The Arbitration Law, 2012 ("the Law") has now been passed in the Cayman Islands and will come into force on a date to be appointed by the Governor in Cabinet.
On a global basis, arbitration has been increasingly recognised as an important alternative to Court proceedings in order to resolve commercial disputes. This is because many parties to commercial contracts prefer being able to conduct legal disputes without the publicity and formality associated with a courtroom. The arbitration procedure is more flexible and normally entails meaningful cost savings when compared with Court proceedings.
In the offshore market, purchasers of financial services and products have increasing regard to the quality of dispute resolution mechanisms in choosing between competing jurisdictions.
The Cayman Islands will now be able to foster an arbitration regime which implements modern international arbitration practices. The Law provides an unitary regime of arbitration based on the UNCITRAL Model Law on International Commercial Arbitration with some additional provisions to suit local conditions and other refinements taken from legislation that has been a success in comparable jurisdictions which have adopted the Model Law (including the Bahamas, Singapore and Hong Kong).
The Law is expressly founded on 3 fundamental principles: 1) a fair resolution of disputes by an impartial tribunal without undue delay or expense; 2) maximum party autonomy, subject only to safeguards in the public interest; and 3) limited judicial intervention. For international commercial enterprises which are already attracted to using the Cayman Islands because of the quality of its dispute resolution services, these features are very likely to increase the choice of Cayman as the seat to conduct arbitral proceedings.
It must be recognised that further steps will be required in order to fully develop the Cayman Islands as an effective seat of arbitration. These include public education and training for practitioners, the establishment of an arbitration centre, and the alignment of administrative policies and procedures to support implementation of the Law. We will alert you to such developments as they occur.
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.