Bermuda: Enforcement Of Foreign Arbitral Awards In Bermuda

Last Updated: 30 September 2019
Article by Keith Robinson, Michael Hanson and Sam Stevens

Chief Justice underlines the jurisdiction's pro-enforcement stance in notable recent judgment

What has happened?

In a judgment handed down on 3 September 2019 in the case of Cat.SA v Priosma Limited¹, the Bermuda Supreme Court:

  • refused an application by the Bermuda based Priosma Limited (Priosma or Award Debtor) to set aside an ex parte order granting Cat.SA (CAT or Award Creditor) leave to enforce a foreign arbitral award rendered in an arbitration seated in Paris (Set Aside Application);
  • granted Priosma's application for a stay of enforcement in Bermuda pending the outcome of an appeal by Priosma against the award to France's highest appellate court (Stay Order); but
  • as a condition of the Stay Order, ordered Priosma to provide security for the full amount of damages and costs awarded to CAT by the three-member tribunal in Paris.

Why is the case noteworthy?

The judgment once again confirms Bermuda's status as a sophisticated, arbitration-friendly jurisdiction. It serves as a classic example of the robust approach taken by the Bermuda courts when asked to enforce foreign arbitral awards against award debtors in Bermuda, even in circumstances where the award in question is being challenged by the award debtor in the courts of the "seat", or legal place, of the arbitration.

The judgment of the Chief Justice of Bermuda, Mr Narinder Hargun, expressly states that the decision is "consistent with the pro-enforcement policy" of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention), which was given legal effect in Bermuda in 1979, as well as the Bermuda International Conciliation and Arbitration Act 1993 (1993 Act), which incorporates the UNICITRAL Model Law into Bermuda law.

On a more technical level:

  1. The judgment stands as good authority for the principle that, pursuant to the legal doctrine of issue estoppel, the Bermuda courts will not allow an award debtor to re-litigate arguments in support of non-enforcement of a foreign award if those arguments have already been made before, and rejected by, the supervisory courts of the arbitration
  2. The judgment makes it clear that even if award debtors are successful in persuading the Bermuda courts to stay enforcement pending a legal challenge in the courts of the foreign seat, there is nevertheless a real possibility that the award debtor may be required, depending on the circumstances, to provide security as a condition of any order granting a stay (potentially up to the full value of the award).

Brief facts

CAT, a member of a French group of (re)insurance companies, commenced an arbitration against Priosma, a Bermudian reinsurance broker, in Paris pursuant to an arbitration agreement annexed to a brokerage agreement. CAT's claim concerned the non-payment of sums it alleged were due to it from Priosma under the brokerage arrangements between the parties.

The subsequent arbitral proceedings in Paris were fully contested by Priosma, which as part of its defence contested the jurisdiction of the tribunal to decide CAT's claim on the grounds that there was no valid and binding arbitration agreement in place between CAT and Priosma (the Jurisdictional Objection).

The arbitral tribunal rejected the Jurisdictional Objection and proceeded to decide the merits of the substantive dispute in CAT's favour. Priosma was ordered to pay CAT the sum of €556,958 along with interest from the date of the award.

On 10 June 2016 Priosma appealed against the award to the Paris Court of Appeal, once again relying on the Jurisdictional Objection. The Paris Court of Appeal dismissed Priosma's appeal, and on 24 September 2018 Priosma issued a further appeal to the Cour de Cassation.This appeal was pending when the Set Aside Application was heard by Bermuda Supreme Court.

Key conclusions and principles

  1. The grounds of the Set Aside Application were identical to the grounds relied on by Priosma before the Paris Court of Appeal. The latter court having rejected those arguments, the doctrine of issue estoppel prevented the Bermuda court from entertaining those same arguments in its proceedings. In short, the Chief Justice concluded that he was bound by the Paris Court of Appeal's ruling.
  2. The fact that Priosma had commenced court proceedings in France to challenge the award meant that Priosma had voluntarily submitted to the jurisdiction of the French courts, and therefore an essential condition under Bermuda law for issue estoppel to apply in the context of a ruling of a foreign court was made out.
  3. The Bermuda court's power to grant a discretionary stay of enforcement of a foreign award pending the outcome of a challenge to the award in the courts of the seat derives from Section 36(2) of the 1993 Act. When deciding whether to exercise its discretion to stay enforcement, the Bermuda Court will apply the "sliding scale" test set out in the foundational and long-running English case of IPCO (Nigeria) Limited v Nigerian National Petroleum Corporation².
  4. As such, the Bermuda court will consider a number of relevant factors when deciding to grant a stay of enforcement, including whether the challenge in the courts of the seat is brought bona fide and not simply by way of a delaying tactic, whether the challenge has a realistic prospect of success, the extent of any delay which would be occasioned by a grant of a stay and any resulting prejudice to the award creditor.
  5. In deciding whether to order the award debtor to provide security as a condition of granting a stay of enforcement, the Bermuda Court will consider (i) the strength of the argument that the award is invalid (as perceived on a brief consideration of the award debtor's arguments in the foreign proceedings); and (ii) whether enforcement will be rendered more difficult for the award creditor if enforcement is delayed³.

Footnote

1 [2019] SC (Bda) 56 Com

2 [2005] EWHC 726 (Comm)

3 Applying Soleh Boneh International Ltd v Government Government of Republic of Uganda. [1993] 2 Lloyd's Rep 208

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 Mondaq.com.

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

Authors
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”

Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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