29 March 2004
It is increasingly common for English lawyers to be consulted by a client with an offshore legal problem.
There are any number of reasons for major offshore litigation. There may be an offshore resident who is a prospective defendant, or an offshore jurisdiction clause in the material document. It may also be the only workable jurisdiction where the proposed defendant has any presence at all. The Thyssen litigation in Bermuda is the leading example recently of very substantial offshore litigation – but there are plenty of others.
The purpose of this article is to give some tips as to what to do next and how to ensure that your litigation runs as smoothly as possible.
One of the first considerations is whether English lawyers have rights of audience. The rules vary between jurisdictions. For instance, it is possible in the Isle of Man and some of the Caribbean jurisdictions for English barristers to obtain licences to appear before the courts. However, in Guernsey and Jersey, only locally-admitted advocates may appear.
In any event, you are almost certain to require local advice and representation to some greater or lesser extent, and although the various law firm directories are helpful, they are very far from infallible. There is no substitute for personal recommendations. In addition, most offshore firms are small – at least by City standards – and it is important for those instructing to consider not just the firm’s size but also its strength in depth. There is little to be gained in instructing the firm with the largest litigation department if it consists largely of trainees and only a handful of partners with any real experience. In large matters, it pays to ensure that the firm has an experienced team ready to assist irrespective of holidays, illness or other absences. Depending on the amount at stake it may well be appropriate to visit the jurisdiction to interview the firms concerned and to make enquiries generally. Speed can also be of the essence given the limited number of firms in such jurisdictions. The early bird gets the firm, not the worm, in this instance.
Often the first questions upon which advice will be sought are procedural: to what extent do the Civil Procedure Rules apply? (to which the answer is often “not at all” – and certainly not directly); how is evidence given?; is this even the proper forum?
Although many Anglocentric offshore jurisdictions operate a system of procedure resembling English practice, there are often important differences which can produce significant consequences. There are few texts devoted to a particular jurisdiction. In Guernsey we have Gordon Dawes’ Laws of Guernsey, which provides a helpful overview and understanding of the extent to which the jurisdiction mirrors English law and practice and, more importantly, how it does not. An English lawyer might be surprised to discover that in Guernsey it is not normal practice to exchange witness statements, and there is an almost total prohibition on hearsay. Experts, in effect, need to be present during the relevant parts of the trial in order to be able to present an opinion.
Differences such as these are quite fundamental. It is also critical to agree at an early stage a ‘chain of command’ between the various onshore and offshore lawyers and their mutual client. How this is to operate can in large part depend on the degree of involvement of the offshore jurisdiction. If the main battle is to take place in that jurisdiction, then it may be that the offshore firm will take the lead in strategic matters.
If, rather, the offshore dispute is a satellite matter (such as where the main proceedings are being conducted in London with freezing orders in one or more offshore jurisdictions), then the reverse may be appropriate. Where there are parallel proceedings raising similar issues running in two or even three jurisdictions, chaos may ensue unless there are clearly defined lines of communication. A recent example involved a Guernsey company arguing that the proper forum of the dispute was not Guernsey but Russia. Diligent enquiries uncovered proceedings in the US, where the same company was saying that the proper forum for that dispute was certainly not Russia, largely on the basis that the courts of Russia were allegedly so corrupt that no fair hearing was possible. It may be of little surprise that the forum non conveniens application in Guernsey was dismissed. Needless to say, such gaffes can cause considerable damage to a case. Yet, in the absence of proper communication and overall control, they can arise.
Allied to this are considerations such as what work is to be carried out by which firm, and who should instruct experts. This can often be linked to consideration of whether the fees of an onshore instructing firm are recoverable in the offshore jurisdiction. You need to know the offshore jurisdiction’s fees rules. If there is doubt, it may be sensible for preparation to be undertaken by the offshore firm. At the very least, the client should be warned of the possible non-recoverability of the onshore firm’s fees, otherwise much embarrassment and unhappiness may ensue. There may also be sales tax advantages to disbursements being incurred by the offshore firm, rather than an English firm, obviously within the bounds of what is both lawful and appropriate.
Document management is also very important. Thought should be given to establishing an intranet site, containing relevant documents, accessible to all those lawyers instructed by the mutual client. Where there are several jurisdictions and many documents involved, this could easily save a small fortune in fax and courier charges. It can also assist lawyers in the different jurisdictions to obtain information on how proceedings in the other jurisdictions are developing, as well as avoiding duplication of costs in preparing disclosure lists. It is obviously important that everyone understands at least the outline of what is going on and where. Regular schedules of work, setting out who is to do what and by when, are also helpful.
Finally, regard should also be given as to whether any special facilities may be necessary to hear the case. In most jurisdictions courts will assist wherever possible. For instance, in Guernsey it is not uncommon for a senior English silk lieutenant bailiffs to be appointed to hear particularly complex or substantial cases.
Certainly, you will want to be informed about your tribunal. Civil trials in Guernsey take place before a judge and a jury comprising three or more lay magistrates who decide issues of fact. This can be of fundamental importance when assessing strategy and the attractiveness of any given point. A highly technical defence, then, is less likely to succeed before a Guernsey court.
In addition, you should consider the appeal procedure and what form the appeal hierarchy takes in the jurisdiction concerned. For example, in Guernsey we have a Court of Appeal of the very highest quality, drawing upon such eminent silks as Jonathan Sumption, Michael Beloff, Elizabeth Gloster, Christopher Clarke and Richard Southwell, to name but a few.
In short, if you think you have a dispute which either involves a question of offshore law or will be resolved in an offshore jurisdiction, then move quickly to instruct the best firm available within the relevant jurisdiction and then take account of the kind of issues touched upon above. All of this will help to ensure that proceedings in offshore jurisdictions need not be a fraught experience.
Christopher Edwards is an associate litigator at Ozannes
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