In this issue:-
- Madoff Claims – Latest Developments
- Arbitration Act 2010
MADOFF CLAIMS – LATEST DEVELOPMENTS
The Commercial Court in Dublin is currently dealing with around 50 cases arising from the role played by the convicted fraudster Bernard Madoff in respect of two Irish investment funds, Thema International Fund plc and AA (Alternative Advantage) plc. Dillon Eustace was the first Irish firm to initiate proceedings on behalf of an investor in one of these funds and currently represents the largest number of investors in litigation in the Commercial Court whose investments were affected by Mr. Madoff's activities.
HSBC (as custodian of each of the affected funds) brought a Motion to stay the proceedings brought by one of Dillon Eustace's clients last year, saying that investor claims should not be allowed to proceed until after the outcome of the cases being brought by the affected funds themselves. In his judgement dated 16 October, 2009 Mr. Justice Clarke ruled that HSBC were not entitled to succeed with their Motion, on the basis that the streamlined procedures and case management capabilities of the Commercial Court in Dublin were more than capable of dealing with the issues in the investor cases together with the actions initiated by the funds themselves and any other related proceedings. He said:
"All proceedings in which an allegation is made against Thema or HSBC (whether involving only those defendants or other defendants and whether either or both of those parties is a defendant, third party, or otherwise joined) should be linked for the purposes of case management and trial with a view that the management of all such proceedings should be conducted together by a single judge."
The pleadings have now virtually closed in all of these related proceedings; however, one particular issue is to be determined by the Commercial Court before any of these cases go to trial.
Mr. Justice Clarke has ruled that the following question will have to be determined in advance because of the particular nature of one investor's claim, in summary:
- Does a custodian have an obligation to account to a fund or its investors arising from the UCITS Directive / Regulations?
- Leaving aside the UCITS regime, is the relationship between HSBC and the Thema investors that of trustee and beneficiary in equity giving rise to a fiduciary relationship and, in turn, a duty to account?
The Court has recently announced that a hearing of this preliminary issue will take place on 18 May of this year and further updates will be published by Dillon Eustace as the matter develops. The determination of these questions is likely to be of note to those involved in similar litigation in other jurisdictions as well as those involved in the funds industry in Ireland and the decision of the court will be eagerly anticipated, both in Ireland and internationally
ARBITRATION ACT 2010
On 8 March, 2010, the President of Ireland signed the Arbitration Act 2010 (the "Act") into law and all of the provisions of the Act will come into effect on 8 June, 2010.
The legislation is intended to update and streamline existing arbitration law in Ireland and to create a clear legal framework consistent with best practice in the international arbitration arena. The Act repeals all pre-existing Arbitration legislation and applies the United National Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration to all arbitrations which take place in Ireland.
The Irish Courts have repeatedly vindicated the independence of the arbitral process and the Act will further enhance that position. Under the Act, only in very limited circumstances will a party be able to have recourse to the Courts. The Act provides that a decision of the High Court is final thus avoiding the prospect of cases ending up with costly and lengthy Supreme Court appeals.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
