International Arbitration Eighth Edition

• Published date: 12 April 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Campbells
• Author: Mr Andrew Pullinger and Shaun Tracey

Introduction

The Cayman Islands (colloquially known as "Cayman") enviably lie in the warm waters of the north-western Caribbean. Drawn by its exceptional beaches and clement weather, the territory attracts tourists from the world over. Being only an hour's flight from Miami, it is also a natural offshore hub for many North American clients. It is a British Overseas Territory which enjoys political stability and has a well-founded reputation for a strong and impartial judiciary.

The legal system descends from the English common law, so its decisions draw wisdom from influential precedents created in the courts of many Commonwealth states. Any ultimate appeal lies to the Judicial Committee of the Privy Council of the United Kingdom.

Cayman is the world's fifth-largest financial centre and home to more than 80% of the world's hedge funds. Cayman's more than 11,000 funds have combined assets in excess of US$6 trillion. The Cayman courts are therefore experienced in resolving disputes of the highest magnitude and regularly produce judgments which are relied upon in many jurisdictions. Its laws and legal system are well developed and extremely well versed in the financial and corporate arenas.

Arbitration in the Cayman Islands, as a viable form of alternative dispute resolution, was traditionally not suited to international cases. The old Arbitration Act of 2001 was based on the UK's Arbitration Act 1950. It contained what would now be considered to be weaknesses relating to the wider powers of the court to control arbitration proceedings. A prime example was the court's power to continue court proceedings that had been commenced despite there being a valid arbitration clause. These anachronisms were remedied by the Arbitration Act, 2012 (the "Act"). This was modelled on the UK's Arbitration Act 1996 and the provisions of the UNCITRAL Model Law ("Model Law").^1,2 It was a complete and effective overhaul of the former arbitration position in the Cayman Islands, and a response to the growing importance of arbitration as a dispute resolution alternative.

In common with many jurisdictions, the Cayman Islands has seen arbitration growing in popularity.³ Arbitration clauses are increasingly being included in commercial contracts and there is anecdotal evidence of greater recognition among practitioners and clients alike of the potential benefits of arbitration in the jurisdiction. As a result, there are now many reported cases from the Grand Court which relate to...