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Cayman Islands Government

CBA President's Address

Caymanian Bar Association President's Address for the opening of the Grand Court 7th January 2009

Introduction

My Lords, Honourable Chief Justice, Honourable Mr. Justice Henderson, Honourable Mr. Justice Quin and Magistrates of the Summary Court, I rise on behalf of the Caymanian Bar Association to second the motion of the Honourable Attorney General to open the Grand Court for the year 2009.

2008 was an eventful year. With your indulgence, I will now highlight some of the issues that the profession has had to face over the course of the last year and can expect to face this year. I will also describe some of the issues of concern to the Caymanian Bar Association.

Challenges to the Administration of Justice

2008 saw the unprecedented use of powers by His Excellency the Governor, including:

First - the appointment of a commission of inquiry into actions of a current Government Minister ultimately resulting in recommended changes to the rules regarding civil servants, confidentiality and government papers;

Secondly - the appointment of a commission of inquiry, which remains outstanding, into the conduct of one of our Grand Court Judges; and

Thirdly - the launch of a corruption investigation involving the Royal Cayman Islands Police Service by an independent team from the Metropolitan Police in London. The actions taken by this independent team included the arrest of one of our sitting Grand Court Judges and the search of his home and court chambers which were subsequently challenged by judicial review and found to have been improper, illegal and an abuse of process.

While the Association wholeheartedly supports all proper efforts to investigate possible corruption, the investigation by the independent team has raised real concerns in addition to those arising from the misconceived and improper arrest of a sitting Grand Court Judge. These concerns include:

  • a lack of clear oversight and direction;
  • a lack of transparency on the subject of the investigation;
  • a lack of proportionality regarding the action taken; and
  • the length and cost of the investigation.

The consequent damage to the perception and reputation of Cayman as an international jurisdiction is, as of now, uncertain. But, the fact that much of this damage will have been caused by the world wide publicity attending the improper arrest of the Judge, heightens those concerns.

We all patiently await the report by the investigation team and any remedial action that will be taken so we can put this behind us, move on and try to repair the damage that has been done to the administration of justice in these Islands.

Changes to the Court of Appeal

August 2008 saw the retirement of Justice Edward Zacca who has headed the Court of Appeal since its inception in 1984. We are all incredibly indebted to him for his exceptional service and contributions to jurisprudence in these Islands. In his retirement speech Justice Zacca did leave us with three helpful suggestions with which we agree:

First - to establish a committee of the Bench and Bar to discuss problems in the administration of justice;

Secondly - to implement a code of conduct for the Judiciary; and

Thirdly - to provide continued training of the Judiciary.

We welcome Justice Forte, Justice Mottley, Justice Vos, Justice Conteh and the new President, Sir John Chadwick. These gentlemen provide the Court of Appeal with impressive and extensive experience. That experience will serve these Islands well.

The Profession generally

The number of lawyers in these Islands has grown greatly. Many members of our Bar are not from Cayman and do not go to Court. This has affected the former closeness and collegiality that we all enjoyed when our Bar was much smaller, and the profession should seek to minimise that affect. I can certainly commit, for myself and my fellow council members, to work hard towards promoting:

  • professional excellence, integrity and courtesy;
  • collegiality among all practitioners; and
  • the proper administration of justice, including forging closer links between the Bench and Bar.

Promoting professional excellence, integrity and courtesy must start early. In this regard the Association:

First - will be accepting applications from Caymanian student members from this month. Each of those student members will, if they so choose, be assigned a more senior practising member of the Association as a mentor;

Secondly - is close to completing a model training programme for Articled Clerks. While larger firms already have comprehensive training programmes some of the smaller law firms should find this model helpful. We have committed to complete the programme by the end of the first quarter of this year; and

Thirdly - is working on professional seminars for students and practising lawyers alike. However, these efforts are currently stymied until a new Code of Conduct is in place.

Finally, the Association is also concerned at the low pass rate in the professional practice course with only a 50% pass rate this year. We think that this is directly related to the entry requirements for the course and will be making recommendations to the Legal Advisory Council shortly.

Constitutional Modernisation

Much has been said about the draft constitution received back from the UK. Having only recently obtained a copy the Association is committed to providing its comments in due course.

Legal Practitioners Bill and Code of Conduct

Both the Caymanian Bar Association and the Cayman Islands Law Society have been frustrated at the lack of progress of the new Legal Practitioners Bill and a modern Code of Conduct reflecting the sophistication of Cayman's legal profession. I notice that this has been mentioned at the opening of the Grand Court in each of the last four years but I know also this has been under consideration for considerably longer. Whilst progress was made in 2008, the Bill seems again to have stalled. I suspect this may be due to the pressure on the Attorney General's Chambers with other matters in 2008; but this is a fundamental issue for the profession and each day that it is not dealt with is a day of continued reputational risk for these Islands and loss of revenue for the Government. There is no reason why this cannot be dealt with and completed by the end of the first quarter of this year.

Current Challenges for the financial industry

Onshore Initiatives

In the wake of the global financial crisis "tax havens" and their bank secrecy laws and purported lack of transparency are again under attack. There are three main initiatives that we face:

  • the UK will be reviewing the financial systems of its territories in the first quarter of 2009;
  • the OECD will be publishing a "Greenlist" of compliant jurisdictions at the end of February of 2009; and
  • the "Stop Tax Haven Abuse Act" co-sponsored by President-Elect Obama is likely to find traction in the U.S.

We are hopelessly outmatched in terms of our bargaining position in these initiatives even though it is clear that the crisis was caused by onshore factors. However, at the centre of most of these attacks is the issue of exchange of information on tax matters. Cayman must be proactive on this issue in particular. If we are, a substantial part of the basis for the attacks, disappears. Particular areas for action include:

First - continuing negotiations for bi-lateral tax information exchange agreements with all jurisdictions with which Cayman has significant business relations. The recent changes to the Tax Information Exchange Law allowing unilateral action by Cayman in this regard is a step in the right direction and could be a very useful tool where our onshore counterparts are deliberately stalling;

Secondly - the Confidential Relationships (Preservation) Law should be repealed and replaced with legislation consistent with the previous common law and data protection regulations more akin to the data protection legislation in the U.S. and UK; and

Thirdly - the recent U.S. Government Accountability Office's report is helpful and recognises the Cayman Islands as a co-operative offshore jurisdiction that is willing to adopt international standards on cross-border exchange of information and is not a "secrecy jurisdiction" which assists U.S. citizens in evading taxes. Cayman needs to build on this recognition and to differentiate itself from other offshore financial centres that might be characterised in this way.

Competition

  • Over the past 3 years, Cayman's competitor offshore financial centres have been very active. They have significantly overhauled their laws to make their entities more user friendly and lightened their regulatory framework to attract more business. Their primary target has been and remains Cayman and they are making ground. Our main competitors have ensured that there are commercial courts in place with internationally recognised judges with expertise in the particular types of financial products established in offshore financial centres. In addition the regulatory authorities in these same offshore financial centres have been very active in directly engaging the regulators in China, India and other developing users of offshore financial centres to gain recognition so that they are well placed to secure business originating from those increasingly important jurisdictions.
  • The log jam on commercial and financial services legislation in Cayman must end:

First - we need to clear the backlog. There are draft Bills submitted by the private sector sitting on the shelf waiting to be progressed. There has been some progress lately but it is not sufficient; and

Secondly - the Attorney General and the Government need to agree a fast track approach for critical bills and suggestions received from the private sector. Both the Caymanian Bar Association and the Cayman Islands Law Society support this initiative and stand ready to support the Attorney General and the Government in this regard.

  • Cayman needs to continue to try to ensure that the Monetary Authority's regulatory oversight is sufficient to satisfy international standards but light enough to continue to attract business.
  • The Government and the Monetary Authority should mount a sustained campaign with onshore regulators at least to open communication and at best obtain some favourable recognition.
  • As our competitors have done, we must move forward with the establishment of a commercial court. This would have the dual effect of catching up with our competitors as well as alleviating the burden of cases on the main Grand Court. We understand that there has been some progress in this regard and hope that this becomes a reality in 2009.
  • The Government must recognise the level of contribution of the financial industry to the economy of these Islands, which now significantly exceeds the contribution from tourism, and commit the necessary resources to sustain and grow the industry. The first step in this process is to have an elected Minister with the financial services industry as his or her primary portfolio.

General Matters

Legal Aid

In respect of Legal Aid, the Association welcomes discussion on the recommendations of the Law Reform Commission as noted in their Final Report No. 4, July 2008. The Association shares the Commission's view that legal aid is an issue for society as a whole and not singularly a responsibility of the profession. We also agree with the Commission that the existing system has produced "good value for money". Improvements to the existing system rather than a complete overhaul should be preferred and is the only way forward that allows us to predict the cost with any certainty.

Court Administration

We applaud the Honourable Chief Justice's commitment towards technological advancement in the administration of the justice system. We agree that this is an area in which we really can expect to achieve greater efficiencies and saving of costs. I understand that the areas under consideration include electronic filing, tele video conferencing, the use of electronic documents instead of hard copies in Court and the use of the on line Cayman Law Reports. In their own way these are initiatives that will help to keep Cayman ahead of its competition as a place for resolution of complex financial and commercial disputes although I am sure that funding will prove challenging. The Caymanian Bar Association stands ready to assist as it can with this initiative.

2008 Obituaries

In 2008 we lost four members of our profession in the Cayman Islands:

  • Warren Connolly
  • William Walker
  • Stephen Hall-Jones
  • Jonathan Tarboton

It is appropriate that we remember them on this occasion. Messrs Connolly and Walker were, with Sir Vassel Johnson, who also died last year, architects of Cayman's success as a financial centre. In remembering them, we should not lose sight of the need to sustain that success by adapting to changing global financial imperatives.

Conclusion

Now it only remains for me formally to second the Attorney General's motion to open the Grand Court for 2009 and on behalf of the Caymanian Bar Association I would like to take this opportunity to wish all Judges of the Grand Court, all Summary Court Magistrates, all the Court Staff and fellow members of the legal profession a very happy, healthy and prosperous 2009.

James Bergstrom

Caymanian Bar Association President

7 January 2009

For further information contact: Bina Mani