ANNUAL REVIEW

Litigation & Alternative Dispute Resolution 2015

November 2015  |  LITIGATION & DISPUTE RESOLUTION

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An ever increasing multiplication of cross-border disputes continues to take place. As a result, the regulation of well suited litigation and alternative dispute resolution instruments for international issues represents a major need and concern. This trend is very much confirmed by the two main debates which have polarised the international scene over the last year. Firstly, in May 2015, more than 70 international players, including states and institutions, adopted or signed the International Energy Charter. Twenty-five years after its introduction, the energy governance framework, regulated by the Energy Charter Treaty, has been modernised into a new legally binding instrument. Secondly, the US and the EU have been busy discussing the Transatlantic Trade Investment Partnership. This draft agreement seeks to regulate a number of issues affecting investment between the US and EU economies, including market access, regulatory cooperation, rules and a dispute resolution system.

 

UNITED STATES

David N. Cinotti

Venable LLP

“Commercial disputes in the United States often follow major economic developments. For many years, the US recession gave rise to disputes such as those regarding residential mortgage-backed securities. Now that some segments of the economy have improved, M&A and antitrust litigation appear to be increasing. On the other hand, energy disputes may rise given the low price of oil and other issues in the energy industry. Consumer class actions following product recalls and revelations of data breaches are also major areas of litigation. Privacy and data security will likely continue to be at the centre of many disputes in the future. In general, though, commercial entities appear to be taking steps to reduce the cost of dispute resolution, through settlement and other means.”

 

MEXICO

Marco Tulio Venegas

Von Wobeser & Sierra

“The most recurring themes are commercial disputes arising from distribution, loans and bankruptcy proceedings. As for the particular industries or sectors involved in litigation, we have seen an increase in the construction and energy sectors. The reason behind this is that there has been a drastic reduction in governmental expenditure in these sectors, which has led companies to try to save money through several strategies, some of which have resulted in litigation. In addition, the reduction of the oil price has drastically affected the liquidity of companies involved in these sectors, prompting the increase in disputes.”

 

ARGENTINA

Ricardo A. Ostrower

Marval O’Farrell & Mairal

“In recent years, we have seen an increase in complex commercial disputes in our region related to regulations and state intervention in the oil and gas industry. Since energy-related disputes demand a speedy and sophisticated process, arbitration is undeniably the preferred dispute resolution mechanism for these issues. Businesses seek to ensure the effectiveness, flexibility and confidentiality of the procedure, while keeping open the prospect of preserving existing business relationships. In the litigation arena, consumer claims are a recurring theme in recent years, including collective or class actions and related punitive damages. This development comes in the wake of some high-profile consumer cases in our jurisdiction. Since Argentina lacks exhaustive federal legislation specifically on collective or class actions, case law has played a key role in determining crucial aspects of this type of litigation.”

 

CAYMAN & BRITISH VIRGIN ISLANDS

Kirsten Houghton

Campbells

“In the Cayman Islands and the British Virgin Islands commercial litigation, in the main, tends to focus on formal insolvency proceedings in financial services matters, principally in hedge funds and banking. Both jurisdictions also host a large number of holding corporations for trading entities in developing economies, in particular in Central and Latin America, the Middle and Far East and Russia. Those structures have recently begun to generate contentious business. Recently in Cayman, we have seen an increase in the use of insolvency procedures, particularly the appointment of provisional liquidators, to facilitate the multijurisdictional restructuring of a number of holding company structures, in particular as a result of events in China, with some success.”

 

UNITED KINGDOM

Rajinder Bassi

Kirkland & Ellis

“Disputes can arise in all industries and at any time. That said, we are still seeing disputes concerning the after-effects of the financial crisis. Transactions done in haste under distressed circumstances, where certain eventualities were not considered, have often led to disputes down the line. The increased regulatory focus on the financial sector has led to a number of investigations and related litigation involving financial institutions. The size and complexity of these issues means we are likely to continue to see such claims for some years to come. We also continue to see more antitrust cases. These claims may increase further now the Consumer Rights Act 2015 has paved the way for standalone antitrust class actions in the UK.”

 

FRANCE

Elie Kleiman

Freshfields Bruckhaus Deringer LLP

 “Themes involving corporate fraud, breach of directors’ duties, misrepresentation to investors and other stakeholders continue to be recurring in a variety of sectors, ranging from financial institutions to consumer products. Basic commercial disputes arising from more common circumstances, such as breach of contract, also tend to multiply, as do disputes arising out of contract termination.”

 

BELGIUM

Sébastien Ryelandt

Clifford Chance

“In the aftermath of the financial crisis, disputes in the financial sector probably still take the lion’s share of high profile and complex commercial disputes. Insolvency proceedings also remain at high levels. On a similar note, many minor commercial disputes are the consequence of the precarious financial situation of the debtor, unable to settle their invoices or to perform their contractual obligations on time. Persistent low interest rates have also led to an inflation of disputes relating to interest rate swap agreements concluded at the time the market expected a future rise of interest rates.”

 

LUXEMBOURG

Fabio Trevisan

Bonn Steichen & Partners

“In Luxembourg there are no court costs and no punitive damages. Consequently, a trial court seems much more attractive than arbitration proceedings, which require the payment of arbitrator fees. However, though a court trial is not very costly, it is a lengthy process. One may be tempted to disregard an arbitration clause but the state courts, upon request of the defendant, will declare themselves incompetent to rule on these proceedings. In Luxembourg we are also used to dealing with cross-border disputes with a seat either in Luxembourg or in a foreign jurisdiction, as well as dealing with disputes governed by foreign or international law. Therefore, there are no particular industries or sectors which play host to a significant number of disputes.”

 

SWITZERLAND

Dr Urs Feller

Prager Dreifuss AG

“As in past years, we are still seeing bankruptcy related litigation. Since Switzerland is home to many international holding companies and large conglomerates, insolvencies in other countries frequently lead to litigation in Switzerland. The area of international bankruptcies is still unchartered legal territory in several aspects and can quickly lead to contentious issues regarding jurisdictional authority. The banking industry has also seen a significant number of disputes, particularly regarding efforts by Swiss banks to regularise their past dealings with US clients. The cooperation with the US Department of Justice has led to a multitude of cases where bank employees and third parties are engaging in litigation to avoid their personal data being transferred to the United States.”

 

GERMANY

Jan K. Schäfer

King & Spalding LLP

“Disputes arising out of mergers and acquisition are quite common in Germany, and many of them are resolved through arbitration. Otherwise, construction projects tend to have a high risk of becoming litigious. In the last few years, a large number of gas price adjustment cases were brought before arbitrators or judges, but the number of such cases seems recently to be dropping again. In the investment funds sector, there are still a number of cases being filed resulting from the closure of open-ended real estate funds and their liquidation, raising various novel issues. The recent scandal involving a German car manufacturer will likely trigger a large number of shareholder claims given the dramatic drop in share prices.”

 

SPAIN

Víctor Manuel Sánchez

Cuatrecasas, Gonçalves Pereira

“In recent years, banking-related disputes have been a booming trend both at the courts and in commercial arbitration. They present a vast range of profiles, yet in arbitration cases they are usually related to complex financial products subscribed by medium to large corporations affected by the economic crisis. An emerging trend now beginning to appear in the courts is litigation for damages caused by cartels. Post M&A arbitrations, and arbitrations related to engineering and construction projects, are still a big portion of total cases, and real estate disputes are expected to appear soon given the current activity of real estate transactions..”

 

SWEDEN

Krister Azelius

Vinge

“The number of commercial disputes is increasing following what I would say is an international trend. Swedish companies nowadays consider disputes as a normal part of business and have developed a more modern view on this by trying to deal with the dispute separately from the normal business relationship with the counterparty. This trend is general for more or less all industries and sectors. However, we can see an increased number of disputes against auditors, board members, lawyers and other consultants, where the claimant alleges that the consultant has been reckless in giving advice. Over the last few years there have been a couple of widely published cases against auditors.”

 

ITALY

Alfredo Craca

Craca Di Carlo Guffanti Pisapia Tatozzi

“As to commercial and corporate arbitrations, recurring themes are represented by corporate liability claims against directors, challenges to shareholders meetings resolutions and litigation regarding shareholders agreements. In Italy, arbitration proceedings are common in relation to all commercial agreements, including, for example, financing and leasing agreements, where medium to large size companies are involved. We are also experiencing an increasing number of arbitrations in the gas & energy sector.”

 

CROATIA

Ivana Manovelo

Macesic & Partners Law Offices LLC

“In Croatia, in the last few years, construction seems to be playing host to a significant number of disputes. This is a result of developments in the Croatian economy in the last 15 years. Namely, Croatia witnessed a real estate and construction boom in the first decade of the 21st century. The financial crisis and recession that begun in 2009 hit the construction sector, which resulted in unfinished projects, unpaid loans, unsettled relations between investors, buyers and banks which finally led to a number of commercial disputes. Construction disputes are settled not only through litigation but arbitration as well.”

 

TURKEY

Orçun Çetinkaya

Moroglu Arseven

“The Turkish economy has fallen on hard times due to political uncertainty, with the US dollar and euro increasing against the Turkish lira, as well as wider regional unrest among the country’s neighbours. As a result, Turkish corporations have faced payment difficulties and are sometimes forced to downsize. Accordingly, the main recurring themes for commercial disputes in Turkey are dissipation of assets, suspension of bankruptcy and re-employment lawsuits. Enforcement of injunctions is also becoming more difficult. The textile industry is one of the leading sectors in this respect, with a significant number of commercial disputes.”

 

HONG KONG

Nick Gall

GALL

“Commercial disputes in Hong Kong usually involve shareholders’, directors’ and joint venture disputes, both international and domestic. These matters tend to proceed to litigation quickly, often to restrain persons from dealing with assets under dispute. A common recurring theme in Hong Kong is the use of interlocutory injunctions to prevent the dissipation of assets pending the determination of litigation or arbitration. We are also continuously seeing an upswing in disputes between PRC-based entities, largely involving oil, gas and energy infrastructure..”

 

UNITED ARAB EMIRATES

Michael Kerr

Dentons

“In the international business arena in the UAE, arbitration continues to be much preferred over litigation in the local courts, particularly in the construction and projects sectors. Factors weighing against the courts in onshore UAE are unpredictability and the protracted and often uncontrollable process. In addition, Arabic is the only language admitted in onshore UAE Court litigation. As most business is conducted in English, all documentation has to be translated, adding significant cost. However, Dubai’s financial free zone, the Dubai International Financial Centre (DIFC), has its own Court, modelled on the High Court in London, where proceedings are conducted in English. The DIFC Court has provided international businesses with a real alternative to arbitration.”


CONTRIBUTORS

Bonn Steichen & Partners

Campbells

Clifford Chance

Craca Di Carlo Guffanti Pisapia Tatozzi

Cuatrecasas, Gonçalves Pereira

Dentons

Freshfields Bruckhaus Deringer LLP

GALL

King & Spalding LLP

Kirkland & Ellis

Macesic & Partners Law Offices LLC

Marval O’Farrell & Mairal

Moroglu Arseven

Prager Dreifuss AG

Venable LLP

Vinge

Von Wobeser & Sierra


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