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Litigation abroad; should you wait for others?

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With the huge growth of social media in recent years, individuals who have legal issues abroad, whether it is problems with a failed development overseas or issues such as Swiss Franc Mortgage problems in Cyprus, are now able to gain access to specifically created on-line investor forums. These forums and Facebook pages are where people who find themselves in similar legal positions can discuss the various issues that may have arisen as a result of a particular developer, project and/or dispute in a particular foreign jurisdiction.

As litigation can often be an expensive exercise - particularly in a foreign jurisdiction - many people understandably will try and keep their costs down by sitting on the side-lines waiting for other people in their group or development to take the legal initiative and then hope that they can tag onto the coattails later on down the line. They take the view that other people can pay for legal fees and that once a favourable sentence or judgement is issued it will be possible for them to jump in at the last minute with minimal costs and get the same result.

Whilst this tactic may work there are various problems associated with this;

What if everybody takes the same attitude?

We frequently get contacted by groups - both large and small - of investors about their potential legal issues abroad with a particular project or developer. Often it is the most vocal people in those groups who are happy for others to take the legal process forward whilst they remain uncommitted and wait, hoping to get a good result at no cost further down the line.

Invariably this can often lead to everybody within a group scenario waiting for somebody else to take the initiative but in the end nobody does. Due to this lack of action the case(s) sometimes become “time-barred” under statutory legal provisions and the potential claimants are then legally prevented from advancing any form of legal claim rather than any financial factors which may until that point have been driving their decisions.

Less pressure on the other party

If the other party – developer/ lawyer/ bank - knows that there are lots of people who can potentially make a claim against them but only a few actually take legal action then this takes the pressure off the other side. It gives them more time to sort things out or to remedy any breaches. It allows them to also concentrate all their resources on defending the few cases filed rather than spreading their resources out amongst many claims. Generally pressure on the other side will be reduced if there is only a few people litigating rather than a large number of people litigating. The pressure brought by numerous investors can go a long way to resolving issues by creating leverage in any out-of-court negotiations.

You fall behind the list

Again, and understandably perhaps, some people wish to wait to see whether the first case of a similar legal basis to theirs will be successful before starting any litigation of their own. This may be a prudent tactic but can also have serious consequences. In some countries litigation can last years. If you wait until litigation is finished with other people before starting your own case then it is probable that you will then have to start the whole legal process from the beginning. Even if the original case makes your case easier you still have to wait for the huge delays that we see in the courts of some countries such as Spain and Cyprus before your case comes to court. You will naturally be several years behind other people in your process. Litigation abroad is rarely the same as we see with the PPI claims – i.e. once the precedent has been set other claims effectively become automatic and the other party rolls over on each one. Your circumstances may be slightly different from other people. The court procedure may require you to go through the whole legal process. The other side may test your resolve by making you go to court as they know a certain number of people won’t do this and in most jurisdictions so called “class actions” are legally not permitted and claimants must proceed alone on the merits of their own case.

The circumstances may change

Those people who take litigation first will, assuming that their case is successful, have the first bite of the cherry when it comes to enforcing their successful legal outcome. If individuals wait until others have had a successful legal judgement before starting their legal case then by the time they get a judgement in their favour all the assets of that company may have disappeared or the company may have gone into administration. Most sentences will be approached on a first come first served basis.

Settlements may be limited to those who get in first

In some cases an out of court settlement may be reached with a company in order to avoid a court judgement. The terms of that settlement may be confidential with a non-disclosure agreement signed between the parties. If other claimants are waiting for an outcome of a court judgement they may not find out what the final outcome was, meaning that their wait was pointless. Equally a settlement may be limited to a certain number of people and after that the company may decide to defend any additional actions thereafter.

The company may learn

It could also prove to be that in those first cases in court the company makes a mistake in their legal approach or doesn’t have enough evidence, and that in subsequent cases the company will take a different and more effective approach to their defence and may find further evidence to support their case. Just because similar cases are won doesn’t mean that the subsequent cases will also be won. The same would be true of cases which are originally lost, as new evidence may come to light which will determine different outcomes.

International litigation is a complicated matter and you should not make decisions on how to proceed with litigation alone. If you have a legal problem abroad it is vital that you take independent legal advice from a lawyer or law firm who specialises in international litigation. The vast majority of UK law firms do not have relationships with international firms or experience of international courts and will perhaps mistakenly make decisions based on UK law. 

If you have a legal issue abroad and would like advice from an experienced and specialist UK based solicitor about possible international litigation then you can contact our legal team

Disclaimer – International legal issues are a complex area of law and this information is no substitute for independent legal advice on an individual basis taking into consideration your personal circumstances and legal requirements. This information is provided to provide general information only and was correct at the time of publishing. The legal position in relation to international transactions can change frequently and this page may not have been updated following any changes in the law. You should therefore not rely on this information and should seek legal advice in relation to your personal circumstances.