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How to Win a Dispute

Summary of Panel Discussion

Prior to disputes arising

Draft contracts properly

• Record terms expressly, accurately and unambiguously
• Specify governing law of contract and jurisdiction
• Consider the most favourable jurisdiction for resolving the dispute
• Specify the mechanism for resolving any disputes - identify the most favourable method of dispute resolution: mediation, expert determination, arbitration etc.
• Include important clauses in the contract, for example: limitation of liability, entire agreement clause, termination provisions

Retain evidence

• Evidence is crucial to any dispute – you need to preserve it
• Have a comprehensive Document Retention Policy (DPR) in place:
  1. ensure that it is followed by all staff (who should be trained accordingly)
  2. senior key individuals should be charged with the responsibility for the proper application of the DRP
  3. an organisation's IT department should be involved in setting up the DPR parameters
  4. a DPR should categorise documents (eg. external written communications, internal communications, notes etc) and make retention periods clear for each category
  5. remember that the term "document" has a wide definition
  6. the periods for document retention should be those specified in setting up the any applicable statute/regulatory provision (retention periods are likely to vary between different jurisdictions). For example in Hong Kong the Securities and Futures Commission (SFC) guidelines state that financial institutions regulated by the SFC are required to retain records relating to their business for not less than 7 years
  7. there should be a clear policy for the destruction of documents - documents not to be retained must be destroyed in accordance with the policy and not on a random basis – the random destruction of documents is likely to arouse suspicion
  8. where documents are not retained a record should be maintained of what types of documents were destroyed, when and by what means
  9. electronic information should be systematically archived by backing up
  10. consistent application of a DRP is likely to receive a more favourable reception from a court/regulator
  11. if in doubt retain the document/s and seek legal advice
• Preserve privilege of documents, if possible
• For advisers: record advice contemporaneously in attendance notes - in the case of legal advice (and perhaps other forms of professional advice), where advice is given and is not recorded, a court is likely to draw an inference that the advice was not given in the first place (obiter in Delhaise v. Ng & Co [2004] 1 HKLRD 572 CFI)

When the dispute arises

Involve advisers

• Involve advisers at an early stage of a dispute
• Obtain legal advice on:
  1. merits of case for/against
  2. responses to opponents and third parties
  3. dealing with publicity surrounding case
  4. preservation of privilege
  5. procedures and formalities
  6. presentation of evidence
• Choose advisers wisely – factors to take into account: experience, expertise etc
• Consider involving media consultants (particularly in the case of disputes in Indonesia)
• Be honest with advisers! - better to give “air” to problems/weaknesses in privileged discussions than to have them raised first by opponents
• Establish as early as possible what a "win" would be
• Notify insurers – this is privileged
• Know the courts – courts in different jurisdictions have their own idiosyncrasies

Control documents

• All documents relevant to the dispute are discoverable in litigation, so they need to be 'controlled' as soon as the dispute arises
• Do not create unnecessary documents
• Beware of emails - a particular risk due to their informal nature - always ask: if it were a letter or memo and not an e-mail would I still include the point?
• Do not make unnecessary comments in (or on) external and/or internal documents - the judge will read your comments! Do not circulate internal e-mails/memos with impulsive judgments or comments e.g. “Oops I think we really have done it this time!”; litmus test: would you be comfortable for a judge to read the document/comment? if in doubt, do not commit it to writing
• Arthur Anderson/Enron case is an infamous example:
  1. Nancy Temple (Arthur Anderson in-house lawyer) wrote in an email: “I recommend deleting reference to consultation with the legal group and deleting my name on the memo”… “I suggest deleting some language that might suggest we have concluded the release is misleading”
  2. Arthur Anderson was charged with knowingly and corruptly persuading employees to withhold, alter and destroy documents relevant to the Securities and Exchanges Commission enquiry into Enron - Arthur Anderson was found guilty on single charge of obstruction of justice (although the conviction was overturned in May 2005, on an appeal to the US Supreme Court)
• Suspend routine document destruction immediately on a dispute arising
• Consider where all documents relevant to the dispute may be located
• Give lawyers access to all documents
• Do not destroy documents potentially relevant to proceedings:
  1. consequences of the destruction of potentially disclosable documents in litigation has been considered in a number of high profile cases
  2. For example in Douglas v. Hello! EWHC 55 [2003] – it was found that Hello! had deliberately destroyed documents after proceedings had begun. The court held that it would be appropriate to strike out Hello!'s defence if the destruction amounted to an attempt to pervert the course of justice. On the facts the court found that there was nothing to say that Hellos' conduct justified an order striking out its defence

Prepare your case

• The management must be prepared to commit time and attention to the matter for the duration of the dispute
• You need good key witnesses - they must give straight answers; tell the whole truth as understood/remembered
• Contemporaneous evidence is very important
• Evidence must be legitimately obtained
• You need good experts (remember that they are ultimately there to assist the court) with relevant expertise

Ending the dispute

Dispute avoidance/settlement

• Consider alternative dispute resolution from the outset
• Weigh up the benefits/risks against likely costs of continuing litigation/dispute
• Always keep settlement in mind - consider possibility of settlement regardless of the stage of dispute
• Consider merits and weaknesses of your position at an early stage of the dispute
• Factors to consider when settling: merits of case, legal costs, ability to keep matters private, minimise reputational damage, ability to maintain good relationships
• Keep lines of communication open
• Do not be afraid to make the first offer