British Virgin Islands: The Arbitration Review Of The Americas 2019 - British Virgin Islands

Last Updated: 10 September 2018
Article by Adrian Francis and David Welford

The legislation governing arbitration in the British Virgin Islands (BVI) is the Arbitration Act 2013 (the Act), which came into force on 1 October 2014 and repealed the Arbitration Act 1976 (the latter will nevertheless continue to govern arbitrations commenced before 1 October 2014). The Act contains comprehensive legal provisions that take into account modern principles and practices of arbitration and incorporates many of the articles of the UNCITRAL Model Law (Model Law). But this is not simply a modernising statute; it is one that, together with the BVI's accession to the New York Convention on 25 May 2014 (making an arbitral award from a BVI tribunal enforceable in other contracting states), is designed to make the BVI as popular a seat for international arbitration as London, Paris and New York. In particular, the Act provides for the establishment of a statutory body, the BVI International Arbitration Centre (IAC), with a governing board and the power to promulgate rules under the Act. John Beechey was appointed by Cabinet on 7 September 2015 as the first chairman of the IAC Board. Mr Beechey was president of the ICC International Court of Arbitration from 2009 to 2015. The IAC is now fully in operation, with a bespoke set of rules and an extensive panel of international arbitrators.

This article outlines the current legislation and focuses on important decisions. There are specific sections in the Act relating to mediators, but these are not examined in any detail here.

The Act

Overview and jurisdiction

The Act has as its object the facilitation and attainment of a fair and speedy resolution of disputes without unnecessary delay and expense. It applies to arbitration under an arbitration agreement, irrespective of whether the arbitration agreement is entered into in the BVI, if the place of arbitration is in the BVI. 'Arbitration agreement' is defined as an agreement by the parties to submit to arbitration all or certain disputes that have arisen or that may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement, but must be in writing. The Act contains various mandatory provisions that will principally apply to arbitration agreements entered into before 1 October 2014 and a number of opt-in provisions that parties may choose to include in their arbitration agreement by reference.

The statute does not expressly define those matters that are arbitrable, and the common law will therefore govern whether a dispute is capable of being resolved by arbitration or not. Except where third parties agree to be bound, an arbitration agreement (and any award) will generally only affect the parties to it. There are English authorities to the effect that an award may, in certain circumstances, be relied on in a claim against a third party for an indemnity and the BVI courts are likely to follow those authorities.

The BVI courts are also likely to follow the approach of the English courts in upholding the arbitration agreement where possible, so as to give effect to the intentions of the parties that their differences should be resolved by the arbitral process and not the courts. The liberal interpretation of arbitration clauses – thereby avoiding semantic arguments about whether the dispute 'arose out of ' or was 'in connection with' or 'arose under' a contract – was forcefully espoused in England in Fiona Trust Corp v Privalov & Ors, an approach that has been endorsed in the BVI in Victor International Corporation and Victor (BVI) Limited v Spanish Town Development Company Limited & Ors.1 In summary, absent express words to the contrary, parties are to be taken to have intended that all their disputes should be arbitrated.

A question that frequently arises is whether applications to appoint liquidators, or claims by minority shareholders in relation to unfairly prejudicial conduct, fall within the exclusive jurisdiction of the BVI courts or are arbitrable. In Zanotti v Interlog Finance Corp,2 the BVI court held that an arbitrator could grant relief in unfair prejudice proceedings. As far as winding-up applications are concerned, in these writers' view, an order appointing liquidators over a BVI company may only be made by the BVI court. In Artemis Trustees Limited & Ors v KBC Partners LP & Ors,3 the BVI court held that the position is different in relation to limited partnerships. The court held that because a limited partnership, unlike a limited company, has no identity separate from the identities of its constituent members, and because the winding up or dissolution of the partnership would have no effect on the rights and interests of third parties (again, unlike the windingup of a limited company), there was no legal obstacle to the making by an arbitrator of an order dissolving or winding up a limited partnership.

Article 16 of the Model Law is incorporated in the Act, expressly giving the tribunal the competence to rule on its own jurisdiction, including:

  • any objections with respect to the existence or validity of the arbitration agreement;
  • whether the tribunal is properly constituted; and
  • what matters have been submitted to arbitration in accordance with the arbitration agreement.

The tribunal may rule on jurisdiction either as a preliminary question, or in its award on the merits. If, by way of preliminary question, the tribunal rules that it has jurisdiction, the court may be requested, by a dissatisfied party, to decide the question. There is no appeal from the court's determination, nor is there any appeal (including to a court) from a ruling by the tribunal that it does not have jurisdiction.

If a party commences court proceedings concerning a matter that is the subject of the arbitration agreement, then any party to that agreement can ask the court to refer the matter to arbitration.

The court must make that referral (and stay the court action) unless it finds that the arbitration agreement is null and void, inoperative, or incapable of performance.

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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.

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