Legally India: What would you define as a global dispute?

In my view a global dispute involves various parties, from a number of different countries, litigating or arbitrating issues that frequently span multiple jurisdictions. This could range from parallel proceedings going on in different jurisdictions or substantive proceedings in one jurisdiction with interim relief applications in other jurisdictions or, as is common in international arbitration, where the parties are from different jurisdictions and have chosen a neutral seat and neutral governing law.

Legally India: How is cross-border litigation such as this generally handled within Europe?

The EU has developed a sophisticated legal system that allows cross border disputes between parties in more than one member state to be dealt with in a co-ordinated and relatively seamless way. This legal system deals with jurisdiction and enforcement, applicable and governing law of contracts and non-contractual disputes and also the service of documents and the taking of evidence. By way of example, if you’re looking at court litigation in the EU, the Brussels I Regulation of 2001 and the Recast Brussels I Regulation that came into force in 2015, make it far easier to determine which jurisdiction will fit a particular dispute.

A good illustration of how this operates in practice is the position in relation to parallel proceedings. Before the Recast Brussel I Regulation, there had always been a problem with a concept known as an ‘Italian torpedo’. This was a situation, where for example, the parties had provided in the contract between them for the exclusive jurisdiction of the English courts but one party decided to issue proceedings in Italy in contravention of that agreement. Prior to the Recast Brussels Regulation, the English court would have to stay the subsequent proceedings until the Italian court decided it did not have jurisdiction and this often resulted in a tactical rush to be the first to issue proceedings and significant delays. But since the Recast, the Italian proceedings, although issued first, would actually have to be stayed in favour of the English court, so this revision to the Regulation has been useful.

In non-EU international disputes, usually where the Defendant is not based in an EU Member State, the European rules will not apply and an English court will apply its common law rules – it will be necessary to show that England is the more appropriate forum for the dispute. This can result in more jurisdictional challenges. The question of which forum is the more appropriate does not arise where the Recast Brussels Regulation applies.

Legally India: What is the greatest fear when dealing with a dispute that could potentially become a global one?

First and foremost, you need to get all your ducks in a row: in some cases you will have a fairly clear jurisdiction clause and governing law provisions providing a clear road map of where proceedings should be issued and the law governing the dispute, but of course there are a lot of disputes that are non-contractual, where you need to do a very quick analysis of where the appropriate forums are. You may also need to decide where would be the best jurisdiction to seek injunctive relief, if that is appropriate. Often, especially in fraud cases, you will want to obtain freezing relief and you will need to consider where you want to obtain that. In some jurisdictions, including England, you can obtain worldwide freezing orders and this will often be critical to a successful outcome. You need to be in a position to advise your client on the appropriate forms of action it can take.

Each jurisdiction has its own rules governing not just procedure but also substantive law and this needs to be explained to a client and advice given as to which jurisdiction and law may best serve a client’s interests, especially if they are the ones bringing the claim. This will often depend on what procedural mechanisms are available in each jurisdiction, the speed of the process and how easy it is to enforce the judgments of a particular country overseas. One area where there is often a large discrepancy in civil procedure is disclosure; disclosure in common law countries such as England and the US is generally wider than in civil law countries where often the parties only need to disclose documents that they rely on with a very limited right to seek further very specific documents.

A difficult scenario, in a non-EU context, would be if you allow another party to issue proceedings first as you may then face a dispute in a different jurisdiction to the one your client may have preferred and at the same time have to persuade the court to stay those proceedings, by convincing the court of your preference for another jurisdiction or seek anti-suit relief. This can result in expensive satellite litigation around jurisdiction.

Legally India: And which are the riskiest jurisdictions to deal with?

It really depends on how you define ‘riskiest’. In order to mitigate jurisdictional risk due diligence should be carried out on your contract prior to, and after, signing it. The client should understand its risk management processes, the political context and wider issues in the jurisdictions within which it operates, like anti-bribery and corruption, as these can affect ability to litigate under a contract.

In the beginning when you’re entering into a contract, consider very carefully what the jurisdiction clauses and the governing law clauses are, to maximise your opportunity to enforce your contract in a jurisdiction that you want. You of course need to consider at the outset where your counterparty has assets against which you can enforce in the event of a dispute and whether the judgments of your preferred jurisdiction will be readily enforceable in those jurisdictions.

However, opting to arbitrate in a different jurisdiction may not present as many potential problems. For example, an Indian and US party may choose arbitration in England or some other mutually acceptable neutral venue. Each could enforce their award in the other’s jurisdiction under the New York Convention. The Indian courts are currently far more favourable to arbitration, so that international arbitration awards can be more readily enforced in India than was previously the case, although the timescales can still remain fairly lengthy.

Legally India: What governing law clauses are generally most popular?

Surveys suggest that English governing law is still the most popular with international parties and was chosen as the governing law in 40% of all global corporate arbitrations in 2017. In 2016, 27% of claims commenced in the Commercial Court related to arbitration. In the year to end of September 2017, this rose to 30%, clearly illustrating the value of the English courts in underpinning arbitration enforcement. This is primarily because England is viewed as one of the most commercially friendly legal systems, its courts support and value arbitration and in terms of substantive law, the purpose behind the English law of contract is to give effect to the common intention of parties under the contract.

However, it is also quite common to see US law and Hong Kong law and if there are European parties, a neutral civil law approach: for example, I have seen arbitrations agreements for Swedish law, French law, and German law. This will often depend on whether the parties (or their lawyers) come from a common or civil law background.

Legally India: What are the top things one can do to avoid global dispute risk?

Auditing your contracts is very important. This is not just because it will help to identify whether the terms are being complied with but will also help you understand at a glance, what your options are if a dispute arises; what is the governing law of the contract, and if specified, in which jurisdiction will proceedings have to be issued, and if not specified, in which jurisdiction could proceedings be issued and any risks associated with that jurisdiction. Finally, is there a dispute escalation process? Are the parties required to engage in some form of ADR prior to litigation or do they precede straight to arbitration?

Another very important factor is document management and how you manage your internal documentation. Thought needs to be given to how you manage your information flows during a project and in the early stages of a dispute. It is often useful to have a central repository of e-mail which is broken down into structured folders rather than relying on e-mails stored locally. The better this is organised the easier it will be for the client and therefore the legal team to identify relevant documents at the outset. Consideration also needs to be given to how privileged documents are retained – they should generally be separated out from the main body of documentation. When a dispute arises the business should be advised on the preservation and generation of documents – the idea being to limit the amount of information that is generated which discusses the issues in the dispute and to limit the risk of any damaging statements being made that may become disclosable in the litigation.

Jurisdictions also have different pre-action requirements that parties should abide by before resorting to the courts. At the outset the purpose of these requirements is to save time and cost, at least in English litigation. For example, when litigating in the English courts the parties must carry out some pre-action correspondence with the other side before issuing proceedings. This involves drafting an often lengthy letter of claim, the claimant needs to give the respondent time to respond to it, and the court actively wants lawyers to advise their clients to discuss settlement at an early stage.

Legally India: What kind of timeframes are we talking about in global disputes?

It is difficult to give specific timelines as it really depends on what action you need to take and the nature of the dispute. For example, if you need to get urgent injunctive relief, such as a freezing injunction, in the English courts you can do that in a few days, or even a few hours, if very urgent. However, if you did get an injunction, you need to issue proceedings in a fairly short timeline, so you need to understand what the basis of your action is and the claims you are making need to be supported.

Other factors that also determine the speed at which matters can proceed include deciding where proceedings are going to be issued. This can be problematic in situations where you haven’t got a clear contract – in a situation where parties are acting on the basis of the exchange of drafts – or the jurisdiction is not provided for in the contract. One party may challenge the jurisdiction chosen by another and this can lead to ‘satellite’ litigation determining this issue before the primary issues in dispute are even considered.

Another factor which may influence the time frame may be the dispute escalation process set out in the contract. If the contract provides for different dispute resolution mechanisms for different elements of the contract then resolution of the dispute can take some time as each stage is carried out and it may often not be possible to issue proceedings without going through those stages.

We would generally expect a dispute to go through the English courts in 12 to 18 months although this can be considerably longer if jurisdictional issues need to be resolved. You also need to bear in mind the time for enforcement of your judgment. If the other side does not pay then enforcement could take a few months to a few years depending on the jurisdiction.

Legally India: Which global arbitration venues are most attractive?

London remains a very popular seat for international arbitrations. The prominence of London was evidenced by a Queen Mary University of London survey from 2015, which listed London, Paris, Hong Kong, Singapore and Geneva as the top five seats of respondents’ choice, with London leading the way with 47% of preferences. Often when we are acting for international clients, the choice of venue is made on the basis of neutrality depending on the nationality of parties.

But increasingly for Asian parties, and also for Indian parties, Singapore is viewed as an important venue. For Middle-East disputes, Dubai is an increasingly important venue and there seems to be particular interest in disputes under DIFC- LCIA rules. These are supported by the DIFC courts which are populated by experienced judges and lawyers with backgrounds in common law systems such as England, Singapore and Australia.

In terms of a quick settlement of disputes, parties and their legal advisers are starting to use rules that allow for expedited dispute resolution: a number of the arbitral institutions rules now do that. The International Chamber of Commerce (ICC) has an expedited settlement procedure, and the Singapore International Arbitration Centre (SIAC) has also introduced one, as has the Stockholm Chamber of Commerce (SCC) in Sweden, and the Hong Kong International Arbitration Centre (HKIAC) is considering this as well. Those solutions will be popular where you have a smaller dispute below a certain monetary threshold.

Legally India: What are the biggest changes you predict in disputes going forward?

The big change at EU and UK level is the introduction of online dispute resolution, mainly for consumer disputes. In the UK there has been a move driven by Lord Justice Briggs towards online dispute resolution with the development of tools to deal with smaller scale commercial disputes. And the EU has developed the Online Dispute Resolution (ODR) platform, which puts consumers and traders in touch with a view to resolving disputes by ADR.

One of the things that will need some focus in the future is how these technological platforms can be developed for more complex international disputes. It is a big challenge to get these to work for bigger disputes, especially from a common law perspective where proceedings are dependent on witness and expert evidence delivered in court, but there may be some scope for case management aspects to be dealt with in a more mechanised way, for example by using artificial intelligence (AI).

AI will also be much more important in terms of document production and disclosure, and in the coming years those processes will become more efficient, cheaper and accepted readily by the courts.

The English courts have already made some strides towards this. In 2016 the English court accepted the use of predictive coding and sophisticated software document review by keywords in litigation disclosure. This followed a trend started in the US courts.

What is interesting too is how global commercial disputes can be managed in the future. Last year, Lord Chief Justice Thomas spoke in Beijing about the idea of introducing an international dispute procedure, and he envisaged commercial courts in different jurisdictions working together under a single procedural code that could operate on a transnational basis.

The UK has been an active proponent of closer co-operation between countries’ commercial courts and in April 2017 hosted the inaugural Standing International Forum of Commercial Courts, with judges of various commercial courts from different countries discussing how judgments of commercial courts could most effectively be enforced abroad, and best practices for the running of hearings in the commercial law context. It also considered how best to interact with arbitral bodies in situations where parties cannot agree on which dispute resolution mechanism to use.

For such initiatives to succeed, in a lot of cases there will need to be political consensus: some governments may not necessarily be overly keen to have a system driven by a Common Law or a Western or English perspective. But equally, from the perspective of trade, some countries may see it as more attractive for internal and external investment to have a system aligned with that of their overseas markets.

Legally India: What inroads has litigation funding made?

Litigation funding – where a third party funder agrees to cover the costs of litigation in return for a cut of potential damages – is now increasingly commonplace in UK court proceedings and arbitrations. In particular it has improved the ability of individual claimants or a number of them to bring group litigation claims.

There’s also been an interesting development – especially from an arbitration perspective – in the English Commercial Court case of Essar Oilfields vs Norscot Rig Management, where the arbitrator awarded costs, including litigation funding costs to the successful party. The Commercial Court turned down Essar’s appeal against the costs awarded in the arbitration, deciding that the litigation funding costs could be recovered.

So, in arbitration, even if you’re paying your damages away to third party funders, in principle you may get that back from the other side, though this may be challenged in future.

Litigation funding is also catching on internationally and in particular in two important jurisdictions: Singapore, since the middle of last year, and Hong Kong have passed laws permitting third party funding of arbitrations which in turn is incentivising parties to choose these forums for their arbitrations.