Banking litigation strategies after Woolf
| Pages | 211-218 |
| Published date | 01 March 1998 |
| Date | 01 March 1998 |
| DOI | https://doi.org/10.1108/eb024970 |
| Author | David Jones‐Parry,Simon James |
| Subject Matter | Accounting & finance |
Journal
of
Financial Regulation
and
Compliance
Volume
6
Number
3
Banking litigation strategies after Woolf
David Jones-Parry and Simon James
Received: 24th April, 1998
Clifford
Chance,
200
Aldersgate
Street,
London
EC1A 4JJ; tel: 0171 600 1000; fax: 0171 600
5555
David Jones-Parry is a partner at Clifford
Chance. He specialises in advising and
acting for financial institutions on litiga-
tion, enforcement and regulatory issues.
Simon James was a partner at Clifford
Chance specialising in financial disputes.
He is now responsible for knowhow, edu-
cation and technology in Clifford Chance's
Contentious Business Area and is a
member of the Commercial Court's
work-
ing party on the Woolf reforms.
ABSTRACT
This paper considers the issues facing banks
who
become engaged
in litigation and the strate-
gies and
procedures
available to obtain the most
effective solutions. How these will be affected
by the reforms in civil procedure proposed by
Lord Woolf
are
also
discussed.
INTRODUCTION
The business of banks involves taking risks.
Those risks include credit risk, market risk
and a variety of other economic risks. In
addition, when a bank enters into a trans-
action, it takes a legal risk, namely the risk
that the transaction will not achieve from
the legal perspective what it was intended
to achieve, or will only do so with undue
delay or at undue cost.1 This risk arises
whether the transaction in question is a
conventional loan or is the most innovative
derivatives product, and includes the risk
that enforcing a contract will require long
and expensive legal proceedings. This
paper is concerned with the strategies and
tools which can be employed in the Eng-
lish courts in order to try to avoid litiga-
tion becoming unnecessarily costly or
drawn out. In particular, this paper will
consider the possible impact on current
strategies of the major reforms in civil pro-
cedure due to be introduced in April 1999
in the light of Lord Woolf's report, 'Access
to Justice'.
THE PRINCIPAL MEANS OF OBTAINING
JUDGMENT
Banks can become involved in litigation in,
very broadly, two ways: first, as a plaintiff
seeking to recover a sum the bank claims is
owed to it; and, second, as a defendant,
either where the bank's counterparty has
launched a pre-emptive strike seeking to
avoid indebtedness to the bank or where
the counterparty seeks to pass losses to the
bank. In either case, the bank's aim will be
the same, namely to bring the litigation to
a swift, cheap and satisfactory conclusion.
The most satisfactory conclusion in litiga-
tion for any bank is to obtain a judgment
in its favour, or at least to use the litigation
processes to obtain a settlement which can
be considered as the equivalent.
The first and foremost way to obtain
judgment is through a full trial at which
all substantive factual and legal issues will
be determined — indeed, the prime pur-
pose of the system is to impose on the
parties procedural steps designed to lead to
a trial. The principal steps are: pleadings
to set out the parties' cases; discovery to
Journal of Financial Regulation
and Compliance, Vol. 6, No. 3,
1998,
pp. 211-218
© Henry Stewart Publications,
1358-1988
Page
211
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