Stephen Wilson, QC & Tony S. Gruchot of Graham Thompson take part in Negotiating Effective Contracts & Dealing with Disputes
QUESTION ONE – What is your best practice approach when advising General Counsel to ensure dispute resolution clauses are to their real advantage and do not obstruct enforcement proceedings?
Because of the antiquated state of the arbitration law in the Turks and Caicos Islands (‘TCI’) – the Arbitration Ordinance (Cap. 4.08) came into force 10 years before the UNCITRAL Model Law was adopted by the United Nations Commission on International Trade Law and is as sparse in its provisions as the Arbitration Act 1889 of England and Wales. The result is that the law in TCI remains much the same as it was in England and Wales before the Arbitration Act 1934 – we always advise that arbitration clauses are drafted in as much detail as possible and incorporate by reference institutional rules (such as the AAA), as well as providing for the selection of arbitrators through a recognised international arbitration organisation. Qualified, impartial arbitrators are not easy to find in TCI.
In addition, the TCI is not a contracting party to and has not ratified the New York Convention, meaning that any arbitration award made in a TCI arbitration is not automatically recognised and enforceable elsewhere. As such, we would generally recommend that any arbitration clause selects a jurisdiction other than the TCI and one which is a party to the New York Convention as the seat of the arbitration.
As for other forms of alternative dispute resolution, there is a genuine absence of qualified, impartial mediators in TCI. We would again suggest that any dispute resolution clause providing for mediation as a form of dispute resolution is drafted to select mediation in a jurisdiction that benefits our client and with which he/she is comfortable and familiar.
The TCI is not a party to any treaty dealing with the mutual recognition and enforcement of judgments, meaning that judgments and orders of the TCI courts are not automatically enforceable in other countries. An exclusive jurisdiction clause selecting the courts of the TCI can be advantageous to a client if it has assets elsewhere in the world and not in the TCI.
QUESTION TWO – Are there any particular rules around funding litigation in your jurisdiction that General Counsel should be aware of?
Contingency fee arrangements, that is to say, an agreement whereby the amount of the legal fees is contingent on the success of the claim and is dependent on the value of the damages recovered, are unlawful at common law. A contract which breaches the rule against champerty and maintenance is against public policy and is therefore unenforceable.
Conditional fee agreements have been commonplace in England and Wales since their statutory introduction in 1995. A conditional fee differs from a contingency fee in that the fee, whilst still only payable in the event of success, is calculated as a percentage uplift on the normal hourly charging rate i.e. it is independent of the number of damages recovered. There is no equivalent legislation in the Turks and Caicos Islands (‘TCI’) and conditional fee agreements are not present in the jurisdiction.
Damage-based agreements (‘DBAs’), a form of contingency fee arrangement, are now available in England and Wales for most contentious work (other than criminal or most family matters) under relevant legislation. Again there is no equivalent legislation in the TCI and DBAs are not present in the jurisdiction. In the absence of any specific legislation in the TCI to allow for any form of a contingency fee, any arrangement which amounts to be a contingency fee would offend the rule against champerty and maintenance and would be unenforceable.
There is also an absence of legal protection insurance and ‘after the event’ insurance and as a result, all litigation is funded on a private client basis.
QUESTION THREE – What techniques are typically used by international counterparties in your experience when attempting to gain the initiative during a dispute? How important are civil procedural rules?
Depending on the nature of the claim, an international counterparty may seek to either establish a jurisdictional basis for a claim in the TCI or seek to avoid the jurisdiction of the TCI courts at all costs. Finding or avoiding a jurisdictional hook is a technique that must be deployed early in the proceedings to be effective. Civil procedural rules play an important part.
As to establishing jurisdiction in the TCI, the TCI courts will follow the principles established at private international law. The Rules of the Supreme Court 2000 (which are based upon the Rules of the Supreme Court of England and Wales as they stood at 1 January 1999), provide that a defendant who wishes to dispute the jurisdiction of the court, must do so within the time limited for the service of a defence in those proceedings. A defendant must, therefore, act quickly and must not be seen to “take a step in the proceedings” to avoid coming within the court’s jurisdiction.
Jurisdictional challenges are often deployed by international counterparties as a means to delay or stymie unwanted litigation.
Advising an international client on whether to submit to the TCI jurisdiction or not, will very much depend on the nature of the claim. For large commercial matters, the TCI has a highly competent and independent judiciary with a very limited backlog, so matters can be determined quickly. For other matters, such as personal injury claims, we may well advise a plaintiff client that awards outside the TCI are likely to be more favourable.
An international counterparty with resources and a lot at stake may seek to have the litigation (although based in TCI) driven primarily by a large international firm. While this will no doubt afford the client (and the TCI attorneys) with extended resources in terms of manpower, it may have significant costs consequences for the client. Although the TCI courts follow the general principle that costs will follow the event, the Legal Profession Ordinance provides that costs are only recoverable in respect of work done by attorneys admitted to the role of attorneys in TCI.
TOP TIPS FOR: Successful negotiations
Do your homework and be prepared: Research the topic and gather as much pertinent information prior to the negotiation as possible. What are the counterparty’s needs? Where are their pressure points? What are their options? Doing your homework is vital to a successful negotiation.
Clearly define your goals: Prior to the negotiation, make sure you are clear on what you want as well as your ‘walk-away’ point. Aim high: A proven strategy for achieving higher results is opening with an extreme position. Those looking for payment should ask for more than they expect to receive; those having to pay should offer less than they are prepared to pay.
Don’t dangle a carrot you cannot give up; and don’t wield a stick you are not prepared to use: No matter how much you want to reach a deal or a particular outcome, don’t promise something you are unable to deliver. The use of ultimatums and threats (best made without getting emotional) are part of negotiation but never make a threat you are not prepared to follow through.
Listen, listen, and … listen: Spend more time listening than talking during the discussion. The other negotiator will tell you everything you need to know – all you have to do is listen.
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Contributing Advisors
