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Report No. 188

U.S.A.

(A) New York:

In 1993, in the State of New York, the Supreme Court, Civil Branch, New York County established commercial courts in four Parts on an experimental basis. (see http://www.courts.state.ny.us/com.div/brief_history_of_CD.htm). The aim was to concentrate litigation in that Court in those Parts. The reaction of commercial practitioners was very favourable. In Jan., 1995, a task force of the Commercial and Federal Litigation Section of the New York State Bar Association recommended that these Commercial Parts be expanded. Specifically, it was proposed that a Commercial Division of the State Supreme Court be established in areas of the State in which commercial litigation was prosecuted.

Shortly thereafter, the Chief Judge, Judith S. Kaye, created the Commercial Courts Task Force, headed by Hon. E. Leo Milonas and Robert L. Haig, Esq., to examine the Report of the Commercial & Federal Section of the New York Bar Association and to make recommendations. The Task Force proposed that a Commercial Division be established in appropriate jurisdictions. The Task Force also made various recommendations regarding case management, technology and the like.

In Nov. 1995, the Commercial Division was established in Monroe County (Rochester) and also in the New York County, beginning with one Justice in the former and four in the latter.

The Commercial Division was intended as a vehicle for resolution of complicated disputes. Successful resolution of these disputes required particular expertise on the part of the Court across the broad and complex expanse of commercial law. Because disclosure in commercial cases could be difficult, protracted and expensive, the Division sought to bring to bear in each case, vigorous and efficient case management. Deadlines were set and enforced and discovery was managed as needed to protect the rights of the parties to fair disclosure while minimizing expense and delay. Motion practice, especially in the form of motions to dismiss or for summary judgment, became more common in commercial cases than in others. The case-load of the Division is thus particularly demanding, requiring of the Court scholarship, expense and wealth of energy.

The Commercial Division in New York had endeavoured to utilize technology to assist in handling its case-load effectively. The Division, for instance, contributed to the development of and pioneered implementation of case management soft-ware, now widely used in New York State. In Monroe County, the Division operates a calendar that can be answered electronically. In New York County, decisions of the Division Justices bearing the County Clerk's entry stamp are posted on the website promptly after their issuance. Decisions are posted on-line in other Counties as well.

A particularly noteworthy form of technology is the courtroom for the New Millennium in Supreme Court, New York County. This courtroom is equipped with state-of-the-art technology, such as flat-screen computer monitors in the jury box on the witness stand, and at the counsel-table; an electronic black-board; real time court reporting; an electronic projector, computer docking stations for counsel; video capability, and the like. Similar court-rooms are due to be introduced in the venues across the State.

An Alternative Dispute Resolution Programme (ADR) was established in New York County in early 1996. Pursuant to the rules of this programme, cases are referred by the Justices for mediation or any other form of ADR the parties might wish to undergo. Volunteer neutrals, of whom there are some 250, handle ADR proceedings. The Rules provide for deadlines for the process. A similar programme is in place in Westchester County and is being studied in other jurisdictions. Branches of the Division were established in Eric, Nassau and Westchester counties in 1999 and in Albany and Suffolk counties in 2002.

As to the commercial Parts, the Bar has responded favourably to the work of the Division, and so have leading representatives of the business community. For example, the Commercial and Federal Litigation Section described the Division as 'a case study in successful judicial administration'. The Business counsel of New York State applauded the work of the Division, describing the Court in 2000 as "the envy of business in other States". The American Corporate counsel Association has expressed its appreciation and support for the Division and urged other States to follow New York's lead. The American Bar Association's Business Law Sections described the Division in 2000 as "a model of a specialized Court devoted to the resolution of business disputes".

In general, the Commercial Division, Supreme Court, New York County entertains complex commercial and business disputes in which a party seeks compensatory damages totalling $ 125,000 (exclusive of interest, costs and Attorney's fees). Due to case load considerations, the Justices of the Division are empowered to transfer out of the Division cases which, in their judgment, do not fall within this category, notwithstanding that a party has described the case as 'commercial' on the request for judicial intervention.

Notwithstanding the foregoing limit of $ 125,000 commercial cases in which compensatory damages of $ 25,000 or more are sought, will not be transferred out of the Division, if filed in accordance with the procedures governing the Division's 'Filing by Electronic Means programme'. For this purpose, the words 'commercial cases' include commercial real property disputes and the types of matters identified, without regard to the monetary threshold of $125,000, such as

(1) suits to collect professional fees

(2) cases seeking a declaratory judgment as to insurance coverage for a personal injury or property damage action,

(3) proceedings to enforce a judgment regardless of nature of underlying case,

(4) first-party insurance claims and actions by insurance claims and actions by insurers to collect premiums or rescind policies,

(5) attorney malpractice-actions,

(6) breach of contract or fiduciary duty, fraud, misrepresentation, business tort (e.g. unfair competition), or statutory violation arising out of business dealings (e.g. sale of assets or securities, corporate structuring, partnership, shareholders, joint ventures, and other business agreements, trade secrets and restrictive covenants;

(7) transactions governed by the Uniform Commercial Code (exclusive of those concerning individual cop. Units),

(8) complicated transactions involving commercial real property,

(9) commercial bank transactions,

(10) internal affairs of business organizations or liability to third parties or officials thereof,

(11) malpractice by accountants or actuaries,

(12) complicated environmental insurance coverage litigation etc. (see
http://www.nycourts.guv/comdiv/guidelines_for_assignment_of_casesnyc.h tm).

In New York, 4 experienced Judges were assigned to staff the commercial Part which led to 35% increase in the disposition of business cases in 1993 as compared to 1992 (see Appendix B of Maryland Task Force Report, 2002). After 1995 Report of the 'Commercial & Federal Litigation Section' of the New York State Bar Association, recommending a 'Commercial Court', the 'Commercial Division' began hearing cases in New York County, with an additional commercial division judge designated in Monroe County (Rochester). By the end of 1996, the Chief Administrative Judge, New York County, reported that the business court resulted in a 29% reduction of the average time to dispose of cases assigned to it.

Further there had been an 85% increase in the number of cases settled before trial, and a 20% decrease in the volume of pending cases. By 1998, the Court reported a 36% reduction in the average time to dispose of cases, reducing the average time which a case spends on the docket from 648 days to 412. These decreases in the number of cases on the docket allowed New York County to re-assign one of the business court judges to the general docket as the amount of business cases formerly handled by 4 Judges could now be handled by 3. As a result, one full Judge's time became available to address and dispose of other cases on New York's civil and criminal docket creating judicial efficiency for all cases, not simply those pending before the business court.

New York's 'Commercial Division' has been widely acclaimed by business people throughout the country as a success. Robert Haig, CoChairperson of the Commercial Court Task Force in New York and advisor to 9 States and 5 counties on the establishment of specialized commercial courts to administer business litigation, testified before the Task Force that establishment of the Commercial Division has had a positive impact on New York's economy and that the business community is extremely enthusiastic about its continued operations.

The New York County branch of the Commercial Division includes a Court-annexed alternative dispute resolution programme, in which parties can obtain the services of a mediator from a roster of specially trained professionals experienced in Commercial matters. By Nov., 1999, the ADR programme had handled close to 1000 cases and achieved settlements in about 85% of cases. West Chester County of New York State also started ADR programme.

The NY Commercial Division takes advantage of technological advances such as Courtroom 2000, which uses computers, display monitors and multimedia equipment to increase the speed and effectiveness in which attorneys can try their cases. A digital evidence presentation system allows 34instant retrieval and quick display of digitized documents. Real-time Court reporting allows parties to view the transcription of the proceedings as it is being created e.g. evidence. Trial time is shortened by 40%. Now the New York business division has extended the New York, Monroe, Nassau, WestChester and Eric counties.



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