On a rock and roll
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Funds, gaming and financial services make up much of the work available in tiny Gibraltar.
Gibraltar’s importance as an international financial centre is growing, with amendments to legislation and new avenues of business making it more and more popular. Despite this the legal market continues to be small, with a handful of firms taking the bulk of the work.
Gibraltar has always occupied a slightly strange place in international terms – a British territory bordering Spain and occupied over the centuries by a diverse group of nationalities.
In the legal and business market it has also occupied a place of its own. While being part of the EU by virtue of being British and governed by a law derived largely from English common law, Gibraltar has generally been regarded as an offshore jurisdiction. Its work resembles that of the Channel Islands or the Caribbean, heavily focused on financial services, and these days that resemblance is even more marked.
In the past few years Gibraltar has been growing several areas of business with the aim of making itself competitive with jurisdictions such as Guernsey or Jersey. But because it is an EU country it is also seeking to compete with the major onshore financial centres, notably Ireland and Luxembourg.
That ability to compete has been enhanced this year, according to Hassans partner James Lasry, who points to recent revisions to the territory’s experienced investor fund (EIF) legislation as a key development.
The new legislation allows someone setting up a fund in Gibraltar to use a foreign fund administrator in certain circumstances. Previously, explains Lasry, the requirement was that the administrator had to be based in Gibraltar, which limited choice as only a handful of fund administration companies are present there.
“That’s a big change,” says Lasry. “When a fund redomiciles in Gibraltar it can use its existing administrator even if it’s a non-Gibraltar one. This has opened up the funds market. Gibraltar has around 200 sub-funds in the EIF regime and this could open it up a lot more.”
Isolas partner Christian Hernandez agrees with Lasry. “There’s still a lot of work out there to be attracted to the jurisdiction,” he says.
Lasry adds that changes outside Gibraltar have also made it a more attractive funds domicile.
“With Luxembourg getting rid of their option to have a pre-authorised launch for their funds Gibraltar is now the only European jurisdiction where you can set a fund up and launch it before authorisation,” he explains.
Lasry is quick to add that a “pre-authorised” fund launch does not mean that the fund lacks scrutiny. A potential launch must be reviewed by two independent bodies, but the practice means a fund manager can market and even accept subscriptions for a fund before its authorisation by the regulator.
“It’s kind of like the American approach to regulatory licensing, which is if you want to do something you just let us know, but once you do you’re subject to regulatory supervision,” he adds, saying that the Gibraltar regulator is rigorous while being approachable.
Insurance and online gaming are other growing areas in Gibraltar. Hernandez confirms that Isolas is looking at growing its insurance department.
“That’s an area that perhaps inadvertently as a firm we’ve neglected simply because we’re so busy with other work, but it’s something we’re growing now,” he says.
Other work has included, as in other jurisdictions in recent years, restructuring and refinancing. But Hernandez reports that in the past year non-distressed work is picking up again. He says Isolas has just worked on two bond issues, advising the banks.
As a result of the new and growing industries, contentious teams in Gibraltar’s law firms are also doing well.
“Because Gibraltar’s developed as a jurisdiction the type of disputes that we get here are much bigger than ones we had historically – it goes hand in hand,” notes Triay & Triay partner Charles Simpson. “You attract people over and inevitably some end up falling out over things, so that gives rise to disputes. But we’re not marketing ourselves as a jurisdiction for disputes – it’s just a natural consequence of business life.”
Gibraltar has just opened a new court building and also added to its judicial ranks, with Sir Mark Potter – previously president of the Family Division for the High Court of England and Wales – appointed to Gibraltar’s court of appeal.
However, all the regulatory changes and new avenues of business have had little impact on the local legal market. Hassans, Isolas and Triay remain the largest three firms and dominate the business coming from overseas.
“I tend to see the same people on the other side all the time,” says Hernandez.
A healthy number of lawyers working in Gibraltar are Gibraltarian, but firms still rely on solicitors coming from the UK or other Commonwealth jurisdictions to fill their ranks. While the increasing number of companies setting up in Gibraltar means that in-house roles need to be filled, the local lawyers report that these businesses are tending to recruit from the UK rather than the Rock.
For their part, firms are having to be flexible and adapt to the changes brought in by the regulator and the government.
“That’s the nature of law in a small jurisdiction – you’re always having to develop and change your colours,” says Simpson. “You can’t say that you’re a specialist funds lawyer even though you might have a big funds practice. If the market changed you need to turn your hand to something else.”
Luckily for Gibraltar, its lawyers have been skilled at doing this and will doubtless continue to be so.