Dispute Resolution In The Cayman Islands

Efficiency/integrity

The Cayman Islands are a British Overseas Territory, with a stable democratic system of government and a low crime rate. The legal system is based on the English common law, as amended by domestic statute, with the Privy Council as the highest Court of appeal. The legal structures, concepts and approach are instantly recognisable to any English, US or other common law adviser. This backbone of legal similarity and political stability has proved crucial to the growth of the Islands.

Over the last 20 to 30 years, the Cayman Islands have developed specific legislation to facilitate a wide range of international financial transactions. In addition, the Cayman Islands have a broad and deep pool of accountants, bankers, lawyers and other service providers in order to offer service levels similar to those found in the leading onshore centres.

Over 40 of the top 50 banks globally hold licences in the Cayman Islands. With nearly 10,000 registered investment funds, Cayman Islands fund vehicles are routinely used by institutional and independent asset managers. Cayman vehicles are considered, by a very wide margin, to be the market leader for offshore hedge funds. In terms of insurance, the Cayman Islands are one of the most attractive jurisdictions for captive vehicles, and continue to be the leading jurisdiction for healthcare captives. The administration of justice in Cayman is carried out on three levels: Summary Court, Grand Court and the Court of Appeal. In 2009, in response to the needs of the fi nancial services industry, the Financial Services Division of the Grand Court was established (the FSD). The FSD has dedicated, highly experienced and sophisticated judges presiding over complex fi nancial services disputes. Appeals from the Grand Court lie to the Cayman Islands Court of Appeal. Further appeal lies to the Judicial Committee of the Privy Council in London. Judgments of the Privy Council are persuasive in many jurisdictions. By way of example, the Privy Council recently made new law extending the tort of malicious prosecution to civil as well as criminal cases, in the Cayman Islands matter of Crawford Adjusters and others v Sagicor General Insurance (Cayman) Limited [2013] UKPC 17.

Enforcement of judgments/awards

In principle, foreign judgments and arbitral awards can be enforced in the Cayman Islands Courts. With the exception of Australian judgments, there is presently no system for registration and automatic enforcement of foreign judgments. Instead, judgments are generally enforced by Court action as if they were based on a contractual right. The process for enforcement therefore involves the commencement of a fresh action in the Cayman Islands Courts. Judgment is usually granted on a summary basis. Once granted, the judgment can be enforced by seizure of property or other means, as with any other local judgment.

There are a number of well established formal requirements which must be satisfi ed before the Court will enforce a foreign judgment or arbitral award. These are as follows:

The foreign Court or tribunal was competent to hear the claim. The judgment or award involves a positive obligation, such as an obligation to pay a debt or perform a specified task. The judgment or award is final and conclusive. The judgment or award does not involve taxes, fines or penalties. The requirement that the foreign Court was competent to hear the claim should be assessed with reference to the principles of Cayman Islands law, rather than the law of the country making the judgment. This important distinction was illustrated in the case of Banco Mercantil Del Norte SA v Cabal Peniche [2003 CILR 343], in which the Cayman Islands Court declined to summarily enforce a judgment of the Mexican Courts.

It was argued that the defendant in that case had submitted to the jurisdiction of the Mexican Court by voluntarily appearing in those proceedings. The appearance relied on what is known as Amparo proceedings in the Mexican Courts. The aim of the Amparo proceedings was to obtain an order setting aside the deemed service of the proceedings. This would be considered a submission to the jurisdiction of the Mexican Courts, but under Cayman Islands law it would not.

Under Cayman Islands law, purely contesting the jurisdiction of the Court does not amount to a voluntary submission to the jurisdiction. Accordingly, on the facts of this case, there was real doubt that the Mexican Court had jurisdiction (applying Cayman Islands law), and the Cayman Islands judge declined to grant summary judgment on the enforcement application. The judge concluded: "I am of...