The Financial List arrives
Coinciding with the new court term, we now have a dedicated court established exclusively to hear specialist financial markets disputes. We wrote about the proposals for this Financial List back in June and July. Now that it has opened, what can we expect?
New procedures and forms
The nuts and bolts of the Financial List have been passed into law by the latest Statutory Instrument, which amends the Civil Procedure Rules to introduce CPR Part 63A and Practice Direction 63AA. Alongside this, the courts are introducing lightly modified versions of key court forms, including the N1 Claim Form and N244 Application Form.
Revised definition of eligible claims
The definition of a “Financial List claim” has been tweaked since the initial consultation, but it remains broad in scope. It covers not just specific types of finance arrangement such as derivatives, complex financial products and financial benchmarks (subject to a £50m claim value threshold) but also any claim which “requires particular expertise in the financial markets” or “raises issues of general importance to the financial markets”. The courts have always taken a flexible approach to the criteria for specialist lists like the Commercial Court or Chancery Division. So it seems likely that within reason, if a claimant wants to be on the Financial List it will be.
Cases will be started directly in the Financial List, and can be issued in the Chancery or the Commercial Registries (whichever is appropriate) using the dedicated Financial List forms. Parties in pre-existing cases can apply to a Financial List judge to transfer onto the List, using the procedure set out in the Practice Direction. This is likely to be an attractive option particularly for cases currently subject to Chancery’s more idiosyncratic case management procedures. As explained in our June blog, Financial List cases will largely use the Commercial Court procedures and registry, which are particularly suited to the sort of heavy, complex litigation the List is expected to attract.
For a case on the Financial List, at the first CMC it will be allocated a docketed Financial List judge for the whole lifecycle of the case. We understand that there will now be twelve judges on the inaugural list, comprising six Chancery Division and six Commercial Court judges, chosen because of their experience in hearing finance cases. The large number of judges suggests the court is anticipating significant volumes of cases. The list of judges will be published on the Rolls Building website on 2 October.
The Financial List Guide gives scope for a claimant to draw to the court’s attention particular features of the case that should be considered when allocating the right judge to a case. So even within the List it seems efforts will be made to tailor judges to particular types of finance cases, which is a welcome refinement.
The test case scheme
The provisions for financial markets test cases are being enacted as a pilot scheme (known as the “Financial Markets Test Case Scheme”) via a new Practice Direction 51M. It will operate for an initial period of two years as part of the Financial List. Whether it is extended beyond that point will depend on how well it is taken up.
To qualify for the Scheme a claim must be started in the Financial List and must raise “issues of general importance to the financial markets in relation to which immediately relevant authoritative English law guidance is needed”.
To start a qualifying claim a party who is or was actively in business in the relevant market may by mutual agreement issue proceedings against another party in that market with opposing interests as to how the issue in question should be resolved. The parties will seek to agree the factual scenario for the court to consider.
The court will assess at the first CMC whether the claim is properly a qualifying claim and whether all the opposing interests are represented. Trade, professional or regulatory bodies or other third parties may be joined to the proceedings. In particularly important cases a trial can be heard before two Financial List judges, or a Financial List judge and a Lord Justice of Appeal. As a general rule there will be no costs orders on Scheme cases.
There will inevitably be a lag before there are any significant numbers of Financial List cases that have passed the pleading stages to the first CMC, when the effects of being on the List will really begin to be felt. Complex, high value cases of the sort the List is designed to attract invariably take several months to reach the CMC stage from first issue of the Claim Form. But we would expect to see some applications to transfer existing cases over from the Chancery Division in the meantime, made by parties alive to the benefits of the List.
As for the test case scheme, we are not aware of any test cases anticipated to commence in the coming weeks to resolve issues already latent within the financial markets. But given the unique benefits of the scheme trade bodies, regulators and the like are no doubt actively bearing in mind this new tool at their disposal.
The court service will be gathering and hopefully publishing statistics on new claims in due course to help form an early picture of take up for the List. Given the large numbers of financial markets claims litigated through the English courts in recent years, we expect that the List will quickly become a major feature of the litigation landscape.