Litigation Country Comparative Guide

• Published date: 26 February 2021
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Contracts and Commercial Law, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: McGrath Tonner
• Author: Mr Benjamin Tonner, Pramod Joshi and Sally Bowler

What are the main methods of resolving commercial disputes?

The three primary mechanisms in the Cayman Islands for resolving commercial disputes are (in order of popularity) litigation, arbitration, and mediation.

Litigation

Litigation is the most prevalent method of the three and is the focus of this guide. For large commercial disputes, litigation is usually commenced in the Financial Services Division ("FSD") pursuant to the Grand Court Rules 1995 and FSD User Guide (see question 2 below).

Litigation is adversarial in nature and the standard of proof is on the balance of probabilities. The court has wide powers to case manage the proceedings and the conduct of the parties.

Arbitration

There is no formal requirement to pursue alternative dispute resolution ("ADR") under the Grand Court Rules however the court may encourage the parties to pursue ADR where appropriate.

Large commercial contracts involving Cayman Islands entities tend to include arbitration clauses most commonly providing for the seat of any arbitration to be in the Cayman Islands, New York, London, or Hong Kong.

Arbitration is governed by the Arbitration Law 2012 (based on and the UNCITRAL Model Law on International Commercial Arbitration 1985) and the Foreign Arbitral Awards Enforcement Law 1997 (which gives effect to the New York Convention). As with litigation, arbitration is an adversarial process.

Mediation

Mediation is a structured, non-adversarial negotiation led by a neutral mediator with a view to reaching a settlement. The number of professionally accredited mediators is steadily growing in the Cayman Islands however mediation is not compulsory in commercial disputes and it is infrequently used in practice.

Negotiation

As one would expect, it is also common for parties to resolve matters through non-mediated negotiation either directly or through their legal representatives.

What are the main procedural rules governing commercial litigation?

The Grand Court Rules 1995 ("GCRs") and Grand Court Practice Directions ("PDs") are the primary procedural codes in the Cayman Islands. The Financial Services Division Users Guide sets out additional rules for commercial litigation.

These procedural rules set out the framework for case management of the entire process and include specific rules on service of documents, disclosure (also called discovery), witnesses and expert evidence, settlement offers and costs.

The Cayman Islands GCRs are very similar to the pre-1998 English Supreme Court Rules ("SCRs"). When seeking to interpret and apply the GCRs, it is accepted practice to seek guidance from the way the English courts interpreted the equivalent provisions of the SCRs.

The Court of Appeal Law (2011 Revision) and the various sets of Court of Appeal Rules govern appeals from the Grand Court. Appeals from the Court of Appeal to the Judicial Committee of the Privy Council in London are covered by the Cayman Islands (Appeal to Privy Council) Order 1984 (as amended) and the Judicial Committee (Appellate Jurisdiction) Rules 2009 (as amended).

What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?

The court system in the Cayman Islands has a hierarchal structure, where appeal lies to the court above.

Small claims (which are outside the scope of this guide) are commenced in the Summary Court. All other claims (whether they be civil, judicial review, family, trusts or estate matters) start life in the Grand Court.

Within the Grand Court there are five specialty courts known as 'divisions':

• Civil Division
• Financial Services Division (FSD)
• Family Division
• Criminal Division
• Admiralty Division

Commercial disputes are brought in the Civil Division or the FSD. The Grand Court has unlimited monetary jurisdiction, so it can determine commercial disputes of an unlimited value.

The FSD is likely to be of most interest to the reader since it assumes jurisdiction over the following matters:

• Disputes relating to Cayman Islands registered investment funds or exempted insurers
• Insolvency/bankruptcy related proceedings
• Trusts or estate related proceedings with a value more than US$1.2m
• Breaches of insurance contracts where claim exceeds US$1.2million
• Any action for breach of contract or breach of duty by or against a professional service provider with a value over US$312,500
• Applications under Cayman Islands' financial services regulatory laws
• Proceedings to obtain evidence in support of foreign letters of request
• Applications for international co-operation in bankruptcy proceedings
• Proceedings brought under the Arbitration Act 2012
• Enforcement of foreign judgments or arbitral awards
• Any application for an order dissolving a partnership that carries on business as a mutual fund

FSD trials are heard by a specialist FSD judge sitting alone.

If the verdict is contested, either party may seek permission to appeal to the Court of Appeal where traditionally cases will be heard by a panel of three judges.

The final court of appeal is the Privy Council in London, England where normally five judges hear the appeal.

How long does it typically take from commencing proceedings to get to trial?

The basic timetable is dictated by the GCRs in conjunction with the FSD Users Guide. The court does, however, retain discretion to fix deadlines for each stage of the process depending upon the complexity and/or urgency of the case. Judges treat deadlines seriously and can impose sanctions on a party (such as financial costs orders or even dismissal of the party's case) if its actions cause undue delay or costs to be unnecessarily incurred.

It is not uncommon for a commercial dispute to take 12-18 months to reach the final hearing/trial stage. Parties should also factor into their considerations the time it will take for any appeals (such as those which may lie to the Court of Appeal and Privy Council).

Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?

Hearings

Proceedings are held in open court or in the judge's chambers. Proceedings in open court are open to the public, whereas proceedings in chambers are generally considered to be private (i.e. confined to the parties to the proceedings). The judge may, however, allow other interested parties, including members of the public, to attend a chambers hearing.

In practice, interlocutory hearings are often heard in chambers whereas trials are conducted in open court in accordance with the principle of open justice (which is explicitly protected by the Cayman Islands Constitution).

The court can impose reporting restrictions. It also has the discretion to hear matters 'in camera' (meaning, in private) where it is in the interests of justice to do so.

Documents filed

Originating documents (such as writs and petitions) are filed with the court registry and will be placed on the public register unless otherwise ordered by the court.

Weekly Cause Lists (published on the Cayman Islands' judicial website) advertise the matters that the court will be hearing during that week. Certain cases will, however, be anonymised (for example, ex parte applications where publicity would potentially defeat the object of the hearing or where proceedings relate to commercially and/or personally sensitive matters).

As a rule, judgments of the Grand Court, Court of Appeal and Privy Council are available to the public. Indeed, the catalogue of court judgements has recently become available online. Certain orders and applications of particular interest may also be published in the Cayman Islands Law Reports (available on the Judicial website) or in the Cayman Islands Gazette.

In appropriate instances the parties' names may be anonymised in published judgments. Certain sensitive judgments may also be embargoed for a period.

All other court documents are not automatically open to the public however they are available to the parties. There is also a procedure in the GCRs for non-parties to apply to the court to have access to some or all the court file if they can satisfy the court that such access is appropriate in the circumstances of the case.

Insolvency proceedings

In insolvency proceedings, the petition for the winding-up of the company must be heard in open court. Interlocutory applications, either before the hearing of the winding-up petition or after the making of a winding-up order, are normally heard in the judge's chambers.

Arbitration

Arbitration proceedings are conducted in private and confidentially unless the parties agree otherwise. Disclosure of any confidential information relating to the arbitration is actionable as a breach of confidence. Confidentiality extends to information supplied by the parties, evidence given during the arbitration and any rulings or awards.

Mediation

Mediations are normally conducted on a without prejudice basis and in private. Statements made in, and documents prepared for, a mediation cannot be used outside the mediation process.

What, if any, are the relevant limitation periods?

Limitation periods are largely governed by the provisions of the Limitation Law (1996 Revision). Depending upon the type of claim being pursued, the limitation period differs.

The limitation date is normally 6 years from a 'triggering event'. The triggering event is normally the date upon which a cause of action accrues (in other words, the date the claimant acquires the right to bring the action), for example, the date a contract is breached.

Claims that are subject to the 6-year limitation period include:

• Contract: The cause of action normally accrues on the date of the contract is breached;
• Tort (excluding libel & slander and personal injury): The cause of action accrues on the date the damage is first suffered;
• Certain 'open-ended' loans: The cause of action accrues on the date a written demand for payment is made;
• Enforcement of judgments: The triggering event is the date the judgment became enforceable;
• Actions...