In this article, Deborah Ruff, Julia Kalinina Belcher and Charles H Golsong, of , consider the issues and how advisors should prepare for and manage disputes involving HNWIs and PEPs. The editors are grateful for these views and invite readers to respond. Email tom.burroughes@wealthbriefing.com and jackie.bennion@clearviewpublishing.com

Context is vital
The English courts’ standing as a safe and neutral forum for the resolution of disputes remains unabated. In particular, the predictability afforded by the stability of its legal system and the absence of juries, coupled with the significant range of powerful interlocutory weapons available to litigants, continue to prove useful for HNWIs and PEPs involved in disputes.  

A recent article in The Times indicated that a record number of claims involving Kazakh and Russian litigants were filed in the English Commercial Court in 2018, with those countries occupying the third and fourth spots respectively behind the UK and US for nationality of parties and many HNWI cases.(1) 

Citing research, the article stated that most litigation between CIS (Commonwealth of Independent States) parties now involves individuals, rather than companies or governments, who are often facing worldwide freezing orders and involving complicated jurisdictional issues. 

The growing number of individuals involved in litigation increases the personal stakes for them. As such, wealth managers and advisers should not shy away from discussing potential disputes with their clients. However, they should be mindful of the potential reputational issues that could stem from, for example, their being called to give evidence. Below are some of the points which you and your clients should be aware of. 

Casting the first stone
Starting court proceedings should be seen as a final resort and considered only if negotiations are at an impasse, the business relationship in question is beyond repair, or urgent relief is required that only a court can give. Before filing proceedings, consider the value of the relationship and act accordingly to de-escalate (negotiations, mediation).

Threatening litigation or arbitration is risky, as a bluff may well be called. On the other hand, recipients of a letter before action should take urgent action to instruct lawyers. Ignoring a dispute seldom makes it go away, and both arbitration tribunals and courts will proceed to a decision even if the respondent does not participate.

Along with the steps outlined below, clients should: 
-- Ensure they obtain the defendant’s place of residence and all potential addresses in all jurisdictions, and factor in time for serving the defendant out of the jurisdiction, which can be considerable; 
-- When negotiating contracts, consider whether arbitration or court proceedings would be more advantageous. For example, arbitration removes service issues and has the added benefit of confidentiality, while court proceedings could be useful for obtaining disclosure from the defendant including, potentially, pre-action disclosure; 
-- Consider enforcement before, rather than after, the commencement of proceedings, and review all the tools available to ensure that the defendant’s assets will be available to satisfy a court order and possibly lead to early resolution of the underlying dispute, saving both time and costs. Such applications can be brought in support of arbitration proceedings and can, subject to certain conditions, be sought in support of overseas proceedings; and 
-- If a favourable judgment/award has already been obtained but there has been no recovery of damages/costs awarded, consider whether there are grounds for an application to bankrupt (if an individual) or wind up (if a company) the judgment debtor - these may well encourage the counterpart to the negotiating table. On the other hand, if there are many creditors, clients will factor in competition. As a respondent to a claim, clients should think about preparing evidence that there is a dispute rather than a debt payable, in case the client’s opponent tries this tactic.

Preparing for all eventualities
As with many aspects of life, preparation is key. It is critical to have procedures already in place should the time come to bring or defend a claim. The below should, if followed, stand your clients in good stead.

How are your clients’ documents managed? 
Always anticipate a dispute, and act accordingly: 
-- Ensure relevant communications/documents are preserved and easily accessible; 
-- Ensure that relevant employees have an ongoing obligation to assist with evidence after they leave; 
-- Think before firing employees with knowledge of the dispute – they may switch sides; and
-- Keep records of oral communications. 

Once a dispute looms, clients should ensure that all relevant documents are preserved, including meeting notes, notes of telephone calls, etc. If they are unsure, they should be advised to consult their in-house and/or external counsel. 

Handle with care
Clients should review their position properly before responding substantively to their opponent(s), and always think how communications will be perceived by a judge or arbitrator: do not permit parties to fire off emotional messages on email or WhatsApp etc – these will do damage in court. 

-- If applicable, consider limiting those who are authorised to communicate with opponent(s) to a small number of people, to ensure consistency; 
-- Consider which communications/settlement offers should be made on a “without prejudice” basis, and which should be “open”, and 
-- Remember that, under English law, an innocent party cannot recover for losses it could have avoided – consider taking steps to limit losses. 

Where do your clients stand?
If a dispute seems imminent, before filing a claim it’s important that your clients ask themselves: 
-- Have they satisfied contractual pre-dispute requirements?
-- Are there assets to satisfy a future judgment/award? If so, where are they located? If there is a risk of dissipation before the judgment or award, what can they do about it?
-- Do they need other urgent interim relief? If so, where can they get it and what do they need to show? 
-- If pursuing arbitration, consider the possible early relief available from the courts of the seat of the arbitration before the tribunal is formed, and what the relevant test is; and
-- If seeking an injunction, are they prepared to pay the price (undertaking in damages, bank guarantee, etc.)?

As Dwight Eisenhower once said, “in preparing for battle I have always found that plans are useless, but planning is indispensable”. Following the above guidelines should, at the very least, ensure that your clients are as ready as can be. 

About the authors
Deborah Ruff leads Pillsbury’s Arbitration – US & international practice, Julia Kalinina Belcher is a counsel in the practice and Charles H. Golsong a Senior Associate.

1, https://www.thetimes.co.uk/article/5f6fce00-71a6-11e9-a116-49ac88679a93