Cayman Islands: New Law To Boost Cayman's Arbitration Industry

Last Updated: 4 September 2012
Article by Appleby  


The development of international arbitration was originally driven by litigants' dissatisfaction with the time, cost and publicity involved in court proceedings. Arbitration procedures evolved to offer a flexible, efficient and private alternative means to resolve commercial disputes before expert tribunals.

Offshore financial centres like the Cayman Islands have not encountered the same level of demand for alternative dispute resolution mechanisms. Its Grand Court (''the Court'') is well-equipped to handle commercial disputes for sophisticated international parties in a cost effective and expeditious manner; it has a Financial Services Division which is dedicated to handling disputes arising out of the particular transactions and legal structures involving Cayman investment vehicles and other corporate entities.

At the same time, comparable jurisdictions such as Bermuda and Singapore have done a great deal to develop successful arbitration industries, demonstrating that there is a place for such dispute resolution mechanisms to coexist with and complement an efficient court system. In the offshore market, and especially in the current economic conditions, it has become apparent that purchasers of financial services and products have increasing regard to the quality of dispute resolution mechanisms in choosing between competing jurisdictions.

Above all, increasingly widespread adoption around the world of the UNCITRAL Model Law on International Commercial Arbitration (''the Model Law'') has led international commercial enterprises to demand and expect access to the same kind of arbitration mechanisms in every country where they do business. Now the Cayman Islands has joined that group of countries with a variant of the Model Law with some additional provisions to suit local conditions and other refinements which have proved successful in other jurisdictions.

The Arbitration Law, 2012 ( 'the Law')

The Law came into force on 2 July 2012. The Law is expressly founded on 3 fundamental principles which are a hallmark of modern arbitration systems: (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. The provisions of the Law will be construed in accordance with these principles, as will the rules of Court governing arbitration-related applications by virtue of an 'overriding objective' provision. Those rules will also allow parties to take advantage of the benefits offered by the Financial Services Division where all arbitration applications will be filed. The Law is structured with all the key aspects that are required to ensure effective arbitration proceedings, as follows:

(a) The formation of an effective and enforceable arbitration agreement;

(b) Jurisdiction for the Court to stay legal proceedings brought in breach of an arbitration agreement;

(c) The composition of an arbitral tribunal, together with Court powers for appointing, removing and replacing arbitrators as may be required in certain circumstances;

(d) The conduct of arbitral proceedings, including powers of the tribunal and processes to be followed in default of any agreement between the parties;

(e) The jurisdiction and process for granting interim measures and preliminary orders, including limited Court powers to support an arbitration by granting similar relief where necessary;

(f) The making of an award, including the remedies available, fees and costs;

(g) Restricted rights to appeal or otherwise challenge an award in the Court;

(h) Court powers to enforce an award.

Some of the significant provisions of the Law which make up this overall structure are mentioned below.

The Arbitration Agreement

The Law encourages parties to adopt or adapt a model arbitration clause provided in a Schedule to the Law if they are unable to independently formulate an appropriate arbitration clause for the purposes of arbitral proceedings. The clause focuses attention on the fundamental elements to provide an effective, workable agreement and offers certain default provisions (in parentheses below) such as:

(a) a period for the parties to seek to resolve their differences before initiating arbitral proceedings (10 days to respond in writing to a particularised complaint with remedy sought);

(b) the seat of the arbitration (Cayman Islands);

(c) the language of the arbitration (English);

(d) the number of arbitrators (one);

(e) the designation of an appointing authority in order to appoint an arbitrator (which may be designated by the Court in default of agreement).

Stay of Legal Proceedings

It is critical that any domestic court be given the power to stay legal proceedings which are brought in breach of an agreement to submit disputes to arbitration. Some jurisdictions provide their courts with a discretionary power, which exposes both parties to considerable uncertainty. However the Law, in line with other Model Law jurisdictions, provides that the Court must stay such proceedings ''unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed''. This language is clear and familiar to practitioners, predictable in its application, and in practice makes it very difficult for a party to avoid resolving a dispute other than in accordance with its agreement to arbitrate.

The Composition Of An Arbitral Tribunal

The parties to an arbitration agreement may choose any number of arbitrators. Absent such agreement, the Law provides that an arbitral tribunal shall be composed of a single arbitrator - which is consistent with the model arbitration provision in the Schedule to the Law. There has been a tendency in some jurisdictions and among some arbitration institutions to encourage panels of 3 arbitrators, which has caused time delays in fixing arbitration hearings and has added fee costs to the entire process. The Law's encouragement of the appointment of a single arbitrator is to be commended. There is no requirement that an arbitrator be from or resident in the Cayman Islands. Indeed, the Law contains no protectionism of any sort for those involved in the arbitration industry.

The Conduct Of Arbitral Proceedings

Unless otherwise agreed, a party may be represented by a legal practitioner (whether from the Cayman Islands or elsewhere) or by any other person chosen by him. This allows the party flexibility to use an arbitration expert (who may not be legally qualified) or employ the services of overseas counsel, so as to suit commercial needs and the particular issues in dispute: the former would obviously not be possible in court proceedings, while the latter would be subject to limitations and restrictions in obtaining rights of audience to appear in court proceedings.

The parties may agree on powers to be exercised by the tribunal for the purpose of arbitral proceedings and any orders made pursuant to those powers may be enforced with the leave of the Court. The Law also provides a default list of powers that may be exercised by the tribunal in the event that the parties do not agree them - such as the power to award security for costs, discovery of documents and interrogatories, the giving of evidence by affidavit and the preservation and interim custody of any evidence for the purposes of the proceedings. This allows the parties flexibility to determine what an arbitrator can and cannot do, as well as ensuring that he has all necessary powers to conduct an arbitration properly even if the parties do not address their minds to this issue.

The Jurisdiction And Process For Granting Interim Measures And Preliminary Orders

Subject to the parties' agreement, an arbitral tribunal may grant interim measures at any time prior to the issue of an award - including measures to maintain or restore the original position of a party, and to take action that would prevent prejudice to the arbitral process or preserve evidence that may be relevant and material to the resolution of the dispute. Parties considering arbitration will be assured that the tribunal has jurisdiction to act to preserve the status quo pending determination of a dispute. Specific provisions address the regime for obtaining relief on an ex parte basis (i.e. without notice to the other party) and for requiring the provision of appropriate security as part of the price for obtaining an interim measure.

The Court is empowered to exercise any of the arbitrator's powers, and also jurisdiction to grant interim injunctions including asset-freezing orders, but only if the arbitral tribunal is unavailable or incapacitated for any reason. This means that if the tribunal cannot be convened or act for unforeseeable reasons, the parties are not left in limbo and can still seek the relief when they need it. In non-urgent cases, the Court is only permitted to act with the tribunal's permission or the written agreement of all parties; and any order of the Court will cease to have effect if the tribunal subsequently makes an order to which the Court's order relates. These provisions serve to underline the primacy of an arbitrator's powers and the purely supporting role which the Court may play.

The Making Of An Award, Including The Remedies Available, Fees And Costs

The parties may agree the powers exercisable by the arbitral tribunal in terms of remedies. Subject to any such agreement, the tribunal may award any remedy or relief that could have been ordered by the Court if the dispute had been the subject of civil proceedings in that Court.

Unless otherwise agreed, an arbitrator may make interim awards and awards on different issues at different points in the arbitral proceedings; andmay make an award at any time.

The arbitral tribunal has a complete discretion with respect to making awards of costs in relation to an arbitration, unless a contrary intention is expressed in the arbitration agreement.

An arbitral tribunal's fees and expenses may be subjected to assessment by the Court at the request of a party, unless they have been fixed by written agreement or such agreement provides for determination by another person or institution.

Restricted Rights To Appeal Or Otherwise Challenge An Award In The Court

A party to arbitration proceedings may appeal to the Court on a question of law arising out of an award made in the proceedings, but such an appeal first requires leave of the Court - and the parties may agree to exclude this right of appeal in any event.

A party also has an inalienable right to apply to the Court to set aside an award which is tainted by fraud, a breach of natural justice, has some jurisdictional flaw (e.g. the agreement is invalid or does not cover the dispute, the tribunal is not properly constituted), or is contrary to public policy. These are the standard grounds to set aside awards as found in most modern arbitral regimes which follow the Model Law.

Court Powers In Relation To An Award

The Court is given jurisdiction to determine any preliminary point of law, if either all parties agree or the tribunal grants permission. The Court's decision may be the subject of appeal if it raises a legal question of general importance; and unless otherwise agreed by the parties, the tribunal may continue the arbitration in the meantime. This provision gives the parties flexibility to make use of the Court to resolve a complex legal issue which is not best suited to the tribunal (e.g. if the arbitrator does not have legal training) without undermining the entire arbitral process. The parties can also agree to exclude this provision altogether.

Any award made by an arbitral tribunal (where it had jurisdiction) may be enforced with leave of the Court, permitting judgment to be entered in terms of the award; which in turn allows a party to seek post-judgment relief. This provides successful parties with access to the Court's broad array of enforcement processes in order to ensure that arbitral awards have meaningful effect on the losing parties.

The recognition and enforcement of foreign arbitral awards is addressed in a different statute (the Foreign Arbitral Awards Enforcement Law) which gives force to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (''the New York Convention''). However, the Law now provides for the recognition and enforcement of any award, irrespective of the country in which it is made and whether or not that country is a party to the New York Convention, as long as that award satisfies the same criteria as are set out in the Convention.

Other Notable Features

The Law expressly requires a tribunal to conduct arbitral proceedings in private and confidentially; it also allows for related Court proceedings to be held in private on application by a party and to restrict the publication of any confidential information relating to the proceedings in appropriate circumstances. As such, the parties are assured that privacy is maintained in relation to all aspects of an arbitration and that (in appropriate cases) any related court proceedings can also protected in the same way. Such features do not appear in the Model Law, but they are designed to respect parties' interest in preserving confidentiality in respect of arbitral disputes in jurisdictions like the Cayman Islands.


The Cayman Islands can now start to develop an arbitration industry based on a statute which implements modern international arbitration practices. The Law has the promise of support from a judiciary which is committed to giving it all the support which is required by way of arbitration applications, including the fast track procedures offered by the Financial Services Division of the Court.

The next step will be for legal practitioners to encourage commercial parties who use Cayman entities or Cayman law for their transactions to include Cayman arbitration provisions in their agreements. If that initiative succeeds, one can expect the volume of arbitrations to surge in the ensuing 12-24 months, as disputes start to arise in relation to those transactions.

Previously published in MEALEY'S International Arbitration Report, August 2012.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions