) to render a provisional order. However, the applicant must fi le a motion with the court in writing. A preliminary court order loses any effect if the applicant fails to do so (see Article 272 EO). Interim injunctions are always issued and enforced at the expense of the applicant, without prejudice to a claim for reimbursement of costs due to the applicant at the end of an ordinary proceeding, but there are exemptions, e.g. in case of interlocutory proceedings (Zwischenstreit) for which the applicant is entitled to the reimbursement of costs. The opposing party will also be ordered to pay the costs should he or she unsuccessfully have applied for the restriction or removal of the interlocutory injunction. Upon service of the injunction, the applicant can be required to pay in advance to the court the amount of money required for the enforcement of the issued injunction. The enforcement of the injunction may not be effected until that amount has been paid [see Article 286 (1) and (3) EO].

Enforcement of judgments The enforcement of civil law judgments in Liechtenstein is exclusively based on the Liechtenstein Enforcement Act (EO). According to the EO, a formal recognition, and thus the enforcement of a foreign judgment in Liechtenstein, is contingent upon reciprocity and thus generally not possible. Although Liechtenstein is a member of the EEA (European Economic Area), Council Regulation (EC) No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters (EuGVVO; Brussels I) does not apply in Liechtenstein. Neither is it subject to EC regulations and directives in this area of law nor, with only very few exceptions, party to general international, multilateral or bilateral agreements when it comes to the acknowledgment and enforcement of foreign judgments. Furthermore, Liechtenstein is not a signatory to the Lugano Convention. Among others, Liechtenstein is a signatory to the following international and multilateral agreements: • Hague Convention on the Recognition and Enforcement of Decisions relating to Maintenance Obligations, 15th April 1958; • European Convention of 20th May 1980 Concerning the Recognition and Enforcement of Decisions relating to Custody Rights for Children; • European Convention on Information on Foreign Law, 7th June 1986; • Additional Protocol to the European Convention on Information and Foreign Law, 15th March 1978; • European Convention on the Calculation of Time Limits, 16th May 1972; • Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), 10th June 1958; and the

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• Hague Convention on the Law Applicable to Trusts and on their Recognition (“Hague Trust Convention”), 1st July 1985. There are bilateral agreements with Austria and Switzerland when it comes to the acknowledgment and enforcement of judgments in civil law matters, provided the decisions are in compliance with certain prerequisites and formal requirements stated in the agreements. The agreements do not cover every single civil law matter, and expressly exclude the enforcement of interim injunctions, decisions issued in insolvency proceedings, estate proceedings, etc. Finally, it should be mentioned that Liechtenstein has signed the New York Convention. Apart from these exceptions, foreign judgments are, in general, not recognised and enforced in Liechtenstein. However, Liechtenstein law offers specifi c procedures which may provide a chance for a successful plaintiff, who is a creditor on the basis of a foreign judgment, to achieve his or her goal. Under Liechtenstein law, the decisions of foreign courts may be used as a basis for summary proceedings to convert a foreign judgment into an enforceable Liechtenstein court order. The creditor may apply for a payment order or a court order based on a foreign judgment. Such summary court orders have the quality of a Liechtenstein judgment and can therefore be enforced based on the EO. This only works if the opposing party does not object. If the opposing party objects and the summary court order is disputed, Liechtenstein law provides for a specifi c procedure, the “Reinstitution Procedure” (Rechtsöffnungsverfahren) which is laid down in the Liechtenstein Act on the Protection of Rights (Rechtssicherungsordnung, RSO). The demand for such a reinstitution can be considered in the same way as a regular claim and leads to a court procedure in Liechtenstein which is, however, structured as a speedy summary procedure and gives the opposing party a fi rst chance to argue his or her position. When it comes to submitting evidence, there is a very restrictive approach. The decision of the Reinstitution Procedure is of the utmost importance for what happens next. The creditor has a legal title if the court grants the reinstitution. There is no “normal” appeal against such a decision; rather, the opposing party has to fi le a disallowance claim (“Aberkennungsklage”). Should reinstitution not be granted, the creditor has to act against the debtor through regular procedures (see Article 51 RSO). An attempt to enforce foreign judgments in Liechtenstein could lead to entirely new procedures in Liechtenstein. It may thus be easier and more effi cient to sue a Liechtenstein debtor in Liechtenstein at the very beginning instead of initiating legal proceedings abroad.

Cross-border litigation Liechtenstein is a signatory to the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, 1970 (the Hague Evidence Convention). Therefore, Liechtenstein assists in the service of judicial documents, as well as the obtaining of evidence such as local inspections, taking statements from witnesses and parties to disputes, the production of documents, providing expert opinions, etc. Mutual legal assistance to parties not signatory to the aforementioned convention is provided but the extent of the assistance has to be evaluated in each case. Regarding interim injunctions and their enforcement, see the sections on Interim relief and Enforcement of judgments. The responsibility for requests for legal assistance lies with the District Court (Landgericht) and is enforced pursuant to Liechtenstein procedural law.

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International arbitration Liechtenstein, with its political neutrality, geographically central location, excellent infrastructure and legal framework, is predestined to act as an attractive central European arbitration location. Provisions on arbitration in Liechtenstein can be found in the Civil Procedure Code (see §§ 594 et seq. ZPO). Arbitration law is up to date, due to a total revision in 2010 that closely followed the Austrian provisions and the Model Law on International Commercial Arbitration (“UNCITRAL Model Law”). However, in order to make Liechtenstein more attractive as an arbitration location, it has included several special features in its arbitration procedure, e.g. the grounds for challenging an award are strictly limited. Furthermore, the Liechtenstein Chamber of Commerce and Industry (LCCI) released the Liechtenstein Rules of Arbitration in 2012. Parties may agree that an arbitral tribunal has jurisdiction under these rules. As mentioned above, Liechtenstein is a signatory to the New York Convention which entered into force in 2011, with the effect that the enforcement of Liechtenstein arbitral awards and vice versa is guaranteed in all countries party to that convention. Liechtenstein jurisdiction is arbitration-friendly because nearly every matter that could be subject to a claim may also be the object of an arbitration agreement. In a nutshell, most business- and civil law-related matters can be subject to an arbitration agreement. Only certain company-related disputes, matters of family law and disputes arising out of contract articles of apprenticeship may not be subject to arbitration agreements (cf. § 599 para. 2 ZPO). Arbitration agreements have to be in writing and can be entered into either through signing a common document, a (standard) clause in a contract, or through correspondence. Arbitration parties – Legal entities Regarding legal entities with members (see Article 114 para. 2 PGR), the Liechtenstein Supreme Court has held that disputes between legal entities and the members of the legal entity are arbitrable (LES 1982, 16). However, according to Liechtenstein doctrine, the arbitration panel needs to have its mandatory seat at the place of domicile of the legal entity if the statutes of the legal entity generally provide for arbitration or the parties to the dispute specifi cally stipulate arbitration. Article 114 para. 2 PGR does not apply to foundations and establishments with ceased founder’s rights as they do not have members, but only benefi ciaries. According to the above, the board of a foundation may provide for an arbitration not domiciled in Liechtenstein. The statutes may also provide for arbitration with a non-Liechtenstein venue. All other Liechtenstein legal entities are arbitrable without limitation. Regarding trusts, Article 931 no. 2 PGR provides that a mandatory court of arbitration shall decide in disputes between settlors, trustees and benefi ciaries of trusts settled in Liechtenstein and governed by non- Liechtenstein law. This is the strongest argument for the arbitrability of trusts governed by Liechtenstein law. Arbitrators Unlike Austrian law, Liechtenstein ZPO still excludes judges of the courts of law from serving as arbitrators during their tenure. The minimum standards as to the neutrality of the arbitrators set forth in § 605 para. 1 ZPO constitute mandatory law and may not be derogated by agreement of the parties. The parties may provide for stricter or additional requirements as to neutrality or specifi c qualifi cations. An arbitrator’s duty to disclose any circumstances infringing his or her impartiality or independence lasts from his appointment until the closing of the arbitral proceedings. An arbitrator is obliged to disclose such

GLI - Litigation & Dispute Resolution 2018, 7th Edition 178 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London GASSER PARTNER Attorneys at Law Liechtenstein circumstances immediately. Any challenge to the suitability of a particular arbitrator can only be based on justifi able doubts regarding his or her impartiality or independence. Challenging of arbitrators Parties are free to agree on a specifi c challenge procedure. To challenge an arbitrator, it is not necessary for him or her to actually lack impartiality or independence. To act as an arbitrator, arbitrators are required to disclose several personal matters such as fi nancial or other business interests in the subject matter of the dispute, or personal or business relationships with one of the parties. The grounds for challenging an arbitrator are open to interpretation by the courts. The grounds for challenging state judges in Liechtenstein courts, including applicable case law, may serve as a guideline for what will constitute doubts as to an arbitrator’s impartiality or independence. If the parties have failed to agree on a challenge procedure, § 606 para. 2 ZPO provides a default procedure. A party challenging an arbitrator must fi le an application with the arbitral tribunal explaining the reasons for the challenge. The application must be fi led within four weeks of the challenging party gaining knowledge of the circumstances constituting such reasons. If a challenged arbitrator does not resign from offi ce upon such an application, or if the opposing party contests the challenge, the arbitral tribunal, including the challenged arbitrator, decides on the challenge. According to § 608 ZPO, a substitute arbitrator must be appointed if an arbitrator resigns or is successfully challenged. Liechtenstein Arbitration Association The Liechtenstein Arbitration Association (LIS) (www.lis.li), which in fact is not an arbitral institution in the literal sense, is a non-commercial association of lawyers and academics working in arbitration, which was established in June 2011. They work together closely with the Liechtenstein Chamber of Commerce and Industry (LCCI) to establish opportunities for national and international arbitration in Liechtenstein. One core purpose includes the development and advancement of Liechtenstein as an arbitration venue. The association currently counts more than 40 members who, in their daily work, are frequently confronted with issues relating to arbitration.

Mediation and ADR Alternative Dispute Resolution (ADR) Unlike a few years ago, Liechtenstein does not provide for mandatory mediation. There are several organisations which provide alternative and extrajudicial means of dispute resolution in Liechtenstein, including the Conciliation Board and the Professional Ethics Committees. The Conciliation Board (www.schlichtungsstelle.li) is a mediator for conﬂ icts between clients and banks, investment and asset-management companies and payment service providers. It provides a neutral and cost-free service that deals with speciﬁ c client complaints. An essential precondition is its independence from any possibly involved institutes. The Professional Ethics Committee of the Liechtenstein Institute of Professional Trustees and Fiduciaries (Liechtensteinische Treuhandkammer) is responsible for disciplinary complaints regarding licensed trustees and trust companies.

Regulatory investigations As a member of the EEA (European Economic Area), Liechtenstein has to implement most of the EU legislation, such as directives and regulations, on condition that they have

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Thomas Nigg Tel: +423 236 30 80 / Email: [email protected] Thomas Nigg is a Liechtenstein lawyer and citizen, currently practising in Vaduz. He studied law at the University of St. Gallen (Switzerland) where he obtained his Master of Arts in Legal Studies HSG (M.A. HSG) in 2008. In 2007 he began practising as a lawyer in Liechtenstein and was admitted to the Liechtenstein Bar in 2010. In 2014 he was appointed partner in Batliner Gasser Attorneys at Law (now GASSER PARTNER Attorneys at Law). In 2016 he was appointed senior partner of GASSER PARTNER Attorneys at Law. The greater part of his work involves representing clients, mostly corporations or high-net-worth individuals, before courts in civil, criminal and administrative matters and assisting clients in commercial, corporate and criminal law, pertaining to both national and international affairs. In addition he is a co-author of “Litigation and Arbitration in Liechtenstein”, the Liechtenstein chapter in The Asset Tracing and Recovery Review, and has authored articles on various legal topics.

Eva-Maria Rhomberg Tel: +423 236 30 80 / Email: [email protected] Eva-Maria Rhomberg is an associate at GASSER PARTNER Attorneys at Law, currently practising in Vaduz. Before joining GASSER PARTNER in 2017, she studied law at the Universities in Vienna and Innsbruck, where she earned her Master’s degree in law (Mag. iur.) in 2013. After graduating from Innsbruck University, she worked as a patient representative for an extrajudicial mediator and as a legal trainee at the Financial Market Authority (FMA) in Liechtenstein. Her main areas of practice include civil law, criminal law, litigation and compliance.

Domenik Vogt Tel: +423 236 30 80 / Email: [email protected] Domenik Vogt is a senior associate at GASSER PARTNER Attorneys at Law, currently practising in Vaduz. Before joining GASSER PARTNER in 2015 he studied business law at the Vienna University of Economics and Business, where he earned his Bachelor’s degree in law (LL.B.) in 2012 and his Master’s degree (LL.M.) in 2014. In 2013, during his Master’s studies, he spent a semester abroad at the University of Chicago. After graduating from the Vienna University of Economics and Business he studied at Christ’s College, Cambridge, where he obtained his second Master’s degree (LL.M.) in 2015. In 2017 he passed the Liechtenstein bar exam. His main areas of practice include civil law and the law of succession, corporate and foundation law, M&A, litigation and arbitration, administrative and tax law.

GASSER PARTNER Attorneys at Law Wuhrstrasse 6, 9490 Vaduz, Liechtenstein Tel: +423 236 30 80 / Fax: +423 236 30 81 / URL: www.gasserpartner.com

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Datuk Peter S.K. Yap – Amin, Yap & Co. Mark Ho – Chellam Wong Ooi Huey Miin – Raja, Darryl & Loh

Introduction – The Malaysian Legal System Malaysia is a member of the Commonwealth of Nations and as a result, its legal framework draws heavily from the English legal system. Malaysia has a written Federal Constitution which sets out clear parameters against which legislation is formulated and passed. In this regard, the common law of the United Kingdom has been incorporated into Malaysian law through an act of Parliament namely, the Civil Law Act 1956 (Act 67). Section 3 of the Civil Law Act 1956 provides that the Malaysian courts shall apply the common law and the rules of equity as administered in England on 7 April 1956, i.e. just prior to Malaysia’s independence in 1957. Malaysia has since developed its own body of common law, albeit based on the legal principles expounded under the English common law. Case law from other Commonwealth jurisdictions is considered by the Malaysian courts as persuasive authority in the development of Malaysian common law. Malaysia is a federation comprised of 13 states and certain federal territories. Its legislation is therefore divided into federal laws which apply throughout Malaysia and state laws which apply in the state in which they are enacted. There is also another component of Malaysian law, i.e. Syariah law, which is largely state-regulated and applied only to Muslims in respect of personal laws such as matrimonial, inheritance, succession and apostasy. There are two types of courts in Malaysia: the civil and criminal courts; and the Syariah courts. That said, Syariah courts do not have a role in determining commercial disputes, even those relating to Islamic fi nance. Only lawyers admitted to the Malaysian bar have the right to appear before the courts although it is possible for foreign lawyers to apply for ad hoc admission on a case-by-case basis. However, such ad hoc admission is rarely granted. Lawyers qualifi ed to appear before the civil courts must obtain separate qualifi cations to have rights of audience in the Syariah courts. As for the hierarchy of the civil courts in Malaysia, they are divided into the superior courts and the subordinate courts. The subordinate courts are divided into Magistrates and Sessions courts, which have different monetary jurisdictional limits (MYR100,000 for Magistrates courts and MYR1,000,000 for Sessions courts). Appeals against decisions of the subordinate courts are brought to the High Court.

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There are two High Courts in Malaysia: the High Court of Malaya (which covers Peninsular Malaysia); and the High Court of Sabah and Sarawak (which covers East Malaysia). In addition to its appellate functions, the High Court also serves as a court of fi rst instance with unlimited original monetary jurisdiction and in respect of specifi c types of claims including judicial review, company law remedies and arbitration-related claims. Rights of appeal (which may, in some cases, be subject to leave thresholds) lie from decisions of the High Court to the Court of Appeal, which is strictly an appeals court with no original jurisdiction. Appeals against decisions arising from the subordinate courts end at the Court of Appeal, while decisions arising from the High Court may be appealed further to the apex court of Malaysia, the Federal Court. All civil appeals to the Federal Court are subject to a leave fi lter. The Federal Court also has original jurisdiction to hear certain matters, including constitutional issues. A table setting out the hierarchy of civil and commercial courts in Malaysia is as follows:

Effi ciency and integrity In Malaysia, under the Federal Constitution, the judiciary is separate and distinct from the legislature and the executive. Superior court judges are constitutionally guaranteed security of tenure. In 2013, the Malaysian courts introduced Key Performance Indicators (“KPIs”) in the administration of court cases. This has increased effi ciency in the disposal of cases by setting a target timeline to conclude cases; to wit, nine months in the High Courts and Sessions Courts and six months in the Magistrates Courts. This is the prescribed time period to complete a case from the fi ling of the action until judgment or order. Where there is an appeal, the prescribed time for conclusion is nine months from the fi ling of the notice of appeal. Whilst KPIs are not “hard and fast” rules imposed by the courts, there were initial fears that their introduction would reduce the administration of justice to mere statistical targets

GLI - Litigation & Dispute Resolution 2018, 7th Edition 183 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Amin, Yap & Co. Advocates & Solicitors Malaysia and that expediency would be preferred over due process and justice. However, the effects of these KPIs have been largely positive and the Malaysian courts now operate effi ciently with minimal, if not no, backlog of cases without compromising the integrity of the process. To improve effi ciency, specialised courts including “New Civil Courts”, “New Commercial Courts”, “Admiralty Courts”, “Intellectual Property Courts”, “Construction Law Courts”, “Muamalat Court” and “Corruption Courts” have also been introduced in selected states throughout Malaysia. These efforts have also been largely successful in not only the effi ciency of the disposal of cases but also in developing real expertise within the judiciary in these areas. As at 30 September 2017, the pre-2016 cases pending in Magistrates Court are 182 (civil and criminal), in Sessions Court are 854 (civil and criminal), in High Court are 1868 (civil and criminal), in Court of Appeal are 55, and in Federal Court are 59.1 This is a substantial reduction of the number of backlogged cases. Another notable measure introduced for the purpose of simplifying and expediting the litigation process was the introduction of common rules of procedure by the Rules of Court 2012 (“the ROC 2012”) which amalgamated the rules of practice for the subordinate courts and the High Court into a single uniform set of rules, streamlining the procedures to be applied. A key rule developed under these Rules was Order 34, which arms the courts with signifi cant and far-reaching powers of pre-trial case management to give orders and directions for a “just, expeditious and economical disposal of proceedings”, and which allowed the courts to be more proactive in ensuring that cases move effi ciently and are not held up by dilatory tactics employed by litigants. Courtrooms have been equipped with electronic equipment for real-time digital audio- visual recordings of the proceedings, which are then made available to the parties.

Privilege and disclosure The law on “privilege” and “without prejudice” documents is set out in Section 23 of the Evidence Act 19502 which provides that in civil cases, admissions are not to be considered as evidence if made either upon an express condition that they are not to be disclosed, or under circumstances inferring such an agreement between the parties. In short, this privilege applies to any communication and any document made during the course of negotiations between parties that are earnestly seeking settlement. Not all documents marked “without prejudice” are automatically privileged. Two conditions apply across the board in determining whether a communication or a document is privileged: 1. the parties must be in dispute and that dispute led them to negotiate with one another; and 2. the communication between the parties must contain suggested terms that would ﬁ nally lead to the settlement of the dispute.3 Thus the nature of the communication or document is more important than the label or the absence of the label “without prejudice” on a document, which will not in itself preclude it from being privileged. For example, where the initial letter is labelled “without prejudice”, it may be implied that subsequent letters, not bearing this mark, will also be privileged4 unless there is clear indication in the correspondence to show that the privilege is not claimed.5

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A “without prejudice rule” communication will lose its privileged status once the negotiation results in a settlement,6 when both parties consent to waive the privilege,7 when there is in truth no negotiation at all,8 or when the evidence shows perjury, blackmail or other serious and unambiguous impropriety.9 Other situations where privilege may arise are envisaged under sections 121 to 132 of the Evidence Act 1950. In summary: 1. A judge is not bound to answer any questions as to how he carries out his duty as a judge or as to anything of which he has knowledge in court in his capacity as a judge.10 2. Except in suits involving married persons, prior consent must be obtained from a married person for the disclosure of marital communication11 – however, if the acts and the communications were inextricably connected and cannot be separated, the married person may be compelled to give evidence.12 3. Permission/approval has to fi rst be obtained from the offi cer in charge, subject to the administration of a Minister or Chief Minister if a person wishes to produce or give evidence from any offi cial records relating to state affairs which are yet to be published.13 4. A public offi cer is not bound to disclose communications conveyed to him in offi cial confi dence if the disclosure to be made is against the public interest.14 5. An advocate and solicitor is barred from disclosing any communication between him and his client in the course and for the purpose of his or her employment by, or on behalf of, his or her client, and from disclosing any communication made to him or her by his or her client – this also extends to clerks or servants of the advocates.15 The new Order 24 of the ROC 2012 removes the automatic right to discovery in legal proceedings. Order 24, Rule 3 of the ROC 2012 provides that discovery can only be carried out if an order of court has been given in respect thereof.16 The court may order the discovery of the following documents: 1. documents that the party relies on or will rely on; and 2. documents that could adversely affect the party’s case, adversely affect another party’s case, or support another party’s case. Discovery is ordered for relevant documents. An order for discovery is subject to the test of “necessity”. The ROC 2012 does not provide a specifi c period of time within which discovery must take place. This is handled through courts’ directions during case management and will depend on the volume and complexity of the documents involved. In Malaysia, an action against a third party for discovery is possible in accordance with the principles in the case of Norwich Pharmacal Co v. Customs and Excise Commissioners.17 If a party refuses to obey a court order for discovery, the court may dismiss the action, strike out the defence, or order judgment in default of discovery and make any such order as it thinks fi t.18 A party in default of a discovery order may also be liable to committal for contempt of an order of court.19 A party to whom documents are disclosed during the course of discovery shall be deemed to have impliedly undertaken not to use the same for any purpose other than the proceedings. Discovery is, of course, subject to privilege. Once privilege is established, the right to withhold the document or the information is an absolute right.

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Costs and litigation funding Courts are empowered to order costs in proceedings before them. The general rule is that costs follow the event, i.e. the successful party will be entitled to its costs in respect of the proceedings, although there are exceptions to this. Courts may also make “no order as to costs”, or order parties to bear their own costs. An example where the general rule does not apply would be where a plaintiff is successful but the court nevertheless considers that the action was unnecessary or protracted by the plaintiff’s own conduct. In such a situation, the court may make no order as to costs, or potentially order the successful plaintiff to pay the defendant’s costs. The quantum of costs to be awarded is at the discretion of the court. In the subordinate courts, the costs are generally ﬁ xed according to the cost schedule found in Order 59 Rule 23 of the ROC 2012. In the superior courts, costs are ordinarily awarded on a “party to party” basis and are assessed and determined by considering a number of factors, including the complexity, difﬁ culty and novelty of the issues, the amount of work reasonably required, the importance of the case and value of the claim. The superior courts are empowered to order costs in a litigation to be paid on a full indemnity basis but in practice, this power is rarely invoked. Litigation funding is presently not widespread in Malaysia. It may potentially be a basis for a defendant to seek security for costs against a “nominal” plaintiff under Order 23 of the ROC 2012. Furthermore, the rule against champerty survives as part of the common law applied in Malaysia. As far as advocates and solicitors are concerned, section 112 of the Legal Profession Act 1976 (“the LPA”) expressly prohibits “contingency fee arrangements”, i.e. any agreement that provides that payment will only be made in the event of success of the legal action. Recent attempts to promote litigation funding in the context of arbitration proceedings via proposed amendments to the Arbitration Act 2005 were not successful and it remains to be seen how this particular practice will develop in the context of Malaysian dispute resolution in the future.

Interim relief Courts are empowered to grant interim relief, whether in aid of litigation under their purview, arbitrations or litigation in other jurisdictions. The courts commonly are widely familiar with the grant of prohibitory and mandatory interim injunctive relief. Generally in cases where prohibitory interim injunctive relief is sought, American Cyanamid principles are applied. Common law principles as to the grant of injunctive relief are complemented by Orders 29 and 92 of the ROC 2012, paragraph 6 of the Schedule to the Courts of Judicature Act 1964, and Section 50 and Chapter IX of the Speciﬁ c Relief Act 1950. Freezing orders are also commonly granted in accordance with Mareva guidelines, as are pre-action discovery orders. Other types of interim relief that may be granted include the appointment of receivers over assets of the defendants. There are, however, certain circumstances where injunctions may not be granted. For example, an injunction will not be granted against the Government where it would interfere with the public duties of any department of the Government of Malaysia.

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Enforcement of foreign judgments Foreign judgments may be enforced in the Malaysian courts by way of: (1) a common law action, i.e. an action based on the foreign judgment; or (2) a summary application under the Reciprocal Enforcement of Judgments Act 1958 (“REJA”), provided that the foreign judgment is obtained from a court recognised in the schedule thereto. If a foreign judgment is to be registered as a judgment in Malaysia under REJA, it is important the following question be asked: 1. Is the country listed under the First Schedule of REJA?20 2. Is the judgment that of a superior court?21 3. Is it a ﬁ nal judgment of a superior court?22 4. Is the party seeking to enforce the judgment a judgment creditor within the meaning of Section 2 of REJA?23 5. Is the judgment contrary to public policy?24 6. Is the notice of registration of judgment served?25 The registration of a foreign judgment and the procedure is contained in Order 67 of the ROC. Once a foreign judgment is enforced as a Malaysian judgment, whether under the summary procedure of REJA or otherwise, there are several modes of execution which may be taken on the same, which are set out in Order 45 of the ROC 2012. They are: 1. Writ of seizure and sale. 2. Prohibitory orders. 3. Garnishee proceedings. 4. Writs of possession. 5. Charging order. 6. Committal proceedings. Action on any judgment shall not be brought after the expiration of 12 years from the date on which the judgment became enforceable.26 Order 46 Rule 2(1)(a) of the ROC 2012 clearly provides that if six years pass from the date of judgment, leave of the court is required for execution proceedings to be brought.27

Cross-border litigation Malaysian courts recognise provisions for the choice of governing law in a contract but will not give effect to such a clause if it is against Malaysian public policy. In Joerg Hugo Schmidt v. Menk Sdn Bhd,28 the choice of law clause provided that the applicable law was German employment law and the High Court held that “if necessary, the Malaysian courts will have to decide on the merits of German law with the help of respective foreign law experts”. Also, in the recent Federal Court case of Scandinavian Bunkering (Singapore) Pte Ltd v. MISC Bhd,29 where the contract stipulated English law as the law governing the agreement, the Federal Court held that English law governed questions of substantive law (general damages and special damages issue) but Malaysian law still governed questions of procedural law (the quantiﬁ cation of general damages). Malaysian courts retain a discretion to hear a claim even where parties in their contract

GLI - Litigation & Dispute Resolution 2018, 7th Edition 187 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Amin, Yap & Co. Advocates & Solicitors Malaysia have agreed to refer the dispute to a foreign court.30 In this regard, Malaysian courts are guided by the principles of forum non conveniens laid out in The Eleftheria,31 which can be summarised as follows: 1. In which country is the evidence on the issues of fact situated and what is the effect of that on the relative convenience and expense of trial between the Malaysian and foreign courts? 2. Does the law of the foreign court apply and, if so, does it differ materially from Malaysian law? 3. With which country/countries are the parties connected, and how closely? 4. Do the defendants genuinely desire trial in the foreign country, or are they only seeking procedural advantages? 5. Would the claimants be prejudiced or become unlikely to have a fair trial if they were sued in the foreign court as they would be deprived of security for their claim? Would they be unable to enforce any judgment obtained, be faced with limitation of time that is not applicable in Malaysia, or for political, racial, religious or other reasons? Malaysia is not party to any international conventions for mutual assistance for service of process, such as the Hague Service Convention. However, Malaysia civil procedure does allow for service of Malaysian court process out of the jurisdiction and vice versa. Where a foreign party obtains leave from its local courts to serve proceedings on a party in Malaysia, that foreign party is required to adhere to procedures under Order 10 of the ROC 2012 in order to effect service in Malaysia.32 The Malaysian courts may also assist in the taking of evidence of a witness in Malaysia for use in court proceedings in another jurisdiction – Order 66 of the ROC 2012. The Malaysian courts have the power to make, in relation to a matter pending before a court or tribunal in a place outside the jurisdiction, orders for the examination of witnesses and for attendance and for production of documents, and to give directions. An application for such an order is to be made ex parte (or without notice) by a person duly authorised to make the application on behalf of the foreign court or tribunal in question, and shall be supported by afﬁ davit.33

International arbitration Malaysia acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (“New York Convention”) in 1985. Presently, arbitration in Malaysia is regulated by one piece of legislation, the Malaysian Arbitration Act 2005 (“AA 2005”), which is based on UNCITRAL Model Law 1985 and largely modelled after the New Zealand Arbitration Act 1996. The AA 2005 makes no distinction between commercial arbitration and non-commercial arbitration. Both domestic and international arbitrations seated in Malaysia are governed by the same regime under the AA 2005; there are provisions in Part III of the AA 2005 that generally govern domestic arbitration only, although parties are at liberty to “opt-out” of their application in cases of domestic arbitration, and “opt-in” to their application in cases of international arbitration. The process of recognition and enforcement of arbitral awards (which includes awards made in member states of the New York Convention) in Malaysia essentially follows the Model Law and New York Convention regime whereby passive remedies against enforcement are limited to those grounds contained in Article V of the New York Convention.

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Procedurally, applications for enforcement may be made to a High Court in Malaysia on a “without notice” basis similar to the regimes available in Singapore and the United Kingdom. The Asian International Arbitration Centre (formerly known as the Kuala Lumpur Regional Centre for Arbitration) (“AIAC”) (website: https://aiac.world) is the main arbitral institute in Malaysia. The AIAC has been gaining popularity internationally as both an administrative body and venue for arbitrations in the past decade. AIAC provides wide-ranging ADR services and, in addition to its conventional rules, also has as part of its services, speciﬁ c procedures in place for emergency arbitration, fast-track arbitration, arbitration of Islamic commercial disputes and domain name dispute resolution. The Director of the AIAC is the default appointing body under the AA 2005.

Recent developments Since coming into force, the AA 2005 has been substantially amended twice, fi rst in 2011 and more recently in 2018 (with the latter amendments coming into force on 8 May 2018), largely to bring the AA 2005 in-sync with updates to the Model Law in 2006, particularly relating to the more extensive defi nition of arbitration agreements provided for in Option 1 of Article 7 of the Model Law and the more expansive provisions regarding interim relief under Articles 17A to J of the Model Law. Malaysia is generally regarded as arbitration-friendly. Malaysian courts have applied a pro-arbitration stance in: (1) staying court proceedings commenced in breach of arbitration agreements (see the Federal Court’s decision in Press Metal Sarawak Sdn Bhd v. Etiqa Takaful Bhd [2016] 5 MLJ 417); (2) the grant of interim measures to support arbitrations (see the Federal Court’s decision in AV Asia Sdn Bhd v. Measat Broadcast Network Systems Sdn Bhd [2014] 1 CLJ 821); and (3) the enforcement of awards (see: the Federal Court’s decision in CTI Group Inc. v. International Bulk Carriers SPA [2017] 5 MLJ 314). Malaysian courts have also not shied away from setting aside arbitral awards made in Malaysia wherein tribunals have exceeded their mandate under an arbitration agreement (see: the Federal Court’s decision in Thai-Lao Lignite Co Ltd & Anor v. Government of the Lao People’s Democratic Republic [2017] 9 CLJ 273). Other key developments in 2018 have been the introduction of section 3A of the AA 2005, which makes it clear that parties are free to choose their own representation in arbitration, and amendments to section 33 of the AA 2005 that expressly confer, unless excluded by the parties, power to a tribunal to award simple or compound interest. The introduction of section 3A of the AA 2005 underscored Malaysia’s commitment to support parties’ choice of representation, which had been refl ected some years earlier in 2013 by amendments to Malaysia’s Legal Profession Act 1976, which permits non- Malaysian legal practitioners to represent parties in arbitration in Malaysia. Another major development by the 2018 amendments to the AA 2005 has been the abolition of section 42 of the AA 2005, which was the component of Part III that allowed for post-award references to the courts on questions of law (akin to appeals on questions of law under section 69 of the UK Arbitration Act 1996). As a consequence of this amendment, moving forward, the only remaining avenue for an active challenge to an arbitral award made in Malaysia would be to apply to set aside under Article 34 of the Model Law-type regime.

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Mediation and ADR Mediation Malaysia has also actively promoted mediation as a means of alternative dispute resolution. The Malaysian Mediation Act 2012 (“MMA 2012”) provides for express recognition of the binding nature of settlement agreements arising from mediation, confi dentiality of mediation communications and for general immunity from suit of mediators (save for instances where fraudulent or wilful misconduct is involved). The Malaysian Bar Council established the Malaysian Mediation Centre in 1999 which organises training and accreditation of its panel of mediators. The AIAC also provides mediation services and has its own panel of accredited mediators. Industry-specifi c mediation bureaux include the Financial Mediation Bureau, which handles complaints from policyholders against insurance companies, and the Banking Mediation Bureau, which provides for consumer disputes with banks. The conciliation process is a mandatory precursor to claims to the Industrial Court under the Industrial Relations Act 1967. Mediation is encouraged but not compelled upon litigants in court proceedings. Malaysian courts provide mediation services and facilities, with judges and registrars serving as mediators. In 2014, statutory adjudication of payment claims in the construction sector was introduced in Malaysia upon the coming into force of the Adjudication: Construction Industry Payment and Adjudication Act 2012 (“CIPAA 2012”). TDR (Adjudication) With the introduction of CIPAA 2012, unpaid parties under written construction contracts seeking payment of their claims, are conferred a statutory right to refer these claims to adjudication and to obtain adjudication decisions, which may be enforced as judgments upon a summary process application to the Malaysian courts under the framework of CIPAA 2012. As is the case in other jurisdictions with statutory adjudication regimes, this mode of dispute resolution is considered “temporary dispute resolution” (“TDR”) as it may be resorted to without prejudicing the parties’ rights to seek fi nal determination of their disputes by way of arbitration or court proceedings. CIPAA 2012 applies to every construction contract made in writing (as defi ned under section 2 thereof) relating to construction work carried out wholly or partly within Malaysia. Therefore, non-Malaysian contractors or construction industry service providers engaged in construction works carried out in Malaysia may potentially avail themselves of this statutory remedy as well. Adjudication under CIPAA 2012 is administered by the AIAC. In the four-odd years of the operation of CIPAA 2012, adjudication has quickly become the preferred “fi rst stop” for the making of construction contract-related claims in Malaysia, largely due to AIAC’s effi ciency in administering the adjudication process and a judiciary that is supportive of the statutory adjudication process (see for example, the Court of Appeal’s recent decision in Martego Sdn Bhd v. Arkitek Meor & Chew Sdn Bhd & another appeal [2018] 2 CLJ 163).

Regulatory investigation In Malaysia, various administrative bodies and tribunals with regulatory and/or investigative functions operate to deal with business or consumer affairs.

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The Central Bank of Malaysia, which oversees and regulates payment systems infrastructure and the banking business, provides a channel for consumer complaints against banking institutions via a dedicated “Complaints Unit”. Taxpayers aggrieved by tax assessment may appeal against such assessments to Special Commissioners of Income Tax within the framework of the Malaysian Income Tax Act 1967. Apart from the Central Bank and the Inland Revenue Board, examples of regulatory bodies that are actively engaged in the enforcement of laws under their purview include: (1) the Malaysian Companies Commission (which monitors, regulates and enforces the law relating to corporations registered in Malaysia); (2) the Malaysian Securities Commission (which regulates capital markets and which is empowered to enforce securities laws under its purview and investigate breaches); (3) the Malaysian Competition Commission (which is responsible for the implementation, monitoring and enforcement of Malaysian competition laws under our Competition Act 2010); and (4) the Commissioner of Personal Data Protection (which is responsible for the implementation, monitoring and enforcement of personal data protection under the Personal Data Protection Act 2010). There are a number of statutorily established tribunals that determine claims by aggrieved parties in speciﬁ c areas (within the parameters and monetary limits prescribed by the relevant laws) such as the Tribunal for Consumer Claims,34 the Tribunal for Homebuyers’ Claims,35 and the Industrial Court.36 Generally, decisions by administrative bodies may be reviewed by the Malaysian courts by judicial review. As is the case in many other countries, the courts in Malaysia employ a two-stage process of ﬁ rst ascertaining whether aggrieved parties ought to be granted permission (or leave) to apply for judicial review of the decision complained of, and then only if permission is granted, going on to review the decision complained against.

* * *

Endnotes 1. Tun Raus Sharif, former Chief Justice of Malaysia, in his speech on ‘Judicial Reforms by The Malaysian Judiciary’ on 10 October 2017. 2. Section 23 of the Evidence Act 1950. 3. Malayan Banking Bhd v. Foo See Moi [1981] 2 MLJ 17. 4. Paddock v. Forrester (1842), 3 Man. & G. 903. 5. India Rubber v. Chapman [1926]20 BWCC 184. 6. Knapp v. Metropolitan Permanent Building Association (1888) 9 N.S.W.R. 468. 7. Dusun Desaru Sdn Bhd v. Wong Ah Yu [1999] 2 CLJ 749. 8. Daya Anika Sdn Bhd v. Kuan Ah Hock [1998] 6 MLJ 537. 9. Halfords Media (UK) Limited v. Ponomarjovs (October 2015 – Chancery). 10. Section 121 of the Evidence Act 1950. 11. Section 122 of the Evidence Act 1950. 12. Palldas a/l Arumugam v. PP [1988] 1 CLJ 661. 13. Section 123 of the Evidence Act 1950. 14. Section 124 of the Evidence Act 1950. 15. Section 126 and 127 of the Evidence Act 1950. 16. Order 24 Rule 3 of the Rules of Court 2012. 17. Norwich Pharmacal Co v. Customs and Excise Commissioners [1974] AC 133.

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18. Order 24 Rule 16 of the Rules of Court 2012. 19. Order 24 Rule 16 of the Rules of Court 2012. 20. First Schedule of the Reciprocal Enforcement of Judgments Act 1958. 21. Section 3(2) of the Reciprocal Enforcement of Judgments Act 1958. 22. Santong Trading Pte Ltd v. Hj Industries Sdn Bhd [1996] 3 CLJ 95, “the court held that “fi nal” is intended to mean and should be construed as meaning fi nal in the sense of admitting no further disputation”. 23. Section 2 of the Reciprocal Enforcement of Judgments Act 1958. 24. Banque Nationale De Paris v. Wuan Swee May & Anor [2000] 4 CLJ 435. 25. Order 67 Rule 7 of the Rules of Court 2012. 26. Section 6(3) of the Limitation Act 1953. 27. Order 46 Rules of Court 2012. 28. Joerg Hugo Schmidt v. Menk Sdn Bhd [2011] MLJU 367. 29. Scandinavian Bunkering (Singapore) Pte Ltd v. MISC Bhd [2015] 3 MLJ 753. 30. Globus Shipping & Trading Co (Pte) Ltd v. Taiping Textiles Berhad [2015] 3 MLJ 753. 31. The Eleftheria [1969] 2 All ER 641. 32. Order 62 of the Rules of Court 2012. 33. Order 66 Rule 1 and 2 of the Rules of Court 2012. 34. Established under Section 85 of the Consumer Protection Act 1999. The primary function is to hear and determine claims fi led by consumers under the Consumer Protection Act 1999. The Tribunal provides an alternative forum for consumers to fi le claims in an easy, simple, inexpensive and speedy manner. 35. Established under Section 16B of the Housing Development (Control and Licensing) Act 1966. The primary function is to hear and determine claims for any loss incurred or any matter concerning a person’s interests as a homebuyer (such as late delivery, poor workmanship like leakage, cracks, unsafe wiring and crumbled cement). 36. Established under Section 21 of the Industrial Relations Act 1967. The main objective of the Industrial Court is to act as the decision-maker in case of all industrial/trade disputes. “Trade disputes” means any disagreement between the employer and workman or employee which is connected with the employment or non-employment, or the terms of employment, or the conditions of work of such workman or employee leading to industrial action (i.e. General strike, Occupation of factories, Slowdown (or Go-slow)).

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Datuk Peter S. K. Yap – Amin, Yap & Co. Tel: +603 207 00100 / Email: [email protected] Peter Yap is the managing partner at Amin, Yap & Co. He is responsible for corporate and commercial matters at the ﬁ rm and has extensive experience in securities law and regulatory matters, shareholders’ disputes, government concessions and general commercial litigation. Peter is a Barrister at Law and admitted as a member of the Honourable Society of Lincoln’s Inn. He was called to the Bar of England and Wales in 1993 and admitted to the Malaysian Bar in 1995. Peter is a member of the Disciplinary Committee appointed by the Advocates and Solicitors’ Disciplinary Board of Malaysia. In 2015, Peter was bestowed with the Darjah Pangkuan Seri Melaka award by the Governor of the State of Melaka. The award carries with it the honoriﬁ c title “Datuk”.

Mark Ho – Chellam Wong Tel: +603 620 30988 / Email: [email protected] Mark Ho, a member of Middle Temple Inns of Court, was called to the Bar of England and Wales, in 1992. He read in chambers in Messrs. Skrine and was admitted as an advocate and solicitor of Malaya in 1993. In 1997, he was admitted as an advocate and solicitor of the Supreme Court of Singapore. Mark Ho is the managing partner of the fi rm of Chellam Wong, a commercial practice situated in Kuala Lumpur. The fi rm celebrates its 21st anniversary this year. The fi rm’s portfolio includes litigation and non-litigation matters such as conveyancing and banking documentation. Mark Ho is known for commercial and corporate litigation, corporate debt restructuring and insolvency and receivership. He also advises on Securities Commission and the Kuala Lumpur Stock Exchange (“BURSA”) laws and regulations. Mark Ho is also an avid cyclist and swimmer, and a collector of fi ne watches.

Ooi Huey Miin – Raja, Darryl & Loh Tel: +603 269 49999 / Email: [email protected] Huey Miin is a disputes resolution partner of Messrs. Raja, Darryl & Loh in Kuala Lumpur. He was called to the Malaysian Bar in 1999 and actively appears as counsel at all levels of the West Malaysian courts and in arbitrations, both domestic and international, in disputes covering a diverse range of areas. His focus area has been in commercial arbitration and arbitration-related court proceedings. He has successfully acted for clients in numerous cases, including both resisting and seeking enforcement and challenges to arbitral awards, and has a number of reported cases to his credit that involve arbitration-related issues of general importance. He also sits as an arbitrator and adjudicator.

Amin, Yap & Co. Advocates & Solicitors Level 7, UBN Tower, Box 100, 10 Jalan P Ramlee, 50250 Kuala Lumpur, Malaysia Tel: +603 20 700 100 / Fax: +603 20 701 200

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Miguel Angel Hernandez-Romo Valencia & Miguel Angel Hernandez Romo Foley Gardere Arena

Effi ciency of process Court procedures in Mexico follow the same steps generally: a) lawsuit; b) answer to the lawsuit; c) evidence period; d) allegations; and e) fi nal judgment. The rules governing the court procedure are different depending on the state where the parties are litigating and the nature of the confl ict (Civil, Criminal, Labour). Mexico is a country that accepts and, to some extent, encourages alternative dispute resolution procedures in order to alleviate the overwhelming number of cases that have to be resolved by the courts. Amongst such ADRs there is arbitration, mediation, and some other forms of conciliation during the proceedings. Decisions in Mexico are based on law and not on equity. But there are exceptions to this rule, and in such cases the decision will be based on general legal principles – if and only if there is no applicable law to solve the problem at stake, or if the interpretation of the law would not solve the problem. Also, if there is doubt regarding the interpretation of a contract, and such contract cannot be resolved according to the interpretation rules established in the law; if such doubts relate to accidental clauses of the agreement, and the agreement is gratuitous, such doubts will be resolved in favour of the least transmission of rights and interests; if the agreement is onerous, such doubts will be resolved in favour of the major reciprocity of interests. If doubts relate to the main object of the contract, so that it could not be established what was the real intent of the parties, the agreement will be declared null. Court procedures in Mexico are effi cient, both in time and in essence. Litigation proceedings are not very lengthy, courts follow the deadlines established by law, and render their judgments according to them.

Integrity of process The judiciary in Mexico is completely independent of any political or religious belief, and its members are impartial when rendering their judgments.

Privilege and disclosure As a general rule, all documents may be considered as privileged, understanding such concept in the sense that parties have no obligation to give such documents to another party, unless they are requested by the authority to do so. Even though parties have no obligation to open their ﬁ les to other parties, this general rule

GLI - Litigation & Dispute Resolution 2018, 7th Edition 194 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Foley Gardere Arena Mexico has an exception. Such exception exists when one of the parties requests specifi c documents from the other. The request has to be very clear, i.e. establishing date, sender, recipient, etc. Therefore, if parties in litigation don’t have in their possession certain documents (documents that are the basis for their claim and/or defence), they can request a certifi ed copy of such documents to the party that has them in its possession. Once the request has been made, and if the requesting party can prove to the court that it has requested the document, but that it has not been delivered by the other party, the court may order such party to give the certifi ed copy requested. In case the other party fails to produce such document, the court may warn the other party that if it does not produce the document requested, the court will consider that the the claims made by the requesting party in its lawsuit may be true and valid. In Mexico, full discovery is not permitted.

Costs In Mexico, costs are awarded against the losing party, but not in every case. The law clearly establishes when costs are awarded to the other party. Costs are allocated in a different way, depending on the state where litigation takes place. In Mexico City, costs are awarded to the winning party if the counterparty has acted in bad faith, falsely or without any basis for its claim. The purpose of costs is to cover the legal costs that the other party has incurred because of the litigation. However, these legal costs awarded are not based on the real disbursement made by the winning party, but on what the law establishes. Judges may determine the amount of the costs awarded to the winning party, if possible; if it is not possible to award a specifi c amount, the parties will have to start an ancillary proceeding in order to quantify the costs. Costs will only be awarded to the parties if they can prove that they were aided by an attorney. In Mexico City, costs are awarded on the following basis: If the amounts claimed are identifi ed, fi rst instance costs will be awarded as follows: (a) if the amount of the litigation is not higher than 3,000 times the minimum daily wage in Mexico City, costs will be 10% of such amount; (b) if the amount of the litigation is higher than 3,000 but not over 6,000 times the minimum daily wage in Mexico City, costs will be 8% of such amount; and (c) if the amount of the litigation is higher than 6,000 times the minimum daily wage in Mexico City, costs will be 6% of such amount. Second instance costs will be increased by 2% (i.e., 10% will be increased to 12%; 8% will be increased to 10%; and 6% will be increased to 8%). If the amounts claimed are not identifi ed, costs will be awarded according to a scale established in the Internal Law of the Superior Tribunal of Justice of Mexico City.

Litigation funding The agreement between clients and attorneys for their fees can be agreed very openly, without limitation, including contingency fee, third-party funders or insurance.

Interim relief Interim remedies can be requested and granted by the court if: (a) there is a threat that the person against whom the lawsuit will be ﬁ led or has been ﬁ led will hide or leave the place where litigation is taking place; (b) there is a threat that assets will be hidden or deteriorate in

GLI - Litigation & Dispute Resolution 2018, 7th Edition 195 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Foley Gardere Arena Mexico such cases when an in rem action will be brought; and (c) there is a threat that assets will be hidden or sold in such cases where a personal action will be brought, and those are the only assets of the debtor. The only interim remedies available are: (a) confi nement; and (b) provisional seizure of assets. In order for the confi nement to take place, the party requesting it should post a bond in order to guarantee possible damages and loss of profi ts that could be caused to the other party due to such order. The amount of the bond is established by the judge at his discretion. In order for the provisional seizure of assets to take place, the party requesting it should express the value of the claim or of the thing that is claimed, and the judge will determine the amount of the seizure. If the provisional seizure is not claimed based on an executive title, the plaintiff has to post a bond in order to guarantee the possible damages and loss of profi ts that might be caused. If the defendant deposits the value or object claimed, or posts suffi cient bond or proves that it has suffi cient assets (real estate) to pay the amounts claimed, the judge will either deny the interim injunction requested, or leave without effects the interim injunction previously granted. If the interim remedy is requested and granted before the litigation takes place, the party that requested it has to fi le the lawsuit within the following three days if the litigation will take place in the same jurisdiction; if it is in a different jurisdiction, the court will extend such period of time according to the distance where the litigation will take place (one additional day for each 200 kilometres or fraction exceeding 100 kilometres). Interim injunctions can be obtained without prior notice to the defendant, but not on the same day they are requested. Confi nement is a mandatory interim injunction that compels a party not to leave the place where the litigation is taking place without leaving a suffi ciently instructed representative, and with suffi cient funds, to be responsible for the outcome of the case. In Federal Civil Procedures, the judge can grant all of the appropriate injunctions in order to maintain the status quo. These kind of injunctions are granted without prior notice to the defendant. During the proceeding or before it, the judge may grant the interim injunctions consisting in: (a) seizure of assets in order to guarantee the outcome of the case; and (b) deposit or seizure of things, books, documents or documents that are the subject matter of the litigation. The interim injunctions mentioned in this paragraph may be granted if the party that requests them guarantees the possible damages and loss of profi ts that the defendant may suffer.

Enforcement of judgments The Federal Code of Civil Procedures establishes that foreign judgments can be enforced in Mexico as long as they comply with the following rules: (a) that formalities related to letters rogatory were complied with; (b) that they were not issued in an in rem action; (c) that the foreign judge had jurisdiction according to international rules consistent with those mentioned in Mexican law; (d) that the defendant was notifi ed or served personally; (e) that such judgment cannot be overturned or modifi ed by any means in the jurisdiction where it was issued; (f) that the action brought in such jurisdiction is not pending, between the same parties, before Mexican courts, and in which Mexican courts had heard fi rst about such case; (g) that the fulfi lment of the obligation ordered is not contrary to Mexican Public Policy; and (h) that the judgment fulfi ls the conditions to be considered authentic (apostille). Mexican courts can deny the execution of foreign judgments, even if they comply with all of the requirements mentioned above, if it can be proven that Mexican judgments are not enforced in the jurisdiction where the judgment was issued.

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In order for a foreign judgment to be executed, it has to be requested through letters rogatory, and such letters rogatory have to comply with the following: (a) have an authentic copy of the judgment, award or judicial resolution; (b) have authentic copies proving that summons were served personally and that the judgment cannot be overturned or modifi ed by any means; (c) translated into Spanish; and (d) that the party that wishes to execute such judgment mentions an address where the homologation will take place. The competent court to enforce a foreign judgment is the court of the domicile of the defendant, or where the defendant has its assets. Once the court receives the request to execute the foreign judgment, it will grant the defendant a period of nine days in order to put up a defence or exercise their rights. If they offer evidence, the court will set a date for a hearing. After the hearing, the court will issue its judgment. Mexican courts are very open in assisting foreign courts. The Federal Code of Civil Procedures has a chapter devoted to assisting foreign courts, and it establishes that requests from foreign courts do not have to be legalised if they are transmitted by offi cial authorities, but they do have to be translated into Spanish. Mexican courts may assist foreign courts in any aspect, since the Federal Code of Civil Procedures does not establish any prohibition on assistance. Letters rogatory have to be delivered to the required authority either through the parties, judicially or by diplomatic or consular agents, or by the central authority of any of the countries involved in this process. Once the letters rogatory are received by the court that will assist the foreign court, such court will assist the foreign court according to the applicable laws, but the foreign court may request the local court to avoid local formalities or to use specifi c formalities different than local formalities, if this is not harmful to Mexican public policy. Mexico is a signatory to several conventions related to the execution and enforcement of judgments and awards, including the New York Convention.

Cross-border litigation The Commerce Code establishes that letters rogatory received from abroad will be carried out according to Mexican law, but local courts can simplify local formalities or act according to different formalities than Mexican, if this is requested by the court that issues the letters rogatory or by the interested party, as long as such lack of formalities or additional formalities are not contrary to public policy and constitutional rights. It is easy to obtain orders in Mexico in support of proceedings elsewhere, as long as such orders are not contrary to Mexican public policy. A very important limitation when obtaining evidence in Mexico has to do with documents; Mexican law clearly states that when documents have to be given to a foreign tribunal, the request of such documents cannot be generic, but rather very speciﬁ c.

International arbitration The following bodies are used to resolve large commercial disputes in Mexico: a) International Chamber of Commerce. b) American Arbitration Association. c) Mexican Arbitration Centre.

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The legislation applicable to arbitration is the Commerce Code. Mexico has incorporated the UNCITRAL model law into the Commerce Code, with a few modifi cations. For example, the Commerce Code has a full chapter on costs and fees of the arbitration tribunal. The parties are free to agree on the procedural rules that the arbitrators will follow. If they do not agree, the arbitrators will guide the arbitration in a manner they deem appropriate (this includes determining the admissibility, appropriateness and value of the evidence). However, the parties must be treated equally and be granted the full opportunity to express their rights (Commercial Code), and the arbitration proceedings must refl ect this. Local courts can intervene to assist arbitration proceedings. The competent court is the Judge of First Instance (local or federal) of the place where the arbitration takes place. If the arbitration takes place outside of Mexico, the competent court for the recognition and execution of the judgment is one of the following: a) federal judge of fi rst instance; b) local judge of fi rst instance of the domicile of the party against whom the judgment is rendered; or c) judge where the assets are located. If requested by one of the parties, local courts can adopt provisional interim measures, even if an arbitration agreement exists and the arbitration proceedings have begun. If the arbitration tribunal or one of the parties (after obtaining approval from the arbitration tribunal) requests it, local courts can intervene to assist arbitration by taking or obtaining evidence. Arbitration proceedings and awards cannot be appealed before local courts, but they can be challenged. The only challenge that Mexican law accepts in arbitration, is a challenge against the award on the basis of nullity of the award. After the arbitration tribunal has issued the award, the parties can try to nullify it. The award may be nullifi ed if: a) One of the parties to the arbitration agreement was incapacitated. b) The arbitration agreement is not valid under the law chosen by the parties or under Mexican law. c) One of the parties was not duly notifi ed of the appointment of an arbitrator or of the arbitration proceedings, or if for any other reason it was not able to exercise its rights. d) The award refers to an issue outside the scope of the arbitration agreement or makes decisions outside the terms of the arbitration. e) The composition of the arbitration tribunal or the proceedings were not in line with the agreement of the parties. f) The judge confi rms that under Mexican law, the subject matter of the dispute cannot be subject to arbitration or that the award is contrary to public policy. The party that claims nullity should fi le a writ before the court claiming such nullity and a summary proceeding will initiate. In such proceeding, the parties have the right to present evidences and prove the nullity or not of the award. In such proceeding, the defendant may counterclaim recognition and enforcement of the arbitral award. The parties cannot appeal against the decision issued by the trial court; the only existing avenue to try to modify

GLI - Litigation & Dispute Resolution 2018, 7th Edition 198 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Foley Gardere Arena Mexico it is through Amparo proceedings (a remedy for the protection of constitutional rights in Mexico). With respect to arbitration awards, the parties cannot waive their rights to request the nullity of the proceeding or the Amparo proceedings.

Mediation and ADR Over the last decade, Mexican courts have been vouching for the use of mediation to solve civil, commercial, family and criminal (damages) disputes, but ADRs only apply if the parties agree. Courts cannot compel the parties to use ADR to solve disputes. Mediation that has been supported by Mexican courts has its own set of rules.

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Miguel Angel Hernandez-Romo Valencia Tel: +52 55 5214 5000 / Email: [email protected] Obtained his law degree from Escuela Libre de Derecho in Mexico City in 1992. Studied at the Southwestern Legal Foundation in 1993. Obtained his LL.M. from the University of Texas at Austin in 1994. Worked as a summer clerk in Washington, D.C. for Hogan & Hartson. Worked in Houston, Texas, for Fulbright & Jaworski as an intern. Attended postgraduate studies at Escuela Libre de Derecho for the course in Obligations (Torts), Commercial Law and International Business Transactions. Author of an article related to insurance law. Professor of Introduction to the Mexican Legal System and Professor of Procedural Law at Universidad Iberoamericana. Has been practising law since 1992, specialised in civil, commercial, insurance and family litigation, international arbitration and bankruptcy proceedings. Joined Gardere-Foley law ﬁ rm as head of the litigation group in the Mexico City Ofﬁ ce in September of 2017.

Miguel Angel Hernandez Romo Tel: +52 55 5214 5000 / Email: [email protected] Obtained his law degree from Escuela Libre de Derecho in Mexico City in 1960. Obtained his LL.M. from Harvard Law School in 1961. He has been a professor of law since 1961. He has been practising law since 1961, specialising in Civil, Commercial, Arbitration and Bankruptcy proceedings. He studied in Rome, Italy, for three years at the Gregorian University (1952– 1955). He is the former Dean of Escuela Libre de Derecho in Mexico City (1993–1998). Member of the American Law institute. He was the chair and co-reporter for the Transnational Insolvency Project, Mexico, of the American Law Institute. Member of the American College of Bankruptcy. Has written several articles on Mexican Civil, Commercial and Procedural Law.

Foley Gardere Arena Blvd. Manuel Avila Camacho No 36, Piso 18 02, Col. Lomas De Chapultepec, Delegacion Miguel Hidalgo, Ciudad De Mexico, C.p. 11000, Mexico. Tel: +52 55 5214 5000 / Fax: +52 55 5284 8569 / URL: www.foley.com

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Silvia Uscov USCOV | Attorneys at law

Effi ciency of process The Romanian civil system is of the continental type, generally applying the principle of double jurisdiction: fi rst instance and appeal, the law also providing the possibility of exerting extraordinary means of appeal in certain situations. Since the ordinary court’s solutions are not a judicial precedent for the other ordinary courts, in order to ensure the unitary interpretation and application of the law by all courts, the General Prosecutor of the Prosecutor’s Offi ce attached to the High Court of Cassation and Justice, ex offi cio or at the request of the Minister of Justice, the governing boards of the High Court of Cassation and Justice or of the courts of appeal and the Ombudsman, have the duty to ask the High Court of Cassation and Justice to rule on the interpretation of law when courts have interpreted it differently in similar cases. The High Court of Cassation and Justice is also called to intervene with another procedure complementing the appeal in the interest of the law, which also tends to unify the legislation, before erroneous solutions are made. The mechanism was inspired by other legal systems, mainly from the French, but adapted to the realities of the Romanian judicial system. The jurisdiction of the court is established at the fi rst court hearing based on the law and the parties’ conclusions, the ruling concentrating on both the determination of the court level and the territorial jurisdiction. Regarding the court level, one of the most important criteria of determination is the value of the object of the dispute. The law also establishes the court’s specifi c jurisdiction in certain areas, such as insurances, guardianship or family claims, inheritances, insolvency, or immovable property. The judge will recommend amicable settlement of the dispute to the parties through mediation and will have an active role in the litigation in his/her attempt to solve the case, based on the principle of fi nding the truth. To that end, with regard to the facts and the grounds of the law invoked by the parties, the judge is entitled to ask them to provide oral or written explanations to discuss any factual or legal circumstances, if not mentioned in the application or in the pleadings, to order the administration of the evidence they consider necessary, as well as other measures provided by the law, even if the parties oppose it. The prosecutor takes part in civil actions in certain cases provided by law, for example whenever necessary to protect the rights and legitimate interests of minors. Also, the prosecutor can plead in any civil process, at any stage, if he considers it necessary to defend the rule of law, the rights and interests of citizens. However, in practice, the Public Ministry rarely, almost never, uses this possibility. Any complaint/application/petition or statement of defence is addressed to the court in

GLI - Litigation & Dispute Resolution 2018, 7th Edition 201 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London USCOV | Attorneys at law Romania writing and can be transmitted either through classical channels (post, courier) or by electronic means of communication (fax, e-mail). With regard to the communication of applications by electronic means, they are considered to be formulated in due time if they are communicated before the closure of the activity of the court – not until midnight, as was the case with the classical means, which led to vivid debates after the decision that the High Court of Cassation and Justice gave in the interpretation of the legal provision. This aspect is of great importance, because the parties are entitled to submit statements or counterstatements and to request the administration of certain evidence by the court only within a certain period of time, so that this procedure does not lead to delaying the settlement of the case. Regarding the duration of the trial, at the ﬁ rst hearing, the judge establishes the settlement term, and if this is exceeded, the parties have a special procedure to prevent any more delays in settlement of the case. Everyone has access to the court portal, a site where certain information is provided about the litigation that is pending or which has been settled, along with the pronounced decisions. Besides this possibility, only the parties have access on the basis of a password provided by the court, to the electronic ﬁ le implemented, unfortunately, only by certain courts for the time being. In general, all disputes are open to the public, the court hearing is audited and the court clerk writes the notes for the hearing on the basis of the claims of the parties and the judge’s orders. The parties may propose that the court admit certain evidence, but it is up to the judge to decide which is useful for solving the case, and may also ask parties or third parties to present evidence. The law provides for lawyers to be able to administer evidence, but in practice there have been no such cases, with the parties having more trust in the judge to administer them. The parties are entitled at any moment of the trial to present their transaction on the rights that are under discussion in front of the court. The payment order procedure is a fast-track procedure for obtaining an enforceable title in respect of uncontested, liquid and receivable claims consisting of obligations to pay amounts of money resulting from a civil contract, established by an appropriate document or determined by a statute, regulation, or other document signed by the parties or otherwise permitted by law. The pre-trial procedure consists of a summons transmitted to the debtor. In case of failure to submit a statement of defence, the judge may, considering the circumstances of the case, recognise this as an acceptance of the creditor’s claims. Another fast procedure is set up for claims lower than RON 10,000 (slightly above €2,000), where the procedure is usually carried out without the parties’ participation in the court, except where the parties decide otherwise, and only by a contradictory written procedure on standardised forms. The procedure is inspired by the European Parliament and Council Regulation 861/2007. Typically, the judgment is made on the basis of the documents submitted by the parties, but other evidence may be administered if the expenses for their administration are not disproportionate in relation to the value of the object of the dispute.

Integrity of process The independence of the judges is established at the constitutional level and guaranteed by an independent body, the Superior Council of Magistracy, accompanied by the guarantee of their immovability. In a particular way, prosecutors in Romania are considered magistrates; they are part of the Superior Council of Magistracy and follow the same

GLI - Litigation & Dispute Resolution 2018, 7th Edition 202 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London USCOV | Attorneys at law Romania higher education institution together with the judges, although they do not enjoy the same guarantees, which is a subject of continuing dispute for defenders of human rights. The cases of incompatibility of a judge are provided by the law, a situation in which he is obliged to abstain from the trial of the respective case, or to be recused by the interested party. The judge’s failure to comply with the duty to abstain when he or she knows that one of the causes provided by the law for his abstention is applicable, constitutes a disciplinary offence. The same obligation is also provided for prosecutors under the same sanction. Change of venue of the trial may be required for reasons of legitimate suspicion or public safety. Suspicion is considered legitimate in cases where there is doubt about the impartiality of judges due to the circumstances of the trial, the parties or local conﬂ icts. Exceptional circumstances that presuppose that the trial of the case at the competent court could lead to public order disruption is a reason for the change of venue for reasons of public safety.

Privilege and disclosure The following are subject to professional secrecy: legal advice to the client; correspondence between the lawyer and his client; professional correspondence between lawyers; notes taken at the meeting between the lawyer and his client for the analysis of the facts, or a judicial fi le or documents of legal relevance; material support of evidence which the lawyer orders in the interest of preparing and carrying out the defence; testimonies received by the lawyer in the exercise of his profession; the names of the clients; the lawyer’s professional agenda; fi nancial documents and banking operations relating to the professional benefi ts; information obtained in relation to the client and his place of residence; and any aspect of, or related to, the lawyer’s exercise of their profession. However, lawyers will nevertheless be able to testify if the affected party has lifted the obligation of professional secrecy. As mentioned above, the judge may order a party or a third party to provide evidence that would lead to the case being solved, even if they are opposing, subject to the imposition of a judicial fi ne.

Costs The judicial costs consist of court fees, lawyers’ fees, experts’ and specialists’ fees, witnesses’ allowances and losses due to the need to attend the trial; transport costs and, where appropriate, accommodation, as well as any other expenses necessary for the trial (for example, translations). The judge is entitled to reduce the fees due to lawyers if they consider that they are excessive in relation to the value or complexity of the case or to the work done by the lawyer, also taking into account the circumstances of the case. The court fees, as well as lawyers’ or experts’ fees, may be covered by the state by making a request for public judicial assistance if the party meets certain conditions. The losing party will be ordered to pay court costs at the request of the winning party. If, at the ﬁ rst hearing, the defendant has agreed with the applicant’s claims, he may not be ordered to pay the costs unless, prior to the commencement of the proceedings, the applicant has been in default. If a claim is only partially awarded, the costs are reimbursed proportionally or are reciprocally compensated.

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Litigation funding Litigation funding is not regulated in Romania, but nothing prevents the cost of litigation being covered by a third party. However, it is debatable if the third party will be able to recover his expenses, unless he has a convention in that respect with the respective party. Contingency fee arrangements are only allowed if these amounts are set against a fee paid before the process is completed, to prevent the lawyer associating himself as a partner in a client’s private business, thus leading to a potential conﬂ ict of interest.

Interim relief Precautionary measures are those procedural means that aim to make available the debtor’s goods or the assets that are the object of the trial, in order to avoid their disappearance or the diminution of the debtor’s patrimonial asset, who henceforth will not be able to dispose of these assets. The precautionary measures were created to help the diligent, cautious creditor who does not yet have a writ of execution that can be enforced, so that at the time and in the event of obtaining the enforceable title, he will be able to proceed with the recovery of goods. Only after obtaining the enforceable title will the creditor be able to effectively execute his claim. However, these measures have a temporary character, as they persist until the ﬁ nal decision on the merits of the statement is ﬁ nally settled. The judge will be able to order provisional measures in urgent cases to retain a right that would be damaged by the delay in going through all the stages of a trial, to prevent imminent and irreparable damage, and to remove the obstacles that can be encountered on the occasion of an execution. The injunctive relief is granted if there are indications of a claimant’s right, and is temporary and enforceable. If the injunctive relief does not contain any indication of its duration and the actual circumstances of the case have not changed, the disputed measures will have effect until the dispute has been settled on the merits. For intellectual property rights, the law provides a special injunctive relief. Typically, evidence is handled during court hearings, so after the court has been seized of the case. However, there are situations where evidence, which could serve to settle the case, may disappear before the trial begins or even during the trial, but before the proposal and admittal of the evidence. If the person concerned is limited to administering this evidence by the usual means, that is to say, in the course of the proceedings, it may not be able to prove its claim or, as the case may be, the defence. In order to prevent such a situation, the law regulates the procedure for preserving the evidence.

Enforcement of judgments The bailiff is an executing body appointed by the Minister of Justice who carries out the obligation established by an enforceable title, which may be represented by a decision of a civil, commercial or criminal court, credit agreement of a credit institution, authenticated agreements by the Notary Public, as well as any other decisions or documents which, according to the law, may be enforced, which has not been executed voluntarily. Enforcement of any of these can only be done if the claim is uncontested, liquid and due. Foreign judgments that are not voluntarily executed may be enforced on the territory of Romania, on the basis of the given authorisation, at the request of the person concerned, or by the Romanian court if the exequatur procedure criteria are met: the judgment is deﬁ nitive according to the state in which it has been obtained; the trial has been settled by a competent court; and there is reciprocity regarding the effects of foreign judgments between Romania

GLI - Litigation & Dispute Resolution 2018, 7th Edition 204 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London USCOV | Attorneys at law Romania and the state of the court that pronounced the judgment. However, foreign judgments by which precautionary measures and provisional enforcement measures have been taken may not be enforced on the territory of Romania. Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, is applicable between EU Member States. This Regulation establishes that judgments issued in one of the EU Member States are recognised and enforceable without any special procedure. If the foreign judgment contains an unknown measure under the law of the EU Member State of enforcement, it should be adapted to a measure provided by the law of the EU Member State concerned, which has equivalent effects and similar objectives. Even if the exequatur procedure has been suppressed between EU Member States, the person against whom enforcement is sought should be able to request refusal to recognise or enforce a judgment if he considers that one of the grounds for refusal of recognition applies (for example, the person concerned did not have the opportunity to defend himself if the judgment was rendered in absentia).

Cross-border litigation With regard to obtaining cross-border evidence within the European Union, judicial cooperation between the courts of the Member States in the fi eld of obtaining evidence in civil or commercial matters is governed by Council Regulation (EC) 1206/2001 of 28 May 2001. For example, it may be necessary to hear witnesses or experts from other Member States or to visit the court of the place of the deed located in another Member State. According to Article 21 of Regulation No. 1206/2001, it prevails, in its subject-matter, over the provisions contained in bilateral or multilateral agreements or arrangements concluded between the Member States, in particular the Hague Convention of 1 March 1954 on Civil Procedures, and the Hague Convention of 18 March 1970 on the taking of evidence abroad in civil and commercial matters in relations between the Member States which are parties thereto. At the request of the parties or ex offi cio, the Romanian judicial authorities may request a rogatory commission to be held in non-EU Member States. The Romanian judicial authorities send the request for a rogatory commission to the Ministry of Justice, which is the central authority competent to transmit requests for rogatory commissions to non-EU Member States. Upon receipt of the request for rogatory commission, the Ministry of Justice carries out the international regularity check and sends the request for rogatory commission directly to the competent central authority of the state where it is to be conducted. Once fulfi lled, the rogatory commission is received by the Ministry of Justice, which will send it to the Romanian judicial authority that is requesting it. The rogatory commission becomes evidence of the case fi le for which it was requested, having the same value as if the respective judicial act had been performed by the competent Romanian judicial authority. In the absence of bilateral or multilateral legal instruments in the fi eld of judicial assistance in civil and commercial matters (to which Romania and another state are parties), requests to natural or legal persons domiciled in Romania for judicial assistance, formulated by foreign judicial authorities, for the purpose of obtaining evidence by rogatory commissions, shall be transmitted by the Romanian Ministry of Justice for settlement to the foreign judicial authorities by diplomatic (consular) way. In this situation, judicial assistance will

GLI - Litigation & Dispute Resolution 2018, 7th Edition 205 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London USCOV | Attorneys at law Romania be granted on the basis of international courtesy, ensuring reciprocity. Foreign authorities decide on the settlement of such requests for rogatory commissions.

Mediation and ADR The law allows parties to seek mediation in civil or criminal disputes, except for matters relating to personal rights and rights that cannot be waived by the parties; these cannot be the object of mediation. The parties are not required to seek mediation services and have the option to waive mediation at any time but, as stated above, the legislation in force requires judges to inform the parties of the possibility to opt for mediation, and of the advantages of this procedure. Directive 2008/52/EC provides the possibility to request the written agreement resulting from mediation to be enforced, and in Romania this is obtained by a court decision or by a procedure before a notary public. Even if there are certain advantages in using this procedure, such as conﬁ dentiality, reduced costs, short settlement period and ﬂ exibility, in Romania they are not commonly used. For applications where the parties request the court to give a ruling to settle the parties’ understanding resulting from the mediation agreement, a court fee of RON 20 (€4) is paid. In cases where the mediation agreement concerns the transfer of ownership of one or more immovable property, the parties have to also pay 50% of the amount of the tax that would be due for the claim for the asset with the highest value of the goods that make up the object of the transferred right.

Regulatory investigations The National Authority for Consumer Protection coordinates and implements the Government’s strategy and policy in the ﬁ eld of consumer protection, and acts to prevent and combat practices that harm the lives, health, security and economic interests of consumers. Also relatively recently, the National Authority for Consumer Protection has made additional attributions regarding consumer credit agreements for real estate, the insolvency procedure of individuals, and alternative dispute resolution between consumers and traders.

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Silvia Uscov Tel: +40 745 947 310 / Email: [email protected] Silvia Uscov is a Managing Partner of USCOV | Attorneys at law, overseeing the Bankruptcy and Restructuring workgroup. As an experienced business attorney, she draws on her experience in corporate law, commercial and business crime litigation. An experienced Human Rights lawyer, Silvia has safeguarded human rights and civil liberties through civil and criminal proceedings, in front of both local and international courts such as ECHR. Through her practice, Silvia has taken to the bar in various business crime cases involving prosecution by specialised criminal investigation units, against both business owners and executive employees. Combining commercial and business law expertise with a productive white-collar defence career, she can effectively represent complex interests of both companies and their executives.

USCOV | Attorneys at law 23 Titus Street, District 4, Bucharest, Romania Tel: +40 787 532 600 / Fax: +40 21 636 27 14 / URL: www.uscov.eu

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Dr Viktor Gerbutov & Artem Kara Noerr

Effi ciency of process Russian civil procedure is characterised by the existence of two systems of state courts hearing civil matters: arbitrazh courts and courts of common jurisdiction. As a rule, arbitrazh courts hear business disputes not involving private individuals, whereas courts of common jurisdiction hear all other disputes. In the last few years, the effi ciency of Russian civil procedure in arbitrazh courts has increased signifi cantly. The main achievements to note include: • operation of a single user-friendly public online court database (kad.arbitr.ru) containing details and copies of all court judgments for all cases; • admissibility of making almost all court fi lings online; • mandatory automatic audio recording at fi rst instance and appeal court hearings; • admissibility of participation in court hearings via video conferencing arranged by other arbitrazh courts (including simultaneous video conferencing by several parties); and • online access to full case fi les in simplifi ed court proceedings. The effi ciency of Russian civil procedure in courts of common jurisdiction is increasing as well, but it is still far from the level achieved by arbitrazh courts. Russian civil procedure is relatively quick. In average cases, fi rst instance court proceedings normally take four to six months (and include only two or three hearings), whereas two stages of appeal proceedings may take an additional four to fi ve months. Debts confi rmed by written evidence may be enforced using simplifi ed court proceedings, which are conducted without court hearings and take only around two months until an enforceable judgment is obtained. However, the short terms of the proceedings and high workload of judges (especially in Moscow) may affect the quality of justice in complex disputes.

Integrity of process It appears that most ordinary commercial disputes are resolved by Russian courts independently and impartially. However, in politically sensitive or high-proﬁ le cases with signiﬁ cant funds at stake, the independence and impartiality of the judiciary cannot be fully guaranteed. It is also worth mentioning that in the last few years, based on the principle of good faith, Russian case law has elaborated various judicial concepts aimed at preventing bad faith

GLI - Litigation & Dispute Resolution 2018, 7th Edition 208 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Noerr Russia behaviour (both in procedural and substantive law contexts). Such concepts include estoppel and the transfer of a burden of proof based on considerations of fairness. According to The City of Saratov v Oganesyan (Ruling of the Supreme Court dated 13 April 2016, case no. А57-12139/2011), because of the estoppel principle, when the initial actions of the claimant show the claimant acknowledges the defendant has a certain procedural status, it cannot subsequently raise objections against such a status. As explained by the Supreme Court in Koshel v Myzilev (Ruling of the Supreme Court dated 18 July 2017, case no. 5-КG17-94), because of the estoppel rule, a party which has by any means confi rmed in the past the validity of a contract cannot invoke its invalidity in the future. The estoppel rule derives from general foundations of civil legislation and is a particular case of application of the principle of good faith according to which when establishing, exercising and protecting civil rights and performing civil duties, participants in civil legal relationships must act in good faith; no-one may benefi t from their own unlawful or bad faith behaviour. The concept of estoppel was broadly described in The City of Yoshkar-Ola v Magistr Plus (Resolution of the Arbitrazh Court of Volgo and Vyatka Circuit dated 7 June 2017, case no. А38-8254/2015 as follows: “… The existing legislation and established court practice do not tolerate contradictory and bad faith behaviour by business market participants which does not comply with ordinary commercial honesty. Such behaviour, in particular, includes behaviour of a party contradicting its previous statements or behaviour, provided that the other party reasonably relied upon them when taking its own actions.” According to Grane Export v RIF (Ruling of the Supreme Court dated 28 February 2018, case no. 308-ES17-12100), when during the insolvency proceedings of a Russian debtor, a creditor’s claim is based on an arbitral award and there are suspicions that the award was issued for a fake debt, to challenge such a claim, the other creditors of the insolvent company need to provide only prima facie evidence to confi rm their suspicions. After that, the burden of proof regarding the claim is transferred to the creditor that is a party to the arbitration proceedings, since for such a creditor it should be easy to prove the debt already confi rmed in the arbitration proceedings.

Privilege and disclosure The concepts of privilege and disclosure do not exist under Russian civil procedure. A party to the proceedings is allowed to ask the court to support it in obtaining a speciﬁ c evidence where such evidence cannot be obtained; however, in practice not all such motions are readily granted by the courts. Questioning of the parties to the proceedings as well as of the witnesses is rather complicated and the remedies available for enforcing such questioning are limited. Certain persons cannot be summoned as witnesses, in particular representatives in civil (or other) proceedings with respect to the information obtained in connection with such proceedings.

Costs The costs of Russian civil procedure (court fees in particular) are still very low. For instance, the maximum state fee for ﬁ ling the claim is approx. €3,000. However, there are pending discussions over a law bill that may substantially increase this state fee. Under Russian civil procedure, the losing party must compensate the winning party for their costs. However, legal fees are subject to compensation for a reasonable amount only. At present, Russian courts do not normally grant any signiﬁ cant cost orders for legal fees.

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Therefore in complex and expensive disputes, most of the winning party’s legal fees cannot be recovered from the loser. However, debates on this subject (including among the judges of the Russian Supreme Court) are ongoing. There are no general cost security mechanisms available under Russian civil procedure, save for deposit payments to secure costs relating to experts and witnesses.

Litigation funding Admissibility of contingency fee arrangements in Russian civil procedure has been a matter of heated debate in the last 10 years; the relevant court practice of the highest Russian courts on this subject has changed several times. At present, the validity of contingency fee arrangements is very controversial. However, debates on this subject (including among the judges of the Russian Supreme Court) are still ongoing. Litigation funding mechanisms do not formally exist under Russian law. However, in the last few years there has been increasing discussion of this topic in the Russian legal market. At present, several Russian investment ﬁ rms offer relevant services.

Interim relief Interim relief is provided for by Russian civil procedure (in both arbitrazh courts and courts of common jurisdiction) to secure enforcement of a future judgment, to prevent harm to the applicant as well as to secure evidence. Interim relief can be sought in support of pending litigation or arbitration as well as in support of future litigation and arbitration (in Russia or abroad). According to paragraph 49 of Resolution of the Plenum of the Supreme Court dated 27 June 2017 no. 23, interim relief in support of cases considered by a foreign court may be granted by a Russian court based on the principle of forum convenience or effective jurisdiction: the jurisdiction is considered to be effective when the interim relief granted can be quickly and properly enforced. The places of effective jurisdiction include the location of the applicant, the location of the funds or other assets to be arrested, and the place of violation of the applicant’s rights. However, when considering such a motion, a Russian court must check whether the foreign court is competent to consider the dispute on the merits and whether the exclusive competence of the Russian courts is not violated. The admissibility of interim relief in support of foreign court proceedings was recently confi rmed in Shukin v Rostovzev (Ruling of the Supreme Court dated 28 March 2018, case no. А41-20656/2017) with respect to arrests sought by Mr Shukin over various land plots located in Russia and shares in various Russian companies owned by Mr Rostovzev in connection with court proceedings conducted in Cyprus. Russian law does not provide an exhaustive list of possible interim relief. Ordinary interim relief measures include the civil arrest of assets, restrictions and prohibitions on a defendant and third parties (including registration authorities, etc.), mandatory instructions to a defendant and third parties. In IP disputes, admissible interim measures include blocking access to infringing websites and the civil arrest of domain names. In practice, Russian courts are quite reluctant to grant interim relief (save for IP disputes, where interim relief is granted more readily). According to the offi cial statistics, in 2017, fi rst instance arbitrazh courts granted only around 31% of the interim relief motions fi led. Worldwide freezing orders are not expressly provided for by Russian civil procedure. However, there are no formal restrictions on Russian courts granting interim relief with

GLI - Litigation & Dispute Resolution 2018, 7th Edition 210 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Noerr Russia respect to assets located abroad and in Russian practice there have been plenty of cases where such interim relief was actually granted. Russian courts do not normally enforce interim relief granted by foreign courts or arbitration tribunals. However, such foreign relief granted (especially if breached by the other side) may be used as additional evidence to apply for interim relief before a Russian court. As noted in Shukin v Rostovzev, the interim relief granted by the Cyprus court supports the necessity of the interim relief sought in Russia. As noted in paragraph 52 of Resolution of the Plenum of the Supreme Court dated 27 June 2017 no. 23, anti-suit injunctions granted by a foreign court do not prevent a Russian court from consideration of a dispute falling within its competence under Russian law.

Enforcement of judgments Russian court judgments are normally enforced by the Russian court bailiff service. However, monetary judgments may be enforced directly by banks holding debtors’ accounts. The workload of Russian court bailiffs is normally fairly high and therefore in practice, enforcement proceedings may be time-consuming and costly. Foreign court judgments are recognised and enforced by Russian courts where (i) there is an international treaty providing for such enforcement, and/or (ii) on a reciprocal basis. In the last few years, Russian courts have recognised and enforced on a reciprocal basis the judgments rendered, in particular, by the courts of the UK1 and the Netherlands,2 but have refused to recognise US judgments.3 Russia is a party to the New York Convention of 1958 and the European Convention on International Commercial Arbitration dated 1961. The scope of application of the public policy objection under Article V of the New York Convention has been changing signiﬁ cantly in Russian case law over the last 20 years. From its extremely wide application in the 1990s, it had come to be applied quite reasonably and cautiously by 2014. However, in the last few years there has been a worrying trend of renewed extensive application of the public policy objection by Russian courts. The following cases could be used as examples. In Legal Intelligence Group v Andreeva (Resolution of the Arbitrazh Court of the Moscow Circuit dated 21 June 2018, case no. А40-204126/2017), the courts used the public policy objection to set aside an arbitral award in a situation where the award was rendered with respect to claims from an assignment agreement regarding the claims under a purchase agreement regarding shares in a Russian company because the company itself was not summoned to the arbitration proceedings. In Gruz-Ligistika v Kulikova (Ruling of the Supreme Court dated 18 May 2018, case no. А38-2183/2017) the Supreme Court opined that compliance with a pre-trial settlement procedure (established by law or contract) should be considered part of Russian public policy. In Trellas Enerprise v VEB-Lising (Ruling of the Arbitrazh Court of Moscow dated 7 June 2018, case no. A40-11010/18), the court used the public policy objection to set aside an arbitral award in a situation where the claimant, before commencement of the arbitration proceedings, did not comply with a pre-trial settlement procedure (requiring a written demand to be sent to the defendant). Also, in the view of the court, the arbitral tribunal did not assess certain facts that were important for the substance of the dispute. In Sumskoe NMPO v Uralstroyenergomontazh (Resolution of the Arbitrazh Court of the

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Moscow Circuit dated 11 May 2018, case no. А40-201473/16), the courts dismissed an application on the recognition and enforcement of the arbitral award based on public policy where the amount of the penalty recovered by the arbitral tribunal exceeded the amount of the statutory penalty. In Siman France v Sibirsky Cement (Resolution of the Arbitrazh Court of the West-Siberian Circuit dated 10 March 2017, case no. А27-781/2011) based on the public policy objection, the courts refused to recognise and enforce an international arbitral award rendered upon an SPA agreement because this SPA agreement was previously declared invalid by a Russian court in separate proceedings. In Energotrans v RTH-Logistics (Resolution of the Arbitrazh Court of the Moscow Circuit dated 13 March 2018, case no. А40-219058/2017) based on the public policy objection, the courts refused to recognise and enforce an international arbitral award rendered on a transportation contract since the arbitral tribunal did not check whether, during execution of the contract, the internal corporate procedure of the debtor was complied with (whether the contract, being a major transaction for the debtor, was approved by the debtor’s shareholders).

International arbitration There is a pending arbitration reform in Russia with signiﬁ cant amendments to Russian arbitration law which entered into force on 1 September 2016. One of the important achievements of the reform was the recognition of corporate disputes regarding Russian companies (including those arising from share purchase agreements and shareholder agreements, on challenging the company management’s decisions, etc.) to be arbitrable starting from 1 February 2017. Arbitration agreements on corporate disputes executed before 1 February 2017 were declared to be non-enforceable/invalid (Article 13(7) of the Federal Law no. 409-FZ dated 29 December 2015). However, certain formal requirements for the arbitral institutions considering corporate disputes were adopted. First of all, corporate disputes may be heard only in arbitration administered by a permanent arbitration institution. A foreign arbitration institution may achieve the status of a permanent one only after obtaining a permit/licence from the Russian Government. If a foreign arbitration institution does not obtain the permit, the awards of such an arbitral tribunal in Russia will be deemed to be awards of an ad hoc arbitral tribunal, so such awards, if rendered in a corporate dispute, may be denied recognition and enforcement in Russia. Secondly, with respect to most corporate disputes, save for disputes concerning the rights to shares and exercise of the relevant rights, as well as disputes arising out of the activities of share registrars, the place of arbitration should be in Russia. It should be, however, noted that, as explained in Soklakova v Grech (Ruling of the Supreme Court dated 22 May 2018, case no. 5-KG18-94), and Lotteks Oil S.A. v Urumtsev (Ruling of the Supreme Court dated 6 February 2018, case no. 5-KG17-218), a dispute out of an SPA will become a corporate one only if its subject matter would be ownership of the shares or collateral with respect to them. Mere payment claims out of an SPA do not qualify as a corporate dispute. Arbitrability of disputes out of public procurement contracts and other contracts executed for public needs has been a matter of debate in the last few years. Although the pending arbitration reform, contrary to the previous case law, has generally supported arbitrability

GLI - Litigation & Dispute Resolution 2018, 7th Edition 212 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Noerr Russia of such disputes, current case law still often recognises such disputes to be non-arbitrable. FSK EAS v IZ EAS (Ruling of the Arbitrazh Court of Moscow dated 11 August 2017, case no. А40-75603/17) could be seen as a recent example of such approach. However, very recently in Mosteplosetstroy v Mosinzhproekt (Ruling of the Supreme Court dated 11 July 2018, case No. А40-165680/2016), the Supreme Court has conﬁ rmed the arbitrability of such disputes as a general rule.

Mediation and ADR In the last few years, the Russian government has tried to promote mediation and ADR procedures in Russia and amended the civil procedure rules accordingly. However, there appear to be no actual results of this attempt, and mediation and ADR procedures are very rarely used in practice.

Regulatory investigations In recent years (including in 2017) the Russian Federal Antimonopoly Service (FAS) has been very active in its antitrust investigations in Russia. The increase in investigative activity is partly due to the recent amendments to Russian antitrust rules, in particular the differentiation and increase in liability for antitrust violations. Another recent trend is the examination of new markets by FAS. In particular, in FAS v Google (Decision of FAS dated 18 September 2015, case no. 1-14- 21/00-11-15, subsequently upheld by the Russian courts), Google was held liable for abusing its dominant position in the market for pre-loaded apps on Android OS mobile devices and was fi ned RUB 438m (approx. US$ 7m). This was the fi rst time that FAS had investigated such a narrow market in the fi eld of IT. Another fi eld of activity by FAS in recent years has been price coordination. In FAS v Apple (Decision of FAS dated 27 March 2017, case no. 1-11-59/00-22-16), FAS held that the Russian subsidiary of Apple was liable for prohibited coordination of iPhone prices among its dealers. The same approach was used by FAS in FAS v LG (Decision of FAS dated 26 February 2018, case no. 1-11-18/00-22-17). In FAS v Shipping companies, FAS held fi ve international container-shipping companies liable for concerted actions and fi ned them a total of RUB 1.5bn (approx. US$ 24m). This is one of the fi rst cases to investigate concerted actions, which are more diffi cult to prove than normal cartels. In February 2017, the shipping companies reached a settlement with FAS which was approved by the court. This case, along with others, apparently shows the readiness of FAS to settle, albeit on its own terms, which may be said to be another recent trend, because in the past such settlements have been extremely rare. It should be noted that in most cases, FAS receives the evidence in the course of “dawn raids” – unexpected visits by FAS to the premises of companies under suspicion for the purpose of collecting documents and information for investigation. The legal framework for searches and the powers of FAS during these dawn raids, as well as compliance by FAS with statutory procedures during the dawn raids, are often challenged in court. As for the prospects of challenging FAS’s decisions in court, the courts generally tend to uphold the decisions of FAS. However, it should be noted that the standard of proof used by FAS for determining that conduct violates antitrust rules (in cartel cases, in particular) sometimes deviates from the standard of proof normally applied by courts and in some recent cartel cases, FAS’s decisions have been set aside by the courts.

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Endnotes 1. BTA Bank v Ablyazov, ruling of the Arbitrazh Court of Moscow dated 16 March 2017, case No. А40-202676/15-29-1644. 2. Oceanic San v Investﬂ ot, Resolution of the Arbitrazh Court of Povolzhsky Circuit dated 23 January 2012, case No. А55-5718/2011. 3. Biotekh v Medintorg, Resolution of the Arbitrazh Court of the Moscow Circuit 19 October 2017, case No. А40-44353/17.

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Dr Viktor Gerbutov Tel: +7 495 799 5696 / Email: [email protected] Dr Viktor Gerbutov heads the Litigation, Arbitration & ADR and co-heads the IP practice groups with Noerr Moscow. He has substantial experience in advising clients on – very often controversial and complex – issues of Russian civil law (in particular, contract law, collaterals and noncontractual remedies), corporate law and civil procedure. He represents clients before Russian courts and arbitration tribunals and also acts as a Russian law expert witness before foreign courts. Dr Viktor Gerbutov is a listed arbitrator at the Arbitration Center of the Russian Union of Industrialists and Entrepreneurs and a member of the International Chamber of Commerce (ICC Russia), Arbitration and IP committees. Additionally, he lectures as Associate Professor at the Alekseev Private Law Research Centre under the President of the Russian Federation, and also at the Law Faculty of the National Research University Higher School of Economics.

Artem Kara Tel: +7 495 799 5696 / Email: [email protected] Artem Kara focuses on advising clients on various aspects of antitrust law, such as merger control procedures, compliance issues and vertical and distribution agreements. He is experienced in strategic and foreign investment ﬁ ling procedures. Artem also conducts compliance and antitrust seminars and trainings. Defending clients before the Russian Federal antitrust authority is another part of his work. Artem is a member of the Expert Council of Russia’s FAS for developing competition in information technologies.

Noerr 1-ya Brestskaya Str. 29, Moscow, Russia Tel: +7 495 799 5696 / URL: www.noerr.com

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Chia Boon Teck & Wong Kai Yun Chia Wong LLP

Effi ciency of process The Singapore Judiciary has a stellar international reputation and is lauded for “its effi ciency, its technological sophistication, [and] its accessibility”. The paradigm shift from a classical non-interventionist model to a hybrid facilitative model has been credited for this achievement. Specifi cally, a four-pronged approach is adopted as part of Singapore’s “toolbox of techniques” to enhance effi ciencies in the litigation process. They include diversionary, facilitative, monitoring and control, and dispositive measures. The fi rst measure is described as diversionary because its purpose, as the name implies, is to divert disputes away from full-blown litigation. Minimising curial intervention is a core tenet of Singapore’s arbitration jurisprudence, with bodies such as the Singapore International Arbitration Centre, the Singapore Institute of Arbitrators, and Maxwell Chambers set up to achieve that aim. The robust promotion of alternative dispute resolution (ADR) is also demonstrated by the 2010 Subordinate Court’s Practice Directions requiring all parties to submit an ADR status form to the court at the Summons for Directions stage. Since the 2010 Practice Directions took effect, the number of cases referred to court mediation from pre-trial conferences has more than doubled. Secondly, unlike the Big Bang reform seen in other common law jurisdictions, Singapore has taken gradual steps to streamline the effi ciency of its judicial processes. Among them, the most widely-known facilitative measure is the Integrated Electronic Litigation System, or eLitigation for short. This system allows for the easy generation and processing of court documents by both law fi rms and the court, thus conferring downstream automation. In 2016, the Supreme Court achieved a clearance rate of 97%. This means that the number of existing matters disposed of was almost equivalent to the number of new matters fi led. In terms of monitoring and control, Singapore adopts three benchmarks to evaluate the overall effi ciency of its justice system – lifespan of cases, clearance rates and waiting periods. The Singapore Supreme Court has set itself an 85% standard to dispose of all writ actions within 18 months of fi ling. This target has been constantly achieved throughout the past decade. Finally, dispositive measures that encompass the concept of automatic discontinuance help combat any residual effects of Singapore’s “somnolent regime” of the early 1990s. The Rules of Court provide that if no step has been taken for more than a year, the action will be deemed to have been discontinued. With this rule, claimants are mindful not to let their action fall into inactivity. This quartet of measures has helped Singapore create an expedient judicial system that makes it ideal as a venue for international and commercial disputes. This is refl ected in

GLI - Litigation & Dispute Resolution 2018, 7th Edition 216 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Chia Wong LLP Singapore numerous global metrics, which constantly place Singapore amongst the cream of the crop. In the 2017 World Economic Forum’s Global Competitiveness Report, Singapore was ranked ﬁ rst in the world for the efﬁ ciency of the legal framework in settling disputes. In the 2017 Heritage Foundation’s Index of Economic Freedom, Singapore was placed third globally for judicial effectiveness. Given the increasing economic prominence of Asia, Singapore’s sound legal infrastructure makes it well-equipped to serve as a hub for cross-border, multi-jurisdictional disputes.

Integrity of process According to the 2017–2018 Rule of Law Index compiled by the World Justice Project, Singapore was ranked 4th globally and 1st in Asia for absence of corruption. Singapore has also endorsed the Latimer House Principles which enshrines the principles of judicial independence in Article IV. Principally, Singapore’s well-regarded impartial legal system can be broken down into its individual and institutional components. Individually, the Chief Justice, Judges of Appeal, and Judges of the Supreme Court are appointed by the President on the advice of the Prime Minister. Conversely, the removal of a judge may only be effected by the President on the recommendation of a tribunal appointed by him. Therefore, this mitigates the risk of Executive interference with judicial independence, ensuring the integrity of the judicial system. Institutionally, separation of powers in Singapore is founded on the concept of constitutionalism. This is achieved by subjecting each of the three branches of government – the legislature, the executive, and the judiciary – to inter and intra-branch checks and balances. In Singapore, judicial independence is protected by the Constitution, statutes and the common law, thus shielding it from government pressure and extraneous private interests. By adopting the Westminster model, it confers legitimacy and trust upon Singapore’s legal system. In the domain of commercial litigation, individual integrity is enhanced by the fact that judges of the newly-established Singapore International Commercial Court (SICC) are highly remunerated so as to prevent corruption. The SICC also offers litigants the option of having their disputes adjudicated by a panel of experienced judges comprising specialist commercial judges from Singapore and international judges from both civil law and common law traditions. This cross-collaboration adds to Singapore’s value as the premier destination for independent international commercial dispute resolution. SICC proceedings are also governed by a conﬂ uence of best practices from other commercial courts and from international commercial arbitration. The judge presiding over each case heard by the SICC is appointed by the Chief Justice, as opposed to practising lawyers. This prevents a common quandary faced in international arbitration, where the adjudicator has a direct or indirect pecuniary interest in the proceedings. It is apparent, therefore, that the legal safeguards implemented ensure that the Singapore Courts may be relied upon in commercial cases to administer justice according to the law.

Privilege and disclosure Legal professional privilege in Singapore can be bisected into two protective doctrines of lawyer-client privilege and litigation privilege. The former safeguards communications between a lawyer and his client for the purposes of providing or obtaining legal advice, while the latter protects communications made where there is a reasonable prospect of litigation, including with third parties. The rationales behind these concepts are the encouragement of

GLI - Litigation & Dispute Resolution 2018, 7th Edition 217 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Chia Wong LLP Singapore candid disclosure for effective legal representation, and the preservation of the sanctity of the adversarial legal system. Statutorily, sections 128 and 131 of the Evidence Act (Chapter 97) regulate the extent of permissible disclosure of privileged communications. Under Singapore law, legal professional privilege applies equally to both Singapore-qualifi ed lawyers and foreign lawyers with respect to the scope of protection. The prescription of legal professional privilege in Singapore may be viewed as an exception to a litigant’s discovery obligations in civil proceedings. Similar to privilege, the process of discovery is bifurcated into two parts – general discovery and specifi c discovery, as provided for under Order 24 rule 1 and Order 24 rule 5 of the Singapore Rules of Court, respectively. Parenthetically, general discovery requires each party to disclose documents on which they rely or will rely, irrespective of whether they are supportive or adversarial to the party’s case. A party may also make an application for specifi c discovery of a particular document or class of documents from the other party if it believes that party has, or at some time had, these documents in its possession. Increasingly, modern commercial litigation is characterised by voluminous documents, and can render a litigant’s compliance with discovery obligations onerous. As a key commercial hub at the heart of Asia hosting over 40% of Fortune 500 companies’ Asia- Pacifi c headquarters, the traditional model of discovery may no longer suffi ce in Singapore. Therefore, an alternative to the conventional process of discovery has been established – known as the e-Discovery framework – set out in Part V of the Supreme Court Practice Directions. In general, parties are expected to use e-Discovery if the amount in dispute exceeds S$1m, discoverable documents exceed 2,000 pages, or where discoverable documents are predominantly stored electronically. For the commercial litigant, it is pertinent to note that in keeping with its character as an international court, the SICC deviates from the traditional discovery framework. In order to facilitate a swifter and more cost-effective resolution of disputes, the SICC largely relies on the International Bar Association Rules on the Taking of Evidence in International Arbitration 2010. In concrete terms, each party is required to provide all documents on which it relies, and a party may request from any person the production of documents. Nonetheless, where justice of the case is impeded by the limited disclosure of documents under the SICC’s regime, parties may seek and obtain an order for the traditional discovery process to apply. This allows for fl exibility in the SICC proceedings, achieving an optimal balance between effi ciency and justice.

Costs Under the “costs follow the event” doctrine in Singapore, the losing party in civil litigation would be ordered to contribute legal costs to the victor. The court maintains its discretion in awarding cost awards, but such discretion is often exercised with the principle of proportionality in mind. The purpose of adhering to the proportionality doctrine is to discourage frivolous and vexatious claims. In the context of international commercial dispute resolution, litigants of a case in the SICC would have to pay two separate fee components – court fees and hearing fees. The former involves fees that are payable at particular stages of the proceedings, while the latter relates to fees that are payable depending on the duration of the matter heard in the SICC. This position adopted by the SICC differs from the High Court, where court fees payable hinge on documents that are ﬁ led, and not on the number of judges on the coram. Similarly, there is a divergence between the two courts in the determination of hearing fees. Instead

GLI - Litigation & Dispute Resolution 2018, 7th Edition 218 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Chia Wong LLP Singapore of operating on an ad valorem basis, a single rate, governed by factors such as number and length of hearings, is applicable in the SICC irrespective of the quantum involved. On the related issue of costs, Order 110 rule 46 of the Singapore Rules of Court provides guidance on proceedings in the SICC. Essentially, the reasonable costs of any application are to be borne by the unsuccessful litigant unless the court orders otherwise. When considering the question of costs, the same aforementioned rule provides guidelines for factors taken into account by the court. Among others, the more apposite ones include the reasonableness for a party to contest a particular issue, the complexity of the subject matter, and the time and effort expended on the application. As can be seen, the marked emphasis on promoting efﬁ ciency, and minimising Daedalian complexities, underscores the idealness of Singapore as a setting for multi-jurisdictional commercial litigation.

Litigation funding Third-party litigation funding is a prominent contemporary issue in Singapore’s current legal scene, albeit still in its infancy phase. In an effort to remain on the leading arbitration jurisdictions’ top table, Singapore is undergoing a rapid paradigm shift in its attitude towards third-party funding by embracing it as a viable mechanism for increasing access to justice in arbitration proceedings. Before a landmark 2017 amendment to Singapore’s Civil Law Act, agreements for third-party funding in dispute resolution proceedings were impotent because of violations to the doctrines of maintenance and champerty. The enactment of the Amendment Act and the Funding Regulations in 2017 abolished the tort of maintenance and champerty, effectively validating contracts involving third-party funding provided certain conditions are met. Specifi cally, the two conditions imposed are that the third-party funding must be in relation to the prescribed dispute-resolution proceedings, and that the third-party funder must be a qualifying third-party funder. In addition, the Amendment Act simultaneously amended Singapore’s Legal Profession Act, allowing a solicitor to introduce a third-party funder to a client on the condition that the solicitor does not receive any direct fi nancial benefi t from the referral. This two-pronged approach, to maintain Singapore’s competitiveness against the likes of London, Paris and Geneva as the ideal forum for international arbitration, has already reaped tangible rewards, with a fl urry of activity in the market for third-party funding evident and an increase in third-party funders setting up operations in Singapore. In light of this gravitation towards the allowance of third-party funding, it can be inferred that Singapore is prioritising access to justice over the competing consideration of preventing the abuse of the court process in the arena of international arbitration proceedings. With the 2017 amendment, claimants are now empowered to pursue viable claims, which they would not have been able to pursue prior to the amendment because of the signifi cant costs of international arbitration proceedings. The risk of frivolous claims may also be diminished by the fact that third-party funders are generally profi t-oriented, thus ensuring only meritorious cases are funded. Moving forward, one should keep a close eye on the expansion of the scope of third-party funding. Presently, third-party funding is only extended to international arbitration proceedings. As the paradigm shift takes full effect, third-party funding could be extended to the domains of litigation and insolvency proceedings.

Interim relief Singapore courts have a broad discretion to award interlocutory (interim) injunctions. Invariably, a party must satisfy three settled principles before an injunction can be granted.

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They are: (1) that there is a serious question to be tried; (2) the party cannot be adequately compensated by damages alone; and (3) the balance of convenience lies in favour of granting the injunction. In the case of an application for an ex parte injunction, that is, without notice to the other party, the applicant must give full and frank disclosure of all material facts to the court, and is obliged to give an undertaking in damages to the court should the injunction prove unwarranted. In addition, there are several other interim orders that may be granted under Singapore law. Among them, the more commonly utilised ones are freezing orders (also referred to as Mareva injunctions) and search orders (also referred to as Anton Piller orders). Freezing orders are designed to restrain a defendant from dealing with his assets both within and outside the jurisdiction pending the outcome of the trial. Since the effect on the defendant is rather profound, strong evidence is required before such an order is made. In summary, the court has to be satisfi ed that the applicant has a good arguable case against the defendant, that there is a real risk of asset dissipation without an injunction, and that the defendant has assets in Singapore. On the other hand, the purpose of a search order is to inhibit a defendant from destroying incriminating evidence in his possession prior to trial. Generally, search orders are employed in actions relating to intellectual property rights infringement and abuse of confi dential information. There is already a well-developed corpus of law on the substantive and procedural requirements of such an application in Singapore. Briefl y, there must be: a strong prima facie case; potentially very serious damage to the plaintiff; clear evidence that the defendant has incriminating evidence in his possession; and a real possibility the defendant could destroy such evidence. Pertaining to interim measures in aid of international commercial arbitration, Singapore’s position is currently a meld of both the free-choice model and the court-subsidiarity model. Consistent with its policy of limited curial intervention and its pro-arbitration position, Singapore courts are empowered to make interim orders in support of foreign arbitrations, but only if the case is urgent and the arbitral institution has no power to act. Moving forward, the Singapore courts are expected to continue the status quo of adopting a balanced approach towards the regulation of the arbitral process. The strong judicial support currently is also one of the main pull factors that make Singapore an attractive jurisdiction to conduct commercial and investor-state arbitration.

Enforcement of judgments With the proliferation of cross-border transactions in today’s globalised economy, there is a growing need for countries to develop their own dispute-resolution jurisprudence to handle the issue of recognition and enforcement of foreign judgments. In Singapore, there are two principal mechanisms by which foreign judgments may be enforced – the common law regime and statutory regimes. Under the common law regime, a foreign judgment creates an obligation to pay the judgment debt. However, the legal requirements under Singapore law must be met for the foreign judgment to be enforceable. Of greater substance are the statutory regimes – namely, the Reciprocal Enforcement of Commonwealth Judgments Act (RECJA), the Reciprocal Enforcement of Foreign Judgments Act (REFJA) and, most recently, the Choice of Court Agreements Act 2016 (CCAA). Summarily, the RECJA provides for the registration and enforcement of foreign judgments obtained from the United Kingdom and gazetted jurisdictions including New Zealand and the Commonwealth of Australia, while the REFJA enables the enforcement of judgments in Singapore from countries that afford

GLI - Litigation & Dispute Resolution 2018, 7th Edition 220 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Chia Wong LLP Singapore reciprocal treatment to judgments in Singapore. However, both the RECJA and REFJA are blighted by several limitations, chief among them their applicability only to monetary judgments from superior courts, and a restricted number of jurisdictions. The need to rectify the shortcomings of the RECJA and REFJA was part of the reason behind Singapore’s ratifi cation of the Hague Convention on Choice of Court Agreements, and subsequently, the formation of the CCAA in 2016. Effectively, the Convention overcomes both the aforementioned limitations of the RECJA and REFJA, enhancing Singapore’s position as an international dispute-resolution hub. Under the Convention, if a Singapore court is chosen under an exclusive choice of court agreement in international civil or commercial cases, the courts of other contracting states must suspend or dismiss parallel proceedings, and the Singapore court judgment must be recognised and enforced in other contracting states. Likewise, as a party to the Convention, Singapore has similar obligations towards other jurisdictions which have ratifi ed the Convention. There may be cases where a foreign judgment falls within the ambit of both the CCAA and one of the RECJA or the REFJA. In such a scenario where there is an overlap, Singapore’s position is that the CCAA takes precedence over the other two. This is to avoid uncertainty and confusion over which regime should apply in terms of recognition and enforcement of foreign judgments, thereby providing greater clarity to commercial parties in cross- border transactions on where to resolve their disputes. Consequently, the RECJA and REFJA have been amended to refl ect this position, rendering them inapplicable to CCAA- qualifi ed judgments. In summary, Singapore provides a desirable environment for parties and businesses in the context of drafting jurisdiction clauses in commercial contracts. The existing frameworks that have been established also complement and buttress the enforceability of SICC judgments, enabling the SICC to better fulfi l its role as a venue for hearing international commercial cases.

Cross-border litigation A signifi cant development in the landscape of cross-border litigation in recent years is the inception of international commercial courts in many jurisdictions around the world. Singapore’s version of it, as mentioned earlier, is the Singapore International Commercial Court (SICC) – the brainchild of Chief Justice Sundaresh Menon. This section aims to outline some of the procedural issues surrounding multi-jurisdictional disputes heard by the SICC, in particular the determination of foreign law and confi dentiality applications. One of the appealing characteristics of the SICC which makes it a world-renowned international centre for dispute resolution is the fl exibility offered. In terms of the determination of foreign law, the SICC confers on parties to a dispute the option of choosing between two approaches. The fi rst is the traditional “adversarial” model, similar to other Commonwealth jurisdictions such as England and Australia. Under the traditional approach, foreign law must be proven by the party who pleads it. Invariably, this involves expert witnesses on foreign law and cross-examinations in court. However, it is pertinent to note that the SICC has shown a willingness to depart from the rigid application of the traditional model – most notably in the 2017 case of BCBC v PT Bayan Resources, where cross-examination was dispensed with while reserving the parties’ right to take issue with the expert witnesses’ positions. With the consent of both parties, the process of determining questions of foreign law was modifi ed to streamline its effi ciency and cost- effectiveness.

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Under the alternative approach, the SICC relies on the basis of submissions, oral or written or both, to determine questions of foreign law. A distinction between this approach and the “adversarial” model is that there is no requirement for parties to consent to the alternative model, so long as the court takes the view that proceeding by basis of submissions is apt. The SICC also has the option of referring questions of foreign law to courts with whom a memorandum of understanding exists. These are the courts of New South Wales, the Dubai International Financial Centre, and the State of New York. In the course of litigation proceedings, confi dentiality is another issue of major concern to the parties. For the SICC, an optimal equilibrium has been struck between the public interest of open justice and the countervailing private interest of safeguarding confi dential information. While SICC judgments can contribute to the development of an international lex mercatoria through publication of its jurisprudence, it also has safeguards in place to protect the confi dentiality of commercially-sensitive information. They include the granting of confi dentiality orders, the preparation of a “confi dential bundle” for trial, and limited disclosure of documents for public inspection. As evinced from the multitude of measures in place, the SICC is mindful of the especial importance of confi dentiality in a commercial setting, which may not necessarily be observed outside of an international commercial court. This makes it a pragmatic and attractive forum for the resolution of cross-border multi-jurisdictional disputes.

International arbitration The number of cross-border transactions and investments in the Asia-Paciﬁ c region is currently at its 10-year zenith. With this spiral of economic activity, multi-jurisdictional disputes are becoming more common – in tandem with increasing globalisation. The utilisation of international arbitration as a method to resolve these disputes has seen an upsurge in popularity, in particular, due to the ease of multi-jurisdictional enforcement and the need for an open, neutral and cost-effective forum. Singapore is presently at the forefront of the promotion and development of international arbitration, and its efforts have been recognised globally. Singapore has been consistently ranked as the top city in Asia and among the top ﬁ ve in the world for ICC arbitrations, alongside the traditional arbitration heavyweights of London, Paris and Geneva. There is a plethora of reasons which can explain the attractiveness of Singapore as a destination for international arbitration. Geographically, Singapore’s location at the heart of Asia and as a hub for world trade and international commerce serve as a natural advantage for Singapore to function as the ideal venue. In addition, Singapore’s close proximity to the economic powerhouses of the region, China and India, strengthens arguments for arbitration to be held in Singapore. As arbitration frequently requires a forum that has no relations to either party, Singapore’s neutrality has also allowed it to thrive as an arbitration venue. In terms of government initiatives, the liberalisation of legal services, minimal curial intervention, advantageous tax incentives, and the strong pro-arbitration stance have all helped Singapore achieve its goal as a leading arbitration centre in Asia. Singapore also has a supportive legislative framework in favour of arbitration, demonstrated by its acceptance of international best practices with the adoption of the Model Law and the New York Convention. The Singapore International Arbitration Act, which was originally based on the UNCITRAL Model Law, has also undergone numerous revisions consistent with the overall “hands-off” approach. Infrastructure-wise, the triumvirate of institutions that form the government’s resolution to

GLI - Litigation & Dispute Resolution 2018, 7th Edition 222 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Chia Wong LLP Singapore enhance Singapore’s standing in the global arena has achieved signiﬁ cant prominence. The ﬂ agship Singapore International Arbitration Centre (SIAC) serves to oversee and manage the administration of international arbitration; the Singapore International Mediation Centre provides mediation services to parties wishing to resolve cross-border disputes amicably; while Maxwell Chambers was conceived as an integrated arbitration complex with the principal purpose of co-locating key international arbitration institutions. SIAC’s total caseload has quadrupled over the last decade and has a steady year-on-year increase in the administration of aggregate sums in dispute. As evinced from the volume and breadth of cases handled by these institutions, and the immense success and reception to their institution, they are expected to continue anchoring Singapore’s position at the top of the arbitration rankings in the future.

Mediation and ADR At the opposite pole to arbitration along the ADR spectrum is the process of mediation – a consensus-oriented, party-directed approach aimed at achieving a conciliatory resolution of disputes. In Singapore, the mediation culture is fi rmly established and strongly encouraged, even in the arena of high-value commercial disputes. Where parties with deep pockets might be willing to go the distance of the entire court process, the judiciary plays an important role in installing the process of mediation as a viable and parallel alternative to litigation. Under the Rules of Court, the court may take into consideration parties’ conduct in relation to attempts at resolving the matter through mediation when awarding costs. This incentivises both parties to consider the feasibility of alternative methods of dispute resolution, thus potentially diverting away from litigation. To entrench the supportive mediation environment in Singapore, the Singapore International Mediation Centre (SIMC) was launched in 2014 to address the mediation needs of parties in cross-border commercial disputes. Simultaneously, a novel protocol was developed in conjunction with the Singapore International Arbitration Centre (SIAC) to further encourage the use of mediation. Together, the SIMC-SIAC protocol introduced an Arb-Med-Arb dispute-resolution process where a dispute is referred to arbitration before mediation. If they prove to be unsuccessful, the arbitration proceedings would continue. This integrated framework for recording a mediation settlement as a consent award can be enforced under the New York Convention, making the SIMC-SIAC protocol a vital tool in Singapore’s dispute resolution arsenal. The Arb-Med-Arb clause differs from the Med-Arb clause in that arbitration is commenced fi rst, before the dispute is referred to mediation. To further enhance Singapore’s position as a premier international dispute resolution hub, the Mediation Act was recently passed in 2017 to strengthen the legislative framework for mediation. In summary, the Act provides an expedited route for parties to enforce mediated settlement agreements by allowing such agreements to be recorded as court orders. The Act also signifi cantly clarifi es that discussions during the course of mediation are confi dential, bar certain narrow exceptions. Essentially, the 2017 Mediation Act tackles the common disadvantages of mediation – lack of enforceability and clarity. With greater protection afforded to parties, Singapore has stationed itself among the preferred choices of businesses as an avenue for dispute resolution.

Regulatory investigations In the recent Doing Business 2018 report published by the World Bank, Singapore was ranked 2nd out of 190 economies in the ease of doing business. This marks the 12th

GLI - Litigation & Dispute Resolution 2018, 7th Edition 223 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Chia Wong LLP Singapore consecutive year in which Singapore has been ranked among the top three in the world. Paradoxically, the reason for Singapore’s success as an eminent commercial and fi nancial hub is partly due to its stringent but pragmatic regulatory approach. The stable business environment is underpinned by high standards of supervision and regulation, balancing an internal solutions-oriented attitude with an external international outlook. There are four main regulatory bodies under Singapore’s disclosure-based regime which complement each other in their work: the Monetary Authority of Singapore (MAS); the Singapore Exchange Ltd (SGX); the police; and the Competition Commission of Singapore (CCS). Firstly, the MAS functions as the central bank of Singapore, and has the power to administer the Securities and Futures Act, the Financial Advisers Act, and the Singapore Code on Take-overs and Mergers. It can also enforce the civil penalty regime for market misconduct, thus ensuring a well-regulated business environment. Secondly, the SGX serves a dual role as a market regulator and a commercial entity. As part of its regulatory capacity, the SGX monitors compliance of listed companies and is empowered to take remedial actions against defaulting ones. Thirdly, pursuant to Part IV of the Criminal Procedure Code, the police have investigative powers to summon any person to assist in investigations. Prosecutions of fi nancial crimes are helmed by the Commercial Affairs Department, a highly specialised unit of the police force. Finally, the CCS encourages competition in markets by prohibiting collusive practices, anti-competitive agreements, and corporate abuse of dominance. It is also able to compel production of documents and inspect premises with or without a warrant as part of its wider powers of investigation. On a macro-level, the interplay between domestic and foreign agencies is paramount to maintaining Singapore’s reputation as a robust and practical, yet pro-business fi nancial hub. The MAS is a signatory to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information. Under this agreement, MAS is able to order the furnishing of information to a foreign authority if there is an ongoing investigation, aiding in foreign enforcement actions. This harmonious and cooperative approach has resulted in Singapore being the preferred choice for over 700 fi nancial institutions and businesses across the full spectrum of asset classes.

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Chia Boon Teck Tel: +65 6342 0002 / Email: [email protected] Mr. Chia Boon Teck graduated with a Bachelor of Laws from the University of Shefﬁ eld, United Kingdom, in 1993 as its top foreign student and amongst the top 5% in the Faculty of Law, and was awarded the Herbert Smith Prize in Commercial Law. Mr Chia was called to the English Bar (Lincoln’s Inn, United Kingdom) as a Barrister-At-Law in 1994, and he was admitted to the Singapore Bar as an Advocate & Solicitor in 1995. In practice for the past 23 years, Mr Chia is a prominent member of the legal profession in Singapore and the Co-Managing Partner of Chia Wong LLP, who has been involved in many high-proﬁ le cases.

Wong Kai Yun Tel: +65 6345 0002 / Email: [email protected] Ms. Wong Kai Yun is an accredited Singapore Mediation Centre (SMC) Associate Mediator for civil and commercial disputes and an accredited Mediator on its Family Panel for family disputes and sits on the panel of SMC’s collaborative Family Practice. She is also a Mediator on the panel of Cross-Border Family Mediators of bei Internationalen Kindschaftskonfl ikten (MiKK), Berlin, Germany. Ms Wong is listed in the IFC (International Financial Centre) Power Women Top 200 list of the most powerful women in government, private wealth, private client advisory and philanthropy across the world’s fi nancial centres. In practice for the past 23 years, Ms Wong is one of the top Family lawyers in Singapore and the Co-Managing Partner of Chia Wong LLP who has been involved in many high-profi le cases.

Chia Wong LLP 6 Temasek Boulevard #38-02 Suntec Tower 4, Singapore 038986 T el: +65 6342 0002 / Fax: +65 6348 0002 / URL: www.chiawongllp.com

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Pedro Moreira & Isabel Álvarez SCA LEGAL, SLP

Effi ciency of process Introduction to the Spanish legal system Spain is a democratic State and a parliamentary monarchy in which, as in all modern democracies, powers are divided up between the three main branches of government. Judicial Power is vested in courts and tribunals, whose function is to administer justice in the name of the people. In Spain, Judicial Power is ruled by the Constitution of 1978 (hereinafter, “CE”), specifi cally in Title VI (articles 117 to 127), and in Organic Law 6/1985, of July 1st, on the Judicial Power (hereinafter “LOPJ”), modifi ed by the Organic Laws 19/1993, 20/2003 and 2/2004. Different judicial bodies are in charge of the exercise of Judicial Power, organised in the civil, criminal, contentious-administrative, labour and military orders. These bodies must deal with and decide all the litigations that must be prosecuted in Spain, according to their nature. In this chapter, we will focus on the Spanish institutional framework by which the prosecution of litigations in the civil and commercial areas is governed. Courts and tribunals For judicial purposes, Spain is organised territorially into municipalities, parties, provinces and Autonomous Communities. The organisation and running of the courts and tribunals is regulated in the LOPJ, under which these bodies may be single-judge courts or collegiate courts. Next, we proceed to analyse the most relevant categories of courts and tribunals in the context of civil and commercial disputes: • Supreme Court (Tribunal Supremo): Based in Madrid, the Supreme Court is the highest judicial body in all orders, except for the interpretation of constitutional rules, for which the Constitutional Court is responsible. The Supreme Court has jurisdiction throughout Spain and all other judicial bodies exercise their powers in subordination to it. It is formed by the civil, criminal, contentious-administrative, labour and military chambers. The matters it deals with are assessed and regulated in the LOPJ, the most relevant civil proceedings dealt with by such court being those related to cassation of appellation rulings, revision and other extraordinary remedies. • High Courts of Justice (Tribunales Superiores de Justicia): These courts are judicial bodies with jurisdiction over the territory of each Autonomous Community, after which they are named. Each of these courts is made up of the civil and criminal, contentious-administrative and labour chambers.

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The High Courts of Justice are the judicial bodies before which all successive procedural instances of pleas initiated in the respective communities for matters within their competence fi nish up, without affecting the higher competence of the Supreme Court and central jurisdictional bodies in certain matters. The Civil Chamber of these courts deals with appeals for annulment and review against resolutions of jurisdictional bodies of the civil order based in the Autonomous Community, provided that the appeal is based on violation of civil, local or special law norms of the community, and after the corresponding Statute of Autonomy has approved this. In addition, it supports and controls arbitration, as well as requests for exequatur of arbitration awards or foreign resolutions, unless this corresponds to another court or tribunal according to the provisions of treaties or European Union regulations. • Provincial Courts (Audiencias Provinciales): Each province has a court, which is a higher judicial body with certain powers in the civil and criminal areas. As a rule, each Provincial Court is named after the capital of the province and extends its jurisdiction to the entire territory of that province. In the civil order, these courts mainly deal with and decide on appeals against rulings given by the courts of fi rst instance. • Courts of First Instance: These are single-judge judicial bodies with jurisdiction in civil and most commercial matters. In each judicial county, there are one or more courts of fi rst instance. Their headquarters are in its capital and it has jurisdiction in all its territorial area. • Commercial Courts: These judicial bodies are based in the capital of each province; they have jurisdiction over it, although commercial courts may be established to extend their jurisdiction to two or more provinces of the same Autonomous Community. These are specialised courts within the civil order, and have jurisdiction in the commercial area (bankruptcy, anti-competitive practices, transportation, industrial property, intellectual property and publicity, as well as corporate matters, among others). However, civil matters that are not expressly assigned to them by law are dealt with by the courts of fi rst instance. • Constitutional Court: This court is the Spanish constitutional body that acts as supreme interpreter of the Constitution. It is regulated in the CE, in Title IX (articles 159 to 165), and in Organic Law 2/1979, of October 3rd, of Constitutional Court, amended by Organic Law 6/2007, of May 24th. This court is independent from the Judicial Power and, in the performance of its function, is subject to the CE and its Organic Law only. In addition, it is unique in its order and extends its jurisdiction to the entire national territory. The magistrates of the Constitutional Court are appointed by the King, among lawyers and other professionals in the world of law proposed by different higher bodies of the State, including the Parliament and the Government (article 159 CE). The last interpretation of the provisions of the CE is constitutionally assigned to the Constitutional Court which, as such, is in charge of hearing requests for the declaration of unconstitutionality of ordinary rules, protection of rights foreseen by the CE and solving confl icts of competence between the State and the Autonomous Communities and between the Autonomous Communities, without detriment to others that the laws of ordinary rank may assign to it.

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Mechanisms for dispute resolution The Spanish legal system basically foresees two ways of resolving disputes in civil and commercial matters: on the one hand, judicial proceedings; and, on the other, voluntary proceedings, the latter being an alternative to the fi rst with two types of instruments, mediation and arbitration. a) Judicial proceedings In civil and commercial matters, the Law 1/2000 of January 7th, of Civil Procedural Law (hereinafter, “LEC”), basically foresees two types of declaratory judgments for the resolution of disputes: the so-called “small claims procedure” and the ordinary procedure; and an abbreviated procedure without a properly declaratory character, the order for payment procedure (procedimiento monitorio). • The small claims procedure, regulated in articles 437 to 447 of the LEC, is a type of declaratory procedure for claims of up to €6,000.00, and for the prosecution of matters expressly mandated by that legal body, regardless of their amount. This procedure begins with a claim, which is followed by the defendant’s written response, and a sole hearing in which decisions are taken about procedural issues and the admission of evidence, then evidence is taken before trial and it ends with the issuance of a ruling. • The ordinary procedure, regulated in articles 399 to 436 of the LEC, is applicable to certain matters expressly contemplated in the law (for example, in competition law matters, and claims to amounts of over €6,000.00, as long as this matter is not to be dealt with by a small claims procedure). This procedure is similar to a small claims procedure, except for the fact that, instead of a sole hearing, it is developed with two, namely: a pre-trial, in which procedural issues are resolved and evidence is proposed and admitted; and a main trial, in which the evidence is produced and conclusions, on the evidence and the law applicable to it, are drawn by the parties. Once the trial has been held, the case ends with the issuance of a ruling. • The order for payment procedure, ruled in articles 812 to 818 of the LEC, is an expediting procedure foreseen for the settlement of disputes which, as we have said, does not have a declaratory nature and does not end with the declaration of the law to be applied to the claim it is dealing with. Like the aforementioned declaratory judgements, it is heard by a Court of First Instance and is intended for monetary claims of any amount, provided that the claimed amount is liquid and determined, the deadline for its settlement has expired and that it is backed by any evidence means admitted in law (invoices, delivery notes, etc.). The procedure is initiated by an initial petition, in which the court is asked to require the debtor to pay or make the pertinent allegations. If the debtor pays or does not answer the court’s request, the judge will issue a payment order, which has an executive character and ends the procedure; if the requested party opposes, the requesting party has to fi le a declaratory claim, to be dealt with in a small claims or ordinary procedure, depending on amount claimed by the plaintiff. b) Voluntary proceedings Arbitration and mediation are currently regulated respectively, in Law 60/2003, as of December 23rd, on Arbitration, which repealed the fi rst Spanish arbitration law enacted in 1988, and in Law 5/2012, of July 6th, on mediation in civil and commercial matters.

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As provided in Law 60/2003, submission to arbitration is always voluntary and responds to an agreement – previous or contemporary to the dispute – between the parties, to choose the arbitrator, the language of the proceedings, the place and whether the arbitration is to be governed by rules of law or equity. An arbitrator (or several) will be in charge of resolving the dispute through an arbitral award. Although submission to arbitration is voluntary, the resolution issued in the arbitral proceedings is, in any case, mandatory for the parties. Once the award has been issued, neither party can go to court to obtain a different resolution, since an arbitration award is deemed a judged thing. In the event that the parties fail to comply with the award voluntarily, the party benefi ting therefrom may request the enforcement of the same before the courts of the State, by fi ling a suit for execution, under the terms provided by the LEC for judicial resolutions liable to execution. With the approval of the aforesaid laws on arbitration and mediation, the legislator has tried to encourage the use of mediation and arbitration to solve private disputes. However, for the time being, partly due to lack of knowledge by the justiciables and partly due to the costs that it may entail, voluntary proceedings are not heavily used in Spain. Procedural management From a procedural point of view, Spain has a special characteristic, insofar as the law provides for the existence of a professional other than the lawyer (hereinafter, abogado or “lawyer”); the Procurador de los Tribunales (hereinafter, Procurador), to whom it entrusts the representation of each of the parties in civil and commercial proceedings. In her capacity as representative of the party, the law assigns the Procurador, among others, powers to serve the pleadings of the party she represents and to receive notifi cations of the pleadings served by the other, as well as the decisions issued by the judicial body before which the case is being heard. Her intervention is mandatory in all civil proceedings, with the exception of the order for payment procedure and in proceedings whose amount does not exceed €2,000.00, where the parties do not need to appear in court with the assistance of a Procurador. At the same time, the abogado is responsible for the client’s assessment and technical defence. As with the Procurador, her intervention is mandatory, except in regard to the initial request for payment procedure and in proceedings whose amount does not exceed €2,000.00. In recent years, with the approval of Law 18/2011, of July 5th, which regulates the use of information and communication technologies in the administration of justice, and the Royal Decree 1065/2015, which develops it, an electronic system (LEXNET) was set up, through which all the procedural documents must be served and all the notifi cations made in the proceedings must be received. Although its introduction means progress, so far, the use of LEXNET has not signifi cantly invigorated the procedural management system, as it suffers from technical defi ciencies and its participation in this process is still limited.1 Effi ciency of the system In general terms, the Spanish legal system adequately protects the rights of the justiciables, who see their disputes resolved in an independent and professional manner within a period of time that is usually not too long.

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The time it takes to resolve a dispute in the fi rst instance, that is, from the fi ling of the claim to the sentencing, is usually shorter than a year. In case of appeal, it would be necessary to count on one more year until the matter is ruled in the second instance. Once an appellation ruling has been issued, and if this resolution is to be revised by the Supreme Court (in those scenarios where this is allowed), the procedure may be extended for another two years. This average timespan, which clearly does not seem excessive, at least in comparison with other countries in our legal and cultural vicinity, can, however, be extended in certain situations – as there can be other delaying factors, such as diffi culties with the service of the claim to the defendant, excessive workload of the court or tribunal in charge of the case, or the request for legal aid by one of the parties, with consequent damage to the interests of the parties or of one of them. Notifying the defendant of the claim can be problematic when the defendant does not reside at the address the plaintiff is aware of, since, in that case, the law imposes the burden on the plaintiff of fi nding an address where the claim can be served to the defendant. In our opinion, this is a bad solution, especially in the area of contractual disputes, in which, like in other countries, it would be possible for the law to consider the inclusion in contracts of a domicilium citandi for each of the parties, to the effect that the party to whom the court has to notify the fi ling of the claim is considered notifi ed as of the moment at which the judicial notice has been sent to the address included in the contract.

Integrity of process In Spain, access to the judicial system is fully granted by the CE. In effect, article 24 of said legal body establishes, as a constitutional principle, the right of individuals to effective judicial protection in the exercise of their rights and legitimate interests without ever being defenceless. Likewise, article 117 of the CE guarantees respect for certain essential principles, undoubtedly necessary for the proper functioning of the Judiciary, such as the principles of impartiality, independence, job stability and responsibility of judges and magistrates and of legality, according to which the work of these must always be based on the law. In addition, as established in the LEC (articles 99 and following), judges and magistrates must refrain from hearing any lawsuit in which, objectively, they may have some type of interest; the parties may request their exclusion, if they believe that the judge or a certain magistrate appointed to hear the case are not in a position to do so impartially, and the affected judge or magistrate have not recused themselves ex ofﬁ cio from hearing such case.

Privilege and disclosure Privileged communication Legal privilege is a right and an essential duty in the Spanish legal profession, extending to communications between lawyer and client and between lawyers themselves. In Spain, legal privilege in the legal profession is regulated in different legal bodies, especially in the LOPJ, the General Statute of the Spanish Practice of Law, approved by Royal Decree 658/2001, of June 22nd, and the Code of Ethics of the Spanish Practice of Law. According to the aforementioned regulations, lawyers are to keep secret all facts or news they know through any of the modalities of their professional performance, so that the relationship between abogados and their clients must be protected by a duty of conﬁ dentiality imposed on the legal practitioner. As a rule, abogados are not forced to

GLI - Litigation & Dispute Resolution 2018, 7th Edition 230 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London SCA LEGAL, SLP Spain declare on matters in which they have been professionally involved. Legal privilege encompasses the conversations of the lawyer with her clients, opposing parties or their lawyers, and as such these conversations cannot be recorded without prior consent of the parties involved, and will always be protected by legal privilege. Likewise, communications by the lawyer and her client, and between lawyers, must be considered confi dential and reserved. The duties that imply legal privilege will remain even after the abogado has ceased to provide services to her client. The breach of legal privilege by lawyers can have different disciplinary consequences that, depending on their severity, can range from the imposition of a minor penalty to the disqualifi cation of their position for a specifi c time, or even expulsion from the Bar Association to which they belong. Disclosure 1. In civil proceedings, an essentially accusatory model of evidence applies, so it is the parties who are obligated to collect and prepare the evidence they consider appropriate to prove their claims, with very limited intervention from the judge, who, as far as not admitting evidence he does not consider pertinent, can do little more than invite the parties to propose certain evidence to prove certain facts, if he believes the evidence proposed by them is insuffi cient. The hearing of evidence is ruled by the LEC, which provides for the necessary requirements and deadlines. They vary according to the declaratory procedure. As for the admitted evidence, the LEC includes several types, such as, among others, witnesses’ testimony, the declaration of the other party and the contribution and examination of documents, including electronic documents of any type. Although, as we have pointed out, the Spanish evidence system is essentially accusatory, it is only possible in a limited way for each party to develop an intense probative activity (Discovery) which the other party cannot refuse, under the supervision of a judge and prior to the inception of contentious proceedings, unlike what happens in several common law countries and, especially, in the United States of America. However, recently, the legislator has chosen to include in Law 15/2015, of July 2nd, on non- contentious proceedings, a procedure applicable in commercial matters under which, within certain terms, a person legally obliged to keep accounting, may be required to display the corresponding books, documents and accounting support. In the event that she does not do so without justifi cation, the court will apply a coercive fi ne of up to €300 per day until the requested evidence is submitted. 2. In May 2017, the Royal Decree Law 9/2017, of May 26th, came into effect, which transposed, among others, the Directive 2014/104/EU, of the Parliament and the Council. It establishes certain rules to govern, under national law, actions for damages resulting from infringements of the competition law of the Member States and the European Union. In procedural matters, this transposition was carried out through the addition of new provisions, on procedures for claiming damages for breach of competition law, to the LEC (articles 283bis a to 283bis k). The new regulations are intended to prevent the obstruction of evidence by the opposing party, adopting a series of measures to those effects, such as, for example, the possibility of having a hearing for such purpose. The court may adopt measures to order a document production. However, it is by no means a true “discovery” mechanism,

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since the request for production to third parties or to the opposing party is allowed for certain documents only, and in all cases under certain proportionality requirements that signiﬁ cantly limits its use.

Litigation costs In Spain, procedural costs are all those verifi able expenses that originate during a legal process, the most important of which are the fees charged by professionals (abogados, procuradores, experts), translation of documents and publication of notifi cations in offi cial gazettes, and the court fees.2 The costs are imposed in the ruling, in accordance with a general principle according to which the costs are imposed on the party losing the lawsuit, who, therefore, is liable for the payment of her own costs and those of the winning party (article 394 LEC). Also, as a general rule, if the claim is upheld partially, each party will bear its own litigation expenses, the common ones being borne by each of the parties equally. Once the court imposes costs on one of the parties, the same must be assessed in a separate proceeding (cost assessment proceeding), initiated at the request of the winning party, although its amount as a rule shall not exceed one third of the amount of the main lawsuit.

Litigation funding To litigate in Spain, each party must pay for their own lawyer’s and Procurador’s3 fees; nevertheless, as we have said, such fees may be recovered by either party according to the judgment of costs. However, nothing prevents the costs of a lawsuit being fi nanced by a third party, and this despite the fact that, so far, no legislation specifi cally covering this type of fi nancing has been approved. The truth is that, in recent years, as in other countries, in Spain, several fi nancial institutions and shadow fi nanciers have begun to fi nance lawsuits, notably those where disputed amounts are substantial. In addition, for those who do not have suffi cient fi nancial means, the law provides for legal aid, as foreseen in the CE (article 119). Pursuant to Law 1/1996, of January 10th, on legal aid, legal aid is granted to every person engaged in a dispute, whether as a plaintiff or a defendant, whose yearly income does not exceed a certain amount established by law.

Interim relief In Spanish legal proceedings, the claimant has the power, if she deems it appropriate, to request precautionary measures, in order to ensure the effectiveness of the legal protection that may be granted to her in the ruling. These measures may never be adopted ex offi cio by the court. In civil proceedings, these measures are ruled in articles 727 et seq. of the LEC, which foresee a series of specifi c precautionary measures that may be adopted (liens, intervention or administration of productive assets, movable property deposit, etc.); notwithstanding that, when appropriate, the plaintiff may request the court to adopt certain measures not specifi cally foreseen in the law. The Judge shall decide by an order and in separate proceedings, wherever she upholds the precautionary measures requested by the plaintiff or, by contrast, dismisses them. The granting of precautionary measures needs to be grounded and comply with a series of requirements established by law.

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Unless expressly provided otherwise, the enforcement of precautionary measures is subject to the provision by the plaintiff of a surety bond that covers the damages that those measures could impose on the defendant’s estate.

Enforcement of judgments/awards Under Spanish legislation, the enforcement of rulings falls under the authority of the judicial power (article 117.3 of the CE). Likewise, the LEC regulates the enforcement procedure in civil matters in its articles 5, 45 and 551 et seq. In the event that the condemned party does not voluntarily comply with the judgment, the winning party may, by suit for execution, request the enforcement of such ruling. The law establishes that the suit for execution must be based on an enforceable title. Final judgments,4 arbitral awards and mediation agreements made through a deed issued by a notary public, are all deemed enforceable titles. As a general rule, the enforcement is requested by application and at the request of a party before the Judge of the Court of First Instance that has issued the judgment or resolution that is intended to be executed, or who has heard the case in the ﬁ rst instance. The suit for execution must express the title on which the enforcement is based, as well as the court protection sought from the court, the property of the condemned or obliged party that is to be seized, the investigation measures necessary to identify seizable assets, and the name of the person or persons against whom the judgment is to be enforced. Once the necessary procedures have been carried out and provided that all assumptions and procedural requirements are met, the court shall dictate a general enforcement order followed by a decree, which will detail the speciﬁ c appropriate enforcement measures, including those concerning the investigation of the assets of the condemned or obliged party. The condemned or obliged party may oppose the enforcement on several grounds, in which case a limited contradictory procedure is opened. In this limited procedure, the court allows the hearing of evidence, after which a court order maintaining the enforcement or dismissing it is issued; the said resolution is appealable. In the event that, in the enforcement, assets subject to seizure5 are found, the claimant may request that the court orders their seizure.

Cross-border litigation According to the provisions of the LOPJ (article 21), as a general rule, Spanish courts will hear claims that arise in Spanish territory in accordance with the provisions of international treaties and conventions that Spain is part of, in the rules of the European Union and in Spanish laws. Likewise, the aforementioned rule establishes a series of matters on which the Spanish courts shall have exclusive jurisdiction, and this regardless of whether the dispute presents elements of connection with other jurisdictions.6 Recently, the Spanish Parliament enacted Law 29/2015, as of July 30th, on international legal cooperation in civil matters, which rules on international legal cooperation between Spanish and foreign authorities in civil and commercial matters (hereinafter, LCJI). Among other matters, the LCJI covers the serving of court and other ofﬁ cial documents, including notiﬁ cations, as well as the request for execution of letters rogatory, at the request of foreign authorities. The LCJI is governed by a principle of cooperation7 – under which

GLI - Litigation & Dispute Resolution 2018, 7th Edition 233 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London SCA LEGAL, SLP Spain our authorities are to cooperate with foreign authorities on the said matters, even in situations where the existence of reciprocity by these in similar cases has not been determined. The Ministry of Justice of Spain is the department in charge of applying the LCJI, and, as such, is obliged to collaborate with the requesting authorities and resolve any diffi culties that may arise in the processing of cooperation requests. Notifi cation of documents According to the LCJI, the Spanish authorities may make notifi cations abroad (or receive notifi cations therefrom) by mail addressed to the recipient, provided that the legislation of the destination State8 does not exclude such practice. In the event that the defendant does not appear in the proceedings, it will be suspended as long as it has been proven that the document has been regularly served; likewise, six months after the date of dispatch of the document, the competent authority shall deem the party’s request duly addressed even if it has not been able to verify that the notifi cation has taken place. As for the documents issued by a notary public and other authorities, the LCJI provides that they can be notifi ed abroad, when the requesting authority is Spanish, or in Spain, when the issuing authority is foreign, for formalities concerning court documents, as long as such formalities are suitable for these documents. Hearing and obtaining of evidence internationally. Evidence of foreign law The LCJI allows obtaining evidence in Spain for a foreign procedure or abroad for a procedure taking place in Spain, provided that the requested evidence is directly related to this procedure and, if such evidence is to be produced at a pre-trial phase, then it needs to be suitable for such purpose under Spanish legislation. Likewise, the LCJI establishes that the evidence must observe the due process guarantees foreseen in the Spanish legislation and be carried out in accordance with Spanish procedural provisions – though without establishing a listing of evidence that may be heard in Spain at the request of a foreign court. Finally, in what concerns the evidence of foreign law that is to be applied to a lawsuit being heard in Spain, there is a general principle according to which the party invoking foreign law in a court must prove its content and validity. In the absence of evidence, the judge must apply Spanish law (article 281.2 of the LEC). Recognition and enforcement of foreign judicial decisions According to Regulation (EU) 1215/2012, of December 12th, of the European Parliament, in matters of jurisdiction and recognition and enforcement of judgments in civil and commercial matters, judgments issued in a member state of the European Union will be recognised without the need of any recognition proceedings, and may be fully enforced once the court verifi es that none of the grounds for denial of the recognition, expressly foreseen in such piece of legislation, apply. Likewise, the LCJI establishes that foreign judicial resolutions can be recognised and enforced in Spain. In principle, all foreign resolutions that comply with the requirements set forth in the LCJI will be recognised, provided that they are deemed res judicata, in case they have been issued in a contentious procedure, or anyhow defi nitive resolutions, in case they have been issued in a non-contentious procedure. For the recognition of resolutions issued in non-EU countries, the LCJI has opted to keep the traditional exequatur procedure. Once the exequatur has been granted, the foreign judicial resolution will merit recognition and will be enforced as if it were Spanish.

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Likewise, the LCJI contains a list of grounds to refuse the granting of the exequatur, such as the fact that the ruling is contrary to public order, that it has been issued with an obvious breach of the rights of defence of any of the parties, that it rules on a matter over which only the Spanish courts have jurisdiction, or that there is no reasonable connection between the dispute and the foreign court country that has issued the judgment. In addition, the LCJI establishes that no special process will be required for the registration in ofﬁ cial Registries of foreign judicial resolutions that are deemed res judicata. However, the Registrar must verify the regularity and authenticity of the documents presented to her and also the absence of any grounds under which the exequatur should be denied. In those cases in which the registration is denied, the interested parties need to apply for the granting of the exequatur by the competent court. Foreign judicial decisions that are enforceable in the country where they were issued are enforceable in Spain once the exequatur9 has been obtained, the same rule applying to foreign court settlements. For other ofﬁ cial documents, the law does not foresee a prior recognition procedure, provided that a series of requirements are met (being enforceable in the country of origin, not being contrary to public order, and having at least the same or similar effectiveness of similar documents issued by Spanish authorities).

International arbitration As mentioned earlier, arbitration is currently regulated by Law 60/2003, of December 23rd, on Arbitration; this legal body is applicable to purely internal arbitrations as well as to arbitrations that present elements of connection with more than one legal system (international arbitrations). However, with regard to international arbitrations that take place in Spain, these need to comply with the provisions of the European Convention on International Commercial Arbitration, of 1961, of which Spain has been a party since 1975, and the grounds that in Spain, international law prevails over the ordinary internal law, in case of contradiction between them. Likewise, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, of which Spain has been a party since 1977, applies to recognition and enforcement of foreign arbitration judgments.

Mediation With the approval of the aforementioned Law 5/2012, of July 6th, incorporated to the Spanish law with the Directive 2008/52/EC, of May 21st, 2008 of the European Parliament and Council, on cross-border mediation in civil and commercial matters, the Spanish legal system has a new mechanism for voluntary dispute resolution – mediation – for disputes in matters or business, including so-called cross-border disputes.10 Mediation is a dispute resolution mechanism in which, regardless of its name, two or more parties try voluntarily to reach an agreement to resolve a dispute between them with the assistance of a mediator (article 1 of Law 5/2012). As a rule, according to Law 5/2012, mediation is possible when the dispute concerns rights that can be renounced by the parties, as is usual in commercial disputes, and this regardless of whether the mediation takes place out of or during a judicial procedure. The agreement reached in mediation is enforceable whenever it is made in a deed issued by a notary public or once it has been homologated by a court (article 25 of Law 5/2012).

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In 2013, the Royal Decree 980/2013, of December 13th, was passed, which the Law 5/2012 implemented in several aspects, such as the training required for mediators to do their job, the creation of mediator records, the introduction of a simpliﬁ ed electronic mediation procedure, and the possibility to enter in agreements with the Ministry of Justice and the Autonomous Communities to promote the circulation of the information contained in the different mediator records.

* * *

Endnotes 1. This is on the grounds that the abogados cannot access the system in those proceedings in which the representation of the parties by a Procurador is mandatory – a great majority – and also due to the fact that, instead of offering an integrated view of the proceedings (with access to all the documents that have been generated at any time in each proceedings, organised by dates and parties), the system is limited to being a mere platform for the service of documentary communication. 2. In terms of costs, solicitors’ fees are usually calculated according to the Guiding Criteria of the professional association to which they belong, while the Procurador’s fees are calculated through the application of tariffs approved by law. 3. In addition, the plaintiff is also bound to pay the court fees, in the cases foreseen by the law where such payment is mandatory. 4. In certain cases foreseen by the LEC, the law allows the provisional enforcement of judgments that are not fi nal, in the sense that an appeal fi led against them is still pending. 5. In order to protect the debtor, the LEC establishes immunity for seizure of certain assets, as well as proportional quantitative limits, in case of seizure of wages and pensions. 6. This is the case, among others, in the rights over properties located in Spain, the constitution, validity, nullity or dissolution of companies organised under the laws of Spain, and the validity or nullity of any registrations carried out by a Spanish Registrar. 7. The principle of cooperation allows for exceptions, as the LCJI contains a wide range of situations, very similar to the grounds for denial of the exequatur, which can be grounds for the dismissal of requests for international legal cooperation. 8. Along with the documents subject to notifi cation or transfer abroad, there must be a translation to the offi cial language of the destination State or in a language that the recipient understands, and all foreign documents subject to notifi cation in Spain must be translated into Spanish or, where appropriate, into the offi cial language of the Autonomous Community where the documents are to be served. 9. The procedure for the enforcement of foreign resolutions in Spain will be governed, in any case, by the provisions of the LEC, including those relating to the expiration of the right of enforcement of the resolution. 10. A dispute is considered cross-border when at least one of the parties is domiciled in a State different from that of the other party at the time when both agree to use mediation or when they are required, under the applicable law, to accept mediation as the method for solving their dispute (article 2 of Law 5/2012).

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Pedro Moreira Tel: +34 91 781 50 40 / Email: [email protected] A founding partner of SCA LEGAL, SLP, Pedro Moreira has almost 20 years of experience as a litigation lawyer, specialising in civil, commercial and corporate law disputes. Thanks to his expertise in those areas of law and his background in economics and business administration, he regularly advises clients, from different jurisdictions and sectors, in complex litigation cases (in relation to the breach of commercial contracts, damage claims, shareholders conﬂ icts and other corporate law issues, bankruptcy and insolvency matters, etc.), some of them multijurisdictional and/or heard by a court of arbitration. Mr. Moreira advises also on a regular basis on non-contentious matters, mostly in commercial and corporate law. Mr. Moreira graduated in Law from the Complutense University of Madrid and has also a B.A. in Law from the Catholic University of Lisbon, a M.A. in Economics (Diploma de Estudios Avanzados en Economía) from the Complutense University of Madrid and an MBA from the Camilo José Cela University (Madrid). He is a member of the Madrid Bar Association, speaks ﬂ uent Spanish, Portuguese and English and has also a working knowledge of French and German.

Isabel Álvarez Tel: +34 91 781 50 40 / Email: [email protected] Isabel Álvarez is a partner of SCA LEGAL, SLP. She has almost 10 years of experience as a litigator, her practice focusing on civil, commercial and labour law disputes. She regularly advises Spanish and foreign clients in complex litigation cases (in relation to breaches of contract, damage claims, real property and inheritance disputes, termination of labour agreements with directors and other senior staff, etc.). She advises also on a regular basis on non-contentious matters, mostly in civil and commercial law. Ms. Álvarez holds a B.A. in Law from the Complutense University of Madrid and is a member of the Madrid Bar Association. She speaks ﬂ uent Spanish and English.

SCA LEGAL, SLP C/ Castelló 82 – 28006 Madrid, Spain Tel: +34 91 781 50 40 / Fax: +34 91 781 50 41 / URL: www.sca-legal.com

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Balz Gross, Claudio Bazzani & Julian Schwaller Homburger

Introduction Located in the heart of Europe, Switzerland is a civil law country with a long tradition as one of the major global venues for international commercial arbitration and commercial litigation. Switzerland has a reliable court system and its judges are known for their impartiality and independence. Civil proceedings in Switzerland are comparably fast and not overly complicated or costly. Broad pre-trial discovery proceedings, jury trials and long hearings are foreign to Switzerland. Arbitration The Swiss cities of Geneva and Zurich are among the world’s leading venues for international commercial arbitration, with approximately 300 arbitrations commenced in these cities annually. In addition, Switzerland is home to several specialised arbitration centres, such as the Tribunal Arbitral du Sport / Court of Arbitration for Sport, with its steadily increasing number of new arbitration requests each year (599 in 20161). Traditionally, cities in Switzerland have been among the top venues for arbitration proceedings conducted under the ICC arbitration rules worldwide. In a survey conducted on behalf of the European Parliament, arbitration practitioners were asked to recommend the fi ve most favoured States as the seat of an international arbitration. Of the participating practitioners, 85.62% recommended Switzerland, more than any other State included in the study, and 13.6% more than the next most recommended State.2 One of the factors that has contributed to Switzerland becoming one of the world’s leading international arbitration jurisdictions is its arbitration-friendly legislation. Other factors include an excellent arbitration infrastructure, high professional standards in the legal profession, as well as Switzerland’s reputation for neutrality and political stability. In principle, international arbitrations seated in Switzerland are governed by Chapter 12 of the Swiss Private International Law Act (the PILA3), which is currently being revised to refl ect the latest developments in international commercial arbitration. The PILA’s rules on international arbitration provide for a short and concise legal framework that affords the parties maximum fl exibility and recognises the principle of party autonomy to the fullest extent possible. The parties are free to agree on all aspects of the arbitral procedure, and to tailor the arbitration to the specifi c needs of their case, subject only to the principle of due process (the parties’ right to be heard and to equal treatment). The PILA only provides for a very limited number of grounds to challenge the award. Unless the award violates public policy, there is no review on the merits of the award. Challenges to an award are heard exclusively by the Swiss Federal Supreme Court (the highest court in Switzerland) and are generally adjudicated within a time period of four

GLI - Litigation & Dispute Resolution 2018, 7th Edition 238 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Homburger Switzerland to six months from the date of the challenge. The Swiss courts have a well-established, arbitration-friendly practice, and both legal and commercial infrastructure are well suited to serve the needs of international arbitration proceedings. Switzerland has ratifi ed the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention4), and foreign arbitral awards are enforced in Switzerland as a matter of course. State court proceedings State court proceedings in civil matters are primarily governed by the Swiss Civil Procedure Code of 1 January 2011 (the CPC5). The CPC has been in force for about eight years. In March 2018, the Swiss Federal Council started the consultation phase regarding a partial revision of the CPC. Some of the main objectives of this revision are addressed below. The CPC, as well as Switzerland’s substantive civil law, is federal law, whereas the organisation of the judicial system on a cantonal level remains the responsibility of the cantons. Federal law, however, provides for certain guidelines as to the organisation of the judiciary. In particular, the CPC as a general rule requires the cantons to establish a court system with two cantonal instances: a court of fi rst instance, and an appellate court as a second instance for fi rst (and usually full) appellate review. In international cases, State court proceedings are also regulated by the rules of private international law of Switzerland set forth in the PILA and other bilateral and multilateral instruments. Switzerland has ratifi ed a large number of international treaties that are relevant in an international context, including but not limited to the following: • the Hague Convention of 1 March 1954 on Civil Procedure;6 • the Hague Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents;7 • the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the Hague Service Convention);8 • the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters;9 • the European Convention of 16 May 1972 on the Calculation of Time-Limits;10 • the European Agreement of 27 January 1977 on the Transmission of Applications for Legal Aid;11 • the Hague Convention of 25 October 1980 on International Access to Justice;12 and • the revised Lugano Convention of 30 October 2007 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (the Lugano Convention).13 As a general rule, civil proceedings before State courts must be preceded by an attempt at conciliation before a conciliation authority, although the CPC also contains certain exceptions to this requirement. One such exception applies where the respondent is domiciled abroad, in which case the claimant may waive conciliation proceedings. Conciliation proceedings are initiated by an application for conciliation containing, among other things, the prayers for relief and usually a brief description of the matter in dispute. Upon fi ling the conciliation application, the case becomes pending (lis pendens) and the statute of limitations is interrupted. Conciliation proceedings are confi dential and

GLI - Litigation & Dispute Resolution 2018, 7th Edition 239 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Homburger Switzerland rather informal. Within two months of receipt of the application, an oral hearing takes place at which the conciliation authority attempts to reconcile the parties in an informal manner. If no agreement is reached, the conciliation authority issues the authorisation to proceed, allowing the claimant to fi le the claim before the competent court of fi rst instance within three months after issuance of the authorisation to proceed. Court proceedings are initiated by fi ling a fully substantiated statement of claim. The statement of claim must contain, among other things, the prayers for relief, a statement regarding the value in dispute, all relevant allegations of facts, and a specifi c notice of the evidence offered for each allegation of fact. Along with the statement of claim, the claimant has to submit the original copy of the authorisation to proceed as well as the available physical records (documents) to be offered in evidence. Upon receipt of the statement of claim, the court usually orders the claimant to pay an advance on costs. At the request of the respondent, the claimant must also provide security for party costs where the claimant is not domiciled in Switzerland, appears to be insolvent, owes costs from prior proceedings, or where there otherwise appears to be a considerable risk that the respondent’s party costs, if awarded, would not be paid. Thereafter, the court serves the respondent with a copy of the statement of claim and sets a deadline for the respondent to submit a statement of defence. If the respondent is domiciled abroad, service is effected in accordance with the applicable bilateral or multilateral conventions, namely the Hague Service Convention. The court may order a second exchange of written submissions if the circumstances so require, or directly summon the parties to the main hearing. State court proceedings are generally structured in three stages. In a fi rst stage, the factual assertions are pleaded and the evidence is offered. The second stage is the actual evidentiary phase during which the evidence is taken by the court (e.g. witness testimony, fi ling of expert reports, production of documents, etc.). The last phase of the proceedings is the post-hearing stage where the parties may comment on the result of the evidence-taking and, thereafter, the judgment is rendered. In principle, civil proceedings before Swiss courts follow an adversarial model. Accordingly, it is up to the parties to present the court with the relevant facts in support of their case and to submit the respective evidence, unless the law provides that the court has to establish the facts and to take the evidence ex offi cio.14 Conversely, pursuant to the principle iura novit curia, the courts always apply the law ex offi cio. As an exception to the principle of double instance, the cantons are granted the option of establishing a specialised commercial court for commercial and corporate disputes. These courts serve as the fi rst and sole cantonal instance. Where a dispute is heard by a commercial court, the claimant has to fi le his statement of claim directly with the court, without the need to fi rst participate in conciliation proceedings. Challenges to judgments rendered by a commercial court are handled directly and exclusively by the Swiss Federal Supreme Court. Four cantons in the German-speaking part of Switzerland (Zurich, Aargau, Bern and St Gallen) have established such a specialised commercial court. The commercial courts, in particular the commercial court of the canton of Zurich, are frequently chosen as a legal venue by international contracting parties. An important feature of the procedure before the commercial court of the canton of Zurich is the built-in conciliation/settlement hearing, during which a majority of cases are settled. The purpose of such a hearing is to assist the parties in settling their dispute amicably. To this end, a delegation of the commercial court usually presents its preliminary and non-binding

GLI - Litigation & Dispute Resolution 2018, 7th Edition 240 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Homburger Switzerland analysis of the case to the parties and comments on the strengths and weaknesses of their respective allegations. Settlement hearings take place at an early stage of the proceedings (usually after the fi rst exchange of written briefs) and prior to the taking of evidence. On average, about 65% of all cases are settled by the parties in the course of such a hearing. Proceedings before Switzerland’s State courts are conducted in one of Switzerland’s offi cial languages (German, French or Italian, depending on the canton). However, some judges at the commercial court of Zurich are sometimes willing to conduct the settlement hearing in English if a foreign party is involved and provided no party objects. Decisions of the cantonal appellate courts (or the commercial courts) may then be appealed to the Swiss Federal Supreme Court in Lausanne, provided that the amount in dispute is least CHF 30,000.15 Proceedings before the Federal Supreme Court are governed by the Federal Act on the Federal Supreme Court. The grounds for appeal are limited to violations of federal law, international public law or constitutional law (including violations of a cantonal constitution). As a general rule, the Federal Supreme Court is bound by the facts established by the lower cantonal court, unless they were established in a manifestly erroneous manner, and new facts and evidence may not be submitted. In 2017, the Swiss Federal Supreme Court heard 8,029 new cases (7,743 in 2016) and concluded 7,782 cases (7,811 in 2016). Out of these 7,782 cases, 1,805 cases concerned civil/commercial matters including cases relating to the Federal Debt Enforcement and Bankruptcy Act (the DEBA). Out of these 1,805 cases, 46 cases were appeals against an international arbitral award. In 2017, the average duration of proceedings in civil matters before the Swiss Federal Supreme Court was 132 days. 2018 partial revision of the Swiss Civil Procedure Code In March 2018, the Swiss Federal Council launched the process of a partial revision of the CPC. Among other things, the revision aims at: (i) facilitating the process of asserting mass damages; (ii) reducing cost barriers which in the past prevented claimants from commencing State court proceedings; (iii) introducing a legal privilege for in-house counsel in civil proceedings; (iv) strengthening the conciliation proceedings which over the past eight years have effectively reduced the case load of the courts; and (v) improving the procedural tools for the coordination of parallel cases (third-party intervention, joinder of actions, joinder parties). The Swiss Federal Council proposes to introduce a reparatory group action for the collective assertion of monetary claims. This new tool is designed to facilitate the assertion of mass damages claims, e.g. in product liability cases, improper trade cases or cases of antitrust violations involving a large number of claimants. The draft bill proposes that the individual claims of the represented group members are raised by a non-profi t organisation which, according to its bylaws, aims at safeguarding the interests of the affected group of persons. The Federal Council proposed an opt-in system, meaning that an affected person is not bound by a judgment unless he or she authorised the organisation to raise claims on his or her behalf. Another noteworthy proposal in the revision draft is the proposed introduction of collective settlement proceedings. According to the related provisions, an organisation that is authorised to initiate a group action may also enter into a collective settlement agreement with the other party. Such a settlement can be approved by the court and declared binding upon all affected parties. In such a case, all affected parties are bound by the collective settlement agreement, unless they declare their withdrawal from the agreement within a time-period of at least three months.

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Privilege and disclosure Document production Broad (pre-trial) discovery proceedings, as known in common law jurisdictions, do not exist in Switzerland. The scope of document production under the CPC is rather limited. Generally, the court will order a litigant or a third party to produce documents requested by a party where a material allegation of fact is disputed; the requested documents are suitable to prove the alleged and disputed facts; the documents are suffi ciently described; and the documents are in the custody of the requested party (or arguably, where the documents are not in the custody of the requested party, the requested party is entitled to retrieve them from a third party). Such production orders are issued at an advanced stage of the proceedings when the court takes evidence. Additionally, the CPC provides for ‘precautionary evidence-taking’ (pre-trial production of documents or witness questioning) that may be initiated before an ordinary proceeding is pending. This procedure is available where a specifi c statutory right so provides, or where the requesting party credibly demonstrates either that the evidence it seeks is at risk or that it has a legitimate interest worthy of protection. Notably, the need to assess the prospects of potential litigation does not itself constitute such a legitimate interest and without more, will not justify precautionary evidence-taking. Rather, in order to justify a legitimate interest, the requesting party must credibly demonstrate that certain particular facts, if proven, would give rise to a claim against the opposing party, and that the evidence it is seeking through precautionary evidence-taking would enable it to prove such facts. If these facts are pleaded in a suffi ciently substantiated manner, a party may be able to obtain the relevant evidence in order to assess the prospects of litigation. However, where the party is seeking the production of documents, it should be recalled that the particular prerequisites for document production mentioned above also apply in the case of precautionary evidence-taking. Court orders for document production against the opposing party are not enforceable. Rather, where the opposing party refuses without valid reason to comply with a production order, the court will take this into account when appraising the evidence. On the other hand, court orders ordering the production of documents by third parties may be enforced under the threat of criminal sanctions. Given the limited possibilities of obtaining documents in civil proceedings, parties often attempt to collect information through criminal proceedings, or based on the right to access arising out of data protection law. Regarding the latter, the Swiss Supreme Court has held that requesting access to one’s personal data from a bank with a view to potential litigation against that bank does not constitute an abuse of a person’s (data protection) rights, among other things. This broad interpretation of the right to access personal information, together with the broad defi nition of personal data contained in the Data Protection Act – encompassing all information relating to identifi ed or identifi able individuals and legal entities – renders the right to access arising out of data protection law a potentially powerful tool for the gathering of evidence with a view to potential litigation. Privilege Registered lawyers (excluding in-house counsel) are subject to a duty of professional secrecy. This duty of professional secrecy covers all confi dential information connected with a particular lawyer-client relationship, provided that the mandate does not relate to mere ancillary activities such as asset management or board member activities. A lawyer’s duty of professional secrecy is refl ected in the relevant Swiss procedural codes, which provide

GLI - Litigation & Dispute Resolution 2018, 7th Edition 242 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Homburger Switzerland that lawyers, clients and third parties may invoke legal privilege to refuse the disclosure of privileged documents. These procedural provisions thus complement the lawyers’ duty of professional secrecy by providing comprehensive legal privilege encompassing lawyers’ documents. In recent decisions, however, the Swiss Federal Supreme Court held that certain reports prepared by attorneys in the course of internal investigations may not always be covered by attorney-client privilege, namely if the investigation relates to compliance with anti-money laundering regulation and the performance of a bank’s related obligations which the bank outsourced to external counsel. The decisions are heavily criticised in legal writing. In contrast, in-house counsel are not covered by a duty of professional secrecy under Swiss law. As a result, in-house counsel cannot withhold information from the courts and authorities, and their documents are not protected by a legal privilege.

Costs and funding Costs Procedural costs include court costs (judgment fee, the costs of evidence-taking, etc.) and party costs (the costs of legal representation and expenses). Generally, the losing party must bear the procedural costs. If neither party is deemed to have entirely prevailed on the merits of the dispute, the procedural costs are allocated in accordance with the outcome of the case. In case of a settlement, the costs are usually charged to the parties according to the terms of the settlement agreement. Both the court costs and the party costs are determined and allocated ex ofﬁ cio according to the tariffs for the procedural costs. Each canton has its own rate scale that is normally based on the amount in dispute. Procedural costs, therefore, differ from canton to canton. In the canton of Zurich, for example, the following rates apply in ordinary civil proceedings: • if the value in dispute amounts to CHF 100,000, the party costs are about CHF 11,000 and the court costs CHF 9,000; • with a value in dispute of CHF 1m, both court costs and party costs amount to approx. CHF 31,000 each; • where the value in dispute is CHF 10m, party costs amount to approx. CHF 106,000 and court costs to CHF 120,000. Court costs may be increased (by one third or, in exceptional cases, up to a maximum of 200%) or decreased, depending on the complexity of the case and the time spent by the court on the matter. If a case is settled in court, the parties are usually granted substantial reductions in their court costs. Similarly, party compensation may be increased or decreased by one third, depending on the complexity of the case, the responsibility of the lawyer, and the time and efforts spent by the lawyer on the matter. In practice, however, the compensation paid by the losing party rarely covers the actual legal costs incurred by the prevailing party. Reduced rates for court costs and party costs apply in summary proceedings, in proceedings concerning real estate leases and tenancy disputes, and non-pecuniary disputes. Employment law proceedings with a value in dispute of up to CHF 30,000 are free of charge. The procedural costs of appellate proceedings before cantonal courts and the Federal Supreme Court are determined pursuant to similar rules. As explained, courts may order the claimant to make an advance payment up to the amount of the expected court costs. In practice, it is standard procedure for courts to request advance

GLI - Litigation & Dispute Resolution 2018, 7th Edition 243 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Homburger Switzerland payments, although certain exceptions apply. The court costs, which are generally fi xed in the fi nal decision, are set off against the advance paid by the claimant and the balance is collected. If the claimant prevails, it will be granted the right to recover the costs from the respondent. As a result, the claimant bears the risk of the respondent becoming insolvent. With respect to the taking of evidence, each party has to advance the costs for taking the evidence it has requested. Further, at the request of the respondent, the claimant may be required to provide security for potential party compensation where the claimant has no residence or registered offi ce in Switzerland, appears to be insolvent, owes costs from prior proceedings, or where there otherwise appears to be a considerable risk that such compensation, if ordered, will not be paid. If the claimant does not provide the ordered advance or security, the court will declare the action inadmissible. Claimants, and in particular foreign claimants, therefore face signifi cant fi nancial hurdles in initiating civil litigation before the Swiss courts. Litigation funding Court proceedings in Switzerland are usually funded by the parties themselves. However, a party may seek legal aid if it lacks the fi nancial resources to fund the proceedings and if the case does not seem devoid of any chance of success. Legal aid can comprise an exemption from the obligation to pay an advance on costs and to provide security; an exemption from court costs; or the appointment of a legal representative (attorney) by the court, if necessary, to protect the rights of the party. In theory, legal aid is also available to companies, provided, among other things, that the object in dispute is the company’s only remaining asset. According to the Federal Supreme Court’s practice, third-party litigation funding is in principle protected by the fundamental right of economic freedom. Litigation funding by an independent third party is thus permitted in Switzerland, provided that the (funded) party’s lawyer acts independently from – and free from any instructions of – the third- party funder. The attorney representing the party in court is, however, prohibited from participating in the funding. This is due to the fact that attorneys in Switzerland are generally not allowed to make arrangements with their clients pursuant to which their fees are determined exclusively by reference to the proceeds in the case of a success (pactum de quota litis). These principles have been confi rmed by the Federal Supreme Court (decision 2C_814/2014 of 22 January 2015). Despite its permissibility, litigation funding is still not very common in Switzerland. The conditions for obtaining third-party litigation funding are usually rather strict. It may therefore be diffi cult, but not impossible, to obtain litigation funding in Switzerland. The funding party usually requires a success fee. While the fees vary from case to case, a fee of about 30% of the outcome of the litigation is not unusual.

Interim relief In general, interim measures may be ordered if the applying party can credibly establish that: (i) a right to which it is entitled has been violated or that a violation is anticipated; (ii) the applying party holds the entitlement which the requested interim measure is intended to protect (prima facie case); and (iii) the violation threatens to cause harm to the applicant that cannot be easily remedied (see Article 261 CPC). In cases of special urgency, Swiss courts may also order interim measures on an ex parte basis, i.e. without hearing the opposing party. This is the case where there is a risk that the enforcement of the measure will be frustrated if the opposing party is informed of the requested relief before it is ordered. Once

GLI - Litigation & Dispute Resolution 2018, 7th Edition 244 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Homburger Switzerland an ex parte measure is ordered, the court will either summon the parties to a hearing, which must take place immediately, or set a deadline for the opposing party to comment on the measures in writing. Thereafter, the court must again decide on the request immediately. According to the CPC, the court may order whatever is necessary and suitable to prevent imminent harm to the applicant. By way of example, the court may render an injunction prohibiting the opposing party from continuing with a certain unlawful conduct, or it may order such party to remedy an unlawful situation. A party may submit a request for interim relief either before or after the main proceedings have become pending. If interim measures are ordered before the main proceedings have become pending, the court must set a deadline (usually of about 30 days) for the applicant to fi le the principal action. If no principal action is fi led within this deadline, the interim measures become automatically ineffective. The court decides on a request for interim relief in summary proceedings. Consequently, the primary means of evidence to obtain interim relief are documents. An important feature that has been newly introduced in the CPC is the precautionary taking of evidence, which is also governed by the rules on interim measures (see above). If the opposing party provides appropriate security, the court may refrain from ordering interim measures. In addition, any person having reasons to believe that an ex parte interim measure or an attachment will be requested against him or her can fi le a protective brief. The purpose of the protective brief is to allow such person to set out in advance of any request its position in response to the other party’s anticipated arguments. The opposing party will only be served with the protective brief if it initiates the anticipated ex parte proceedings for interim relief. If no application for interim relief is fi led within six months, the protective brief becomes ineffective.

Enforcement of judgments Main sources of law The main sources of law governing the enforcement of State court judgments and arbitral awards are – on a national level – the CPC and the DEBA, and – in international cases – the Lugano Convention, the PILA and the New York Convention. Enforcement of domestic judgments The enforcement of Swiss judgments is governed by the CPC (Articles 335 et seq.) and – to the extent the judgment relates to the payment of money – by the provisions of the DEBA. A judgment rendered by a Swiss court is enforceable if: (i) it is fi nal and binding and the court has not suspended its enforcement; or (ii) it is not yet legally binding (e.g. because an appeal can be fi led against it), but its provisional enforcement has been authorised by the court. The court making the judgment on the merits is competent to directly order the necessary enforcement measures. The party seeking the enforcement of the judgment has to fi le a request for enforcement with the enforcement court. The enforcement court decides in summary proceedings. The opposing party can comment on the request; however, if necessary, the enforcement court may order interim measures on an ex parte basis. If the judgment relates to the payment of money, the party seeking the enforcement can request the local debt collection offi ce to issue a payment order against the other party. If the other party objects to the payment order, any enforceable judgment or arbitral award constitutes a valid title to set aside the objection.

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Enforcement of foreign judgments and awards a) Judgments rendered in a signatory State of the Lugano Convention If the foreign judgment was rendered in a State which is a party to the Lugano Convention, the judgment will be recognised in Switzerland in accordance with the rules of that convention. There are only limited grounds for non-recognition. In particular, a judgment will not be recognised in Switzerland if recognition would be manifestly contrary to Swiss public policy or, if the judgment was rendered in default of appearance, the respondent was not served with the document which instituted the proceedings, or with an equivalent document in suffi cient time and in such a way as to enable him to arrange for his defence. Importantly, the Lugano Convention does not require the party seeking recognition to provide evidence that the document that instituted the proceedings was properly served on the respondent, i.e. that it was served in accordance with the provisions of the Hague Convention of 15 November 1965 on the Service Abroad. Under the Lugano Convention, service is deemed to be suffi cient if it enabled the respondent to arrange for its defence. Upon application of the party seeking enforcement, the foreign judgment will immediately be recognised and declared enforceable upon completion of the formalities provided for in the Lugano Convention. These formalities include submission of an original or authenticated copy of the judgment to be enforced, and of the certifi cate referred to in Article 54 of the Lugano Convention (i.e. the standard form in Annex V to be issued by the court or another competent authority of the State in which the judgment was rendered). The party against whom recognition is sought is not entitled to make any submission on the application. The respondent is heard on appeal only. b) Other foreign judgments and foreign arbitral awards Outside the scope of the Lugano Convention, the recognition and enforcement of a foreign State-court judgment is subject to the principles set forth in the PILA. Under the PILA, a foreign judgment may be recognised in Switzerland if: • the foreign court having rendered the judgment had jurisdiction according to PILA; • no ordinary appeal can be fi led against it or if it is fi nal; and • no grounds for refusal exist. In particular, recognition of a foreign judgment will be refused where doing so would be obviously irreconcilable with Swiss public order, or where the respondent can prove that: (i) it was not properly served; (ii) the judgment was reached in a procedure that violated basic principles of Swiss procedural law, in particular the right to be heard; or (iii) a dispute between the parties was fi rst pending in Switzerland. Whether the foreign court that rendered the judgment had jurisdiction must be determined on the basis of the criteria set forth in the PILA. The PILA sets forth the specifi c situations in which the jurisdiction of the foreign court will be recognised. These include: where a provision of the PILA provides for such jurisdiction; where the respondent was domiciled in the State in which the judgment was rendered; or, in matters of a fi nancial nature, where the parties subjected themselves to the jurisdiction of the foreign court by means of an agreement that is valid under the rules of the PILA. Foreign arbitral awards are enforced in accordance with the New York Convention. According to the Federal Supreme Court’s practice, the formal requirements of Article IV New York Convention should not be applied too strictly (decision 5A_752/2011

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of 9 February 2012). In particular, a Swiss court may enforce an English award even though no German translation was submitted by the applying party. Attachment proceedings A request for attachment will be granted if the creditor credibly establishes that: (i) it has an unsecured and matured claim against the debtor; (ii) assets belonging to the debtor are located in Switzerland; and (iii) a ground for attachment pursuant to Article 271 of the DEBA exists. By far the most relevant grounds for attachment in practice are the following two: • the debtor does not live in Switzerland, and no other ground for attachment exists, provided that the claim has a suffi cient connection with Switzerland or is based on a written recognition of debt pursuant to Article 82 (1) of the DEBA; and • the creditor holds an enforceable title permitting the defi nitive setting-aside of an objection by the debtor in debt enforcement proceedings (“defi nitiver Rechtsöffnungstitel”). Examples of valid titles are enforceable domestic State court judgments or awards, court- approved settlements, or enforceable public deeds. The term “enforceable title” also relates to foreign arbitral awards and to foreign State court judgments (decision of the Federal Supreme Court 5A_355/2012 of 21 December 2012). As a result, any enforceable judgment or (foreign) arbitral award in the hands of a creditor entitles the creditor to attach assets of his debtor in Switzerland, provided that the creditor can credibly show that the foreign judgment or award can be recognised and declared enforceable in Switzerland. The competent Swiss court – i.e. the court located either in the area in which the debtor has assets or in the area which the debt enforcement proceedings are offi cially based – can issue a Swiss-wide attachment order; it is therefore no longer necessary to initiate attachment proceedings in each district in which attachable assets are located. If the requirements for an attachment order in Switzerland are not met, creditors may try to obtain a freezing order in another State that is a party to the Lugano Convention (in particular, a worldwide Mareva injunction of an English court), and then seek recognition of such order as well as a declaration of enforceability in Switzerland. As a rule, freezing orders are deemed to be judgments within the meaning of the Lugano Convention (and can thus be recognised in Switzerland), provided that the defendant was granted the right to be heard before the foreign court prior to the application for recognition and enforcement in Switzerland. By contrast, a foreign ex parte order (i.e. an order issued without the respondent being heard) cannot be recognised in Switzerland. In a remarkable decision of November 27, 2017 (DFT 143 III 693), the Swiss Federal Supreme Court held that (i) a so-called “conservatory attachment” issued by a State court in Athens can be recognised and declared enforceable in Switzerland under the Lugano Convention; and (ii) the appropriate measure to actually enforce the foreign judgment in Switzerland is an attachment order pursuant to Article 271 of the DEBA, given that the Greek “conservatory attachment” operates in rem (rather than ad personam). In passing, the Federal Supreme Court also found that an English freezing order would have to be enforced in Switzerland as a preliminary measure pursuant to Article 340 of the CPC, and thus not in the form of an attachment pursuant to the DEBA.

International arbitration Switzerland continues to be one of the most frequently chosen venues for international commercial arbitration. Over the last decades, Swiss arbitrators have been among the most

GLI - Litigation & Dispute Resolution 2018, 7th Edition 247 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Homburger Switzerland frequently chosen arbitrators; cities in Switzerland are among the most frequently chosen venues; and Swiss law among the most frequently chosen applicable laws. In addition to ICC proceedings, a number of other international arbitration proceedings are conducted in Switzerland, including ad hoc proceedings; proceedings under the Swiss Rules; and proceedings under the rules of one of the specialised arbitration centres such as the Tribunal Arbitral du Sport / Court of Arbitration for Sport. International arbitration proceedings – defi ned as proceedings in which at least one party had its domicile in Switzerland at the time the arbitration agreement was executed – are generally governed by the rules of the PILA. However, the parties are free to opt out of the PILA and choose the rules of the CPC, which in principle govern domestic arbitrations. The rules of the CPC are much more detailed than those of the PILA and differ in certain relevant points. Currently, Chapter 12 of the PILA is undergoing a review process. Since the existing provisions of the PILA remain a widely accepted standard for modern arbitration legislation, the review aims at brushing-up the arbitration framework by adopting certain best practices as well as some of the most important decisions of the Swiss Federal Supreme Court. Among other things, the released draft bill contains provisions relating to the possibility of pleading in the English language in appellate proceedings before the Swiss Federal Supreme Court. Under the PILA there is only one instance of appeal in international commercial arbitration. All appeals must be brought before the Federal Supreme Court. The grounds for appeal under the PILA are very narrow: the award may only be set aside if the arbitral tribunal was constituted irregularly; wrongly accepted or declined jurisdiction; ruled ultra or infra petita; violated the parties’ right to equal treatment or to be heard; or if the award itself violates public policy. In practice, only very few awards are set aside, and these have primarily been based on the grounds of lack of jurisdiction or violation of the right to be heard. Only one arbitral award has been successfully challenged on the ground that it breached substantive public policy (decision 4A_558/2012 of 27 March 2012, relating to a dispute between the Brazilian football player Francelino da Silva Matuzalem vs. the Fédération Internationale de Football Association, FIFA). An appeal to the Federal Supreme Court is normally adjudicated within four to six months.16 The CPC, on the other hand, permits the parties to choose to have a cantonal court hear the appeal, rather than the Federal Supreme Court. As to the grounds for appeal, in addition to the grounds set forth in the PILA, the CPC also permits arbitral awards to be set aside where they are arbitrary or based on an obviously incorrect application of the law or determination of the facts, or on a violation of equity. The grounds for appeal under the CPC are thus substantially broader than under the PILA. Another feature of international arbitration proceedings under the PILA is that the parties – provided that no party is domiciled in Switzerland – may, by an express statement in the arbitration agreement or by a subsequent written agreement, fully waive their right to appeal the arbitral award. The parties do not have this right under the CPC. Such a waiver is sometimes made in order to further expedite the resolution of the dispute and to ensure an increased level of confi dentiality. While initially the Federal Supreme Court was very reluctant to enforce such advance waivers, requiring that the waiver of the appeal be express and clear, the court appears to have become more liberal in this respect. In its early decisions, the Federal Supreme Court refused to enforce general statements, providing that the award “shall be fi nal and binding”, or general waivers of challenges to the award. In a decision of 21 March 2011 (decision 4A_486/2010), however, the Federal Supreme Court concluded that the following statement, contained in the parties’ arbitration agreement,

GLI - Litigation & Dispute Resolution 2018, 7th Edition 248 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Homburger Switzerland constituted a valid waiver of the parties’ right to appeal: “The decision of the arbitration shall be fi nal and binding and neither party shall have any right to appeal such decision to any court of law.” Similarly, in a decision of 3 April 2014 (4A_577/2013), the Federal Supreme Court confi rmed that a statement pursuant to which “neither party shall seek recourse to a law court nor other authorities to appeal for revision of this decision” could only be understood in good faith as an expression of the parties’ intent to waive their right to appeal the arbitral award, despite the rather unusual wording of the clause. Conversely, the Federal Supreme Court has maintained its position that a mere statement to the effect that the award shall be “fi nal” still does not qualify as a valid waiver of the right to appeal (decision 4A_460/2013). According to the Supreme Court’s practice, the parties’ declaration to waive their right of appeal must refl ect their unmistakable will to avail themselves of that opportunity and to opt out of the right to appeal an arbitral award to the Federal Supreme Court. Whether this is the case must be determined by interpretation of the arbitration agreement at hand. In its decisions 4A_444/2016 and 4A_446/2016 of 17 February 2017, the Federal Supreme Court explained that the deadline for the fi ling of an appeal only begins to run upon receipt of the fully reasoned award, as opposed to the operative part of the award only. In a decision of 27 February 2014 (4A_438/2013), the Federal Supreme Court reiterated its practice regarding the severability of the arbitration clause. The dispute related to a licence agreement which stated that after the expiry or termination of the licence, all rights and obligations of the parties would terminate but for some provisions. The arbitral tribunal accepted jurisdiction despite the termination of the agreement. On appeal, the Federal Supreme Court, by referring to the principle of autonomy of the arbitration clause, confi rmed that it must generally be assumed that the arbitration clause contained in a contract is not affected by the expiry or termination of the contract, thereby underscoring the principle of severability of the arbitration clause as a cornerstone of arbitration. On 7 July 2014 (decision 4A_124/2014), the Federal Supreme Court issued a judgment as to whether the pre-arbitration dispute resolution tier in the FIDIC General Conditions is mandatory and, if so, what the legal consequences of a failure to comply with this procedural requirement are. According to that ruling, arbitration proceedings may not be commenced without fi rst completing the DAB procedure if the contract so provides. However, if the ad hoc DAB has not been constituted 18 months after it was requested, the responding party in the arbitration may no longer rely on the mandatory nature of the DAB procedure. In a further decision of 16 March 2016 (decision 4A_628/2015), the Federal Supreme Court held that in the case of a party’s failure to comply with a contractual pre- arbitration dispute-resolution provision, the arbitral tribunal should stay the proceedings until the pre-arbitration dispute-resolution mechanism has been implemented, while the modalities of the stay (notably the time limit of the suspension) are to be determined by the arbitral tribunal. The Federal Supreme Court expressly rejected other options discussed in legal writing, namely the possibility of an award of damages and the option to reject the claim and terminate the proceedings, fi nding that a stay of the proceedings was the only reasonable solution which properly balanced the parties’ interests. In a decision of 27 February 2014 (4A_438/2013), the Tribunal had ordered a stay of one month in order to allow the parties to follow the mandatory mediation proceeding. See also the Federal Supreme Court’s decision 4A_492/2016 of 7 February 2017, according to which a former FIFA employee would have been required to apply to the FIFA dispute resolution chamber before commencing arbitration proceedings.

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On 2 March 2017 (decision 4A_405/2016), the Federal Supreme Court held that a sole arbitrator’s decision to grant a one-day extension for the fi ling of the statement of claim did not violate the principle of equal treatment. It also confi rmed the views of legal scholars that under the Swiss Rules, a belated submission would not necessarily result in an inadmissibility of claims. On the other hand, on 6 March 2017 (decision 4A_490/016), the Federal Supreme Court rejected an alleged breach of due process, confi rming an arbitral tribunal’s decision not to consider arguments submitted in an incorrect format (by e-mail) and in an untimely manner (i.e. not in accordance with the agreed timetable). Swiss Arbitration Centres (Swiss Chambers; Court of Arbitration for Sport) The Swiss Chambers’ Court of Arbitration and Mediation (www.swissarbitration.org) mostly administers commercial arbitrations, investment arbitrations being the exception. Nearly one third of the arbitrations are expedited proceedings, in which the award should be rendered within six months from the date the fi le is transmitted to the arbitral tribunal. The Swiss Rules are widely acknowledged as an alternative to other mainstream rules of arbitration, in particular to the ICC Rules of Arbitration. Under Swiss law and under the Swiss Rules, the parties to an arbitration agreement have the right to request provisional, interim or emergency relief from a State court or from the arbitral tribunal. In the past, parties often had to seek provisional relief from a State court in case of particular urgency – and if the arbitral tribunal was not yet constituted. The revised Swiss Rules address the need to have a choice between the State court and the arbitral process also in these circumstances by clarifying that the arbitral tribunal has the authority to make ex parte provisional orders, and by introducing an emergency arbitrator proceeding. In the case of an ex parte order, the order must be communicated to the other party at the latest together with the provisional order, and the other party must then be immediately granted the right to be heard. The effect of such an ex parte provisional order in practice remains to be seen, since effi cient enforcement may be diffi cult. However, most parties comply voluntarily with the orders of an arbitral tribunal. Under the rules on emergency arbitrator proceedings, parties to an arbitration agreement may opt out of the emergency arbitrator proceeding. If they have not done so, and if there is a need for a provisional measure, and the applying and the opposing party have entered into an arbitration clause providing for the application of the Swiss Rules, a party may apply for emergency relief even before the arbitral tribunal is constituted or even before arbitration proceedings are initiated. Upon receipt of the application (and payment of the advance for the emergency relief proceedings), the Swiss Chambers’ Court of Arbitration will transfer the application to a sole arbitrator, unless it determines that there is manifestly no arbitration agreement, or it concludes that an arbitral tribunal should be constituted fi rst. The sole arbitrator is expected to render the decision on the provisional measure within 15 days from the day the fi le was transmitted to the sole arbitrator. The enforceability of the decision of the emergency arbitrator is unclear – regardless of whether it is called an interim award or an order. Enforcement will hardly be possible under the New York Convention, but it may very well be enforceable under the law of certain jurisdictions, such as Switzerland, where the State court judge will assist in the enforcement (Article 183(2) PILA). The most important of the specialised arbitration centres is the Tribunal Arbitral du Sport / Court of Arbitration for Sport (TAS/CAS; www.tas-cas.org), which handles a large number of sports-related arbitrations.

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Endnotes 1. http://www.tas-cas.org/en/general-information/statistics.html. 2. http://www.europarl.europa.eu/RegData/etudes/STUD/2015/509988/IPOL_ STU(2015)509988_EN.pdf. 3. Federal Private International Law Act of 18 December 1987, SR 291. An unofﬁ cial English translation of Chapter 12 PILA is available at http://www.arbitration-ch.org/asset/92989ed67945478fc27d8b28ce80276e/iprg- english-version.pdf. 4. SR 0.277.12. The English text of the New York Convention is available at http://www.uncitral.org/uncitral/de/uncitral_texts/arbitration/NYConvention.html. 5. Swiss Civil Procedure Code of 19 December 2008, SR 272. An unofﬁ cial English translation of the CPC is available at http://www.admin.ch/ch/e/rs/c272.html. 6. SR 0.274.12. The English text of the Convention is available at https://www.hcch.net/en/instruments/conventions/full-text/?cid=33. 7. SR 0.172.030.4. The English text of the Convention is available at https://www.hcch.net/en/instruments/conventions/full-text/?cid=41. 8. SR 0.274.131. The English text of the Convention is available at https://www.hcch.net/en/instruments/conventions/full-text/?cid=17. 9. SR 0.274.132. The English text of the Convention is available at https://www.hcch.net/en/instruments/conventions/full-text/?cid=82. 10. SR 0.221.122.3. The English text of the Convention is available at http://conventions.coe.int/treaty/en/Treaties/Html/076.htm. 11. SR 0.274.137. The English text of the Convention is available at http://conventions.coe.int/treaty/en/Treaties/Html/092.htm. 12. SR 0.274.133. The English text of the Convention is available at https://www.hcch.net/en/instruments/conventions/full-text/?cid=91. 13. SR 0.275.12. The English text of the Lugano Convention is available at https://www.eda.admin.ch/content/dam/eda/fr/documents/aussenpolitik/voelkerrecht/ autres-conventions/Lugano2/02-conv-prot-ann-corr09_en.pdf. 14. This is the case only in a limited number of matters, such as employment law disputes with a value in dispute not exceeding CHF 30,000, divorce proceedings or disputes between tenants and landlords. 15. In the case of a dispute relating to employment or tenancy law, the minimum value is CHF 15,000. 16. See the updated statistics for 2013 at http://www.arbitration-ch.org/pages/en/asa/news- &-projects/details/974.challenges-of-swiss-arbitral-awards-–-selected-statistical-data- as-of-2013.html.

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Balz Gross Tel: +41 43 222 10 00 / Email: [email protected] Balz Gross is the Head of the Litigation | Arbitration practice of Homburger. His practice focuses on international arbitration proceedings and complex domestic and international litigation. He has acted as party counsel more than 100 international arbitrations, and as arbitrator in numerous international arbitrations. Balz Gross acts as counsel in large, mostly international proceedings before the State courts in all Swiss cantons, in particular the Commercial Courts, and represents foreign and Swiss clients in proceedings involving criminal law issues. “Leading litigator and arbitration counsel” (Chambers 2010), “quick witted and prudent” (Chambers 2011), also praised for his “excellent strategic advice” (Chambers 2012), Balz Gross is described as a “shrewd litigator and master technician” (Chambers 2013), being “very efﬁ cient, convincing and powerful in his interventions during hearings” (Chambers 2014), recommended in Chambers in Arbitration (International), Dispute Resolution (Arbitration Counsel, Litigation) and Employment.

Claudio Bazzani Tel: +41 43 222 10 00 / Email: [email protected] Claudio Bazzani is admitted to practise law in Switzerland and in New York. He is a partner in Homburgers’ Litigation | Arbitration practice and White Collar Crime | Investigations working group. Claudio Bazzani has more than 10 years of experience in conducting large-scale internal and regulatory investigations and in advising corporate clients in compliance matters. He represents clients in investigations by Swiss and foreign authorities and in domestic and international litigation and arbitration proceedings. According to Who is Who Legal Switzerland, Claudio Bazzani is particularly well regarded for his experience in cases involving US regulators.

Julian Schwaller Tel: +41 43 222 10 00 / Email: [email protected] Julian Schwaller is a counsel in Homburger’s dispute resolution team and a member of Homburger’s Restructuring | Insolvency practice group. He represents clients before Swiss State courts and administrative bodies in a wide range of commercial disputes, involving, in particular, insolvency issues, banking matters, M&A disputes, general corporate and contractual matters and insurance law. He has broad experience in attachment proceedings and regularly represents clients in proceedings regarding the recognition and enforcement of foreign judgments in Switzerland.

Homburger Prime Tower, Hardstrasse 201, CH-8005 Zurich, Switzerland Tel: +41 43 222 10 00 / URL: www.homburger.ch

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Hung Ou Yang, Hung-Wen Chiu & Jia-Jun Fang Brain Trust International Law Firm

Effi ciency of process Case assignment system When a civil case is fi led to a court in Taiwan, the court will use its internal computer system to randomly assign a judge to deal with the case. Similarly, when a defendant is indicted by the prosecutor for a criminal offence, the court will randomly pick a judge unless the nature of the case requires that the special court of fi nance should govern. In general, a case will be allocated a particular case number which allows the plaintiff and the defendant to check progress in the case. The plaintiff and the defendant will also have to use the case number to fi le their briefs or affi davits. In order to improve the effi ciency of the court process, the Judicial Yuan enacted the criminal case assignment regulations in the district courts in 2015. Because of the new regulations, the courts now hold an additional hearing before the Preliminary Hearing, focusing on procedural issues, such as whether the defendant pleads guilty or not, whether the indictment is lacking necessary legal conditions which cannot be cured, and whether there is any exemption from prosecution. Thus, with the assistance of this assignment system, the court may deal with cases by an appropriate and suitable procedure which may facilitate the effi ciency of the court process. Online fi ling In 2015, with technological improvement, the Judicial Yuan set up an electronic system for both parties in a civil case or administrative case to fi le complaints or affi davits to the court online. This system changed the traditional rule which required sending the legal documents in person or by mail. However, for the moment, the system only allows online fi ling for civil lawsuits and administrative lawsuits regarding tax and intellectual property issues. In a civil or criminal case, both parties and their attorneys still have to fi le the affi davits or briefs in person or by mail. Both parties and their attorneys may fi le their affi davits or briefs via the electronic system only when the presiding judge allows. In addition, via the electronic system, both parties can easily review all the hearing records/transcripts. This can save time, effort and money for both parties. Online searching for judgments All the civil, criminal, administrative, and IP judgments and rulings can be found on the website established by the Judicial Yuan at http://jirs.judicial.gov.tw/FJUD/. Unfortunately, the searching system can only be accessed and used in Chinese.

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Integrity of process Natural justice While the American legal system, similar to English law, emphasises the due process of law in every respect with regard to litigation and dispute resolution, the Taiwan legal system focuses more on the truth-seeking process. The Taiwanese Code of Civil Procedure is structured in such a way as to seek fi ve main purposes for a civil lawsuit: correct judgment based on truth; fair judgment rendered by an impartial judge; speedy trial; procedural economics; and non-contradictory judgments. However, in a case where both parties do not stipulate the facts, during the trial (which is almost entirely controlled by the judge), it can easily be observed that the court would keep trying to seek the truth. Although each party is granted a right to examine the witness, most of the time the court would directly jump in and ask questions in order to ensure the truth can be found. In this scenario, the attorneys may ask questions only when the court fi nishes asking questions. In addition, because the Taiwan legal system does not have a discovery process which enables one party to obtain evidence from the other party, it is worth noting that each party would try not to submit evidence at an early stage. Although a speedy trial is also the main purpose of the system, at least some key evidence would not be submitted until a case is appealed to the High Court, where most of the time the judgment will become fi nal and binding. The litigation procedure will be seriously prolonged accordingly. Moreover, although oral argument will be the most important way to facilitate the truth- seeking process, the court always orders the attorneys to avoid too much oral argument, when the affi davits and briefs have already shown these arguments. On the other hand, the spirit of natural justice is refl ected in the Taiwanese Code of Criminal Procedure with regard to due process of law. First, under Article 95 of the Taiwanese Code of Criminal Procedure, the defendant shall be notifi ed of all the charges against him. Further to this, like the Miranda warning in the U.S., the defendant may remain silent and is not required to say anything against his own free will during interrogation, not only by the police and the prosecutor, but also by the judge. The defendant may retain a lawyer, who may express his legal opinions at any time during the criminal proceedings. In addition, the defendant may request the police offi cer, the prosecutor, and the judge to investigate evidences in favour of him. Any confession made by the defendant cannot be used as the only evidence with regard to the guilty verdict unless there is corroborating evidence. The most important principle of the criminal justice system, the presumption of innocence, is also adopted under Taiwanese laws so that the criminal defendant cannot be found guilty until proved beyond reasonable doubt by the prosecutor in the trial. Secondly, a foreign defendant has a right to recuse an interpreter because of potential confl ict of interest when the interpreter is a victim in the same case, a prosecutor, or a police offi cer who is involved in the investigation in connection with the defendant under Article 211, Article 200, and Article 17 of the Taiwanese Code of Criminal Procedure. In the past few years, many foreigners who do not speak Mandarin in Taiwan have failed to realise that they may be interrogated by a police offi cer who is also interpreting for the defendant. The potential risk is that the interpreter may mislead or twist what the defendant states or argues at the investigation stage. Third, although in Taiwan criminal justice adopts the inquisitorial system, the Code of Criminal Procedure has been modifi ed multiple times to refl ect the key points of the

GLI - Litigation & Dispute Resolution 2018, 7th Edition 254 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Brain Trust International Law Firm Taiwan adversarial system since 2003. The defendant may: call witnesses and present evidences; cross-examine witnesses face-to-face in front of the court; be represented by a lawyer during investigation and the court process; and be automatically assigned a lawyer during investigation by the police or prosecutor if the defendant has a mental illness or is an aboriginal. In addition, the defendant may argue that the evidences are not admissible in the preliminary hearing on the basis of the hearsay rule under Article 159 of the Code of Criminal Procedure. Before being detained by the court, the defendant and his lawyer may request the court to disclose all the evidences against him, as required by Judicial Yuan Interpretation No. 737. Such regulations are crucial to defendants’ rights, especially when the defendant is a foreigner who is not familiar with Taiwanese laws. Fortunately, recently the Legal Aid Foundation, a pro bono non-proﬁ t organisation, has accepted many foreigners’ requests for free legal assistance provided by volunteer lawyers. Independence and impartiality of the judiciary According to the Taiwanese Constitution, judges shall be free from any intervention while exercising judicial power. Judges may obtain tenure except if they have received criminal or disciplinary measures. For the purpose of protecting the independence and impartiality of the judiciary, the lawmakers further enacted the Judges Act, which provides for judges’ appointment, protection and evaluation. For example, the High Court or the Supreme Court’s opinion of the law cannot restrict the district court judge’s judicial power, because of the protection of the Constitution and Judges Act. Any judge or prosecutor guilty of misconduct would be soon punished severely – but it is not common to see illegal conduct by judges or prosecutors inappropriately interfering with the judicial system.

Privilege and disclosure Disclosure Generally speaking, in a civil case, each party shall present evidences for the favourable facts alleged in his claims under the Taiwanese Code of Civil Procedure. However, neither the civil procedure nor the criminal procedure in Taiwan provides for a US-style disclosure system. In a criminal case, the lawyers may request the court to allow them to review the evidences and documents submitted by the prosecutor. In a civil case, both parties are obligated to give the opposing counsel a copy of any affi davit and evidences submitted to the court. Nevertheless, when the court fi nds that the case is obviously unfair to one of the parties in a civil case, or it is necessary to protect the defendant’s right or the justice in a criminal case, the court shall investigate the evidences in the absence of any request from any party. In addition, when in some cases only one of the parties has access to the most important evidence, like the medical records owned by the hospitals, the court will rule that the hospitals have to present the evidence for the purpose of review. Privilege Under Taiwanese laws, any communication between a lawyer and his client will be protected by attorney-client privilege. It will be considered as confi dential and shall not be disclosed to the court or the prosecutor unless the disclosure is required by laws or permitted by the clients. According to the Taiwanese Code of Criminal Procedure, the lawyer may refuse to testify confi dential information because of the privilege. However, it is worth noting that in a recent criminal case, Taiwanese prosecutors neglected

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Costs In a civil lawsuit, the court fees will be nearly 1.1% of the subject-matter amounts of monetary claim. In general, both parties would claim that the court fees should be paid by the losing party during the trial and the appeal process. For a foreign plaintiff, including a foreign company as the plaintiff, the court probably will render an order that the foreign plaintiff shall pay additional security for the lawsuit to the court when the Taiwanese defendant ﬁ les a request. The court will grant such request because the foreign plaintiff does not live in Taiwan, or because the foreign company is not recognised and registered per Taiwanese law. The amount of the security will be subject to the court’s discretion. As for the lawyer’s fees, they are not included in the court fees. In Taiwan, both parties shall pay the lawyer fees by themselves. However, pursuant to Taiwanese Code of Civil Procedure, both parties shall retain lawyers to represent them in the Supreme Court because of the mandatory representation requirement. In this situation, the lawyer’s fees can be considered as part of the court fees which shall be paid by the losing party.

Litigation funding The Legal Aid Foundation is a non-proﬁ t organisation which provides free legal assistance to low-income households, aborigines or foreigners who are involved in civil, family, criminal or administrative cases under the Taiwanese Legal Aid Act. It has many branch ofﬁ ces in every major city in Taiwan so that people in need may seek legal assistance.

Interim relief Provisional attachment Regarding monetary claims, Article 522 of the Taiwanese Code of Civil Procedure provides that a provisional attachment may be petitioned for the purpose of securing enforcement when the impossibility or extreme diffi culty of future enforcement is shown. Where the enforcement will be conducted in a foreign country, the extreme diffi culty of future enforcement requirement is automatically satisfi ed under Article 523 of the Taiwanese Code of Civil Procedure. The petitioner of a provisional attachment must state clearly in the petition with regard to four points, that is: 1) the parties; 2) the claim and its cause of action; 3) the reason for a provisional attachment; and 4) the court and the jurisdiction. Under Article 526 of the Taiwanese Code of Civil Procedure, the petitioner must show and explain to the court about the claim and the reason for a provisional attachment. It is an ex parte proceeding, so the court does not require preponderance of evidence or convincing evidence to grant a provisional attachment. However, it is not easy to satisfy the impossibility or extreme diffi culty of future enforcement requirement, even though Article 526 of the Taiwanese Code of Civil Procedure states that the petitioner can provide enough funds as security. To reduce the petitioner’s burden, the Supreme Court in 2016 stated that

GLI - Litigation & Dispute Resolution 2018, 7th Edition 256 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Brain Trust International Law Firm Taiwan in a tort case where the petitioner has difﬁ culty in ascertaining the defendant’s assets, the court can additionally consider the likelihood of success on the merits, the amount of the claim, and the defendant’s attitude to such claims. Provisional injunction Regarding non-monetary claims, Article 532 of the Taiwanese Code of Civil Procedure provides that a provisional injunction can be petitioned to secure the enforcement. Similarly, a provisional injunction will not be granted unless the impossibility, or extreme difﬁ culty, of satisfying the claim by future enforcement when the status quo is changed can be shown. Unlike the provisional attachment, the party to be enjoined may be given a notice and an opportunity to attend a hearing, making arguments in opposition to the requested provisional injunction.

Enforcement of judgments In Taiwan, a foreign judgment, ruling, or award shall be recognised by a Taiwanese court ﬁ rst. After recognition, it will be enforceable. Formally, the foreign judgment or ruling must be a ﬁ nal and binding judgment or ruling rendered by a foreign competent court. Substantially, it will be recognised by a Taiwan Civil Court or any other government agency as long as it does not fall into one of the exceptions listed by Article 402 of the Taiwan Code of Civil Procedure. There are four exceptions under the Article 402. A foreign judgment or ruling will not be recognised: 1. where the foreign court lacks jurisdiction pursuant to Taiwanese laws; 2. where a default judgment is rendered against the losing defendant, except in the case where the notice or summons of the initiation of action had been legally served in a reasonable time in the foreign country or had been served through judicial assistance according to the Taiwanese laws; 3. where the performance ordered by such judgment or its litigation procedure is against Taiwanese public policy or morals; or 4. where there exists no mutual recognition between the foreign country and Taiwan. According to the Taiwan Code of Enforcement, a foreign judgment or ruling will be enforced if it does not meet any exceptions listed by Article 402 and if the Taiwanese court permits such foreign judgment to be enforced by a judgment of recognition. Once a foreign judgment, ruling, or award is recognised by a Taiwanese court, it is deemed to be as effective and enforceable as a local judgment.

Cross-border litigation If a lawsuit is not fi led in Taiwanese courts but evidence in Taiwan needs to be investigated, the competent foreign court shall issue a letter of request via diplomatic channels to Taiwanese courts. The letter of request shall contain enough details of the request, such as names, nationalities, addresses of the parties, content and category of evidence, and summary of the case, with a Chinese translation attached. Generally, Taiwanese courts would grant such requests in the context of mutual legal assistance. Currently, the Taiwanese government is amending relevant laws to accept a wider range of requests from foreign courts. The most common issue is how to serve the legal documents to a defendant or respondent who resides in Taiwan. Because personally serving the documents to a Taiwanese resident does not violate any Taiwanese law, many foreign law fi rms would request a Taiwanese law fi rm to assist the process of service.

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International arbitration There are four established arbitration bodies in Taiwan: the Chinese Arbitration Association; the Taiwan Construction Arbitration Association; the Chinese Construction Arbitration Association; and the Chinese Labor Dispute Arbitration Association. If an arbitration clause between the parties is in force, they will be qualiﬁ ed to enter an arbitration award regarding an international dispute. However, if the arbitration award is determined pursuant to foreign laws other than Taiwanese laws, it shall be deemed a foreign arbitration award pursuant to Article 47 of the Taiwanese Arbitration Law. A foreign arbitration award shall be recognised by Taiwanese courts for enforceability according to Article 49 of the Taiwanese Arbitration Law. Further to this, Taiwanese courts shall oversee the selection and disqualiﬁ cation of arbitrators, and the revocation of an illegal arbitration award which has procedural or evidentiary defects. The court can also investigate evidence, if requested by one of arbitration bodies mentioned above.

Mediation and ADR Taiwanese laws provide three main kinds of alternative dispute resolution: mediation; settlement in court; and arbitration. All of these have become more and more important and commonly used in Taiwanese society, whether in criminal cases or civil disputes. In a criminal law case, a defendant can get a more lenient sentence when he reaches a settlement with the victim. Generally mediation and settlement in court are commonly used in small cases, whereas arbitration is usually adopted in very professional cases like ﬁ nancial, construction, labour or intellectual property disputes. Mediation is also mandatory in family law cases under the Taiwanese Code of Family Procedure. The mediation result, as shown on the mediation transcript issued either by the court or by the local mediation committee, will be enforceable exactly like a judgment.

Regulatory investigations In Taiwan, courts are not bestowed with the power to oversee or interfere with a regulatory investigation conducted by governmental agencies because of separation of powers. However, a citizen whose right or interest is unlawfully affected or injured may fi le an administrative appeal with the governmental agency and re-appeal with its superior agency. Finally, the citizen can also fi le a lawsuit against the governmental agency with the Taiwanese administrative court to review the decision or report made, based on regulatory investigations. Like most civil law countries, Taiwanese courts are very conservative in this respect so that most of the time, the decisions of government agencies will not be changed by the court. In addition, government agencies’ decisions or reports when used as evidence usually would be adopted by Taiwanese courts without any diffi culties.

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Hung Ou Yang Tel: +886 2 2707 9976 / Email: [email protected] Hung Ou Yang, Esq. is the Managing Attorney of Brain Trust International Law Firm and specialises in handling transnational legal disputes, business and white-collar crime, business litigation, and the negotiation and drafting of international agreements. Hung Ou Yang has successfully resolved many high-proﬁ le civil, criminal, and transnational disputes, including a complaint concerning pesticide-contaminated land leased by RT-Mart, anti-dumping investigation in connection with CSC’s carbon steel plate, and transnational property litigations concerning an internationally-renowned scholar. Hung Ou Yang also has a wealth of experience in domestic and overseas litigations and negotiations.

Hung-Wen Chiu Tel: +886 2 2707 9976 / Email: [email protected] Hung-Wen Chiu, Esq. ﬁ nished his education at National Taiwan University (Taiwan’s top university) and amassed plentiful experience in criminal investigation before joining the Firm. Hung-Wen Chiu mainly takes charge of e-commerce and labour law consultations and ordinary civil and criminal litigations.

Jia-Jun Fang Tel: +886 2 2707 9976 / Email: [email protected] Jia-Jun Fang, Esq. specialises primarily in legal translations of trial documents and contracts. In addition, his abundant experience in domestic litigations qualiﬁ es him to provide clients with strategies for conﬂ ict and dispute resolution.

Brain Trust International Law Firm 20F.-1, No. 76, Sec. 2, Dunhua S. Rd., Da’an Dist., Taipei City 106, Taiwan Tel: +886 2 2707 9976 / URL: www.btlaw.com.tw

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Orçun Çetinkaya & Burak Baydar Moroğlu Arseven

Effi ciency of process Turkey has implemented a series of judicial reforms in the last decade to enhance the effi ciency of its judicial system. Within this scope, it has renewed fundamental legislation, as well as introduced the National Judiciary Informatics System (“UYAP”), enabling courts and individuals to now carry out procedural acts online. UYAP has received multiple awards, including the 2017 International Data Corporation prize, the 2016 WSIS prize and second place at the 2012 United Nations Public Service Awards. The platform, which has been consistently improved in recent years, eases every legal practitioner’s life in Turkey, meaning lawyers are no longer required to physically visit the courthouse in order to: • review court fi les appointed to them by their clients; • submit petitions and take copies from documents submitted; • deposit expenses and litigation costs with the court; and • conduct asset research of debtors in insolvency cases. In July 2016, Turkey introduced regional courts of justice, a new appellate layer aiming to ease the Court of Cassation’s workload. The effectiveness of this remedy is currently being tested and will be seen over the near future. The new layer is expected to turn the Court of Cassation into a superior court which focuses on establishesing case law rather than reviewing the material facts of the confl ict, which the regional courts of justices are expected to manage from now on. In general, Turkey has a multi-layered judicial system, addressing two pillars: civil and criminal law. Civil proceedings are based on the principle of party preparation, whereas criminal courts apply the inquisitorial system. The evidence-collection phase takes the majority of time in both types of proceedings. Courts tend to place the most evidential weight on expert testimony. As criticisms have been raised about ineffi ciencies in the system to review experts’ competency, there are improvements in legislation to increase the reliability and effi ciency of the expert witnesses. Parties in Turkey tend to be quite litigious, regardless of the prospects of success. There are no real measures which force parties to think twice before resorting to litigation. For instance, the losing party will not be forced to remunerate the winning party for professional fees incurred due to the proceedings, unless such proceedings are deemed to be initiated in bad faith. If the case can be categorised as a claim for an indefi nite amount, the claimant can avoid depositing the pro rata application fee at the beginning of the claim, as well as paying the winning party’s pro rata representation fee in case the claim

GLI - Litigation & Dispute Resolution 2018, 7th Edition 260 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Moroğlu Arseven Turkey is rejected. Thus, Turkish courts’ workload continuously increases every year. Within this framework, a simple trial procedure has been introduced for the commercial cases amounting to or having a value of TRY 100,000 (one hundred thousand) or greater, in order to accelerate especially drawn-out commercial cases and to decrease the workload of the commercial courts. Introducing regional courts of justice has accelerated the appeal process as well. Decisions by courts of fi rst instance for pecuniary matters over TRY 3,560 (approximately US$ 890) can be appealed to regional courts of justice. Likewise, a regional court of justice’s decision regarding monetary issues over TRY 47,530 (approximately US$ 11,900) can be appealed to the Court of Cassation. If a court of fi rst instance’s decision is reviewed by both the regional court of justice and then the Court of Cassation, the process for a decision to become fi nal may take three to four years, depending on the complexity of the case. Regardless of how long the appellate process stretches, the winning party can enforce their decision against the losing party following the fi rst instance court’s decision. To avoid this, a losing party should fi le an appeal including a specifi c request to freeze enforcement, by depositing a sum or bank guarantee letter equal to the amount granted by the fi rst instance court. Generally, parties prefer a bank guarantee letter if the amount granted by the fi rst instance court is signifi cant, as it enables them to use their money instead of keeping it idle as collateral in the enforcement offi ce’s bank account while the case is being reviewed by a regional court or Court of Cassation.

Integrity of process Turkey adopted several legislative changes regarding the rules of natural justice as part of the EU accession process. Signiﬁ cant constitutional changes in 2001 improved Turkey’s rules of natural justice, in line with EU legislation. Accordingly, the constitution protects a fair hearing, the death sentence was abolished, and importance was given to the right to access legal remedies. The constitution protects and guarantees judicial neutrality. The Turkish Code of Civil Procedure also stipulates several detailed provisions to eliminate the partiality of judges. In this respect, the parties may request abdication of the judge in case any concern arises regarding their impartiality. Judges may abdicate themselves at their own discretion without the need of any party’s request. Turkey’s three-layered judicial system allows decisions to be reconsidered by higher courts in terms of both substantive and procedural requirements. As a rule, the regional courts review both the facts and the legal expediency of the ﬁ rst instance court’s decision, limited only within the scope of the appealing party’s requests, while the Court of Cassation only reviews the legal expediency of regional courts’ decisions without being limited by parties’ requests. For some time, the Turkish Court of Justice has been working on a system to improve procedural integrity, involving mechanisms to monitor judges and prosecutors more closely and objectively.

Privilege and disclosure Turkish legislation outlines several provisions regarding attorney privilege and disclosure obligations (Attorneys Law No. 1136). Accordingly, attorneys cannot disclose

GLI - Litigation & Dispute Resolution 2018, 7th Edition 261 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Moroğlu Arseven Turkey information obtained from clients during their duties. Violations of those obligations may cause disciplinary punishments as well as criminal and legal liability. Attorneys cannot testify about facts obtained from clients, without prior client consent. Even if a client does consent, an attorney can still choose to abstain from testifying. However, attorneys must decline to pursue lawsuits or other tasks for a party if they have worked as an attorney or argued in favour of the counter-party in the same matter. Attorneys must retain documents entrusted to them by clients for three years after their power of attorney expires.

Costs Claimants are expected to deposit various fees before, during and after trials, such as: • Fees (such as court fee). • Attorney’s fee. • Other trial costs (such as viewing, notifi cation costs, charges paid to witnesses and experts, etc.) According to the Law of Fees No. 492, as updated for 2018, when making a claim, a claimant must deposit: • a proportional fee, calculated as a quarter of 6.831% of the claimed amount; plus • a fi xed fee of TRY 35.90 (approximately US$ 9). For instance, to fi le a collection claim for US$ 100,000, the claimant must deposit: • Proportional fee: US$ 1,707.75 (6.831% of US$ 100,000, divided by four). • Fixed fee: TRY 35.90. Claimants must deposit an advance to the court fund offi ce, or their lawsuit will be deemed as unfi led (Code of Civil Procedure). During proceedings, judges can request fees from both parties, depending on the actions taken to resolve a dispute. At the end of the trial, the court can decide that the losing party must pay all of the winning party’s litigation costs (including court fees and advance payment deposited by the claimant) along with the attorney’s fee. The attorney fee is calculated on a pro rata basis based on the Attorney’s Fee Tariff revised annually by the Union of Turkish Bar Associations. In a partial decision, the court distributes litigation costs on a pro rata basis. If there are multiple losing parties, the court can distribute litigation costs amongst them, or hold the parties jointly and severally liable.

Litigation funding There is no legislation speciﬁ cally prohibiting or regulating litigation funding in Turkey. Even though litigation funding is not forbidden, it is not a common practice in local litigations and arbitrations, therefore such method has not yet been evaluated by the competent Turkish courts. With regard to international arbitration, particularly investment arbitration, the number of Turkish parties having recourse to litigation funding has seen a rapid surge in recent years, by contrast with domestic litigation. Thus, such opportunity is predicted to spread to domestic litigation in the forthcoming years.

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Interim relief Turkish legislation defi nes interim relief as temporary legal protection, with interim injunctions and precautionary attachments being the most signifi cant and effi cient methods in Turkey. Many types of relief exist, spread over the different laws. In general though, temporary legal protection is primarily regulated under the Civil Procedural Law and the Bankruptcy and Enforcement Law. Interim injunctions Interim injunctions can be requested from the court either before or after fi ling a lawsuit. An interim injunction claim must raise a concern that: • acquiring a right will become more diffi cult, or impossible, due to a change which will occur in the circumstances; and/or • damages will be incurred due to any delay. Interim injunction decisions protect the claimant’s interest during trials, provided that no change occurs to the present circumstances. If a claimant fi les an interim injunction request before fi ling a lawsuit, the original lawsuit must be fi led within two weeks after execution of the interim injunction order, or the injunction will be automatically lifted. The party requesting an interim injunction must deposit a security for the counter party, in order to prevent possible damages which may arise. In practice, courts tend to request at least 15% of the claimed amount as collateral. It is possible to object to an interim injunction decision by appealing to the authorised regional court. Precautionary attachments Precautionary attachment requests enable temporary seizure of a specifi c amount of the debtor’s assets, without hearing the debtor’s defences. Such interim relief is available for receivables (payable and due) in ongoing or planned execution proceedings, where the receivables are not guaranteed with a pledge and at risk of having collection diffi culties. The party requesting a precautionary attachment must: • deposit collateral with the court (usually no less than 15% of the claimed amount); and • seek enforcement of the attachment from the authorised enforcement offi ce within 10 days of the court’s precautionary attachment decision. Failure to do so will mean the precautionary attachment is automatically lifted. Upon executing a precautionary attachment order, the creditor must fi le the claim or start an execution proceeding regarding the merits of their case within seven days, or the relief will again be automatically lifted.

Enforcement of judgments Foreign civil judgments are enforceable in Turkey if they are recognised by a competent Turkish court. If there is no bilateral reciprocity agreement between Turkey and the state where the decision was made, a recognition action will be subject to the Turkish International Private and Procedural Law. Accordingly, decisions will be requested from the court at the place

GLI - Litigation & Dispute Resolution 2018, 7th Edition 263 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Moroğlu Arseven Turkey of habitual residence of the person against whom enforcement is requested. If such person does not live in Turkey, the Istanbul, Ankara and Izmir courts will be deemed competent. The original decision, duly approved by the relevant country’s authorised departments, together with an approved translation, must be submitted to the Turkish courts. The competent court will enforce the decision subject to the following conditions: • Any agreement which may exist, on a reciprocal basis between Turkey and the state where the court decision is given, or de facto practice, or a provision of law enabling the authorisation of the execution of a fi nal decision given by a Turkish court in that state. • The decision must not be on a matter within the exclusive jurisdiction of the Turkish courts, or being contested by the defendant; the decision must not be given by a state court which has accepted itself as competent in jurisdiction even if it is not. • The decision must not be clearly contrary to public order. • The person against whom enforcement is requested and whose right of defence has been violated by that foreign state shall not bring forward that violation before the Turkish court. Turkish enforcement offi ces will enforce recognised foreign judgments as if they were rendered by a Turkish court. When it comes to the enforcement of civil judgments by Turkish courts, except with certain exceptions, a fi rst instance court’s decisions can be enforced even if the case is appealed.

Cross-border litigation As part of the rogatory process, Turkish courts assist foreign courts for cross-border litigation in accordance with the terms and conditions set out under numerous international and bilateral judicial assistance treaties. Turkish courts can collect information, take party statements, carry out site examinations and appoint experts to do reviews if needed, depending on the nature of a request.

International arbitration The International Arbitration Law (“IAL”) outlines principles and procedures regarding international arbitration processes where a foreign element exists and Turkey is determined as the seat of arbitration. Accordingly, the parties can either agree the arbitration rules to be applied, or determine these by referring to international or institutional arbitration rules. In case a claim is ﬁ led before a court and such claim is subject to an arbitration agreement, any party may lodge an objection of arbitration before the competent court, as a preliminary objection. If such an objection is accepted by the relevant court, then the lawsuit will be dismissed on procedural grounds. However, the IAL adopted a limited scope for judicial interference in international arbitrations, only allowing courts to intervene for supportive purposes, such as arbitrator selection, if a dispute arises. Like other contemporary arbitration legislation, the IAL minimised the scope of judicial intervention into arbitration during the proceedings themselves. Courts can only review mistakes and faults made within arbitration proceedings during actions to set aside the arbitrated decision, ﬁ led by the counter-party before Regional Appeal Courts. There are no other legal remedies against arbitration awards. There are two notable arbitral institutions in Turkey:

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1. Istanbul Arbitration Centre: Established in 2014, it aims to become a regional international arbitration body and increase the demand for arbitration in Turkey. Its rules apply to both domestic and international disputes, without discrimination. Parties can determine the arbitration’s seat and language, as well as select the arbitrators. Unless the parties agree otherwise, the arbitration seat will be Istanbul and the arbitrator (or tribunal) will determine the arbitration’s language, considering all circumstances and conditions. The number of arbitrations which have been referred to Istanbul Arbitration Centre has exceeded 15 (ﬁ fteen) so far, 9 (nine) of which have been ﬁ nalised. 2. Istanbul Chamber of Commerce Arbitration Centre: Established in 1979, it operates for both domestic and international disputes. Its rules apply the same approach as above regarding the arbitration’s seat, language, and selection of arbitrators.

Mediation and ADR Mediation has an increasing profi le in Turkey and is considered as a fi nal chance for parties to settle disputes amicably under Turkish law. To promote mediation, the Law on Mediation in Civil Disputes was enacted in June 2013, which also established a Mediation Authority. Also, with amendments made to the Civil Procedural Law, judges are now obliged to encourage parties to settle their disputes or refer to mediation at the beginning of each lawsuit. If the judge deems that there is a chance of settlement or mediation, the judge may postpone the hearing for one time. In line with these developments, the Law on Labour Courts, which has taken effect as of 1 January 2018, stipulates meditation as a mandatory pre-condition for fi ling lawsuits. Despite the increasing number of settlements in labour mediations, such practice raises concerns, as mediators are criticised for not being suffi ciently qualifi ed and for not having the necessary legal background. On the other hand, other ADR tools have not been introduced under Turkish Law; ADR is limited to mediation and arbitration in Turkey.

Regulatory investigations There is no central authority regulating and conducting regulatory investigations in Turkey. Investigations are conducted by several authorities, such as the Ministry of Customs and Trade and the Ministry of Health. Market regulatory authorities such as the Banking Regulation and Supervision Agency, Energy Market Regulatory Authority, Information and Communications Technology Authority, Capital Markets Authority, Public Procurement Authority, Tobacco and Alcohol Market Regulatory Authority as well as the Competition Authority carry out regulatory investigations, either ex offi cio or upon receiving complaints. Turkey has recently established a Data Protection Authority, which is delegated with authorities and duties in parallel to European Union legislation within the scope of the EU accession process. The Authority was quite active last year, and conducted signifi cant investigations and imposed many administrative fi nes for illegal data processing. Although the procedure of regulatory investigations for each regulatory body differs, usually the investigations are conducted by a team of specialists appointed by the decision- making body of the regulatory authority. The time frames for investigations for different regulatory authorities would be different. Usually the investigations involve written and oral argumentation phases, depending on the subject matter of the investigation. There might be more than one round of each phase. The decisions of the regulatory authorities must be reasoned and they are usually public.

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Orçun Çetinkaya Tel: +90 212 377 47 00 / Email: [email protected] Orçun has 15 years of experience. He regularly advises and represents local and foreign clients during cross-border disputes and high-risk issues. He advises clients in regulated markets and represents clients in administrative and criminal investigations. He appears before high courts in Turkey as counsel and is appointed abroad as a Turkish law expert. He is consistently recognised by The Legal 500 and Chambers & Partners for his expertise in disputes, investigations and regulatory advice. He was exclusively recognised for commercial litigation by Client Choice in 2017.

Burak Baydar Tel: +90 212 377 47 00 / Email: [email protected] Burak concentrates on commercial litigation and dispute resolution. He has been involved in a large number of cases related to commercial, corporate and contract law. Burak’s experience spans all stages of execution and enforcement proceedings, as well as debt collection, portfolio compensation and personal injury claims, among others. His work also includes strategic planning and counselling on a range of commercial and corporate issues when these intersect with dispute resolution matters.

Moroğlu Arseven Abdi İpekçi Cad. 19-1 Nişantaşı, İstanbul, Turkey Tel: +90 21 2 377 47 00 / Fax: +90 212 377 47 99 / URL: www.morogluarseven.com

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Tim Prudhoe Prudhoe Caribbean

Effi ciency and integrity of process The Turks and Caicos Islands (“TCI”) is an international fi nance centre in the style of the British Overseas Territories (so, akin to Anguilla, Bermuda, the British Virgin Islands and Cayman Islands), whose fi nancial services industry amounts to more than 10% of GDP. Some 5,800 captive insurance companies call the TCI home. The TCI’s legal system has been based in large part on English law since its annexation as part of the Bahamas by the British in 1799, when a statutory declaration provided that the common law of England, “[...] is, and of right ought to be, in full force within these islands, as the same now is in that part of Great Britain called England”, and expressly made the TCI subject to 207 specifi ed English statutes. As with other British Overseas Territories with a similar common law “inheritance”, that is not a static concept and continues to evolve where local statutes do not exist for certain types of situation. The law of the TCI is now derived from a number of sources including the TCI Constitution, local TCI statutes or “Ordinances”, subordinate legislation, surviving English statutes of those in force in the Islands in 1799 − UK statutes that have been expressly extended to apply in the TCI − and case law (the TCI Courts have settled case law of their own on many issues and look (where appropriate) to English and other common law jurisdictions for persuasive authorities). The TCI legislature continues to take steps to improve its legislation to bring the TCI in line with other common-law-based offshore jurisdictions, with recent companies legislation and imminent limitation and insolvency legislation. The TCI government is keen to increase the attractiveness of the TCI for fi nancial services in other ways, with a pending report from KPMG Jersey on invigoration of the industry. The TCI Court system The TCI Supreme Court exercises fi rst instance jurisdiction in civil claims over US $25,0001 and is vested with jurisdiction and powers broadly similar to those of the High Court of England and Wales.2 Appeals from the Supreme Court are to the Court of Appeal, which ordinarily sits three times each year, with appeals heard by a panel of three judges. Final appeals are to the Judicial Committee of the Privy Council in England for which the relevant Ordinance is in the process of being amended to allow greater fl exibility on the timing of appeals.3 The procedure of the Supreme Court is governed by the Rules of the Supreme Court 2000 (the “RSC”), a TCI adaptation of the old Rules of the English Supreme Court as in force on 1 January 1999 (which in England and Wales have since been replaced by the

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Civil Procedure Rules 1998, which took effect in April 1999 (the “CPR”)). The Court of Appeal’s procedure is governed by the Court of Appeal Ordinance (CAP. 02.01) (as amended) and by the Court of Appeal Rules, the latter adapted from the Bahamas Court of Appeal Rules.4 There are three Justices of the Supreme Court, including the Chief Justice (currently the Right Honourable Margaret Ramsay-Hale, previously a member of the judiciary in the Cayman Islands). There are six appointees of the Court of Appeal, who are not based within the TCI, but elsewhere in the Caribbean region. The current President of the Court of Appeal is the Honourable Justice Elliott Mottley. As with the rest of the Caribbean region, proceedings in TCI Courts can occasionally be disrupted by the weather. In certain situations (such as when hurricane weather or damage makes it necessary), the TCI Court of Appeal sits physically outside the jurisdiction. Integrity of process There is a statutory requirement under the TCI Constitution that judges “shall exercise their judicial functions independently from the legislative and executive branches of government”.5 The Constitution accordingly includes various safeguards for the independence of the judiciary, such as that judges may only be removed from ofﬁ ce after the question of their removal has been considered by the Privy Council in England.6

Privilege and disclosure Under the RSC, disclosure (or “discovery”) takes place after the close of pleadings and requires parties to disclose by list documents relating to the matters in question in the action which are, or have been, in their possession, custody or power. Under the RSC, the test for relevance is broad: any document must be disclosed which “contain[s] information which may enable the party requiring the affi davit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly lead him to a train of enquiry, which may have either of those two consequences” (per Brett LJ in Compagnie Financiere du Pacifi que v Peruvian Guano Co (1882) 11 QBD 55). There is no limitation of “reasonableness” or “proportionality” as per the modern practice in England and Wales under the CPR, as also followed in the BVI and other jurisdictions adopting the rules of the Eastern Caribbean Supreme Court. However, the TCI RSC allow parties to apply for an order limiting discovery in scope to particular matters in issue, or requiring no discovery at that stage or at all, on the basis that the standard discovery process would not be not “necessary” for disposing fairly of the action or for saving costs.7 The Court is also able − prior to the commencement of proceedings − to make an order providing for inspection of property, where that property may become the subject matter of subsequent proceedings or in relation to which any question may arise in any such proceedings (section 10 of the Civil Procedure Ordinance (CAP. 4.01)).8 Parties may assert privilege as a ground for resisting inspection of documents. TCI law in this area largely follows the traditional common law approach, so that parties can assert privilege in the case of legal advice privilege (which attaches to confi dential communications which pass between a client and his lawyer, which have the purpose of giving or receiving legal advice) or litigation privilege (which covers documents prepared for the dominant purpose of pending or instituted litigation). To ensure that privilege is preserved, documents will often be marked “without prejudice” or “without prejudice save as to costs”. However, this marking must be used properly, and

GLI - Litigation & Dispute Resolution 2018, 7th Edition 268 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Prudhoe Caribbean Turks & Caicos Islands a mere assertion will be insuffi cient if the Court decides to evaluate whether inspection of the document will be precluded due to privilege. Additionally, legal privilege does not generally prevent disclosure of documents created to further a criminal or fraudulent purpose, or communications made in the course of procuring advice for the purpose of carrying out fraud (whether or not the legal practitioner was aware they were being used for that purpose). Confi dential documents A non-party to litigation may be ordered to produce relevant confi dential documents under Bankers Trust orders, which, similarly to Norwich Pharmacal orders, require a bank to divulge otherwise confi dential information regarding its customers’ accounts.9 The availability of such relief is potentially complicated in the TCI by the statutory duties of confi dentiality imposed under the Confi dential Relationships Ordinance,10 which applies to confi dential information created in respect of business of a professional nature which arises in or is brought into the Islands.

Costs and funding The TCI – like most English-law-based jurisdictions – is a cost-shifting jurisdiction – i.e., the Court usually orders the loser to pay the winner’s costs. Any costs order is discretionary, so that the Court may reduce (or eliminate) costs awarded to a successful party on the basis, for example, that the party had acted unreasonably in the course of the litigation.11 The Court will typically order the loser to pay about 75% of the reasonably incurred costs12 of the winner on either the standard13 or indemnity14 basis. In general, the costs of any proceedings will be assessed (or “taxed”) at the conclusion of the cause or matter in which those proceedings arise,15 even though a party may have been ordered to pay costs during the course of the proceedings at (for example) the conclusion of an interlocutory application. However, the Courts also have the power at the conclusion of interlocutory applications and other interim hearings to order that costs be taxed and paid by a party within a certain period.16 There is presently no costs-budgeting or costs-capping regime in force in the TCI: costs are ‘at large’ and generally subject to the taxation process that occurs after the conclusion of the proceedings. There may, however, be changes ahead: an early draft (dated April 2016 and still the subject of consultation) of a Legal Profession Bill proposes that lawyers be allowed to charge on a contingency basis.17 Security for costs Security for costs may be ordered in circumstances where: (a) the plaintiff is ordinarily resident outside the jurisdiction; (b) the plaintiff is a nominal plaintiff and it is likely they will be unable to pay the costs of the defendant if ordered to do so; (c) the plaintiff has given an incorrect – or has refused to provide an – address in the writ or other originating process; or (d) the plaintiff has changed their address during the litigation with a view to evade paying costs. An order for security for costs is discretionary; the Court will have regard to all the circumstances of the case, and will not order security unless it considers it just to do so.18 Security for costs may also be ordered in respect of appeals under the Court of Appeal Rules: both in terms of a nominal amount for the cost of the record of appeal, as well as security for the respondent’s costs on the appeal. The applicable rules require a formal demand prior to an actual application.19

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Third party funding and conditional fee arrangements Third party funding and conditional fee arrangements are presently unenforceable in the TCI (but, as above, the TCI may in the future allow fees to be charged on a contingency basis). Champerty and maintenance were abolished as an actual crime in the 1960.20 In 2004, the Privy Council questioned the appropriateness of the prohibition, noting that the content of public policy can change over the years, and suggested that the government might reconsider the position in the light of modern practising conditions.21 Action has not yet been taken on the issue, despite more than a decade passing since those observations were made. Insurance The TCI Courts have not yet considered whether parties are able to use after-the-event insurance.

Interim relief Mareva injunctions As mentioned above, the TCI Courts have the power to order Mareva injunctions. These are a useful tool in fraud cases for preventing or disrupting the disbursement of disputed assets before the outcome of substantive legislation. For relief to be granted, the Court must be satisﬁ ed that: (a) there is a cause of action; (b) it has jurisdiction over the respondent or defendant; (c) there is a good arguable case; (d) there are assets within the jurisdiction which are available to satisfy any eventual judgment; and (e) there is a risk of dissipation. The Supreme Court recently observed that Mareva injunctions are “Draconian measures”, which “should not be regarded as orders the making of which is the norm”, and which “must not be granted without careful consideration”.22 Receivership The Court can appoint a receiver, whether interlocutory or ﬁ nal, in any case where it appears to the Court that it is just and equitable to do so.23 The role of the interim receiver will be to preserve assets that are liable to dissipation, pending the outcome of a claim.

Enforcement of judgments Enforcement of local judgments The Courts have a number of powers for enforcing local judgments or orders, depending upon the judgment or order which it is required to enforce. A judgment or order for the payment of money to the claimant can be enforced through: (a) a writ of seizure and sale; (b) garnishee proceedings; (c) the appointment of a receiver; (d) an order of committal; or (e) a writ of sequestration.24

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A decree holder can apply to the Court for a summons requiring the judgment debtor to appear and be examined regarding their ability to discharge the judgment debt.25 The Court can also request that the judgment debtor provide all necessary books, papers and documents in their possession or power which may evidence their ability to satisfy the judgment debt,26 and can examine other witnesses as necessary.27 Should the judgment debtor not appear, or if there is probable cause that they will leave the jurisdiction, the Court may issue a warrant for their arrest.28 Garnishee proceedings should be brought ex parte and supported by an affi davit containing detailed information regarding the size and type of the debt, and as much information as possible about the judgment debtor.29 If a judgment has been entered in default, and the judgment debtor becomes aware of the judgment when the judgment creditor seeks to enforce the debt, it is possible for the defendant to apply to set aside the default judgment. However, there must be a reasonable prospect of defending the claim, and it is incumbent upon the defendant to act quickly to enter their defence and apply to have the judgment set aside. Thus, in the case of British Caribbean Bank Limited v Varcamp Holding Limited and Varela (2014) CL 212/12, the Court found that the defendants, having been made aware of the application for default judgment and waiting fi ve months to apply to set aside the default judgment, were barred from entering a defence. Enforcement of foreign judgments The Overseas Judgments (Reciprocal Enforcement) Ordinance (CAP. 4.07) sets out a statutory framework for the enforcement in the TCI of judgments rendered in foreign jurisdictions whose courts extend substantially the same treatment to judgments of the TCI Courts. The Ordinance takes effect only where the Governor makes an order expressly extending its operation to a particular jurisdiction. At present, the Ordinance is of no practical effect, because no such orders have been made. In consequence, foreign judgments fall to be enforced at common law. The TCI law position closely follows English law in that the Court will recognise and enforce an in personam foreign judgment in circumstances where it can be satisfi ed that the judgment was: (1) rendered by a court of competent jurisdiction; (2) fi nal and conclusive; and (3) of such a nature that the TCI Court is required to enforce it on principles of comity. Furthermore, the Court must be satisfi ed that, as a matter of TCI law, the foreign court had personal jurisdiction over the defendant. This will be the case if the defendant: (a) was ordinarily resident in the foreign country at the time the foreign proceedings were commenced; (b) voluntarily submitted to the proceedings before the foreign court; (c) appeared as a party in the proceedings before the foreign court (whether as a plaintiff or counter-claimant); or (d) agreed to submit to the jurisdiction of the foreign court by contract or subsequent conduct.

Cross-border litigation International cooperation A number of international agreements concerning mutual legal assistance have been extended to the TCI by virtue of its status as a British Overseas Territory. Requests for

GLI - Litigation & Dispute Resolution 2018, 7th Edition 271 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Prudhoe Caribbean Turks & Caicos Islands cooperation may be made under the Vienna Convention and the UN Convention against Transnational Organised Crime, and also under the Treaty on Mutual Assistance in Criminal Matters between the UK, USA and Cayman Islands (as extended to the TCI).30 These conventions will only be applicable in a narrow variety of civil claims, for example when there are allegations of fraud or other criminal activity, and some may require applications from government authorities rather than applications by persons involved in litigation. Various Bilateral Investment Treaties (“BITs”) entered into by the UK have been extended to the TCI, including its BITs with the Philippines and Belize. Investors in the TCI have the right to refer disputes falling within the scope of these BITs to arbitration. In each case, disputes are heard by leading international arbitration institutions, such as the International Centre for the Settlement of Investment Disputes (or “ICSID”).31 The recent decision in Sebastian Holdings Inc. v Sarek Holdings Ltd and others32 involved proceedings commenced by receivers who were overseas (London) appointees. The grant of leave from the TCI court, of permission to serve out-of-the-jurisdiction proceedings, issued without the receivers ﬁ rst seeking recognition in TCI. From an English perspective there was no dispute as to the ability to appoint the receiver (i.e. in England); nor was there a dispute as to the ability to seek recognition in the overseas (here, TCI) court on the basis of close connection – the company being a TCI incorporated and subsisting entity. The TCI court found that formal recognition was not a necessary pre-condition to issuance of the TCI writ. The Chief Justice made clear that had formal recognition been necessary, then she would have granted it.33 An appeal against the decision is pending – at the permission to appeal stage – and is due for hearing in late August 2018. Letters of request The Court has jurisdiction to grant relief pursuant to letters of request from overseas courts (see above).34 This power is available in both civil and criminal proceedings. The court may grant such requests, in whole or in part, including where the request is for direct evidence that can be used in civil or criminal proceedings in the relevant foreign court.35 Norwich Pharmacal orders and Anton Piller orders Norwich Pharmacal relief is likely to be available in aid of foreign proceedings on the basis of the underlying rationale to this type of relief: i.e., the ascertaining of legal rights and those infringing them. The Court may also grant Anton Piller orders in aid of foreign proceedings.

International arbitration The TCI is not party to the New York Convention 1958 (but remains a party to its now superseded predecessor, the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927). The TCI is a party to the ICSID Convention and ICSID awards may therefore be enforced after recognition as if they were domestic judgments of the TCI Courts.36 Arbitration in the TCI is governed by the Arbitration Ordinance (CAP. 4.08), legislation which is not fully in line with the UNCITRAL Model Law on International Arbitration and has been described by the Judicial Committee of the Privy Council as being “not in the form of a comprehensive code but contains limited and miscellaneous provisions about arbitration, apparently largely derived from English legislation before the Arbitration Act 1979”.37

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The Arbitration Ordinance facilitates a stay of Court proceedings in certain limited circumstances (essentially, where there has been a breach of an arbitration agreement) and provides for the Court to assist arbitral proceedings (by e.g. compelling witnesses to attend or produce documents, and determine any question of law that may be referred to the Court by the arbitral tribunal).38 Courts have recognised that parties have ﬂ exibility to the arrangements made in arbitration agreements and can, for example, choose a curial law which is different to the substantive law chosen by the parties.39 There are not currently any publicised plans to introduce legislation to bring TCI arbitration law more fully in line with the UNCITRAL Model Law. The enforcement of arbitration awards in the TCI is governed by the UK’s Arbitration (Foreign Awards) Act 1930. Although this Act was subsequently repealed in the UK, it has survived in the TCI. Subsequently, foreign arbitration awards may be enforceable in the TCI, as long as the award meets certain criteria: (a) it has been made in pursuance of an agreement for arbitration which was valid under the law by which it was governed; (b) the tribunal making the award was constituted in a manner agreed upon by the parties; (c) it was made in conformity with the law governing the arbitration procedure; (d) if, in the country where the award was made, the award is now ﬁ nal; and (e) the matter under arbitration was lawfully referred to arbitration under the law of the TCI.40

Mediation and Alternative Dispute Resolution Unlike many jurisdictions, there are no Court procedural rules requiring parties to consider or attempt mediation or Alternative Dispute Resolution (“ADR”) before fully engaging litigation. However, most legal practitioners in the TCI offer mediation and other such conventional forms of ADR.

Regulatory investigations There are currently relatively few regulatory bodies in the TCI in comparison with other jurisdictions. The ﬁ nancial services industry is regulated by the TCI Financial Services Commission (“FSC”), an independent statutory body with broad powers to issue guidelines, set regulations, and conduct supervision over those engaged in the ﬁ nancial services industry.41 To date, the FSC has preferred to issue guidelines, rather than exercise its power to issue a regulatory code. The TCI government continues to take steps to improve its AML/CFT regime, including by acting on the recommendations of the Caribbean Financial Action Task Force (“CFATF”). The CFATF is due to visit the TCI in mid-September 2018. Offences relating to corruption, bribery and misappropriation of funds are governed by the Bribery Ordinance 2017.42 This has been given assent but is awaiting a commencement date due to underlying regulations remaining outstanding. The TCI Integrity Commission has broad powers to investigate such offences, including the power of arrest and – with the assistance of the Courts – entry, search and delivery-up powers.43 The Bribery Ordinance replaces the common law offence of bribery and various offences contained in the Integrity Commission and the Elections Ordinances (CAP. 1.05), and combines these provisions into a single framework. It covers bribery in both the TCI

GLI - Litigation & Dispute Resolution 2018, 7th Edition 273 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Prudhoe Caribbean Turks & Caicos Islands and abroad, creating several offences including for: (a) offering, promising or giving an advantage to induce or reward improper performance; (b) requesting, agreeing to receive, or accepting an advantage as an inducement or reward for improper performance; (c) bribery of a foreign public offi cial; and (d) failure by a commercial organisation to prevent bribery. The maximum penalty for these offences on indictment is a potentially unlimited fi ne and/ or 10 years’ imprisonment, and disqualifi cation from holding public offi ce for fi ve years from the date of conviction.

* * *

Endnotes 1. The Magistrate’s Court has jurisdiction in most civil claims up to the value of US $25,000 (s.132 Magistrate’s Court Ordinance (CAP. 2.03)) save in relation to tort and contract claims where the limit of the magistrate’s jurisdiction is US $10,000. The Supreme Court has jurisdiction thereafter. 2. Supreme Court Ordinance (CAP. 2.02) s. 3. 3. The “Turks and Caicos Islands Court of Appeal (Amendment) Bill 2018” amends section 11 of the Court of Appeal Ordinance itself in respect of extension of time for the Notice of Appeal. It is widely acknowledged that the current infl exibility has, in effect, ended many meritorious appeals before they have begun. The Bill closed for comments from the industry in late May 2018. 4. Pursuant to a decision made in 2009 by the President of the Court of Appeal under Section 21 of the Court of Appeal Ordinance, the Bahamas Court of Appeal Rules apply mutatis mutandis to the TCI Court of Appeal. 5. TCI Constitution (CAP. 1.01), s. 85. 6. Ibid, s. 85(6). 7. Rules of the Supreme Court, Order 24 rule 2(5). 8. Civil Procedure Ordinance, s. 10(1)(a). 9. Norwich Pharmacal v Commissioners of Customs & Excise [1974] UKHL 6. 10. Confi dential Relationships Ordinance (CAP. 16.14) s. 3. 11. Rules of the Supreme Court 2000, O. 62, r. 10. 12. Rules of the Supreme Court 2000, O. 62, r. 12(1). 13. Any doubt as to whether an incurred cost is reasonable in amount shall be resolved in favour of the paying party: Rules of the Supreme Court 2000, O. 62, r. 12(1). 14. Any doubt as to whether an incurred cost is reasonable in amount shall be resolved in favour of the receiving party: Rules of the Supreme Court 2000, O. 62, r. 12(1). 15. Rules of the Supreme Court 2000, O. 62, r. 8(1). 16. Rules of the Supreme Court 2000, O. 62, r. 8(2). 17. Draft Legal Profession Bill 2016, s. 63 (2 April 2016). 18. Rules of the Supreme Court 2000, O. 23, r. 1(1). 19. Court of Appeal (Practice and Procedure) Rules, s. 36(1). 20. See generally Gore-Browne Special Release, March 2018 pp71-95, “Champerty, Maintenance and Litigation Funding: Suffi cient Accountability in this Brave(ish) New World?”. Abolition of these crimes in the Turks & Caicos Islands is dealt with in this article, see especially footnote 3 on page 74. 21. Kellar v Carib West Limited [2004] UKPC 30, per Lord Carswell at [21].

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22. Per Williams J in Trinidad and Tobago Unit Trust Corporation v Kinay & Serim (2011) CL 7/10, at paragraph 109. 23. Civil Procedure Ordinance (CAP. 4.01), s. 9; see also Order 30, Rules of the Supreme Court 2000. 24. Rules of the Supreme Court, Order 45. 25. Civil Procedure Ordinance (CAP. 4.01) s. 28. 26. Civil Procedure Ordinance (CAP. 4.01) s. 31. 27. Civil Procedure Ordinance (CAP. 4.01) s. 32. 28. Civil Procedure Ordinance (CAP. 4.01) s. 29. 29. Rules of the Supreme Court, Order 49, rule 2. 30. See https://www.gov.uk/government/publications/international-mutual-legal-assistance- agreements. 31. Agreement between the Government of the United Kingdom of Great Britain and Northern Island and the Government of Belize for the Promotion and Protection of Investments, Article 8; Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Republic of the Philippines for the Promotion and Protection of Investment, Article 10. 32. CL44/2017, decision of Chief Justice Ramsay-Hale 18.1.2018. 33. Ibid, paragraph 51 of the judgment. 34. The Evidence (Proceedings in Other Jurisdictions) (Turks and Caicos Islands) Order 1987 (UK SI 1266 of 1987). 35. TCI Rules of the Supreme Court 2000, Order 70. 36. See English Arbitration (International Investment Disputes) Act 1966 as extended to the TCI by the Arbitration (International Investment Disputes) Act 1966 (Application To Colonies Etc.) Order 1967. 37. The Bay Hotel and Resort Limited v Cavalier Construction Co. Ltd [2001] UKPC 34 (“The Bay Hotel”), per Lord Cooke at page 6. 38. Arbitration Ordinance ss. 17-18. 39. The Bay Hotel, pp. 10-11. 40. Arbitration (Foreign Awards) Act 1930, s.4. 41. See http://www.tcifsc.tc/about-tcifsc. The TCI FSC was established pursuant to the Financial Services Commission Ordinance 2001, and continued under the Financial Services Commission Ordinance 2009. The Functions of the FSC are set out under Section 4 of the Financial Services Commission Ordinance (CAP. 16.01). 42. Ordinance 4 of 2017. 43. Integrity Commission Ordinance (CAP. 1.09) ss. 28-30.

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Tim Prudhoe Tel: +1 649 231 8896 / Email: [email protected] Tim Prudhoe, principal of Prudhoe Caribbean, is an English Barrister litigating around the Region from a TCI base. He has substantial experience in practice in TCI. Mr. Prudhoe holds permanent residence status in TCI and represents companies and high-net-worth individuals often based in and from TCI, the Caribbean region in general as well as the United States, in matters related to international judgment enforcement, asset recovery, fi duciary risk and insolvency. His practice focuses on offshore jurisdictions and their interaction with fi nancial centres around the world. He is widely known as the ‘go-to’ trial lawyer at the sharp end of TCI-connected disputes. In respect of predominantly onshore disputes with no signifi cant TCI nexus, he continues to deploy his relationship with AmLaw 200 litigation fi rm Kobre Kim LLP, where he remains Of Counsel after almost 10 years there as a Partner.

Prudhoe Caribbean Suite A210 Regent Village, Providenciales, Turks & Caicos Islands T el: +1 649 231 889 6 / URL: www.prudhoecaribbean.com

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Oleksandr Zavadetskyi Zavadetskyi Advocates Bureau

Effi ciency of process During 2017 and in the fi rst half of 2018 in Ukraine, we have seen the continuation of the process referred to as the “Judicial reform”. It started in 2016 with the introduction of several fundamental restatements and innovations in the laws regulating the judicial system organisationally – in particular: amendments to the Constitution of Ukraine relating to justice functions; the Law “On High Council of Justice” (which is perceived to be a primary guard of judicial independence); restatement of the Law “On Justice System and Judges” – and had been developing further by restatement of the major laws on procedures. Thus, the Codes of Civil Procedure, of Administrative Procedure and of Commercial Procedure, have undergone complete restatements. Moreover, in June 2018 the long-expected law on the “High Anticorruption court” has been passed by the Parliament and signed off by the president. This process of reforming the judicial system and procedures has resulted in some substantial changes in the respective areas, and appears to have been aimed at improving justice effi ciency, independence and transparency of the courts, the optimisation of judicial procedures and raising their productivity. According to the Ukrainian Constitution, the courts of Ukraine have jurisdiction over all and any disputes arising in the country. Therefore, a situation where a claimant has no competent court to consider a case is unlikely to arise. However, the prevailing opinion among the Ukrainian public for years has been that courts in the country are often biased and even corrupt, and are not an effective instrument to exercise justice. Parties that face litigation usually prepare for a prolonged process with an outcome that is hardly predictable, even for those who have reason to feel they are on the right side. There are courts of fi ve jurisdictions in Ukraine, divided by specialisation (Constitutional, Civil, Commercial, Administrative and Criminal) that hear cases, depending on subject matter and location, plus the recently established (but not yet operative) High Anticorruption court and the High Court on Intellectual Property, which are supposed to have separate competence over corruption charges brought against high-ranking state offi cers and IP disputes respectively. All jurisdictions have their instance levels and territorial competence, except for the Constitutional Court of Ukraine, which is a separate (and the only) judicial authority to hear constitutional cases, and whose resolutions are not the subject of review by the Supreme Court of Ukraine or any other authority. Establishment of a separate anticorruption court is a part of the Judicial Reform and anti-corruption efforts, prompted more by the international institutions, such as the IMF and the World Bank, than by domestic stakeholders. Though Ukrainian policymakers were fast at assuming the merits of passing

GLI - Litigation & Dispute Resolution 2018, 7th Edition 277 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Zavadetskyi Advocates Bureau Ukraine the law on the Anti-corruption court, both local and international communities have observed anxiously the consistent efforts of the legislature to stall the process of the law passing and dilute the law itself. Moreover, the mere fact that the Anti-corruption court has been perceived as a necessary instrument to fi ght corruption in the country speaks of the inability of all the other numerous courts to counter corruption. Judicial consideration of most disputes starts in the courts of the fi rst instance. Administrative courts consider disputes arising out of public-private relations, i.e. when a private law person or entity has a confl ict with a public law entity. Commercial courts consider cases arising out of commercial activity, where disputing parties may be entities as well as individuals, engaged in some sort of business activity, plus some specifi c cases, e.g. corporate disputes, insolvency cases, disputes relating to titles on securities, anti-trust disputes and some others. Civil courts have competence over all other disputes, some administrative disputes and also have departments that handle criminal cases. Proceedings in courts are governed by their respective Codes of procedure, the named Codes and the Criminal Process Code. The law prohibits extraordinary courts of any kind. Courts of appeal consider cases that have been heard by the courts of the fi rst instance and based on the evidence and arguments presented by the parties during the fi rst-instance hearing, unless it is proven that presentation of the new materials had been impossible earlier for sound reasons. Courts of cassation consider cases only within the limits of the submitted statement of cassation. The Judicial Reform has led to the three formerly existing courts of cassation being eliminated and transfer of all cassation authority to the Supreme Court of Ukraine. The ultimate level for cassation appeals in the country is the Supreme Court of Ukraine and appeals are admissible there only for a specifi c type of cases, which do not include, for example, so-called “insignifi cant cases”. There is also a possibility to initiate judicial review of a case after the fi nal judgment has been made and even enforced, if new circumstances pertaining to the case have been discovered and such circumstances would have infl uenced the outcome of the hearing substantially had they been found at the time of the hearing – this procedure has its specifi c rules and limitations, set forth by the process laws. As a rule, judgments of the courts of the fi rst instance come into force and become enforceable either upon lapse of the time for appeal or, if appealed, after a court of appeals upholds the resolution on the case, or issues its defi nitive judgment. Ukrainian courts have broad authorities as to the management of the cases they consider. In particular, courts may adjourn hearings in some cases, determine a procedure for hearing a case, suspend a proceeding, hold a hearing outside of the court premises, join or split proceedings, etc. The restated Codes of procedures have structured the process more strictly. In particular, the concept of a preparatory proceeding has received more weight and become more important in the process. While the Codes set forth three months as the maximum term for hearing a case in the court of the fi rst instance, preparatory procedure took up two of these three months, and the idea is that with the end of the preparatory procedure, the parties will lose the right to submit new arguments related to the substance of the case, unless grounded in arguments that were unavailable to a party during the preparatory procedure. At the same time, courts may act in strict compliance with the process laws only, and cannot operate in a way that is not set forth directly by the law of procedure. While hearing cases, the courts issue: a) defi nitive resolutions that settle disputes, order actions or confi rm facts that have legal consequences; and b) procedural orders, rulings, etc. that are instruments of proceedings-management. Ukrainian names for resolutions and orders depend on the kind of proceeding, court jurisdiction, the composition of the court (one judge or a panel) and the instance of proceeding (First, Appeal or Cassation). Apart from that, some courts are

GLI - Litigation & Dispute Resolution 2018, 7th Edition 278 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Zavadetskyi Advocates Bureau Ukraine authorised to issue “separate rulings” that may be addressed to any person regarding whom a court has identifi ed an illegal activity, and requesting such person to terminate violations of the law. Moreover, by issuing a separate ruling, a court can initiate the start of a criminal investigation. Process laws set forth quite short run-through terms for consideration of disputes (except criminal process, where an appropriate run-through term in the fi rst instance is determined as “reasonable”) – typically, maximum three months following commencement of the procedure in the fi rst instance. Theoretically, most disputes may be resolved in fi rst, appellate and cassation instances during a four-to-fi ve month period; however, in practice, this usually takes from two to three years. Notwithstanding recent changes in Ukraine and reform aimed at raising the standards of justice, the courts are still seen by the majority of Ukrainians as corrupt and incompetent (following various public opinion polls). The Judicial Reform, at its beginning, was viewed as a chance to improve the situation and raise trustworthiness of the judicial system. According to the new version of the Law “On courts system and status of judges”, which came into effect in September 2016, a special non-governmental organ has been created as an aid to the High Qualifi cation Commission of Judges – its name can be translated from Ukrainian as the “Community Council of Righteousness”. This Council has been composed of representatives of NGOs, advocates, scholars and journalists who respond to certain criteria and have gone through the defi ned selection procedure. The Council’s function is to evaluate judges in the process of qualifi cation testing and give recommendations to the High Qualifi cation Commission of Judges. In March 2018, the Community Council of Righteousness declared that it was terminating cooperation with the High Qualifi cation Commission of Judges because the latter systematically overruled, by qualifi ed majority recommendations of the Council and admitted through the tests, judges who did not qualify according to the Council’s criteria of righteousness. In other words, the effort to make judges’ qualifi cation system transparent to society has obviously failed. It is also worth mentioning that courts overall continue to violate terms of consideration of cases. Usually, a dispute is heard by a Civil court for a period of a year instead of three months; Commercial and Administrative courts are somewhat faster, but it is a very rare occasion when a court considers a case faster than within six months. It would be inappropriate to say that the courts of Ukraine are entirely malfunctioning. A good attorney, usually can, if not fully eliminate the fl aws of the judiciary, then substantially reduce these fl aws by accurate and consistent actions.

Integrity of process The laws of Ukraine provide that the courts form a separate, independent branch of the state authority and resolve disputes based on comprehensive, impartial and independent consideration of cases. There is a possibility to seek recusal of judges if grounds arise to suggest that a judge cannot exercise an unbiased approach to the case. In each court, cases are required to be allocated to judges automatically by a special software system. The purpose of automatic allocation is to provide for impartial сonsideration of disputes and to resist corruption, as well as using it as a workload-management tool. There is also an online register of courts’ resolutions in place, where the public can view court resolutions, deﬁ nitive as well as procedural, throughout the court system; however, this register still operates with some ﬂ aws and does not guarantee absolute completeness. Some of the

GLI - Litigation & Dispute Resolution 2018, 7th Edition 279 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Zavadetskyi Advocates Bureau Ukraine court resolutions may be recognised as classifi ed, in part or in whole, in which case such resolutions are not accessible to public observation. In general, court proceedings in Ukraine are public, which means that the public, and reporters, have a right to attend and observe the process unless a court specifi cally rules on a closed proceeding. However, in practice, many courts, especially in the countryside districts, do not have enough capacity to accommodate public observers to the proceedings. Though the Constitution of Ukraine is an act that can be directly implemented by the courts while hearing cases, and the Ukrainian law doctrine recognises all values of the modern concept of human rights, quite often in practice, Ukrainian courts, as compared to other European countries, deliver judgments that lack proper interpretation of laws and raise questions as to their impartiality – this is refl ected not only in professional opinions but also in the media reports. The statute law has overriding priority over natural justice; therefore litigating parties are highly dependent on the literal provisions of applicable regulations. To some extent, judicial discretion is balanced by the operation of the High Council of Justice and its Disciplinary Chamber and the High Qualifi cation Commission of Judges which is involved in the appointment, dismissal and sanctioning of judges. The public has very little infl uence on the process of judges’ appointment and dismissal. As a consequence, in the European Court of Human Rights appeals from Ukraine form one of the largest categories of cases. Efforts are being made currently by Ukrainian society and some state authorities to improve the operation of the country’s judiciary. One of the positive results of the 2017 restatements of the procedure Codes is that provisions of the European Convention on Human Rights, and practice of the European Court of Human Rights, have been made a source of law for courts with even more certainty than before, by refl ecting strict provisions to this effect in the Codes.

Privilege and disclosure There is no concept entirely analogous to disclosure in the Ukrainian court procedures; however, there is a procedure of provision of evidence, where courts issue mandatory rulings to parties to a dispute or third parties. The party to a case may ﬁ le a motion to the court compelling any person to produce evidence and specify the piece of evidence, substantiate why such piece of evidence is relevant, and indicate who possesses such piece of evidence. In general, a principle of competition between the disputing parties is set forth for all proceedings – civil, commercial, administrative, and criminal as well – whereby each party takes the burden of proof regarding parties’ positions in the dispute, and courts are not obliged to investigate on their initiative the circumstances of the cases they hear. Courts are authorised to decide whether a piece of evidence is admissible and relevant to the proceeding, and they can decide whether or not to sanction mandatory provision of evidence. In administrative proceedings, courts may also request evidence at their initiative. Courts may order the parties or third parties to submit evidence directly to the court or through one of the parties to the proceeding. State courts may compel any person, notwithstanding whether they are participants to the case or not, to produce necessary evidence. It is also required that a party that initiates provision of evidence substantiates the impossibility of obtaining such evidence without the involvement of the court. Some categories of information are treated by Ukrainian law as information with restricted access, or privileged. The best examples are the client-advocate privilege, military information with restricted access, and personal medical information. In cases where it is necessary to obtain and consider such information in a court proceeding, a court would

GLI - Litigation & Dispute Resolution 2018, 7th Edition 280 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Zavadetskyi Advocates Bureau Ukraine issue a special ruling sanctioning necessary actions including the conduct of a closed (with no admission to the public) court hearing. In general, any person who has obtained a document, or has been acquainted with information with restricted access or under privilege, is obliged to preserve it from unauthorised disclosure and otherwise treat it as provided by the applicable laws, irrespective of whether this was received during a court proceeding or otherwise.

Costs The costs of court proceedings consist of court duty and the expenses of the litigating parties. Expenses include legal fees and other factual spending which can be compensated to the winning party on account of the losing party according to the court ruling, in amounts that may be appropriately substantiated and recognised as reasonable by a court. While amounts of court duties are set forth by the law, expenses vary from case to case. The court duties are usually payable by the party that initiates a proceeding or some procedural actions in advance and differ depending on court jurisdiction, instance and the nature of the claim or motion. For example, a pecuniary lawsuit in the general Civil, Administrative or Commercial court of the fi rst instance, fi led by a legal entity, would be subject to a court duty of 1.5% of the claimed value, but not less than equivalent of €57 and not more than €20,000 (as of 1 June 2018). Statements of appeals and cassation are mostly subject to a percentage of the court duty of the fi rst instance (150 and 200%, accordingly). In general, court duties have risen substantially in the course of the last years. As a rule, courts allocate offi cially confi rmed costs of proceedings between the parties depending on the fi nal judgment and in proportion to upheld claims. A court may decide not to recognise some expenses of a party as a cost of proceeding, thus refusing to reimburse them on account of a failing party. The restated Codes on Civil and Commercial Procedure introduced a concept of preliminary determination of litigation cost and guaranteed deposit of cost. With fi ling a lawsuit and response to the lawsuit, the claimant and the defendant, respectively, must submit to the court a preliminary estimate of cost. The court, in some cases, may oblige the claimant to deposit an estimated cost in the court’s bank account in order to protect the defendant’s rights to regain the cost should the judgment be in favour of the defendant. Some actions during the process, e.g. involvement of third-party expertise, may be conditioned by a provision of the cost deposit by the initiating party.

Litigation funding There are no particular rules on litigation funding in Ukrainian law, except for state legal aid, where those eligible for the aid may receive it from the assigned state authorities. Any fee structure, including hourly rates, fi xed fees, conditional or success fees, are permitted in Ukraine. All of these fee structures are used in practice. Third-party funding is allowed. However, it is impossible to have legal fees and other litigation-related expenses compensated unless they are factually paid, specifi cally by the party to the proceedings and no earlier than the day when the proceeding is fi nalised, which usually means the date of the court decision.

Interim relief In any type of proceedings, various interim measures aimed at securing the claim are available after the claim is ﬁ led and, in some cases, prior to that, such as seizure of assets, provision of proof, prohibition of certain actions, obligation to perform certain actions (the

GLI - Litigation & Dispute Resolution 2018, 7th Edition 281 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Zavadetskyi Advocates Bureau Ukraine named may be treated as Ukrainian analogues for attachment and injunction), suspension of a public agency’s decision, etc. Examples of interim relief applications that parties may fi le are motions for the involvement of third parties; preliminary injunctions or orders; requests for obtaining evidence; requests for expert opinions; summoning and questioning of witnesses, etc. Usually, a party fi ling an interim relief application covers the costs that arise as a result of this. For example, the party requesting an expert opinion would be required to make an advance payment for the services of the expert or expert institution. These costs are to be fi nally allocated between the parties by the court when rendering judgment. Restatements of the Codes of the civil, administrative and commercial procedure provide for pre-action interim remedies on a broader basis than before the restatements. These remedies may be such as the provision of evidence, observation of premises related to the disputed matter, prohibition to perform specifi c actions, arrest of assets. In civil and commercial proceedings, courts may apply interim remedies not explicitly mentioned by law if it is considered most appropriate in a particular case. Litigating parties in civil and commercial procedure may also avail of counter-remedies, whereby a party that is granted by the court with interim relief is at the same time obliged by the court to procure possible compensation of losses to the other party. In order to obtain pre-action interim remedies, the interested party should fi le a motivated motion to the court; the latter has the authority to uphold the motion as well-grounded or to dismiss it as not suffi ciently grounded. A claimant must fi le a statement of claim within a limited number of days following the court ruling on granting pre-action interim remedies. If the claimant fails to do so, the pre-action remedies terminate. As regards interim relief within international arbitration, the Act of Ukraine “On International Commercial Arbitration” provides that: “it is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, a court to order interim measures of protection and for a court to take a decision granting such measures”. A court may request a party to provide security to cover possible losses on the other’s party side as a result of imposing interim measures. Some instruments used in other jurisdictions, e.g. freezing orders or some kinds of an injunction, are not known in the Ukrainian procedure regulations, but in most cases, there are possibilities with similar effect and problems that arise in using them, which stem more from the weak law-enforcement system in Ukraine than from lack of legislative instruments.

Enforcement of judgments The Ministry of Justice of Ukraine is the governmental body that is responsible for the operation of the state enforcement service and the regulation of private bailiffs. There are speciﬁ c regulations that govern enforcement proceedings. The most signiﬁ cant recent legislative novation in this area has been the passing in June 2016 of the new Law “On entities that enforce judgments” which, along with several other fundamental changes, sanctioned operations of private bailiffs. As a rule, a holder of a court award needs to apply to the state enforcement service with a statement of enforcement or to assign a private bailiff, and if such application or assignment is done in accordance with the regulation, the state enforcement service or a bailiff will commence an enforcement proceeding. In the course of the enforcement proceeding, parties to it (the claimant and the defendant) and, in some cases, third parties, may apply to courts, or vertically up the Ministry of Justice functions, with appeals and statements regarding

GLI - Litigation & Dispute Resolution 2018, 7th Edition 282 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Zavadetskyi Advocates Bureau Ukraine protection of their interests. Foreign judgments are subject to enforcement proceedings in the same manner as domestic judgments, but after their recognition by a local court, per the Ukrainian civil procedure and applicable international treaties that govern such recognition, or on a reciprocity basis. The general term for the presentation of a foreign judgment for recognition in Ukraine is three years from the day of the judgment issue. Foreign arbitral awards can be enforced in Ukraine pursuant to the international treaties, such as the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) and the European Convention on International Commercial Arbitration (Geneva, 1961), as well as under the reciprocity principle. In the latter case, it shall be presumed that a basis for reciprocity exists unless it is proven otherwise. Provisions of the Code of Civil Procedure apply to the enforcement of foreign judgments at all times when there is no superior international treaty on the matter at hand. The Code provides that enforcement of a foreign court resolution can be rejected when any of the explicitly listed circumstances exist, but the state courts do not have the competence to review foreign judgments or arbitral awards in their substance. There is a list of grounds for rejection of enforcement of foreign judgments, set forth by the Code of Civil Procedure, which may be appended by international treaties. The basic grounds for dismissal include: breach of exclusive competence of Ukrainian courts; unawareness of a party to the dispute about the procedure; unenforceability of the judgment in accordance with the laws of the place of trial; existence of a conﬂ icting judgment or active procedure in Ukrainian courts; lapse of the term for recognition; inadmissibility of the subject-matter of the dispute for consideration in the Ukrainian courts; existence of an earlier judgment on the same subject between the same parties; possible violation of the Ukrainian public order or national interests by the requested enforcement. It is also possible to obtain interim measures from the state courts at the stage of recognition and enforcement of an arbitral award in Ukraine. Garnishment measures are provided for by law, and they are perceived mainly as an enforcement measure in cases where there are no assets located in the possession of the defendant.

Cross-border litigation The Code of Civil Procedure and the Code of Commercial Procedure of Ukraine set forth that foreign parties can sue and be sued in Ukraine in the same way as residents. Some exceptions from this general rule can be provided explicitly by law, but this has not been done to any substantial extent so far, except by the sanctions introduced in relation to the confl ict in eastern Ukraine. In addition to the local laws, regulations of international treaties apply to the procedural status of foreign parties to the litigation. In the Administrative jurisdiction, foreign parties generally may act as claimants in the same manner as the local parties, while the defendant side may be represented by the Ukrainian public bodies according to the subject-matter of this jurisdiction, with some exclusions from this rule, specifi cally mentioned by law. For example, compulsory extradition of a foreign citizen from Ukraine requires an administrative lawsuit to be fi led by a competent authority versus an individual. There is a concept of “legal assistance” used in the Ukrainian process regulations, which means cooperation between judicial and enforcement authorities of different countries. In the process of litigation, a Ukrainian court can interact with authorities from other countries where there is a treaty governing international legal assistance in order to receive help in the litigation process, such as summoning of parties, provision of evidence, service of documents, etc. In the same manner, Ukrainian courts and other authorities may assist

GLI - Litigation & Dispute Resolution 2018, 7th Edition 283 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Zavadetskyi Advocates Bureau Ukraine foreign courts in litigation proceedings that involve Ukrainian elements. In particular, starting from 2001, Ukraine is a party to the Hague Convention on the obtaining of evidence abroad in civil and commercial proceedings of 1970, and is a successor-party to the Hague Convention on Civil Procedure of 1954. Legal assistance is available to litigating parties also in the absence of international treaties, however in this case, interaction between judicial authorities would be exercised via the Ministry of Foreign Affairs ofﬁ ces and therefore would be considerably slower and restricted in its efﬁ ciency.

International arbitration In addition to the state courts, Ukrainian law recognises domestic arbitration and permanent or ad hoc international commercial arbitration. There is a category of disputes that fall within the exclusive jurisdiction of the Ukrainian state courts and the Constitutional Court of Ukraine, which includes, as a rule, relationships with the involvement of the state interest. For example, civil disputes falling under the jurisdiction of the Administrative or Criminal courts may not be resolved under arbitration or ADR procedures. The primary rules governing international arbitration with the seat of the tribunal in Ukraine are set forth by the Law of Ukraine “On International Commercial Arbitration”. Some rules concerning international arbitration are also found in the Code of Civil Procedure, the Law of Ukraine “On Enforcement Proceedings”. The permanent Ukrainian arbitration courts operate according to their by-laws. Under the general rule, a national court may not intervene in arbitral proceedings except for very few reasons speciﬁ cally provided by the law. If any of the parties so requests, a state court shall stay its proceedings and refer parties to arbitration in disputes that are covered by an arbitration agreement, unless it ﬁ nds that the latter is not applicable. In some cases, a party may also request a competent court to consider the issue of arbitral tribunal jurisdiction. According to the Ukrainian law, arbitration awards are binding upon the parties and enforceable through the state courts and the enforcement service or private bailiffs. To get enforcement of an arbitration award, a claimant needs to apply to a general Civil court to get an enforcement order within three years from the date of the arbitration award. An arbitral award may be set aside by a local court of appeals if reasons for that, explicitly listed in the law, exist. Disputes regarding the competence of an arbitration, situated in Ukraine, fall within the jurisdiction of the respective courts of appeals. The application for setting-aside an award of arbitration should be made by the complainant within three months from the date of the award, and reasons for setting aside an award include: undermined competence of the arbitration tribunal; correctness of the arbitration procedure; and conformity with the public order. There are two main international commercial arbitration institutions in Ukraine: the International Commercial Arbitration Court; and the Maritime Arbitration Commission of the Ukrainian Chamber of Commerce and Industry. Also, there are a number of arbitration institutions at various industry organisations and professional associations, however many of them do not function actively.

Mediation and ADR Litigation remains the prevailing method of dispute resolution in Ukraine, though arbitration is also frequently used. Generally, cross-border commercial disputes, with few exceptions, may be referred to either local or foreign commercial arbitration. Mediation is emerging but is rarely used, except for ﬁ nancial relations between corporate borrowers and banks, who can beneﬁ t from the Law “On Financial restructuring” which came into force in October 2016 and set forth in detail the organisation and procedure for the restructuring of

GLI - Litigation & Dispute Resolution 2018, 7th Edition 284 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Zavadetskyi Advocates Bureau Ukraine non-performing loans. There is also a concept of settlement agreement used in the civil and commercial process codes, and disputing parties may agree on any procedure of reaching a settlement agreement unless it contradicts the applicable laws. As regards settlement of disagreements between business entities and public offi ces, the offi ce of the Business Ombudsman is worth mentioning – it was established in 2014 and its core body, the Council, operates as the mediator between businesses and regulators. Negotiations are generally recognised as a helpful means of dispute resolution, but the involvement of outside experts is uncommon. When concluding commercial contracts, domestic businesses mostly rely on litigation as a dispute-resolution method in case of a confl ict with their contractors. As an exception from this general trend, banks rather frequently insist on referring disputes with retail borrowers to the competence of arbitration tribunals, but this is mainly because these tribunals operate on the basis of banking associations.

Regulatory investigations There are several public agencies operating in Ukraine whose functions may be characterised as “investigatory”; however, the term itself is not embedded into any of the regulations governing the activity of these agencies. Amongst the most active agencies that combine regulation and controls over compliance with rules are: the National Bank of Ukraine (the NBU); the Anti-Monopoly Committee (the AMC); and the State Fiscal Service (the SFS) of Ukraine. The AMC has authority to investigate anti-trust and anti-competition violations, and its authority covers almost all areas of commercial activity in the country and a wide range of public regulatory activity. The NBU started investigatory action in 2015, commencing with thorough banking industry diagnostics, aimed at identiﬁ cation and resolution of malfunctioning, non-transparent and non-compliant banks. A substantial part of these diagnostics consisted of procedures based on investigatory methodologies. Moreover, the investigatory element has been interwoven into many regulations of the NBU related to banking supervision and AML control, which are likely to stay for a long time. The SFS’s purpose is to investigate tax avoidance, and this agency uses instruments both unique, as well as similar to those used in the investigation of other white-collar crimes and violations. According to all applicable laws, any regulatory investigation in Ukraine may only be conducted in strict compliance with the procedural rules that speciﬁ cally apply to the particular survey. Therefore, any deviation from the applicable regulations, wrong action or inaction, is a ground for applying to the competent court (in most such cases, to the Administrative courts) for protection of rights.

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Oleksandr Zavadetskyi Tel: +38 05 0416 9258 / Email: [email protected] Oleksandr Zavadetskyi started his career in 1996 and received the advocacy licence in 2001. Oleksandr has gained substantial hands-on experience in Litigation, White-Collar Crime and Finance Regulation. Zavadetskyi Advocates Bureau, which was founded by Oleksandr in 2009, has been assigned to handle litigation and white-collar crime cases, as well as to provide advice in various areas of business and civil law, by high-profi le international corporations. Upon introduction of the US and the EU sanctions, related to the confl ict in eastern Ukraine, Oleksandr has also been dealing with sanctions- delisting assignments. Along with practising as an advocate, Oleksandr in different times has occupied several managerial positions in multinational banking groups such as Raiffeisen, Citigroup, Svedbank and Kommerzbank, where he managed legal affairs and recovery of non-performing loans. Moreover, in 2015 and 2016 Oleksandr was engaged with the National Bank of Ukraine to fulfi l several of the NBU’s obligations under the MEFP between the IMF and Ukraine. There Oleksandr worked as Head of Licensing and Related Parties Monitoring, simultaneously being the fi rst-ever Chairman of the NBU Qualifi cation Commission and member of the Banking Supervision Committee.

Zavadetskyi Advocates Bureau 03150, 16 Dylova Str., ofﬁ ce 9, Kyiv, Ukraine Tel: +38 05 0416 9258 / URL: www.zadvocates.com

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Hamdan AlShamsi Hamdan AlShamsi Lawyers and Legal Consultants

Litigation procedures differ in the UAE in each of the seven emirates. The seven emirates that form the UAE each have a Court system and every emirate has a rental dispute centre. That means the Courts (and the rental centres) can operate differently from one another. The Courts of Sharjah, Ajman, Umm Al Quwain, Fujairah Courts fall under the federal administration whilst the Courts of Dubai, Ras Al Khaima and Abu Dhabi each have an independent Court administration. The Courts of Dubai have an independent Supreme Court, namely the Court of Cassation, which determines the interpretation and meaning of the legislator, whilst all the other emirates fall under the Supreme Court based in Abu Dhabi. In addition there are the Dubai International Financial Centre (DIFC) Courts and the newly established Abu Dhabi Global Markets Courts (ADGM). The DIFC Courts are set up within the economic freezone DIFC area in Dubai. The ADGM Courts are based in a similar freezone in Abu Dhabi. Both are independent Courts of the UAE in their own right. They are described as common law islands in a civil law sea, applying a set of laws based largely on the common law of England and Wales.

Efﬁ ciency of process I shall be analysing the process of registering claim, evidence and resources available to a litigant, and the time disputes require. Generally the comments are directed to the UAE Courts, with the DIFC Courts being dealt with speciﬁ cally. The ADGM Courts follow the course of the DIFC Courts. This study does not extend to the criminal Courts or any penal- related matters. Cases are registered in the Courts through the Registrar who will accept the statement of claim and set a hearing date after the parties have paid the fees for the case. This is processed at the Courts and can take as little as one day to complete, unless there are issues that arise and need correcting or clarifying. With the advance of technologies some Courts have opted now to use online methods of registration. The Dubai Courts have introduced an online system and procedure for registering and dealing with cases. The online feature is very helpful and functional and allows parties including lawyers to register any case, injunction or application online. The Dubai Courts’ process of registering a claim online is straightforward and the requirements are set out clearly in the website. After the claim is registered, it is reviewed by the Registrar’s Department who provide their comments on whether or not there are any changes that are required to be made. The Registrar may, in certain circumstances, go so far as to require changes in the particular or statement of claim, particularly focusing on

GLI - Litigation & Dispute Resolution 2018, 7th Edition 287 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Hamdan AlShamsi Lawyers and Legal Consultants UAE the format of the claim. In those circumstances, the process of registration takes up to one week. In the event there is a requirement to change the statement of claim, it may take up to two weeks to resolve the matter. Claims in the other courts in the emirates are registered over the counter; the registration takes one day with payment required on the same day. A hearing date will be provided on that same day. Once a case has been accepted by the Registrar, the online system will request payment and thereafter, after payment is made, a date may be set to hear the dispute. The DIFC requires the parties to register a claim through its online form. There is a 40% surcharge for claims registered over the counter. An ordinary claim will be started through the fi ling of a claim form under Part 7 of the DIFC Courts rules. An application (not expected to involve a substantial dispute of fact) would be commenced under Part 8 of the Rules and an interlocutory application under Part 23. The Civil Courts of the UAE (not the DIFC Courts) are organised by the claim amount in question; the rules for such organisation are found in the civil procedures law and may sometimes be organised further by decisions made by the head of the Courts who oversees and manages the Courts. The case allocation system in the UAE Civil Courts allocates cases in accordance with the amount claimed and its type. Cases under the amount of AED 500,000 in Dubai Courts (AED 200,000 for the other emirates) will be considered minor, and cases above the amount of AED 500,000 (AED 200,000 for the other emirates) for Dubai Cases will be considered major. The minor and major Courts are separate divisions in their own right. In the event a claim value changes, it would be re-assigned to the correct Court. An unquantifi able claim is referred to the major Court. The First Instance Courts are split in accordance with the type of dispute. Cases also are split into type and these typically are: civil; commercial; and labour and property. Therefore there would be a minor and major Court for each type of claim, i.e. a labour minor and a labour major, and so forth. Each Court will usually assign Judges that are specialised in the fi eld that the Court’s name suggests. The minor Courts will have a Judge and an amanuensis (or court secretary). The major Courts will have three Judges presiding, with one of them being the head of the panel together with an amanuensis. There may be a policeman and a translator who will be present at any of the Courts if required. Anyone may attend the Court hearing, whether he is involved in the dispute in question or not. The UAE Civil Courts have four stages, namely mediation, fi rst instance courts, appeal courts and cassation courts. After fi ling but before a case is referred to the Courts, it is referred to a settlement stage where a Judge or an offi cer of a Court will attempt to resolve the matter amicably. Currently, in the majority of the emirates, the mediation process is conducted by a Court offi cer rather than a Judge. There are many claims in the Dubai Courts that will not require mediation. For civil or commercial claims, the mediation stage is unnecessary for claims that, inter alia, do not have a part of the claim that is unquantifi able or where the claim value is more than AED 50,000. In the Dubai Courts there are certain additional processes that are followed before the Courts receive the claim. In respect of real estate cases in the Dubai Courts, they have to be referred to the land department to investigate certain aspects of the real estate, namely whether it is registered, and the details of such registration. For off-plan properties, whether

GLI - Litigation & Dispute Resolution 2018, 7th Edition 288 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Hamdan AlShamsi Lawyers and Legal Consultants UAE it is registered, and if it is a dispute in respect of a handover of an off-plan property, the land department will investigate the construction status and other details of the project. This will assist the Judge in handing down his award. A labour complaint must be made in the Ministry of Labour (or labour offi ce), which takes up to three weeks to complete. In emirates other than Dubai there are no referrals before a case is heard before a Judge, other than mediation. The assignment and specialisation of the Courts and Judges assist in ensuring the best experience is provided in determining the award for the parties. The organisation of the Court provides that the dispute is resolved in the fastest manner possible, with a judgment that considers the circumstances in light of the industry or subject of which the parties are part. Cases that are registered with the UAE civil courts will have a fi rst hearing date set and thereafter there will be a series of adjournments for several reasons. Arguments are not made in a trial once: rather they may continue over several hearings; the hearings are short and there are few oral arguments made. The most common reason for an adjournment is that parties wish to reply to each other’s submissions. In most instances, a Court will allow a party to reply to other parties’ submissions, and in particular, where a party submits new documents. Adjournments are commonly provided for a party to provide translations and documents from abroad. This method of having a series of adjournments, with each party replying to the other’s arguments from one adjournment to another, can allow for the case to be ineffi ciently handled. The late provision of documents can exhaust the previous arguments and start a new set of arguments that could have been effi ciently handled from the outset. The Courts have case management powers including fi ning parties for such acts, though seldom used. An adjournment for judgment signals that either an interim or fi nal judgment may be awarded/pronounced by the courts. The parties will not generally be aware whether a fi nal judgment or an interim judgment is to be pronounced. An interim judgment could be to appoint an expert, stay proceedings, refer the claim to another Court, refer a particular part of the claim to be investigated by the Judge (where there is power to hear from witnesses, with additional powers to call and analyse different evidence that may be impractical in a Court room), or to decide that a certain statement that shall be made under oath. The UAE Civil Court’s tradition is for written submission to be made rather than trials. Parties will present their arguments and reply to each other’s arguments and the Judge thereafter will make a determination. The system does not provide for trials where the arguments of either party will be heard at one sitting. The UAE Civil Court Judges, in some instances, will ask a party for further clarifi cation, at a hearing, if a part of the claim or defence is not clear. In some instances, this can lead to a large number of adjournments. This increase in unnecessary adjournments, and use of written submissions rather than oral pleadings, sometimes encourages lawyers to provide proxies for other lawyers to appear rather than appearing themselves. This adds to the repetitive arguments and increases ineffi ciency, with the Court having to deal with many more submissions than should be the case. The UAE Civil Court system, as it stands, does not manage the arguments and contentions of the parties. The parties can generally provide the arguments how and when they like. An adjournment for a party to reply to submissions made, does not necessarily mean that such a reply will be confi ned to the points made. New and repeated arguments are generally entertained. There is generally very little interference by the Courts in this process.

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The parties should attempt to cover the arguments in their exchange of memorandums and particulars, claim and defence. The fi rst hearing generally deals with the issue of service. This will have been attempted by the Court Bailiff, there being no party service in the UAE Courts. The rules provide that adjournments will be made until service is deemed effective, and it requires that investigations are made to fi nd the correct address of the respondents. After the parties have been summoned and have appeared, the Courts shall order an exchange of argument and submissions. The use of Court-appointed experts is very common in the UAE. In Dubai, the appointment of an expert is fi rst dealt with at the dispute resolution centre, which can take up to fi ve months. Experts need to be registered with the UAE Ministry of Justice and Courts to obtain their licence. After receiving the expert report, there is a further exchange of arguments for and against the expert report. The Courts may, if they fi nd the arguments against the expert report signifi cant, refer it back to the same expert again, or to another expert, or to a panel of experts. Once the Court is satisfi ed there is enough evidence, it will adjourn for fi nal judgment. The process of hearings and adjournment can work out to be very effi cient, since a large amount of cases can be handled, but it requires the parties to assist in managing the case. Some parties abuse the process by dragging and confusing the cases and making them much lengthier than what they ought to be. Evidence laws In general, the onus is on the claimant to prove his case. The evidence and civil procedure laws of the UAE control the admission of permissible evidence including witness statements, written evidence, expert evidence (appointed independently by the Courts), documentary and electronic evidence, including emails. Parties may rely on viva voce witness evidence to prove their case, but this is not the rule. Presenting witness evidence usually requires the consent of the Courts to set a date for such a hearing. The lawyer acting on behalf of the litigant will request either in writing or orally before the Courts to hear any witnesses the party may have. The witnesses will be heard in one Court session. Witnesses are excluded from the Courtroom until after they have given their evidence, to ensure that they do not hear another witness’s statement before giving theirs. The witnesses will be called in one by one by the Court until all of the witnesses are heard. Both the claimant’s lawyer and respondent’s lawyer may be present in these witness hearings. Direct and cross-examination is controlled by the Judge. The Judge will ask any questions to the witness fi rst. The claimant and the respondent may then ask questions (in the event there are several claimants and respondents, there is no particular order between the parties). The amount of time a dispute remains in the Civil Courts depends on the type of dispute, the forum and the complexity. As discussed, some disputes require a preliminary step to be taken before proceeding to the First Instance Court. After all preliminary steps are taken, a claim may be made in the First Instance Court. The First Instance Courts typically take up to one year to fi nish a case. Thereafter if there is any appeal, the appeal Courts would likely take seven months for judgment. Thereafter if an appeal is made to the cassation Court or the Supreme Court, it will typically take anything between four months to a year or more. Thereafter any enforcement of judgment can either take around three months, in

GLI - Litigation & Dispute Resolution 2018, 7th Edition 290 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Hamdan AlShamsi Lawyers and Legal Consultants UAE the event the counter-party has liquid assets (bank accounts), or years in the event there are immovable or other assets. A claim in the UAE Civil Courts can take anywhere between a year to three years for judgment and enforcement. In some instances, it could last for more than three years. In respect of specialised centres such as rental dispute centres, cases at the ﬁ rst instance generally take two months and thereafter appeals take two months, with enforcement taking up to one month. The amount of time that a case may dwell in the DIFC First Instance Courts varies signiﬁ cantly according to the size and complexity of the case. In theory, if all available procedures are adopted, but time is not extended, a case should reach a defended trial hearing in nine months. There is rigorous case management in place in the DIFC and the parties are expected to comply, or make a timely application for adjournment or extension of time.

Integrity of process There are rules governing confl icts of interest in the UAE for the participants in the legal system and judiciary. Whilst they lay the foundation, they are suffi cient to protect the legal system from matters of integrity and confl ict. Lawyers have a specifi c law that governs their profession. Lawyers are administered and licensed in the UAE by the Ministry of Justice, the Dubai Ruler’s Courts and the DIFC Academy of Law. There are general rules governing the conduct of lawyers in the UAE Courts. These protect the integrity of the legal professional and have certain requirements, requiring any licensed lawyer to have the necessary qualifi cations and proof of reputation from a recognised jurisdiction. Committees hear any complaints against a lawyer’s misconduct and such committees have powers to revoke the licence of the lawyer to practise in the UAE. The rules found in the DIFC Courts are comprehensive, with both a mandatory code of conduct and an advisory code of conduct. Lawyers are subject to compulsory education in both Dubai and the DIFC Courts. The civil procedures code ensures that Judges have no confl icts and provide that any decision made by a Judge in such circumstances shall be void. The regulation in the UAE of licensing and appointing Judges ensures that checks are carried out. There is training to ensure that Judges carry out their duties with integrity. There are departments set up in the UAE to receive any complaints in respect of any Judges or the Courts in general. These specifi c departments have many powers in their hands, will seek to investigate the complaint independently, and may refer the matter to the Ministry of Justice. There are available recourses, found in the civil procedures law, for parties to bring action against Judges and prosecutors. The justifi cations for such actions require some elements of fraud, deceit or gross negligence. The most important result will be for the party to void the act or judgment that was made by such persons. Experts play an important function in the justice and legal system. The DIFC Courts accept party-appointed experts and consider the merits of any such expert evidence through examination and cross-examination. The other UAE Courts may accept expert reports provided by parties, but if the Courts are intending to rely on that evidence to determine any part of the claim, the Court should appoint an expert from an approved register of experts. Instances of corruption are rare in the UAE. There are certainly examples where corruption

GLI - Litigation & Dispute Resolution 2018, 7th Edition 291 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Hamdan AlShamsi Lawyers and Legal Consultants UAE has occurred and even been prosecuted, but the UAE is fortunate to have very little corruption. Any corruption is usually taken very seriously by the prosecutors and/or government departments, who will ensure that such corruption is discontinued and recourse is taken against people who have participated in such corruption. The articles which address corruption are found in the criminal laws and the prosecution are very motivated in pursuing such cases. Furthermore, the police and investigation departments in the UAE ensure that any corruption that has taken place is brought to justice. Such departments appear to have the necessary tools, knowledge and checks in place to spot any corruption occurring. There are many rules in the UAE justice system to ensure that a fair trial is given and that each party is afforded protection by the Courts. One example is the ability under the civil procedure rules to re-hear cases for reasons of evidence being unacceptable, such as that a party acted fraudulently by the withholding of documents, as later discovered by the other party. These rules, among others, ensure that the UAE legal system provides the parties with the justice they are seeking and preserves the integrity of the whole legal system of the UAE. The Cassation and Supreme Courts determine whether or not the law has been applied correctly, in the Courts below. The Cassation and Supreme Courts also oversee the application of justice found within the general rules of the civil code. These rules are there to protect the fundamental values and legal culture of the UAE Court system. In some instances, the Cassation and Supreme Courts will remit the case back to the Appeal Courts and replace the Appeal Judges with a new panel if the appeal judgment was incorrect, unjust or unfair.

Privilege and disclosure The UAE Courts will seldom compel a party to disclose all the documents in its hands unless there is a compelling reason for doing so. The basic rules of disclosure are that: i) the law obliges the party to disclose such documents; ii) if the document was shared between the parties and necessary for proving any of their rights or obligations; or iii) if the counterparty has relied on such document in any stage of its defence. There are rules in the evidence laws in the UAE to oblige the counter-party to provide classes of documents in their possession under certain circumstances. Furthermore, the Courts may also oblige a third party to provide the Courts with documents following certain rules within the evidence laws. Electronic documents obtain their standing from the electronic law of the UAE and are governed in a very similar way. The basic rules for electronic disclosure are that a party should mention their source and provide a printed copy of such documents or evidence. If the claimant or respondent does not earlier submit a document and later wishes to rely upon it, and as a result it has caused an adjournment, the Court may (or if the counter-party requests) ﬁ ne the party causing such delay. It is possible to obtain a pre-order (interim relief) to investigate certain evidence, but that requires that a party prove that there is a fear that it may not be able to obtain such evidence later. The Courts will generally appoint an expert to go to the place where such evidence may be obtained and obtain the evidence that is requested. There are no classes of documents that do not require disclosure. The parties may request the Court to order disclosure from third parties and/or the Court may also oblige a third party to provide documents to the Court. The Courts may, in the interests of justice, order a disclosure in accordance with the rules to ensure that the Judge obtains everything he needs to make a correct judgment.

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There are no rules or restrictions as to the use of documents obtained by disclosure by the UAE civil courts. Therefore the parties to a dispute may sometimes avoid disclosure in the event the disclosure of the document would be more harmful to the party than the dispute matter at hand. The DIFC Courts instead may conﬁ dentially deal with documents that are considered conﬁ dential, and a party may request that from the courts.

Costs and funding In the UAE Federal Court the rule is (other than trivial registration fees and transaction fees) 4% of the claim amount, up to a maximum of AED 30,000. The Dubai Courts have amended the fee structure to 7% of any claim amount, up to a maximum of AED 40,000. The Abu Dhabi Courts have a 3% Court fee with no maximum amount. Other fees include fees for applications, interim relief, enforcement; appeal, cassation or supreme Courts do not exceed these amounts. The typical amount a party is expected to pay for a claim with appeal stages and an interim relief application such as a freezing order can be in the region AED 125,000 for the UAE Federal Courts and the Dubai Courts. There is a general trend to set legal fees as a percentage of the claim amount, with some exceptions where law fi rms charge fi xed sums or hourly rates. With small claims, namely less than AED 1 million, the typical legal fees that might be expected are in the region of 4–15% of the claim amount. With larger claims, the legal fees would typically be as low as 2% of the claim amount. For law fi rms that charge a fi xed sum, many parties to litigation can expect anything between AED 20,000 and AED 100,000 or more. The larger part of the legal fees is not awarded in the Federal and UAE Courts, with awards being as low as AED 500, and at the higher end around AED 3,000. Therefore parties do not expect to recover any legal fees. Most of the Court fees are recoverable, including any experts appointed by the Courts, but not experts used by the parties independently. A party can expect recovery of more than 90% of the Court fees. The Courts seldom split the costs specifi cally according to the arguments won, but rather decide to either award the full cost of the case to either party or jointly. The DIFC Courts’ fees are published on scale, with a highest fee of up to US$ 130,000 for claims above US$ 50m. The scale can be found at http://difcCourts.ae/wp-content/ uploads/2015/05/COURT-FEES-AUGUST-2015_31.pdf. Within the UAE, conditional and contingency fee arrangements are not allowed. Given the amount of recovery possible in the UAE Federal Courts (other than the DIFC), parties pay less attention to the recoverability of such arrangements in the Courts. The DIFC allows for conditional fee arrangements and most contingent fee arrangements. There are no rules pertaining to funding litigation in the UAE with the exception of the DIFC jurisdiction, where one of its sources of law is English law, and the rules on funding litigation agreements are expected to be the same as in England and Wales. It is possible for lawyers to fund parties in litigation and this is widely practised by some law fi rms, whilst others ensure they do not fund any costs or fees on behalf of their client. The law fi rms that engage in funding their clients’ litigation tend to recover the costs when any award is collected from the litigation. The money is collected by the law fi rm, then the remaining award is sent to the client. There is no regulation governing how client monies should be handled, with the exception of rules allowing lawyers to recover the costs they have paid, with their debts having priority over other debts in respect of the award.

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Interim relief There are pre-action or pre-suit remedies available in the UAE both in the UAE Courts and the DIFC Courts. The criteria to obtain such remedies vary according to the remedy a person is seeking. Generally such remedies will require two important elements: a) fear of irrecoverable loss; and b) fear of evasion. Parties in litigation in the UAE can ﬁ nd a range of interim relief and recourses to protect their interests. Interim relief may be awarded very quickly; in a matter of a day or two in the UAE Federal Courts and the Dubai Courts. The Federal and Dubai Courts, in most cases of interim relief, will not require a hearing and a submission will be sufﬁ cient. The submission will be submitted to the Registrar, and a Judge will either award or reject the interim relief within two days. The Judge in some instances can request additional documents and queries be answered by the parties in an ad hoc manner, without the need for a formal hearing to be convened. Most interim relief will be awarded ex parte, and the respondent may appeal the decision, where both parties will defend their position. Interim relief in the UAE will lapse if the party who has sought the interim relief does not present a claim to the Courts within seven days of the award of the interim relief. Ex parte urgent and interim relief can be obtained in the DIFC Courts. An immediate order might be obtained, in exceptional circumstances, without hearing but only for preservation purposes. Freezing Orders may be obtained without notice. There will always be a requirement for undertakings, and an early return date will be set. Absent those circumstances, obtaining interim orders and relief from the DIFC will generally require a hearing, which shall be set on three clear days’ notice .

Enforcement of judgments In the UAE, awards are generally enforced by fi ling an enforcement application. Foreign awards may be enforced by obtaining recognition of the judgment and then by enforcement. The UAE is a signatory to the New York Convention on the recognition and enforcement of foreign arbitral awards and has ratifi ed the rules found in the convention. In respect of conventions with other countries the UAE has signed with the following: the GCC, the Riyadh convention, with France, with India, Egypt, China. The treaties have similar requirements and differ slightly if at all. In respect of the UAE Civil Courts, unless stated otherwise by another treaty or law dealing with a particular foreign country’s judgments, a foreign award must satisfy the normal requirements of raising a case in the UAE Courts and, in addition: i) the subject matter of the dispute should not belong to the jurisdiction of the UAE Courts and the foreign Courts must have jurisdiction in accordance with their laws in respect of jurisdiction; ii) the Court that awarded the judgment was the correct forum to entertain the dispute in accordance with their laws; iii) the parties to the dispute have been requested to appear and have correctly been given representation; iv) the judgment is not subject to any appeal in the country it was issued in; and v) the judgment does not confl ict with a judgment or order of the UAE Courts previously issued and does not contradict the order public and morality/ethics of the UAE. The respondent will be notifi ed to appear before the Courts in the UAE in a matter of recognition of a foreign award. The respondent will have the right to challenge the award in the UAE and a respondent may request the Courts to refuse the recognition of the award.

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In respect of the DIFC Courts, a certifi ed copy of the judgment obtained from the originating Court will usually be suffi cient. If the judgment arises from a Court in respect of which the DIFC Courts have a Memorandum of Guidance or Understanding, the procedures will be set out therein. It is also a requirement that the foreign Court had jurisdiction in respect of the matter. Absent a treaty, those requirements can be restrictive. Article 7(6) of Dubai Law No. 12 of 2004 (as amended) simply states that foreign judgments “shall be enforced within the Centre in the manner prescribed in the Rules of the Courts”. The Rules are closely modelled on the Civil Procedure Rules of England and Wales. After an award is made by the Courts, or a foreign award or arbitration award is eventually recognised by the Courts, the party may fi le an enforcement fi le. In terms of procedure, an enforcement fi le might differ slightly between different Courts in each emirate. After a decision of a Judge on enforcement, the Judge’s secretary will send the Order to the respective authorities and persons to perform. Among other enforcement recourses available are freezing and transferring any monies with any banks, auctioning any real estate found registered with the land department, auctioning any cars registered, and auctioning any shares in the stock exchanges in the UAE. The Courts will not freeze any amount more than the debt owed.

Mediation and ADR Different forms of dispute resolution have become widely available to parties in the UAE, with mediation and ADR being widely encouraged. The legal system of the UAE, in respect of dispute resolution, requires parties to attempt settlement or mediation. The civil procedures law requires that cases fi rst go through an informal mediation process. Furthermore the Dubai Courts, in certain types of cases, will require that parties fi rst undergo a formal mediation process, even going so far as appointing an offi cial Court expert to provide the technical support required that will assist the parties in reaching a settlement without allowing the dispute to take more time. In certain types of cases such as employment, the law obliges the parties to fi rst seek to resolve the matter before an offi cial of the Ministry of Labour advises on the rights and obligations of each of the parties. In other instances of family law, and in particular divorce, the parties are required to seek family counselling with an offi cer at the Courts before the matter is referred to the Courts. These types of mediation and ADR required by law assist the parties to understand their position in respect of one another, with the hope that a settlement is achieved without the need to litigate. The DIFC-LCIA Arbitration centre has mediation rules which can be invoked on request by the parties. The mediator will be appointed by the LCIA Court in London.

Regulatory investigations The most common form of regulatory investigations is in connection with the Public Joint Stock Companies (PJSC) listed in the stock exchanges in the UAE. The supervision of the Securities and Commodities Authorities (SCA) over public joint stock companies offers protection to the stock exchanges and investors. The powers of the SCA to regulate the trading and issue of securities on the exchanges include that the board may suspend a company’s stocks from being traded and freeze a number of, or classes of, stocks on the exchange. The SCA will generally send ofﬁ cers

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Hamdan Al Shamsi Tel: +971 4 346 9262 / Email: [email protected] Hamdan completed his LL.B. at the University of Warwick and has been admitted to the Bar in the UAE. He has a decade of experience in litigation in the UAE and has been involved in many different claims that were both civil and common law disputes. He also assists many in their commercial matters, including negotiations and drafting of contracts. He set up his law fi rm at a young age and has now a team of lawyers and partners that are qualifi ed in many areas of the law. The law fi rm has been practising in the UAE since 2011.

Hamdan AlShamsi Lawyers and Legal Consultants 1611, Al Manara Tower, Al Abraaj Street, Business Bay, Dubai, UAE Tel: +971 4 346 9262 / Fax: +971 4 346 9272 / URL: www.alshamsilegal.com

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Rodney G. Strickland, Jr., Matthew R. Reed & Anthony J Weibell Wilson Sonsini Goodrich & Rosati, P.C.

Effi ciency and integrity of process The American legal system. The American legal system, founded on notions of fairness and due process, is respected throughout the world for its ability to deliver predictable, equitable, and effi cient justice. It employs an adversarial model to reach the truth of a matter wherein each litigating party (rather than the court or special prosecutor) bears the responsibility to prove its own case to a jury and/or impartial judge by producing and challenging evidence and legal arguments. American courts adhere to the principle of “stare decisis”, which is “the idea that today’s Court should stand by yesterday’s decisions”. Kimble v. Marvel Entm’t, LLC, 135 S. Ct. 2401, 2409 (2015). The rationale behind this rule of law is that it “promotes the evenhanded, predictable, and consistent development of legal principles, fosters reliance on judicial decisions, and contributes to the actual and perceived integrity of the judicial process”. Id. Natural justice and due process. Similar to principles of natural justice under English law, the American legal system is grounded in several fundamental rights of procedural due process guaranteed by the United States Constitution. In most American legal proceedings, a party is granted, among other rights, the right to an impartial and unbiased judge and (in many cases) jury, to formal written notice of the proceeding and the grounds asserted for it, to an opportunity to object to the proceeding, to obtain evidence prior to trial (discovery), to call witnesses and present evidence, to cross-examine adverse witnesses, to a judgment limited by the evidence presented, to be represented by legal counsel, to a record of the proceedings, and to written fi ndings of fact and the reasons for a decision. These protections are afforded equally to corporations and individuals. The discovery process can be the most expensive and important aspect of U.S. litigation. Courts, both state and federal, allow litigants to serve subpoenas and similar requests for documents on people and institutions relevant to the litigation. Litigants are also permitted to take testimony under oath before trial from adverse parties and non-parties in order to obtain the information and evidence necessary to present the litigant’s case to the judge and/or jury. Court systems. The United States comprises a single federal government and 56 separate governments for each of the 50 states, fi ve territories, and the District of Columbia. Each of these entities has its own court system and laws. Because the substantive and procedural laws of each jurisdiction are different, the choice of venue (e.g., a federal court or a state court) for a civil action will usually have a substantial effect on the procedure and outcome of the action. The federal court system and nearly all of the state court systems are divided into three levels that in most cases consist of: (1) a trial court in which either a jury or judge will examine evidence, hear arguments, and make fi ndings of fact, and a judge will apply the law to the factual fi ndings; (2) an intermediate court of appeal in which a panel of judges will

GLI - Litigation & Dispute Resolution 2018, 7th Edition 298 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Wilson Sonsini Goodrich & Rosati, P.C. USA review any appeal from the trial court’s decision; and (3) a court of last resort comprised of several judges that may or may not choose to review decisions of the intermediate court. In the federal court system, these three levels consist of 94 federal district trial courts, 13 circuit courts of intermediate appeal, and the United States Supreme Court as the court of last resort, which all operate under uniform sets of rules, such as the Federal Rules of Civil Procedure and the Federal Rules of Evidence. Each state has its own procedural and evidentiary rules, although state rules are often based on and very similar to the federal rules. The federal court system also includes several courts of special limited jurisdiction whose jurisdiction is defi ned by subject matter, such as the United States Tax Court, the United States Court of Federal Claims, and the United States bankruptcy courts. Jurisdiction. With some limited exceptions, the jurisdiction of the federal courts is limited to cases arising under federal laws enacted by the United States Congress or cases arising between citizens of different states or a foreign nation. The state courts have jurisdiction over all cases that have a suffi cient nexus with the state, regardless of citizenship, arising under either state law or federal law, except where federal law has bestowed exclusive jurisdiction on the federal courts (such as in cases arising under admiralty, bankruptcy, copyright, patent, and tax laws, among others). Standing. Before a party can initiate a civil action, it must demonstrate that it has “standing” to do so. For civil actions in federal courts and most state courts, this means demonstrating that the party has suffered an “injury in fact” that was caused by the conduct complained of and that can be redressed with a favourable decision from the court. Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334, 2341 (2014). An injury in fact must be concrete (not abstract), particularised (identifi able), and imminent (rather than conjectural or hypothetical). Id. An allegation of future injury may only suffi ce if the threatened injury is “certainly impending”, or there is a “‘substantial risk’ that the harm will occur”. Id. In creating causes of action in the courts, Congress is given wide discretion to identify which injuries will satisfy these standing requirements. “Congress has the power to defi ne injuries and articulate chains of causation that will give rise to a case or controversy where none existed before.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016) (citation omitted). Class actions. Federal and state laws in the United States permit civil actions to be brought by or against representatives of a class of similarly-situated persons on behalf of the absent members of the class. Class actions are appropriate when the class is so numerous that joinder of all members is impracticable, there are questions of law or fact common to the class, the claims or defences of the representative parties are typical of the claims or defences of the class, and the representative parties will fairly and adequately protect the interests of the class. See Fed. R. Civ. P. 23(a). Class actions may be used to obtain a monetary judgment, injunctive relief, and civil penalties on behalf of the class. Class actions may also be settled and dismissed on a class-wide basis, binding the absent members of the class, but only if the court reviews the settlement and fi nds the settlement terms are fair, adequate, and reasonable as to the absent class members. See Fed. R. Civ. P. 23(e). Early resolution of civil actions. When a civil action is fi led in federal or state court, the defendant may respond initially by challenging the suffi ciency of the complaint on several different procedural and substantive grounds, including: lack of subject matter jurisdiction; lack of personal jurisdiction; improper venue; insuffi cient service of process; failure to state a claim upon which relief can be granted; and failure to join a necessary party. See Fed. R. Civ. P. 12(b). In many cases, courts will stay further proceedings, including discovery, until a challenge to the pleadings is resolved. A civil complaint that fails to state “a plausible

GLI - Litigation & Dispute Resolution 2018, 7th Edition 299 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Wilson Sonsini Goodrich & Rosati, P.C. USA claim for relief” cannot survive dismissal, and “a plaintiff armed with nothing more than conclusions” cannot “unlock the doors of discovery”. Ashcroft v. Iqbal, 556 U.S. 662, 678- 79 (2009). Alternative resolution of civil actions. Most federal and state courts have implemented requirements and procedures designed to encourage litigants to resolve disputes outside of court through mediation or private arbitration. Litigants may be required to review materials about alternative dispute resolution (ADR) processes, to discuss settlement options with a court employee, to present the merits of their positions to an early neutral evaluator, or to attend a mandatory settlement conference with a magistrate judge. Options for ADR are discussed in more detail in the Mediation and ADR section below. Electronic case fi ling/searching. The federal court system has adopted an electronic case fi ling (ECF) system that allows for electronic fi ling and service of nearly all papers in a federal case. The federal court system has also adopted a document retrieval system (PACER) that allows the public (for a small per document fee) to search for and view nearly all court records going back several years (except for information that a court may have sealed, such as personal private information or highly sensitive corporate trade secrets). Many state court systems have likewise adopted electronic fi ling and record-searching systems that are made available to the public for free or for a small fee. Hence, when litigating in the United States, it should be assumed that the proceedings will become a matter of public record and readily accessible over the internet to anyone, including the media.

Privilege and disclosure Attorney-client privilege. The American legal system vigorously protects communications between an attorney and a client made for the purpose of giving or receiving legal advice. “[T]he privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice.” Upjohn Co. v. United States, 449 U.S. 383, 390 (1981). “By assuring conﬁ dentiality, the privilege encourages clients to make ‘full and frank’ disclosures to their attorneys, who are then better able to provide candid advice and effective representation.” Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100, 108 (2009). Although robust, the attorney-client privilege can be involuntarily waived and has limits, such as the “crime- fraud exception”, pursuant to which there is no privilege over communications made to assist in committing a crime or fraud. United States v. Zolin, 491 U.S. 554, 562-63 (1989) (citation omitted). (“The attorney-client privilege must necessarily protect the conﬁ dences of wrongdoers, but the reason for that protection − the centrality of open client and attorney communication to the proper functioning of our adversary system of justice − ceases to operate at a certain point, namely, where the desired advice refers not to prior wrongdoing, but to future wrongdoing.”) Attorney work product. Related to the attorney-client privilege is the attorney work product doctrine, which the federal courts and most state courts recognise as protecting documents prepared by an attorney in anticipation of litigation, especially documents revealing “the mental impressions, conclusions, opinions, or legal theories of a party’s attorney or other representative concerning the litigation”. Fed. R. Civ. P. 26(b)(3)(B). Attorney work product generally receives the same protections afforded to attorney-client communications. Corporations. Corporations are treated the same way as individuals under the law with respect to the attorney-client privilege. And communications with a client corporation

GLI - Litigation & Dispute Resolution 2018, 7th Edition 300 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Wilson Sonsini Goodrich & Rosati, P.C. USA made for the purpose of giving or receiving legal advice are protected regardless of whether the legal advice is provided by an outside attorney or an attorney employed by the corporation. Hence, the privilege extends to internal investigations conducted by a corporation at the direction of an attorney for the purpose of giving legal advice, even if the attorney is an employee of the corporation. While courts in some U.S. jurisdictions have held that the privilege only applies if the primary purpose of the communication was a legal purpose rather than a business purpose, others have held that so long as “one of the signifi cant purposes of the internal investigation was to obtain or provide legal advice, the privilege will apply”. In re Kellogg Brown & Root, Inc., 756 F.3d 754, 760 (D.C. Cir. 2014). The participants to a communication do not necessarily need to include an attorney: “communications made by and to non-attorneys serving as agents of attorneys in internal investigations are routinely protected by the attorney-client privilege.” Id. at 758. Waiver of the privilege. The holder of a privilege (the client) can waive the privilege, either intentionally or unintentionally: by disclosing privileged information to third parties that owe no duty of confi dentiality; by relying on privileged communications to support a claim or defence, thereby placing the privileged communications at issue; by failing to take reasonable precautions to maintain the confi dentiality of the privileged communication; or by otherwise acting inconsistently with the purpose and protection of the privilege. Rules of disclosure. A party to litigation is generally entitled to obtain discovery of any information in the possession of adversaries or non-parties “regarding any nonprivileged matter that is relevant to any party’s claim or defense”. Fed. R. Civ. P. 26(b)(1). As this rule indicates, however, disclosure of attorney-client privileged communications and attorney work product cannot be compelled in civil or criminal litigation (unless the privilege has been waived or the crime-fraud exception applies). In the interests of judicial effi ciency, federal and some state court rules have been enacted to preserve the privilege despite inadvertent or limited-purpose disclosure during litigation. Under the federal rules, for example, an inadvertent disclosure of a privileged communication does not waive the privilege, and the disclosed communication may be retrieved, if the owner of the privilege took reasonable steps to protect the privilege prior to the disclosure and reasonable steps to rectify the error after discovering the inadvertent disclosure. Fed. R. Evid. 502(b). A court is also free to enter orders that preserve the privilege even where privileged communications are intentionally disclosed for a limited purpose. Fed. R. Evid. 502(d). Using these rules, parties in litigation may stipulate to discovery procedures that allow for the disclosure of documents to a litigation adversary without having to conduct a costly attorney review of each document beforehand. Such stipulations are especially convenient in cases involving the exchange of large volumes of electronic documents. Protective orders may also be obtained from a court to prevent or limit the disclosure of confi dential proprietary information and other sensitive information. See Fed. R. Civ. P. 26(c). Settlement and the mediation privilege. All courts in the United States recognise a mediation privilege that protects from disclosure any communications made in the context of mediation. Outside the context of mediation, courts in the United States (with some limited exceptions) do not generally recognise a privilege over settlement communications that would prevent such communications from being discovered by a litigation adversary. However, federal and state rules of evidence generally prevent a party from using an opponent’s offers of settlement and statements made in the context of settlement negotiations against the opponent to prove liability. See Fed. R. Evid. 408. Client confi dentiality and confl icts of interest. Attorneys in the United States are bound by rules of professional responsibility that require, among other things, the protection of

GLI - Litigation & Dispute Resolution 2018, 7th Edition 301 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Wilson Sonsini Goodrich & Rosati, P.C. USA confi dential client communications and the avoidance of confl icts of interest. The specifi c rules vary by state, although many states have adopted the American Bar Association’s Model Rules of Professional Conduct. Attorneys may only represent clients with potential confl icts of interest after obtaining a written waiver from the affected clients. For instance, if an attorney attempts to represent a party that is adverse to a current or former client in litigation, the court may disqualify the attorney from the representation.

Costs and funding Each side pays its own fees and costs. The general rule in the American legal system is that each party must pay its own attorneys’ fees and costs unless a specifi c statute or court rule provides otherwise or the parties have contractually agreed to a shifting of fees and costs. See, e.g., Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 550 (2010). Many federal and state statutes allow for the shifting of attorneys’ fees and costs to a losing party when doing so would be in the interest of the public good or to deter particularly bad conduct. For example, some federal and state statutes allow courts to shift fees and costs to the losing party where a party has successfully prosecuted an action resulting in the enforcement of important rights affecting the public interest, such as consumer rights or civil rights. See, e.g., 42 U.S.C. § 1988(b)); Cal. Code Civ. Proc. § 1021.5. Other statutes shift fees and costs in cases dealing with specifi c subject matter (such as intellectual property or employment) where a losing defendant engaged in wilful violations of the law, or where a losing plaintiff has brought a frivolous lawsuit. But even where provided by statute, the shifting of fees and costs is generally left to the discretion of the court, making fee shifting the rare exception rather than the rule. Contractual fee shifting. To deter litigation and prevent a party from using the threat of expensive litigation as leverage to obtain an unfair advantage in business dealings, many business contracts contain fee-shifting provisions. Such provisions allow the prevailing party in any litigation arising from the contract to recover its litigation fees and costs. Courts will enforce these provisions, and most states (like New York) allow courts to enforce even unilateral, non-reciprocal fee-shifting provisions that allow one contracting party to recover fees in litigation but not the other contracting party. Other states (like California) have enacted statutes that effectively convert non-reciprocal fee-shifting provisions into reciprocal provisions, such that if one party would be allowed to recover its fees by contract after prevailing in litigation, any party to the contract that prevails in litigation may recover its fees. Funding litigation. For plaintiffs seeking alternative ways to fund litigation, there are several options. Under a contingency fee arrangement, the client will usually agree to pay its attorneys a fi xed percentage of any settlement or monetary judgment obtained, often around 30% for cases that end before trial and 40% for cases that end after trial. Another option for plaintiffs is to obtain funding from third-party litigation investment fi rms who invest in litigation expected to provide a fi nancial return. Match-making fi rms also exist to help connect plaintiffs with investment fi rms and individual investors. More recently, some companies have begun offering a crowd-source platform for funding litigation that brings litigation fi nancing opportunities to the masses. There are fewer options for defendants seeking alternative funding arrangements. This is because, even if they win on the merits, defendants receive no monetary judgment that can be used to pay legal bills, and in most cases the defendant still has to pay its own attorneys’ fees and costs. Most corporations and many individuals carry insurance policies designed

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Interim relief Preliminary injunctions. Courts in the United States have the power to enter preliminary injunctions to preserve the status quo pending resolution of a lawsuit where a monetary award at the end of the litigation could not redress the plaintiff’s injuries. See Fed. R. Civ. P. 65(a). Preliminary injunctions are an “extraordinary remedy never awarded as of right”. Winter v. NRDC, Inc., 555 U.S. 7, 24 (2008). Parties seeking a preliminary injunction must show that they are likely to succeed on the merits, that they are likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in their favour, and that an injunction is in the public interest. Garcia v. Google, Inc., 786 F.3d 733, 740 (9th Cir. 2015). The most important factor is the likelihood of success on the merits. Id. Additionally, if a party seeks an injunction that orders the other party to “take action” and do more than maintain the status quo, then the party seeking the injunction must establish that the law and facts clearly favour their position, not simply that they are likely to succeed. Id. Preliminary injunctions cannot be entered unless the party to be enjoined has been given notice and an opportunity to present evidence in opposition to the requested injunction. Temporary restraining orders. If there is no time to wait for a hearing and decision on a motion for a preliminary injunction, a court may enter a temporary restraining order to preserve the status quo. Such orders may be entered without notice to the party to be restrained if specifi c facts in an affi davit or verifi ed complaint clearly show that immediate and irreparable injury, loss, or damage will result before the party to be restrained could be heard in response to the motion. See Fed. R. Civ. P. 65(b). Posting bond for interim relief. Courts will usually issue a preliminary injunction or temporary restraining order only if the party seeking the restraint or injunction gives security in an amount that the court considers proper to pay the costs and damages sustained by a party later found to have been wrongfully enjoined or restrained. See Fed. R. Civ. P. 65(c). Range of injunctive relief available. Courts in the U.S. have power to enjoin any action necessary to preserve the status quo of the parties prior to fi nal judgment. Courts may also enjoin a party from transferring money or property outside the United States, but only if the party seeking the injunction claims a lien or equitable interest in the money or property. Grupo Mexicano de Desarrollo v. All. Bond Fund, 527 U.S. 308 (1999) (assets could not be frozen where no lien or equitable interest was claimed); Deckert v. Indep. Shares Corp., 311 U.S. 282 (1940) (freezing assets was allowed as a reasonable measure to preserve the status quo pending a fi nal determination of the plaintiff’s equitable claims). Courts are also empowered to order many types of prejudgment remedies. Fed. R. Civ. P. 64. These additional remedies, which may vary by jurisdiction, include arrest (taking a person into the custody of the court), attachment (taking property into the custody of the court), garnishment (ordering a third party that owes money to the defendant to set aside that money for the benefi t of the plaintiff), replevin (order requiring defendant to return personal property to plaintiff), sequestration (removing property from possession of current possessor pending outcome of proceeding), and other corresponding or equivalent remedies. Fed. R. Civ. P. 64(b).

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Enforcement of judgments Enforcement of judgments. The enforcement of a judgment obtained in federal or state court is governed by individual state law. Similarly, the enforcement in the U.S. of a judgment obtained in the court of a foreign nation is governed by individual state law, as “[t]here is currently no federal statute governing recognition of foreign judgments in the federal courts”. Yahoo! Inc. v. La Ligue Contre Le Racisme et L’Antisemitisme, 433 F.3d 1199, 1212-13 (9th Cir. 2006). Accordingly, enforcement actions must be fi led in state court unless the federal courts have jurisdiction to hear the case by virtue of the diversity of citizenship of the parties (i.e., the parties are citizens of different states). State laws usually allow a judgment to be enforced through a variety of mechanisms, including garnishment of wages or income, placing a levy on fi nancial accounts or safety deposit boxes, placing a lien on real property or personal property, or placing a lien on a future monetary judgment. Other ways to collect judgments include seizure orders (which allow sheriffs/marshals to seize property from a private home or business), turnover orders (which require debtors to give property to sheriffs/marshals), and assignment orders (which require debtors to assign ongoing payments, such as royalty payments, to creditors). Additional procedures for enforcing judgments vary from state to state. Uniform Foreign-Country Money Judgments Recognition Act. In contrast to the federal system, most states have enacted the Uniform Foreign-Country Money Judgments Recognition Act (UFCMJRA) or its predecessor, the Uniform Foreign Money Judgments Recognition Act (UFMJRA), both of which enable parties to enforce foreign judgments in the U.S. Under these laws, a U.S. state court (or federal court sitting in diversity) may enforce a foreign judgment for money damages that is fi nal, conclusive, and enforceable where entered, with some exceptions. Ohno v. Yasuma, 723 F.3d 984, 991 (9th Cir. 2013). Those exceptions include judgments rendered: (i) under a judicial system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law; (ii) where the foreign court did not have personal jurisdiction over the defendant; and (iii) where the foreign court did not have jurisdiction over the subject matter. See, e.g., Cal. Code Civ. Proc. § 1716(b). In addition, a court has discretion to refuse to enforce foreign judgments if it is concerned that the defendant did not receive suffi cient notice of the foreign proceeding, if the judgment was obtained by fraud, if the judgment is repugnant to the public policy of the state, if the judgment confl icts with another fi nal judgment, if the foreign proceeding was contrary to a venue agreement between the parties, if the foreign forum was seriously inconvenient for the defendant, if there are substantial doubts about the integrity of the foreign court, or if the judgment violates the freedom of speech and freedom of the press under either the U.S. or individual state Constitutions. See, e.g., Cal. Code Civ. Proc. § 1716(c). International comity. In cases that are not governed by the UFCMJRA or UFMJRA, courts will follow the principle of international comity. “The extent to which the United States, or any state, honours the judicial decrees of foreign nations is a matter of choice, governed by the comity of nations.” Asvesta v. Petroutsas, 580 F.3d 1000, 1010 (9th Cir. 2009) (citing Hilton v. Guyot, 159 U.S. 113, 163 (1895)). “Where there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction, conducting the trial upon regular proceedings, after due citation or voluntary appearance of the defendant, and under a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries, and there is nothing to show either prejudice in the court, or in the system of laws under which it was sitting, or fraud in procuring the judgment,

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Cross-border litigation Section 1782 Orders. U.S. federal law allows a party to a foreign judicial proceeding to apply to a federal court in the U.S. for an order to obtain documentary and testamentary evidence from within the court’s jurisdiction for use in the foreign proceeding. 28 U.S.C. § 1782(a). The application may be made directly to a U.S. federal court by the party seeking the evidence or as a letter rogatory or request issued by a foreign tribunal, and there is no requirement of reciprocity with the foreign nation. However, the court is not required to grant the application and has wide discretion in deciding the application. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264 (2004). In exercising its discretion, a court will consider whether the person from whom discovery is sought is a participant in the foreign proceeding, the nature of the foreign proceeding, the receptivity of the foreign court to U.S. federal court judicial assistance, whether the request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies, and whether the request is unduly intrusive or burdensome. Id. at 264–65. The same privileges (such as the attorney- client privilege) that apply in U.S. litigation will apply to a Section 1782 order, but the applicant need not prove that the evidence sought is actually discoverable in the foreign proceeding or that it would be discoverable in a hypothetical proceeding in the U.S. Id. at 263. The Hague Evidence Convention. Evidence in the U.S. may also be obtained for use in foreign litigation by letters rogatory under the Hague Evidence Convention (the Convention). In deciding requests under the Convention, courts will consider the importance of the evidence to the foreign proceeding, the degree of speciﬁ city of the request, whether the information originated in the U.S., whether there are alternative means to obtain the evidence, and whether denial of the request would undermine important U.S. interests. Société Nationale Industrielle Aerospatiale v. United States Dist. Court for S. Dist. Iowa, 482 U.S. 522, 544 n.28 (1987). A Section 1782 order is usually more beneﬁ cial to a foreign litigant than a request under the Convention because discovery under Section 1782 is not limited by whether the requested information is discoverable in the foreign proceeding, and because a court considering a Section 1782 order is not required to consider whether the foreign tribunal has subject matter jurisdiction.

International arbitration Arbitration laws. The Federal Arbitration Act (FAA) was enacted by the U.S. Congress to “revers[e] centuries of judicial hostility to arbitration agreements”. Scherk v. Alberto-Culver Co., 417 U.S. 506, 510 (1974). The FAA embodies the “national policy favoring arbitration, and a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary”. AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1749 (2011). The FAA declares all arbitration agreements “valid, irrevocable, and enforceable” as a matter of federal law. 9 U.S.C. § 2. It requires the enforcement of all agreements to arbitrate, even those that require dispute resolution on an individual basis and that prohibit the use of “class action” procedures to aggregate the claims of individuals. Am. Express Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2309, 2312 (2013); AT&T Mobility, 131

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S. Ct. at 1748-49. And the FAA “leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed”. Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985) (citing 9 U.S.C. §§ 3, 4). In light of the FAA’s “strong national policy favoring arbitration of disputes”, “all doubts concerning the arbitrability of claims should be resolved in favor of arbitration”. Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 471 (5th Cir. 2002). International arbitration bodies in the U.S. The U.S. hosts the headquarters of several leading international arbitration bodies, including the International Centre for Dispute Resolution (ICDR) (the international arm of the American Arbitration Association), the International Centre for Settlement of Investment Disputes (ICSID), JAMS International (JAMS), and the International Institute for Confl ict Prevention and Resolution (the CPR Institute). In addition, the U.S. hosts offi ces of the Inter-American Commercial Arbitration Commission (IACAC) and the International Court of Arbitration of the International Chamber of Commerce (ICC). Enforcement of international arbitration awards. In addition to the FAA, the U.S. is a signatory to international conventions regulating the enforcement of arbitration awards, including the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and the Inter-American Convention on International Commercial Arbitration (the Panama Convention). Under the FAA, a federal court must confi rm a foreign arbitration award, unless a party seeking to have the award vacated can establish one of the following: (1) the award was procured by corruption, fraud, or undue means; (2) there was evident partiality or corruption in the arbitrators; (3) the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon suffi cient cause shown, or refusing to hear evidence pertinent and material to the controversy; or of any other behaviour by which the rights of any party have been prejudiced; or (4) the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, fi nal and defi nitive award upon the subject matter submitted was not made. 9 U.S.C. § 10(a). Public policy in the U.S. strongly favours confi rmation of international arbitration awards. Ministry of Def. & Support v. Cubic Def. Sys., 665 F.3d 1091, 1098 (9th Cir. 2011). “Extensive judicial review frustrates the basic purpose of arbitration, which is to dispose of disputes quickly and avoid the expense and delay of extended court proceedings.” Parsons & Whittemore Overseas Co. v. Societé Generale de L’Industrie du Papier (RAKTA), 508 F.2d 969, 977 (2d Cir. 1974) (citation omitted). Thus, confi rmation proceedings are necessarily summary in nature and are “not intended to involve complex factual determinations, other than a determination of the limited statutory conditions for confi rmation or grounds for refusal to confi rm”. Marker Volkl (Int’l) GmbH v. Epic Sports Int’l, Inc., 965 F. Supp. 2d 308, 311 (S.D.N.Y. 2013) (citation omitted).

Mediation and ADR ADR is strongly encouraged and supported by courts in the U.S., and most federal and state courts have implemented ADR procedures and programs. In addition to encouraging ADR options, some courts facilitate their own mediation and settlement programs at no cost to litigants. Depending on the nature of the case, courts may order parties to participate in non-binding ADR with a judicial ofﬁ cer, a court-appointed neutral, or a private neutral retained by the parties. Mediation, arbitration (both binding and non-binding), and early neutral evaluation are popular forms of ADR in the U.S., and several organisations − such as the American Arbitration Association and JAMS − help supply litigants with private neutrals for these ADR options.

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Regulatory investigations Various federal and state agencies in the U.S. have authority to conduct regulatory investigations to enforce the law in the areas of their jurisdiction. These investigations are generally non-public unless and until the agency is required to ﬁ le a formal lawsuit to enforce its orders or a settlement is reached. See, e.g., SEC v. Jerry T. O’Brien, Inc., 467 U.S. 735, 737 (1984). An agency’s investigative powers typically include the power to compel the production of relevant documents and witness testimony and to hold hearings before an administrative adjudicator and/or commission. See, e.g., 15 U.S.C.S. § 77s(c); 15 U.S.C.S. § 46. Some agencies have authority to seek evidence from entities that reside outside of U.S. territorial boundaries and/or the ability to enlist the aid of a foreign government or agency in the investigation. See, e.g., 15 U.S.C.S. § 46(j)(4). The party that is the target of the investigation is entitled to certain due process rights, including the right to object to the discovery sought by an agency as being improper or beyond the scope of the agency’s authority. See United States v. Morton Salt Co., 338 U.S. 632 (1950); Okla. Press Pub. Co. v. Walling, 327 U.S. 186 (1946). The party may also seek to challenge any order or other action of the agency in a court that sits within the Judicial Branch of the applicable federal or state government. Id.

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Rodney G. Strickland, Jr. Tel: +1 650 320 4857 / Email: [email protected] Rod Strickland is a member of Wilson Sonsini Goodrich & Rosati, where his practice focuses primarily on consumer and securities class action defence and general commercial litigation for technology companies. Mr. Strickland’s practice includes cases involving allegations of false advertising, violations of consumer protection and privacy statutes, unfair competition, breach of ﬁ duciary duty, and securities fraud. He is the practice development leader of the ﬁ rm’s commercial litigation practice. He received a J.D., summa cum laude, from Santa Clara University School of Law in 1992, and a B.A. in History and English from the University of Notre Dame in 1989. Mr. Strickland was recognised in the 2014 edition of Northern California Super Lawyers.

Matthew R. Reed Tel: +1 650 565 3990 / Email: [email protected] Matt Reed is a member of Wilson Sonsini Goodrich & Rosati, where he focuses on technology-focused domestic and international arbitration, as well as intellectual property litigation, including patent litigation in U.S. district courts and the U.S. International Trade Commission and trade secret disputes in state and federal court. With a background in chemical engineering, Mr. Reed has successfully litigated numerous cases in a variety of areas, ranging from medical devices to semiconductor processing and packaging to core logic chipsets. Mr. Reed received a J.D. from Columbia University Law School in 1997, where he was a Harlan Fiske Stone Scholar and Book Review Editor of the Columbia Journal of Transnational Law. He received a B.S., magna cum laude, in Chemical Engineering from Brigham Young University in 1994.

Anthony J Weibell Tel: +1 650 354 4134 / Email: [email protected] Tony Weibell is a member in the Internet Strategy and Litigation group of Wilson Sonsini Goodrich & Rosati, where he represents Silicon Valley’s Internet and technology companies in complex civil litigation involving consumer class action, e-commerce, intellectual property, privacy, computer fraud, data breach, antitrust, false advertising, and contractual disputes. He also advises companies on Internet law and strategy, including compliance with the Digital Millennium Copyright Act (DMCA), the Computer Fraud and Abuse Act (CFAA), the Wiretap Act, the Stored Communications Act, and consumer protection and privacy laws. Mr. Weibell received a J.D., cum laude, from Brigham Young University in 2005, an M.S. in Civil and Environmental Engineering from Brigham Young University in 2002, and a B.S. in Civil and Environmental Engineering from Brigham Young University in 2001.

Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road, Palo Alto, California 94304, USA Tel: +1 650 493 9300 / Fax: +1 650 493 6811 / URL: www.wsgr.com

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