The British Virgin Islands' (BVI) Arbitration Act 2013 came
into force on 1 October 2014. It is a landmark piece of legislation
which is expected to propel alternative dispute resolution in the
BVI into high gear. The BVI is now well-positioned to become a key
international arbitration centre.
The Act incorporates these main features:
Incorporation of the UNCITRAL Model Law into the
Act – The Act is modelled on the UNCITRAL
Model Law on International Commercial Arbitration as adopted
by the UN Commission (on 21 June 1985) and further amended (7 July
2006), which provides rules on arbitration proceedings and is
recognised internationally by many countries. The incorporation of
the UNCITRAL model law into the Act will ensure that BVI
arbitration will be conducted according to international standards
and arbitrations in the BVI will also be recognised in virtually
every country in the world.
Extension to the BVI of the New York
Convention - On 25 May 2014 the BVI became a
signatory to the New York Convention, that is the UN Convention on
Recognition and Enforcement of Foreign Arbitral awards. The
extension to the New York Convention will ensure that arbitration
awards pursuant to the Act will be enforceable in all countries
signed up to the New York Convention. Previously, the wording of
the New York Convention was copied into the 1976 Act which the
Court of Appeal held was a clear intent by the legislature
in Ipoc International v. LV Finance Group Limited
(2007), which was guided by the procedure set out in the
Eastern Caribbean Supreme Court Civil Procedure Rules Part 43 on
Enforcement. Although there were mechanisms in place because the
BVI was not actually a party to the New York Convention, arbitral
awards from the BVI were therefore not readily enforceable in other
New York Convention member countries. With the extension of the New
York Convention, this will be remedied and arbitrations taking
place in the BVI will now be recognised by all the member states
throughout the world.
Creation of the BVI International Arbitration
Centre – In order to be effective arbitration
must be seen to be speedy, fair and productive. The establishment
of an International Arbitration Centre under the Act is aimed to
promoting arbitration, providing the necessary facilities for
arbitral proceedings, providing the necessary support to arbitral
tribunals and providing access to parties who choose to settle
their disputes through arbitration. In addition to being charged
with the responsibility for providing guidelines and regulations,
the International Arbitration Centre will be responsible for
maintaining a register of arbitrators which will be readily
available.
Construction of an arbitration
agreement – The Act provides that an
arbitration agreement is an agreement by the parties (whether it is
signed or not) to submit to arbitration all or certain disputes
which have arisen between them in respect of a defined legal
relationship whether contractual or not. The agreement must be in
writing. An agreement is in writing if its content is recorded in
any form, whether or not the arbitration agreement has been
concluded orally, by conduct, or by other means. The Act gives
guidance as to satisfying the requirement:
- electronic communication, if it is accessible so as to be used for subsequent reference;
- if it is contained in an exchange of a statements of claim and defence which the existence of an agreement is alleged by one party and not denied by the order;
- there is reference in a contract to any document containing an arbitration clause provided the reference is such as to make the clause party of the contract.
Composition of the Arbitration
Tribunal – The Act provides that parties are
free to determine the number of arbitrators. The Act provides the
appointment procedures for the arbitration tribunal whether it is
an even panel, uneven panel or a sole arbitrator. Unless the
parties otherwise agree, the arbitrators can appoint an umpire at
any time after their own appointment in instances where there is an
even number of arbitrators.
Court's role – The Act has limited
the court's role where the parties agree to an arbitration, as
the court must give due regard to the parties' wishes and the
provisions of the arbitration agreement. Previously, case law has
shown that where there is evidence of the existence of an
arbitration clause, the court tends to restrict its role and honour
the parties' wishes to arbitrate.
In Ennio Zanotti v. Interlog Finance Corp. &
Others (BVIHCV 2009/034), the judge stayed the
proceedings where a shareholder had wrongly refused to participate
in an arbitration process which was provided for in the
company's memorandum and articles of association.
In Pacific China Holdings Ltd v. Grand Pacific Holdings
Limited (HCVAP 2010/007), the Court of Appeal stressed
the need for procedural fairness of the arbitration process and
held that it had a narrow discretion to override convention
defences.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.