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Sarah is PSL Counsel and Head of Litigation Know How and Training at Allen & Overy LLP. Sarah is also editor of Chapter 5 ‘Forum’, in Division F, International Banking Operations in the Butterworths Encyclopaedia of Banking Law.
Having qualified as a barrister Sarah joined the Litigation department at Allen & Overy LLP. Sarah has worked on a wide range of commercial matters, including banking disputes, complex cross border fraud actions, disputes arising out of the sale and purchase of companies, oil and gas disputes and shareholder disputes.
Sarah heads up the Litigation PSL team at Allen & Overy and in this role is responsible for training and Know How. Sarah has particular interest in conflict of laws and speaks regularly on topics such as governing law, jurisdiction, immunity and arbitration, and is Secretary to Allen & Overy’s Global Legal Opinions Committee. Sarah edits the Forum Chapter of Butterworths Encyclopaedia of Banking. Sarah is a member of the Law Society’s EU Committee and sits on the Lord Chancellor’s Advisory Committee on Private International Law.
I read History at University, and then did a law conversion course. As I recall, I was interested in getting a job with intellectual challenge. I do think though that life as a Historian must be wonderful.
Lady Justice Gloster. She is a highly regarded senior female judge with an impressive understanding of financial instruments and the financial markets.
Probably the increasingly global nature of disputes. At A&O almost all the matters we work on (whether in transactional departments or in the Litigation department) are international in the sense that one or more of the parties are not English and/or the subject matter of the deal or dispute is not related to England. Nevertheless, underlying transaction documents may well be governed by English law and have an English jurisdiction clause or a London arbitration clause included.
Related to this change, is another trend: the increasing use of arbitration clauses in finance documents. Over the last ten years we have seen a marked rise in the number of finance parties that have included optional (one way) arbitration clauses or pure arbitration clauses in their contracts. The increased popularity of arbitration as a dispute resolution mechanism is largely a result of finance parties operating in global markets wishing to take advantage of the greater enforcement possibilities for arbitral awards under the New York Convention 1958.
Following the 2008 financial crisis there has been greater focus by finance parties (and their counterparts) on dispute resolution provisions in transaction documents. At the drafting stage, where (and how) parties’ disputes are to be determined has become much more of a contentious issue on many deals. In part this is due to parties now considering more thoroughly what happens when things go wrong.
My impression is that parties are more sophisticated about forum selection not only at the negotiation stage, but they also have more developed litigation strategies (often aimed at exploiting rules to secure an advantage). Connected to this, I’ve seen an increase in jurisdiction challenges in recent years.
Overall my sense is that there is a greater appreciation that jurisdiction can be crucial not only to the cost and time spent resolving a dispute, but also to its ultimate outcome. There is also more awareness that the enforceability of any resulting judgment/award is a significant factor.
Finance parties need to focus on disputes clauses at the drafting stage to achieve as much certainty as possible – to know where they might be sued and avoid being sued in an unpredictable court. A well drafted clause will help ensure finance parties have their disputes determined in a favourable forum – one with experience in handling complex financial disputes and that takes a commercial approach. It will also seek to protect them (as far as possible) from being sued in an unfavourable forum.
Finance parties should also be aware of the risks associated with complex jurisdiction/arbitration clauses in certain situations (see my response to the question rel: Mme X v Rothschild below).
In September 2012, the French Supreme Court refused to uphold a one-way jurisdiction clause agreed between a bank and its client holding that a unilateral clause of this nature was contrary to the rationale and purpose of Article 23 of the Brussels Regulation (Mme X v Rothschild Cour de cassation, Civil Division 1, 26 September 2012, 11-26022). Last year, the Commercial Court’s judgment in Mauritius Commercial Bank v Hestia Holdings and Sujana Universal  All ER (D) 311 (May) highlighted the controversial nature of the decision in Mme X v Rothschild and confirmed (albeit in Obiter comments) that one-sided jurisdiction clauses are valid in English law. In January 2013, the Loan Market Association published guidance on the implications of the Mme X v Rothschild case, explaining the nature of the court’s decision in the context of facility documentation.
In January 2014, the Luxembourg District Court expressly upheld the use of an asymmetric clause under Article 23 of the Brussels Regulation. The court dismissed an argument (relying on the French Rothschild decision) that a pledge that conferred jurisdiction on the courts of Luxembourg and gave the lenders the right to bring proceedings in ‘before any competent court’ was void. The Luxembourg court noted the criticism of the French decision, that the Brussels Convention (predating legislation) expressly permitted such clauses and that the contracting parties had equivalent bargaining power, concluding the court should give effect to the parties’ bargain.
Commercial parties can take some comfort from the Luxembourg decision. However, until the position under EU law is clarified by the ECJ, risks remain over the use of such clauses in an EU context, particularly where there is a French nexus.
In the same month as the Rothschild decision, September 2012, a decision of the Moscow Supreme Arbitrazh Court (the SAC), was published (Russian Telephone Group v Sony Ericsson Mobile Communications). The SAC had ruled earlier that year that a London arbitration clause with a “one-way” option to litigate ran counter to public policy considerations as the clause inhibited one party’s rights of access to court. The SAC allowed the claimant to continue with its proceedings in Russia, notwithstanding the fact that it did not have the benefit of the option to litigate and so, under the terms of the contract, was required to arbitrate any disputes in London.
This decision underlines the need for finance parties to consider carefully the use of optional arbitration clauses in deals with a Russian nexus (and where there are connections to other jurisdictions where such clauses may be problematic).
From a litigation perspective, I suspect the next change will be the update of opinion to reflect the new “recast” Brussels Regulation to be applied by Member State courts (including the English courts) from 10 January 2015.
Last year I set up a netball team for mothers at local schools in South West London. I play netball regularly with this team.
Interviewed by Kate Gaskell, Solicitor and Head of LexisPSL Banking & Finance.
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