This is the second installment of a three-part letter to the government’s Disaster Recovery Coordinating Committee providing suggestions for restoring and improving the territory’s Commercial Court.
The Virgin Islands Commercial Court competes with commercial courts in Hong Kong, Singapore, London, Cayman, Bermuda and elsewhere. Those courts in many cases are well-resourced, and they are increasingly innovative.
Starting now, we have an opportunity to take the VI Commercial Court to a new and higher level. With imagination, creativity and innovation, we can be at the forefront of commercial courts in the world, bar none.
If we do not take advantage of the opportunity, our standing in commercial dispute resolution will slip.
The world of international commercial disputes has been changing since 2009 when our Commercial Court was established. The demands of “users” (parties and their legal practitioners) have changed and continue to change. The situation for the VI’s core financial services sector has been changing. Competition has increased for commercial dispute resolution business globally, marked by innovation in procedures and in underlying laws in many jurisdictions. Parties increasingly have a choice of where to litigate.
Non-VI lawyers
The VI’s Legal Profession Act 2015 and case law before and after it on the involvement of non-VI legal practitioners in VI litigation have created uncertainties and concerns among those who have a role in whether litigation is brought here.
The VI must innovate and improve just to keep its reputation and ranking.
Also, the VI must aggressively market and promote the Commercial Court. We should aim to do more than just keep our reputation and ranking: We should aim to achieve greater heights and greater opportunities for the territory.
If we enhance our existing offering and innovate, there is real potential to attract increased work, and the accompanying direct and indirect revenues, and to shape the Commercial Court as the commercial court of choice globally. Building upon the existing base of the court, there are opportunities to take advantage of the evolving demands in the dispute resolution sector globally if we design and implement truly innovative changes.
The territory should aim to assure the position of the Commercial Court as a leading — if not the leading — commercial court in the world, and the VI as a leading forum for dispute resolution in the world. To help do that, the review should look carefully at a range of possible innovations and enhancements for the Commercial Court, and the laws of the territory, and deal with concerns about litigating in the VI in at least 13 major areas, each of which is discussed below. Some could be implemented easily and quickly; others may require more analysis and consultation. The Recovery and Development Plan is the ideal opportunity to reflect, re-examine, implement and grow.
The areas for consideration below are not listed in order of urgency, importance or ease of implementation.
Expanding the jurisdiction
We could consider an expanded jurisdictional mandate to bring more commercial dispute work to the VI by changes in laws and procedural rules, and by encouraging contractual submission to the VI’s jurisdiction.
The objective would be to bring more types of disputes involving more litigants from more places into the Commercial Court, and to make it easier to do so. We want disputing parties’ business, and our objective could be to determine their disputes unless it is inappropriate for us to do so. We could deal with any international commercial case with a meaningful VI element and decline jurisdiction only in very limited circumstances.
In addition, contracting parties could be encouraged to opt for a contractual dispute resolution provision that either requires them or gives them a non-exclusive option to bring their disputes to the VI Commercial Court.
The VI could be marketed as a place that provides court-dispute-resolution services for willing parties, almost irrespective of their connection and the dispute’s connection to VI.
As part of achieving this, consideration could be given to the VI seeking to be bound to The Hague “Choice of Court” Convention, which just came into force and which requires courts to honour exclusive choice-of-court agreements.
To encourage and make it easier for the VI to be chosen by contracting parties, there could be one or more model VI litigation clauses that parties could adopt in their commercial agreements. The Commercial Court could entertain disputes brought pursuant to such clauses subject only to a very limited discretion to decline the dispute.
This approach is compatible with the initiatives to encourage commercial parties to choose the VI for commercial arbitration.
Procedural innovations
First, we could consider procedural innovations, enabling parties to have a greater say on a case-by-case basis in the processes by which their disputes are resolved in the Commercial Court, adapting from other dispute resolution mechanisms, most notably international commercial arbitration.
The court’s procedural rules are attractive, and generally speaking they work well.
They are flexible, but only “in a box.”
Case-by-case adoption of certain procedures from other systems, and customised procedures to fit the parties and their dispute, could offer additional options to parties. Whether the parties will use such procedures extensively may be less important than the message “We will do it your way.”
Second, service of court documents could be modernised and simplified. Service can be time-consuming, costly and open to “technical objections” made by persons served. The purpose of service is to give notice of a claim. The rules could provide that bringing the proceeding to the defendant’s attention would suffice. Service could be practical and fair to both sides.
Third, the rules could provide for service without prior court permission, as occurs elsewhere, with a factual assertion that there is a basis for jurisdiction. A defendant, once served, could apply to set aside service if the asserted basis is insufficient.
Fourth, various VI laws could be examined with a view to offering expanded forms of court relief, including interim and supporting relief, that is not available elsewhere (as was done in the Arbitration Act).
Foreign lawyers
The VI should also adopt international standards and practices for foreign lawyer involvement.
The territory, for example, could enable non-VI legal practitioners to be involved in international litigation here just as foreign lawyers are involved in major litigation centres around the world. This involvement is only natural given the international nature of the commercial activities and locations of those involved.
This is a reality and a practical and reasonable necessity. It is even more so the case when there are proceedings in multiple jurisdictions, and the coordination of the litigation is not taking place in the VI. The various roles can be organised rationally, strategies and tactics can be coordinated, and duplication and costs can be minimised.
Commercial parties will not be inclined to litigate in jurisdictions where they are precluded from conducting their dispute resolution in a manner that is consistent with how they operate internationally, and consistent with efficiency and effectiveness.
The ultimate responsibility for VI litigation must be in the hands of a VI legal practitioner, and the work done under his or her general direction and ultimate supervision. At the end of the day, that VI legal practitioner will be responsible to the court and the client.
Growing the territory as an international commercial dispute resolution centre, based on the strength of its dispute resolution services, is what will create opportunities for the people of the VI. This will enable the legal profession to build capacity here.
Financial self-sufficiency
The Commercial Court should be financially self-sufficient or even profitable. This could be achieved in at least two ways.
First, a revised fee structure could go a long way to accomplishing financial self-sufficiency. Commercial Court fees need to be competitive and suit our users but need not be materially below those of our competitors. Also, court fees are a minor component of litigation costs, dwarfed by legal practitioners’ and experts’ fees.
Second, a graduated levy could be charged on liquidation recoveries (effectively, a “success fee” on the liquidation). The levy system, which exists elsewhere, has at least two advantages. First, the levy is calculated and payable at the back-end, when creditors are relatively happy to have a recovery. Second, because the levy is paid through liquidators, administrative costs are minimal. The levy could be a significant contributor to the revenues of the territory.
Enhanced service
Courts, being part of government bureaucracies, understandably tend to operate in that way. That need not be the case for the Commercial Court. A sea change at all levels would not be costly and would encourage users to want to use our Commercial Court. The court could have an entrepreneurial spirit and provide concierge level service.
Our objective could be to treat each user as a valued customer, with courtesy, dignity, reasonable flexibility and timeliness. We could bend over backwards to accommodate their needs. We could approach them with the mindset of “How can we help you?” Our Commercial Court could have as its objective providing the best level of service of any commercial court in the world.
Third-party financing
The financing (funding) of litigation and arbitration by non-parties has become a significant and rapidly growing factor. For example, Hong Kong and Singapore have implemented laws recently permitting, and as necessary regulating, this growing industry. The monetary value of litigation and arbitration financing has been growing significantly, as has innovation by those providing financing.
Making the VI supportive of litigation and arbitration financing (funding) could attract more disputes to the VI and demonstrate more generally that the territory is a leader in international dispute resolution.
Whether the VI, using innovative structures, could attract litigation finance providers to the VI also is worth examining.
Enforcement of court orders
First, an argument has been made that there is a lack of statutory jurisdictional support for VI courts making charging orders, although the issue has not been determined conclusively. Other jurisdictions in comparable circumstances adopted statutes to establish the jurisdiction expressly. To remove whatever uncertainty may exist, the VI could consider doing likewise.
Second, as discussed above, consideration could be given to the territory seeking to be bound to The Hague “Choice of Court” Convention, which makes court judgments to which it applies enforceable on a basis similar to arbitral awards under the New York Convention.
Third, it has been suggested that the VI could lead a re-thinking of the approach to the enforcement of foreign court judgments.
The argument that would need to be considered carefully is that it may be that we can develop an approach better suited to a world of global business, increasing numbers of international commercial disputes that transcend national boundaries, and an expanding number of jurisdictions that meet at least internationally accepted minimum standards in their justice systems, yet a lingering number of jurisdictions that do not. The suggestion is that perhaps a test for non-enforcement could consider what has been termed the “objective irrationality or baselessness” of the foreign judgment — corruption flourishes where courts produce objectively irrational or baseless results. This approach, it was suggested, may enable a court to decline enforcement of judgments that bear the hallmarks of corruption but without needing to conduct any detailed or subjective assessment of the jurisdiction or proceedings from which the foreign judgment emanates. Whether this approach has merit seems worthy of consideration.
Civil asset forfeiture legislation
Serious consideration should be given to implementing modern legislation to make available in the VI civil proceedings for the removal of proceeds of crime from companies domiciled here. The legislation would replace what is considered to be our difficult-to-use conviction-based criminal asset forfeiture statute, the Proceeds of Criminal Conduct Act 1997. Arguably, modern civil asset forfeiture legislation will enable proceeds of crime to be removed more effectively and efficiently than the existing regime, and may assist to enhance the outside world’s perception of the VI and of its international financial services sector.
Foreign insolvency office holders
We could consider expanding recognition of foreign insolvency office holders beyond nine scheduled countries. Alternatively or in addition, common law recognition could be re-introduced legislatively.
Working with other courts
It makes little sense for courts in different jurisdictions to operate in silos when commercial and other activities increasingly cross borders. There need to be avenues for judicial communication and cooperation in cross-border litigation.
The “Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters” (which I was part of developing) have been adopted in the VI. Courts, within parameters agreed by parties, can communicate and cooperate, while maintaining separate and independent adjudicative processes in each jurisdiction.
Similar approaches may be possible for other types of cross-border matters such as those involving companies and their members, intellectual property (particularly patents), fraud and asset recovery, and arbitral award enforcement.
Lawyer disciplinary process
At present, there is no functioning lawyer discipline process in the VI. While the LPA provides for one, it has not been implemented, despite judges and magistrates supporting the need to do so.
While the matter is not a particular Commercial Court issue, the credibility of the VI and its Commercial Court is diminished if there is no functioning process to deal with allegations of lawyer misconduct.
To be continued.
Mr. Leon served as a justice of the territory’s Commercial Court for a three-year period that concluded in March.