As presented by Yisrael Hiller, Partner and Head of US Disputes at Asserson, at the “Managing Cross-Border Disputes” Conference, held at the offices of Meitar Liquornik Geva Leshem Tal in Tel Aviv
Parties frequently choose to centre disputes and arbitrations in London or New York. The substantive and procedural rules in the English and New York courts are similar and both jurisdictions are known as safe, neutral forums with high quality judges. When drafting or agreeing to a dispute resolution and jurisdiction clause, several key considerations should be addressed in order to avoid any difficulties in the event of a dispute.
First, the clause should provide for exclusive jurisdiction in the chosen forum, as well as the applicable governing law.
Second, the clause should provide that the parties consent to service within jurisdiction.
For parties who want their dispute to be dealt with in the US, it is important to ensure that their case will be heard in federal rather than state court.
Before opting for either London or New York as the jurisdiction for their dispute, parties should consider the following important differences between those locations.
- Different costs recovery rules.
Under English law, the successful party typically recovers their reasonable costs from the unsuccessful party. In the US this is extremely uncommon. Generally, no costs are recovered. The difference in how each jurisdiction deals with costs affects how a case is run from inception to trial. It is crucial that parties consider the costs position before selecting a preferred jurisdiction.
- Different rules for disclosure / discovery.
In England, discovery is self-regulated and less contentious. There are no depositions and there is less court involvement than in the US. In New York, on the other hand, the process is more intensive and expensive. There are depositions, more mechanisms for discovery, more frequent and standardised discovery disputes and the process is more expensive and invasive.
- In London, parties are obliged to follow the pre-action protocol. This is not mandatory in New York.
- Limitation periods are uniform in London but may differ in the US depending on applicable state law.
- Logistics and travel time / expenses may be relevant. For example, if the parties are located in Europe, London may be a preferable jurisdiction.
- In cases involving fraud or asset tracing, parties may prefer London which permits use of constructive trust and tracing claims as well as court-issued world-wide freezing orders (WFO). New York and US courts do not employ these tools as broadly as London.
For various reasons parties may prefer to resolve disputes through arbitration, rather than through litigation.
The laws of both London and New York offer court support for arbitration and both jurisdictions favour the enforcement of arbitral awards.
The power of the arbitrator(s) to award costs depends on the rules of the arbitral body. The London Court of International Arbitration (LCIA) rules expressly provide for costs recovery in the event of success, whilst the rules of the International Chamber of Commerce (ICC) and US-based arbitral bodies leave this to the discretion of the arbitrator(s). In the absence of a specific rule, arbitrators will usually follow the applicable substantive law. If parties wish to ensure cost recovery upon success they are advised to include a clause in their arbitration agreement which expressly empowers the arbitrator(s) to award costs to the successful party.
While both London and New York are excellent locations for dispute resolution and arbitration, parties to an agreement should consider which is the most appropriate jurisdiction considering their particular circumstances.
Article written by: Yisrael Hiller, Chavah Apfelbaum and Lyora Seiffe