The Cayman Islands are a British Overseas Territory and a major
global financial centre. Over 40 of the top 50 major banks are
licensed in the Cayman Islands and there are over 10,000 registered
investment funds. The legal system is based on the English common
law with the Privy Council in London being the ultimate court of
A significant number of M&A deals are governed by the law of
the Cayman Islands. The Cayman Islands are also frequently chosen
as a neutral forum for the resolution of disputes. The Cayman
Islands have recently enacted modern arbitration laws which are
loosely based on the UNCITRAL model law. There is also a bespoke
division of the Court known as the Financial Services Division or
FSD. The FSD's sole remit is to handle commercial disputes.
The FSD's Rules require the Court to determine disputes
quickly and proportionately, using modern technology where
appropriate. The recent case of Executive Wealth Management v
Tharwa Investments S.A. FSD 2/2014 offers a good example. This
was a case concerning a share sale agreement between parties based
in the United States and Middle East respectively. Judgment was
handed down approximately 6 months after proceedings were
The issue in Executive Wealth was one frequently seen
in M&A disputes, namely whether the purchaser was entitled to
raise breach of warranty claims against the seller. The relevant
agreement contained commonly used notice provisions which required
the purchaser to serve notice of warranty claims on the seller at
its registered office within a certain time after completion.
In its defence to a claim for the purchase price, the purchaser
claimed that a letter it had written to the seller's lawyers
constituted a valid claim notice. The seller disputed this and
relied on the notice provisions in the agreement, which required
notices to be served on its registered office and, it argued,
should be strictly enforced.
The Judge agreed with the seller, relying on a vivid
illustration from a well known English case in which the Court
explained that if an agreement said that notices have to be written
on blue paper then a notice sent on pink paper could not be
effective, no matter how clear the intent behind the notice.
Although every case turns on its own facts, it is clearly important
in any commercial agreement for there to be a degree of certainty
over what must be done to comply with the applicable term.
Travers Thorp Alberga acted for the successful seller in
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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