The City Disputes Panel faced a sharp test when creditors of the failed Barings Bank met this week to vote on the terms of a settlement of outstanding bond issues.
The panel was called in by the administrators – now the liquidators – of Barings to resolve disputes and litigation arising out of the collapse of the banking group.
The panel is a financial dispute resolution service designed to provide ‘a private, speedy, adaptable, economic and wholly modern service of dispute resolution’.
In the Barings case, the panel started work in late 1995, continued throughout 1996 and into the early months of 1997. It studied the reports of the Bank of England’s Board of Banking Supervision, the report of the inspectors appointed by the Ministry of Finance in Singapore and other documents, including pleadings in the litigation.
The panel also held 150 meetings with interested parties before publishing its final report in May 1997 setting out its settlement proposals, which were reaffirmed in November 1997.
One may either congratulate the panel for a job well done, or castigate it for taking so long in a fast-moving economic world, especially when its proposals were not likely in the end to meet with creditor approval. In New York, a similar body would be expected to take weeks rather than months to submit proposals, no matter how complex the issues.
In short, has the panel failed its first major test? Is the City big enough to resolve disputes such as those arising from the Barings collapse?
If the panel has failed to put forward acceptable proposals, the consequence is years of litigation, and the Securities and Exchange Commission might cast a baleful eye upon the reputation of the City of London for speed and efficacy in dispute resolution.
The Financial Services Authority is in its infancy, the government has yet to decide regulation for the accountancy profession, and the Attorney General is consulting on jury trials for fraud cases.
All this might be a suitable case for Peter Mandelson to cast his wary eye on City regulation, and come up with coherent conclusions to satisfy the global marketplace.
Stuart Bell is Labour MP for Middlesbrough and adviser to Ernst & Young.
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