A tribunal devoted to settling the world's most complex and contentious financial cases opened for business today in The Hague.
Comprised of a group of judges and other international legal and market experts with more than 2,000 years of relevant collective experience, the P.R.I.M.E. Finance Disputes Centre will take on cases which are too specialised for many national or local courts.
It also aims to create an internationally-agreed body of law in areas where different countries often hand down conflicting rulings.
It was the brainchild of Professor Jeffrey Golden of LSE's Law Department and he is chairman of its management board.
The tribunal expects to handle multi-billion-dollar cases in fields such as derivatives and structured financial transactions. Its role is all the more urgent, argue its founders, because of the uncertainty created by world financial crisis.
P.R.I.M.E. Finance (the Panel of Recognised International Market Experts in Finance) is backed by the Dutch government and will hear cases at the Peace Palace in The Hague, where it will be formally opened by Jan Kees De Jager, Finance Minister of the Netherlands. Its advisory board is chaired by Lord Woolf, former Lord Chief Justice of England and Wales.
Professor Golden said: "This project emerged against a backdrop of financial market crisis and legal uncertainty. The amounts at stake are staggering, the legal and contractual issues are complicated and the volume of complex cases is increasing.
"To date, national courts and ad hoc arbitration have been unable to produce a settled and authoritative body of law. Decisions are unpredictable, too decentralised, often taken too slowly and not always enforceable in other jurisdictions. The global marketplace needs a more innovative method of settling disputes and we believe this tribunal is the answer."
The tribunal will operate on the basis of arbitration, with parties agreeing to be bound by its rulings, or by mediation. For each case, it will appoint specialist judges and advisors from its 80-strong bank of experts who combine specific legal knowledge and relevant market expertise.
P.R.I.M.E. Finance is also already offering training in complex financial issues to judges and it will build up a library and database of relevant precedents and documents to aid global understanding of the issues.
Initially set-up with seed money from the Dutch government, the foundation will fund itself in future by setting fees for its expert service. The level of fees and its operating rules will be agreed at its opening conference in The Hague today and tomorrow (January 16 and 17). The conference also includes a series of seminars on dispute resolution in financial markets which have been sponsored by 40 world-leading law firms and legal publishers.
The opening session is also marked by the publication of a paper by senior judge Sir David Baragwanath, now President of the UN Special Tribunal for Lebanon, in which he outlines what cases would be suitable for the court and how it should handle them.
He finds there is a pressing need for greater professionalism in handling complex financial transactions and suggests that P.R.I.M.E. Finance specialise in the broad areas of derivatives, securitised loans and collateralized transactions.
Sir David identifies "an immense black hole of legal uncertainty" around global financial transactions but suggests the P.R.I.M.E. Finance Disputes Centre is well-placed to bring clarity and authority to the field.
More details about the foundation, the conference programme and a list of its expert members.
16 January 2012