The Bahamas Supreme Court gave an important judgement regarding
the efficacy of foreign arbitral awards for being relied upon as
the basis of a statutory demand to evidence insolvency of the
debtor in the liquidation case of In the Matter of BHP
International Markets Limited 2016/COM/bnk/0038. The Court
held that prior enforcement of the foreign award under the
Arbitration (Foreign Arbitral Awards) Act, 2009 was not
necessary and it dismissed opposition to the statutory demand.
BHP International Markets Limited
("Company") was an International
Business Company incorporated in The Bahamas. Wason Holding Limited
("Petitioner") was a creditor that had
obtained a foreign arbitral award against the Company following an
arbitration conducted in Hong Kong pursuant to the UNICITRAL
Arbitration Rules. The Petitioner served the Company with a
statutory demand based upon the foreign arbitral award. No prior
enforcement was obtained under the Bahamian arbitration regime
which contains a procedure for enforcement of foreign arbitral
awards in The Bahamas.
The Company sought to have the statutory demand set aside on
several grounds, including an argument that the foreign arbitral
award must first, by an application for enforcement, be recognized
and domesticated as a Bahamian debt before it may be relied upon in
The Bahamas. Counsel for the Petitioner countered that it was not
necessary first to have commenced enforcement proceedings and that,
if the Court were to accept the Company's argument that prior
enforcement of the arbitral award were necessary to form the basis
of a statutory demand, a natural consequence would be that only
judgment creditors would be able to commence liquidation
proceedings, which cannot be what Parliament intended. The
Petitioner further contended that a creditor has various options
available to him and may pursue his rights how he so chooses in
accordance with statute.
After extensive review of the companies' liquidation regime
pertaining to statutory demands and the arbitration regime
regarding enforcement of foreign arbitral awards, the Honourable Mr
Justice Ian Winder of the Commercial Division held:
"I do not accept the Company's arguments that [the
Petitioner] is precluded from issuing a statutory demand with
respect to the payment of sums awarded in a foreign arbitral award.
It is clear that the Arbitration (Foreign Award) Act, 2009
(AFAA) does not impose a duty or mandatory
obligation on a party in whose favour the award is granted to first
enforce that award locally in order to rely upon it...
The AFAA was never set up to restrict the beneficiary of a
foreign award but to facilitate such a person by treating his
foreign award as a domestic award, in the appropriate
circumstances. The issuance of a statutory demand following a
foreign award and enforcement of that award are not parallel
processes but separate and distinct matters. To require a creditor
to seek to enforce his foreign award before he could issue a
statutory demand cannot be supported as neither the Companies
Act, the AFAA, nor the Arbitration Act requires
The Company's opposition to the statutory demand was
dismissed and the Company ordered to be wound up on grounds that it
was insolvent and that it was just and equitable.
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The request for issue of interim injunction cannot be considered as a substantive claim under Cyprus Civil Procedure Rules.
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