As we noted in the Preface to last year’s edition of the Banking Litigation Law Review, banks will always be regular litigants – generally as defendants – and this year’s contribution of jurisdiction-specific chapters explains how and why.
The themes that emerge from the chapters that follow show that, almost uniformly, the number of cases that might be said to have their origin in the 2008 global financial crisis is reducing. That is partly because of the passage of time – even long-running litigation has to end at some point. It is also because the financial services industry and legal profession have benefited from the guidance given in decided cases. The principles so set reduce uncertainty in providing precedent and less formal indications of how claims will be received. Settlement is promoted – generally for the benefit of all parties and the courts.
There are also some interesting comments on what is being done in particular jurisdictions to provide for alternative means of resolving disputes – to keep them away from the civil courts altogether – or to encourage settlement with the usual savings of costs and court resources. Various countries are thinking about ways in which litigation can be made easier and more efficient – an aim not limited to banking litigation. One topic that is noted in several contributions is the approach of the courts and legislature to class actions. These cover a spectrum from well-established and often-used procedures (eg, the United States) to jurisdictions that have considered class actions and decided against their use (eg, Austria).
Also of interest on a comparative basis is the extent to which different jurisdictions balance contractual freedom and certainty against consumer protection. This is done in various ways through statutory control of contractual clauses (for example, as to interest rates or obligations that are considered unfair) and, importantly, exclusion clauses. Again, the regulatory overlay here is important. Some of the complaints that might otherwise have found their way to the courts are resolved – often more quickly, more cheaply and more effectively – through regulatory enforcement processes. They are strictly outside the scope of this edition, though the regulatory impact on the volume and kind of banking litigation with which the courts are faced cannot be ignored.
A further spectrum of approaches is clear in relation to the difficult issues of confidentiality and privilege. The application of the principles is often fact-sensitive. It has – perhaps as a result – generated significant litigation in more than one jurisdiction. Parties are likely, in the future, to have to weigh up the substantive benefit they hope to secure from the maintenance of privilege and to focus more strategically on how to protect privileged information where it matters most and yield to pragmatism in other respects. This is particularly acute at the interface between litigation and regulation.
If litigation is born in part of uncertainty, a common reflection in what follows is that economic and political change are likely to fuel claims in the future. The reasons for this are various and complex. But any situation in which there is unpredictability means there are likely to be disappointed investors – the quintessential claimant in banking litigation claims. That is the recognised backdrop to much recent litigation. The changing political climate also dictates the regulatory agenda. For many jurisdictions, financial services regulation – which has a major impact on banking litigation – has become bigger and more complex year on year. In the United States, that position is now slowing or even reversing in some respects under the Trump administration, though how this will translate into banking litigation is not yet clear. Last year’s edition noted that there will be changes to UK law as a result of its decision to leave the EU – and doubtless knock-on effects on litigation in the remaining EU states. It commented – in a way that now looks to have been over-optimistic – that this year’s edition could address the issues. However, the clarity that the industry and profession seeks in this regard has not yet been achieved. By next year, it is hoped that substantive comment on what this is likely to mean for banking litigation will be possible.