The court will hear cases involving investment funds, insurers and other financial services providers based in Cayman. This will include regulatory proceedings, insolvency cases and disputes on breach of contract, breach of trust and breach of fiduciary duty, including claims brought against service providers to investment funds.
While other jurisdictions, such as the British Virgin Islands and Bermuda, have dedicated courts to hear commercial cases, the Grand Court’s new financial services division is believed to be the first specialist court of its kind in the offshore world.
The new court, which was created to handle the ever increasing volume of financial services cases here, has been welcomed by members of the Cayman Islands financial services sector.
Former chairman of the Cayman Islands Monetary Authority, Tim Ridley, said, “This very welcome development is long overdue. It is essential that, in these challenging times, Cayman redouble its efforts to ensure we have the right platform in place for all facets of our financial services industry... and an efficient specialist court system is a critical part of the platform.”
Jeremy Walton, a partner at the Appleby law firm, told Hedge Funds Review magazine, “It is well timed, given the general increase in litigation we have seen this year, and expect to see over the next several years.”
The new financial services division will have its own dedicated infrastructure within the courts system. This will include state-of-the-art court rooms and dedicated staff such as registrars. Financial services proceedings will be heard by specialist judges who will sit solely in the division.
“Specialist and dedicated expertise is being brought to bear on cases involving financial companies,” said Mr Walton. “This will include active case management of complex disputes, resulting in speedier decisions, lower legal costs and greater legal certainty. The infrastructure is intended to be comparable to anything in the onshore world.”
No judges have yet been named to sit in the financial services division but, in the meantime, there are some concerns over the cost of initiating proceedings in the new division.
In order to bring a case before the new court, claimants will reportedly have to pay a fixed fee of up to CI$15,000. However, this fee will have to be paid up-front, whereas under the previous system it may never be collected if the case settles before trial.
The hefty fee payable for initiating proceedings in the financial services division will serve to discourage parties from initiating proceedings in the division that do not belong there, Mr Walton said. It also reflects the considerable cost of providing a dedicated and bespoke service for financial services cases.
“In most financial services cases the court fee would be only a fraction of the total legal costs. The concern is that smaller disputes involving financial services no longer have a ready home in the court system. It is expected that most of these claims will be settled before trial. However, if they are contested, these claims may be priced out of the court system,” said Mr Walton.