View from City Road: Crying out for City Disputes Panel
Tuesday 19 April 1994
By its own admission, the City Disputes Panel is a body that would, in any case, be incapable of dealing with the really big cases - the Maxwells, Lloyd's and BCCIs of this world. If it can't deal with the biggies, what hope does it have of settling the wealth of the smaller ones it hopes to hear?
The profusion of City solicitors that have clambered aboard as founder members - Ashurst Morris Crisp, Herbert Smith, Norton Rose and Slaughter and May to name but four - would also suggest that the legal profession at least doesn't expect to lose any work as a result of the panel's formation. For the lawyers, one court of arbitration is presumably as good as any other when it comes to milking the client. If the point is not to cut the City's burgeoning legal bill, what on earth is it?
Yes, it's certainly easy to be cynical but for the time being the panel perhaps deserves to be given the benefit of the doubt. What is intended is a City version of the small claims court, although in most cases the sums involved are by no means small - a cheap, efficient and swift way of dealing with disputes. For this, there is a crying need. With the growth in size, sophistication and complexity of markets, the number of commercial disputes is massively on the increase.
These are often not headline grabbing cases; they are about fees, underwriting arrangements, valuations, and dealing transactions. And often the judicial system is insufficiently expert to arbitrate in a fair and measured way. A judge who has never heard of Gazza is presumably going to find it doubly difficult to comprehend auction rate preferred stocks, butterfly spreads and more complex inventions of the fast-growing derivative markets.
The CDP may in the end prove little more than a utopian dream, but it deserves to be given a chance (the shipping market already has a highly successful parallel), and most City firms should at least try it.
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