From Appleby

Court rules governing arbitration proceedings in the Cayman Islands have been wholly revised by virtue of the Grand Court (Amendment No.1) Rules 2013 which take effect from 1 July 2013.

Until July 2012, the law governing arbitrations in the Cayman Islands did not meet modern international standards and was used primarily for resolving domestic disputes. The new Arbitration Law (the Law), which came into force on 2 July 2012, completely overhauled the arbitration regime and has brought it into line with the current UNCITRAL model law.

The Cayman Islands Grand Court Rules Committee has now approved a wholly revised suite of procedural rules (Order 73), together with necessary amendments to existing rules for financial services proceedings (Order 72) and service of process out of the jurisdiction (Order 11), which will provide legal practitioners with a comprehensive procedural code for arbitration-related court applications and applications to enforce arbitral awards.

These rules reflect the fundamental principle of minimizing court intervention in matters where the parties have agreed to arbitrate. However, a balance must be struck between on the one hand providing sufficient judicial support to arbitrations and exercising a supervisory role (in limited, defined circumstances) to maintain the integrity of an arbitration process; and on the other hand enabling too much intervention so that an arbitral process is undermined and respondents are given the opportunity to delay, or even derail, an arbitration through satellite court proceedings.

The Grand Court rules seek to strike this balance by providing a procedural framework in which the court will secure the just, expeditious and economical disposal of arbitration applications; by providing for the stay of legal proceedings commenced in breach of an arbitration agreement; and by giving procedural effect to the Law which generally limits the court’s ability to intervene in the substantive arbitration proceedings to circumstances where the tribunal is unavailable or incapacitated or to where all available tribunal processes have first been exhausted.

The Grand Court rules provide that every arbitration application, being any proceeding or application which concerns or relates to arbitration proceedings in the Cayman Islands, will be commenced in the Financial Services Division of the Grand Court (the FSD). The FSD is responsible for handling the more complex commercial cases arising out of the financial services sector in the Cayman Islands. In consequence, arbitration applications will be assigned to well qualified, experienced judges who have substantial experience of resolving these kinds of disputes.

Arbitration proceedings are being increasingly recognised as an effective alternative to court proceedings in order to resolve commercial disputes. The Law has modernised the arbitration regime in the Cayman Islands and will stimulate the development of Cayman’s international arbitration industry. The revised Grand Court rules will facilitate the implementation of the Law and will provide the necessary infrastructure for the Cayman court to support Cayman-seat arbitrations.

Jeremy Walton is partner of leading offshore law firm Appleby, and head of its Litigation & Insolvency Practice Group in the Cayman Islands. He is a member of the Chartered Institute of Arbitrators and Chairman of its Cayman Chapter. Anna Gilbert is an associate within Appleby’s Litigation & Insolvency Practice Group in the Cayman Islands.