The concept of commercial courts has taken an international foothold in recent years with more and more jurisdictions choosing to dedicate an arm of their judicial resources specifically to solving domestic and international commercial disputes.
In the US alone, functioning business courts now reside in Alabama, Colorado, Delaware, Florida, Georgia, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, and West Virginia.
And outside the US similar growth is occurring, one of the most recent in Asia being the Singapore International Commercial Court (SICC), which officially launched on 5 January 2015 with the goal of being the regional centre for resolving international commercial disputes, in particular, international banking and financial disputes.
In the US, The New York Supreme Court’s Commercial Division has proven to be successful and a favoured choice by many international and M&A litigants. A number of specialized business courts around the globe were modelled on the Commercial Division’s rules, procedures and jurisdiction, and legal counsel and business leaders in Asian jurisdictions interested in improving business litigation processes in their own court systems have found it helpful to refer to the growth and success of this court.
A measure of this interest is evidenced by the large number of countries that have sent delegations to New York City to meet with the Commercial Division Justices and learn about court innovations that might be implemented in their own countries. Forty-six jurisdictions in all have sent delegations, including from Asia: Australia, Bangladesh, Bhutan, China, Japan, New Zealand, South Korea, Taiwan and Thailand.
“When negotiating agreements (in particular, contractual choice of forum clauses) with commercial interests from other areas of the world, such as South America or Europe, Asian legal counsel and businesses will benefit from understanding the advantages offered by litigating their disputes in the Commercial Division as a neutral judicial forum capable of resolving international business disputes in a fair, cost-effective and timely manner,” says Robert L. Haig, the chair of the New York Supreme Court Chief Judge’s Commercial Division Advisory Council.
To that end, Janet DiFiore, Chief Judge of the State of New York and Chief Judge of the Court of Appeals, the state’s highest court, explains how the Commercial Division of the New York Supreme Court was formed, how it works, why it is successful, and why Asia Business Law Journal readers should pay particular interest to areas such as international arbitration.
By Janet DiFiore
In today’s global economy, litigation is a major cost of doing business. From a business perspective, it is important to know which foreign courts are capable of handling commercial disputes in a fair, cost-effective and expeditious manner. The Commercial Division of the New York State Supreme Court has earned respect worldwide for resolving complex commercial disputes with expertise, efficiency and predictability.
A brief history
In 1993, the Civil Branch of the Supreme Court (our state trial court of general jurisdiction) in New York county (Manhattan) established four new court parts dedicated exclusively to handling commercial litigation. The experiment proved so successful that the Commercial and Federal Litigation Section of the New York State Bar Association recommended that it be continued on a permanent basis.
On 6 November 1995, the Commercial Division officially opened its doors in Manhattan and Rochester. The division has expanded frequently to meet growing demand, and there are now 29 Commercial Division Justices presiding in 10 different jurisdictions: Albany, Kings (Brooklyn), Nassau, New York (Manhattan), Onondaga (Syracuse), Queens, Suffolk and Westchester counties, as well as the entire Seventh (Rochester) and Eighth (Buffalo) judicial districts.
The Commercial Division’s steady growth reflects the strong confidence of the commercial bar and the business community in our state courts. The Business Council of New York State described the Commercial Division as “the envy of businesses in other states”, and the American Bar Association’s business law section hailed it as a model for specialized business courts everywhere.
Keys to success
Cases filed in the Commercial Division are heard by specially assigned judges who possess the experience and expertise to handle these complex cases capably and efficiently, and who are able to draw upon a highly developed comprehensive body of commercial law. Cases are assigned to the Commercial Division when a party files a request for judicial intervention and a special addendum certifying that the case meets the jurisdictional requirements set out in rules.
The Commercial Division’s rules prescribe which cases may be heard. In Manhattan, the minimum amount in dispute must be US$500,000. To be eligible for the Commercial Division, the principal claims in the dispute must involve or consist of: breach of contract or fiduciary duty; fraud; misrepresentation; business tort; statutory and/or common law claims arising out of business dealings; transactions governed by the Uniform Commercial Code; transactions involving commercial real property; shareholder derivative actions; commercial class actions; business transactions involving commercial banks and other financial institutions; internal affairs of business organizations; accounting and legal malpractice arising from commercial representations; commercial or environmental insurance coverage; or dissolution of business entities.
Many domestic and international businesses routinely select the Commercial Division as the venue of choice for their disputes. Why is the Commercial Division so highly regarded by commercial litigators around the world? There are a number of keys to its success:
- Judicial expertise. The assignment of highly qualified jurists who are also well versed in commercial law fosters expertise, consistency, and a high quality of decision making. The Justices are therefore able to draw on a highly developed body of commercial law.
- Proactive case management. Close judicial oversight and hands-on case management, with firm timetables for discovery, dispositive motions and trials, reduce the time and expense of motion practice and disclosure. Deadlines are enforced.
- Transparent uniform rules. Clearly defined, statewide uniform rules, which have been designed to be responsive to the needs of the business community, govern the Commercial Division’s jurisdiction and procedures, resulting in predictability of practice.
- Reliable decisional law. New York has a comprehensive body of commercial decisional law that enables parties to make important business and corporate governance decisions, and to predict the outcome of business disputes.
- Advanced technology. E-filing and case management software enable the court and parties to track the progress of cases. Courtrooms are computer integrated.
- Electronic discovery. The Commercial Division has rules and guidelines requiring the parties to focus on e-discovery issues early in the case in order to reduce litigation cost and delay.
- Alternative dispute resolution (ADR). Innovative and flexible use of ADR, involving experienced neutrals with commercial expertise, has promoted many pre-trial settlements.
Building on success
My predecessors as Chief Judge of New York State, Judith S. Kaye and Jonathan Lippman, showed great vision and commitment in supporting the creation and growth of the Commercial Division. A formal Advisory Council of leading judges and commercial lawyers, including many international practitioners, provides the Chief Judge with strategic ideas and practical guidance.
In recent years, the division has implemented a series of major reforms to speed the justice process, streamline pre-trial discovery, and limit litigation expense and delay. Some highlights include:
- The Preamble to the Rules of Practice for the Commercial Division now states that: “The Commercial Division is mindful of the need to conserve client resources, encourage proportionality in discovery, promote efficient resolution of matters, and increase respect for the integrity of the judicial process.”
- Presumptive limitations on depositions.
- Limitations on interrogatories and privilege logs.
- Consensual accelerated adjudication and summary jury trial (one-day) options that expedite finality and reduce litigation costs.
- Direct testimony of a party’s own witness in a non-jury trial or evidentiary hearing may be submitted in affidavit form instead of through oral testimony.
- Adoption of rules addressing: responses and objections to document requests; resolution of disclosure disputes; and settlement-related disclosure.
- Guidelines on e-discovery involving non-parties.
These reforms recognize that modern business litigation, whether domestic or international, is growing increasingly complex and expensive, often involving massive discovery and intense motion practice. As Chief Judge of New York State, I firmly believe that our courts have an obligation to adopt measures that minimize cost and delay. The Commercial Division reforms have been applauded for streamlining commercial litigation and for setting high standards of judicial efficiency and excellence in the resolution of complex business disputes.