What are the main methods of resolving commercial disputes?
The three primary mechanisms in the Cayman Islands for resolving commercial disputes are (in order of popularity) litigation, arbitration, and mediation.
Litigation is the most prevalent method of the three and is the focus of this guide. For large commercial disputes, litigation is usually commenced in the Financial Services Division ("FSD") pursuant to the Grand Court Rules 1995 and FSD User Guide (see question 2 below).
Litigation is adversarial in nature and the standard of proof is on the balance of probabilities. The court has wide powers to case manage the proceedings and the conduct of the parties.
There is no formal requirement to pursue alternative dispute resolution ("ADR") under the Grand Court Rules however the court may encourage the parties to pursue ADR where appropriate.
Large commercial contracts involving Cayman Islands entities tend to include arbitration clauses most commonly providing for the seat of any arbitration to be in the Cayman Islands, New York, London, or Hong Kong.
Arbitration is governed by the Arbitration Law 2012 (based on and the UNCITRAL Model Law on International Commercial Arbitration 1985) and the Foreign Arbitral Awards Enforcement Law 1997 (which gives effect to the New York Convention). As with litigation, arbitration is an adversarial process.
Mediation is a structured, non-adversarial negotiation led by a neutral mediator with a view to reaching a settlement. The number of professionally accredited mediators is steadily growing in the Cayman Islands however mediation is not compulsory in commercial disputes and it is infrequently used in practice.
As one would expect, it is also common for parties to resolve matters through non-mediated negotiation either directly or through their legal representatives.
What are the main procedural rules governing commercial litigation?
The Grand Court Rules 1995 ("GCRs") and Grand Court Practice Directions ("PDs") are the primary procedural codes in the Cayman Islands. The Financial Services Division Users Guide sets out additional rules for commercial litigation.
These procedural rules set out the framework for case management of the entire process and include specific rules on service of documents, disclosure (also called discovery), witnesses and expert evidence, settlement offers and costs.
The Cayman Islands GCRs are very similar to the pre-1998 English Supreme Court Rules ("SCRs"). When seeking to interpret and apply the GCRs, it is accepted practice to seek guidance from the way the English courts interpreted the equivalent provisions of the SCRs.
The Court of Appeal Law (2011 Revision) and the various sets of Court of Appeal Rules govern appeals from the Grand Court. Appeals from the Court of Appeal to the Judicial Committee of the Privy Council in London are covered by the Cayman Islands (Appeal to Privy Council) Order 1984 (as amended) and the Judicial Committee (Appellate Jurisdiction) Rules 2009 (as amended).
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
The court system in the Cayman Islands has a hierarchal structure, where appeal lies to the court above.
Small claims (which are outside the scope of this guide) are commenced in the Summary Court. All other claims (whether they be civil, judicial review, family, trusts or estate matters) start life in the Grand Court.
Within the Grand Court there are five specialty courts known as 'divisions':
- Civil Division
- Financial Services Division (FSD)
- Family Division
- Criminal Division
- Admiralty Division
Commercial disputes are brought in the Civil Division or the FSD. The Grand Court has unlimited monetary jurisdiction, so it can determine commercial disputes of an unlimited value.
The FSD is likely to be of most interest to the reader since it assumes jurisdiction over the following matters:
- Disputes relating to Cayman Islands registered investment funds or exempted insurers
- Insolvency/bankruptcy related proceedings
- Trusts or estate related proceedings with a value more than US$1.2m
- Breaches of insurance contracts where claim exceeds US$1.2million
- Any action for breach of contract or breach of duty by or against a professional service provider with a value over US$312,500
- Applications under Cayman Islands' financial services regulatory laws
- Proceedings to obtain evidence in support of foreign letters of request
- Applications for international co-operation in bankruptcy proceedings
- Proceedings brought under the Arbitration Act 2012
- Enforcement of foreign judgments or arbitral awards
- Any application for an order dissolving a partnership that carries on business as a mutual fund
FSD trials are heard by a specialist FSD judge sitting alone.
If the verdict is contested, either party may seek permission to appeal to the Court of Appeal where traditionally cases will be heard by a panel of three judges.
The final court of appeal is the Privy Council in London, England where normally five judges hear the appeal.
How long does it typically take from commencing proceedings to get to trial?
The basic timetable is dictated by the GCRs in conjunction with the FSD Users Guide. The court does, however, retain discretion to fix deadlines for each stage of the process depending upon the complexity and/or urgency of the case. Judges treat deadlines seriously and can impose sanctions on a party (such as financial costs orders or even dismissal of the party's case) if its actions cause undue delay or costs to be unnecessarily incurred.
It is not uncommon for a commercial dispute to take 12-18 months to reach the final hearing/trial stage. Parties should also factor into their considerations the time it will take for any appeals (such as those which may lie to the Court of Appeal and Privy Council).
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
Proceedings are held in open court or in the judge's chambers. Proceedings in open court are open to the public, whereas proceedings in chambers are generally considered to be private (i.e. confined to the parties to the proceedings). The judge may, however, allow other interested parties, including members of the public, to attend a chambers hearing.
In practice, interlocutory hearings are often heard in chambers whereas trials are conducted in open court in accordance with the principle of open justice (which is explicitly protected by the Cayman Islands Constitution).
The court can impose reporting restrictions. It also has the discretion to hear matters 'in camera' (meaning, in private) where it is in the interests of justice to do so.
Originating documents (such as writs and petitions) are filed with the court registry and will be placed on the public register unless otherwise ordered by the court.
Weekly Cause Lists (published on the Cayman Islands' judicial website) advertise the matters that the court will be hearing during that week. Certain cases will, however, be anonymised (for example, ex parte applications where publicity would potentially defeat the object of the hearing or where proceedings relate to commercially and/or personally sensitive matters).
As a rule, judgments of the Grand Court, Court of Appeal and Privy Council are available to the public. Indeed, the catalogue of court judgements has recently become available online. Certain orders and applications of particular interest may also be published in the Cayman Islands Law Reports (available on the Judicial website) or in the Cayman Islands Gazette.
In appropriate instances the parties' names may be anonymised in published judgments. Certain sensitive judgments may also be embargoed for a period.
All other court documents are not automatically open to the public however they are available to the parties. There is also a procedure in the GCRs for non-parties to apply to the court to have access to some or all the court file if they can satisfy the court that such access is appropriate in the circumstances of the case.
In insolvency proceedings, the petition for the winding-up of the company must be heard in open court. Interlocutory applications, either before the hearing of the winding-up petition or after the making of a winding-up order, are normally heard in the judge's chambers.
Arbitration proceedings are conducted in private and confidentially unless the parties agree otherwise. Disclosure of any confidential information relating to the arbitration is actionable as a breach of confidence. Confidentiality extends to information supplied by the parties, evidence given during the arbitration and any rulings or awards.
Mediations are normally conducted on a without prejudice basis and in private. Statements made in, and documents prepared for, a mediation cannot be used outside the mediation process.
What, if any, are the relevant limitation periods?
Limitation periods are largely governed by the provisions of the Limitation Law (1996 Revision). Depending upon the type of claim being pursued, the limitation period differs.
The limitation date is normally 6 years from a 'triggering event'. The triggering event is normally the date upon which a cause of action accrues (in other words, the date the claimant acquires the right to bring the action), for example, the date a contract is breached.
Claims that are subject to the 6-year limitation period include:
- Contract: The cause of action normally accrues on the date of the contract is breached;
- Tort (excluding libel & slander and personal injury): The cause of action accrues on the date the damage is first suffered;
- Certain 'open-ended' loans: The cause of action accrues on the date a written demand for payment is made;
- Enforcement of judgments: The triggering event is the date the judgment became enforceable;
- Actions by a beneficiary to recover trust property in respect of a breach of trust (save for breaches relating to fraud).
Limitation periods for certain other commonly issued claims are:
- Actions for breach of trust involving fraud: No limitation subject to the law of equity (such as laches);
- Libel and/or slander: 3 years from the date the cause of action accrued (which is normally the date when damage was suffered);
- Negligence 'latent damage' cases: The later of 6 years from the date on which the cause of action accrued or 3 years from the earliest date the claimant had both the knowledge required for bringing an action for damages and a right to bring such action;
- Personal Injury: 3 years from date of damage or date of victim's knowledge;
- Specialty (written instrument under seal or deed): 12 years from the date the cause of action accrued, which is normally the date of the breach;
- Claims for recovery of land: 12 years from the date on which the right of action accrued.
Time limits may be extended in certain cases such as where there has been fraud or deliberate concealment.
Limitation is a complex area and should always be reviewed carefully.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
There are no practice directions or other procedural rules in relation to pre-action conduct other than in relation to judicial review proceedings (for which there is a specific pre-action protocol).
It may nevertheless be advisable for parties to exchange information in advance of filing proceedings (unless a limitation period is about to expire). This is because the "overriding objective" (set out in the preamble to the GCRs) requires litigation to be conducted in a just, expeditious and economical manner. The parties' pre-action conduct may be taken into consideration when the court considers whether the overriding objective has been complied with. The court will often consider a party's pre-action conduct when awarding costs for or against a party.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
Proceedings in the Grand Court are commenced by filing one of the following documents:
- Writ of summons.
- Originating summons.
- Originating notice of motion.
The choice of originating document is important and will be governed by the nature of the cause of action, the relief sought and the requirements of the GCRs. For convenience, we use the example of a writ of summons (or writ) in this guide unless explicitly stated otherwise.
Proceedings are officially commenced when the court issues the writ by stamping it with the court's seal. Once issued, the claimant has four months to serve the writ on each defendant. Service is generally effected by a privately instructed process server (there is provision for service through the Grand Court bailiff, an officer of the Court, but that is rarely used in commercial matters).
There is provision for service by other means ('alternative' or 'substituted' service) in appropriate circumstances, for example, by electronic means or through government entities overseas. Electronic service was, for instance, permitted at the height of the Covid-19 curfew measures in Q2 and Q3 of 2020.
Service on a defendant located outside the Cayman Islands is subject to the leave of the court and a specific set of rules and time limits apply. This hearing of an application to 'serve out' is normally conducted ex parte. The claimant will have to satisfy the court that the claim has merit before service overseas will be permitted. If leave is granted, the claimant will normally have 6 months to effect service of the writ.
How does the court determine whether it has jurisdiction over a claim?
In accordance with common law principles, the Cayman Islands Grand Court may take jurisdiction if:
- the originating claim (such as a writ) is served on the defendant whilst it is physically present in the Cayman Islands;
- the defendant submits to the jurisdiction voluntarily; or
- the court otherwise gives permission under one of several specific heads (each of which depend upon the claimant showing a sufficient connection to the Cayman Islands), for example, pursuant to an application for leave to serve out of the jurisdiction under GCR Order 11.
A defendant can contest the jurisdiction of the Cayman Islands court by making an application to the court.
Where the jurisdiction of the Cayman Islands court has been established by service of the defendant within the Cayman Islands, the application can only be made on grounds of forum non conveniens. Such applications may be made based on a jurisdiction clause or other connecting factors such as the location of relevant documents and witnesses, the applicable governing law and whether the claimant would be substantially prejudiced by having to proceed with his claim in a different jurisdiction.
The Cayman Islands courts will generally respect the parties' contractual choice of jurisdiction by granting a stay of proceedings commenced in the Cayman Islands in breach of any such jurisdiction clause or by granting an anti-suit injunction restraining the commencement of proceedings abroad. This is, however, subject to there being strong reasons for departing from the clause or where local laws (such as those relating to financial services regulation or insolvency) or issues of public policy take precedence.
If the jurisdiction of the Cayman Islands court has been established by service out of the jurisdiction (see above), then an application may be made to set aside the order granting leave to serve out on the grounds that the court should not have granted leave.
How does the court determine what law will apply to the claims?
The courts will generally respect the parties' freedom to choose the applicable law in accordance with established common law principles. As such, the court will normally uphold the express choice of law within the contract.
The courts can refuse to respect the choice of law on public policy grounds and some local laws may be applied irrespective of the contractual choice of law. For example, certain mandatory provisions apply to the following areas of law:
- Financial services regulation
- Real estate
- Sale and supply of goods
If there is no express choice, the court will determine the law by inferring the intention of the parties or by seeking to ascertain the system of law with which the contract has its closest and most real connection.
In what circumstances, if any, can claims be disposed of without a full trial?
A party may apply to strike out the whole or any part of the other party's statement of claim or defence on the basis that the offending pleading:
- Discloses no reasonable cause of action or defence (and there is no chance of curing the defect);
- May prejudice, delay or embarrass the trial of the action;
- Is scandalous, frivolous, or vexatious; or
- Constitutes an abuse of process.
A party may apply for summary judgment, which is an expedited hearing of the dispute based on affidavit evidence only. The court will only grant summary judgment if it is satisfied, on the evidence presented to it, that the claim or the defence has no realistic prospect of success. The court will not grant summary judgment where there are disputes between the parties in relation to matters of law or fact that merit investigation at trial.
Point of law
A party can apply for the case to be determined on a point of law or on the interpretation of a document without a trial.
In addition, a party can seek the dismissal of a case without a trial for non-compliance with procedural requirements, such as when:
- The claimant has failed, unreasonably, to take steps to bring the case to trial.
- The claimant has failed to file a statement of claim, or a defence to a counterclaim.
- A party has failed to comply with the court's rules or an order of the court; or
- A party has engaged in conduct which amounts to an abuse of process or which makes a fair trial impossible.
Nothing precludes the parties from reaching terms and compromising a claim at almost any stage of proceedings. Settlement terms are invariably incorporated into a form of Consent Order and will require the approval of the Court. If proceedings are to be stayed pending implementation of terms, a 'Tomlin Order' type of arrangement can be entered.
Discontinuance or withdrawal
In the absence of an agreement between the parties, there are also provisions in the GCRs almost identical to the former SCRs in England & Wales that allow a party to discontinuance or withdraw its claim on certain terms (either with or without the leave of the Grand Court).
What, if any, are the main types of interim remedies available?
The main type of interim remedy is the interim injunction. An injunction can either require the other party to do a specific act or refrain from doing a specific act until the court has determined the matters at issue in the proceedings.
The court has jurisdiction to grant interim injunctions in all circumstances in which it is just and convenient to do so. The basic test is twofold:
- There is a serious issue to be tried (prohibitory injunction) or there is a "high probably of success at trial" (mandatory injunction)
- The balance of convenience lies in favour of granting the injunction, pending the trial of the case.
An interim injunction will ordinarily not be granted where an award of damages will provide adequate compensation. An applicant must provide an undertaking to meet any losses suffered by the respondent in the event it is determined that the injunction should not have been granted.
If appropriate, the court can grant an injunction without notice to the respondent subject to the respondent's right to have the matter heard inter partes at the earliest convenient return date.
The Grand Court can grant orders that freeze assets pending judgment or final order if both:
- The applicant has demonstrated a good arguable case against the respondent.
- There is evidence of a real risk that the respondent may dissipate, dispose of, hide, or remove its assets from the jurisdiction prior to judgment being given.
Freezing orders are almost always obtained without notice to the defendant because of the requirement that there must be risk of dissipation.
The court can grant freezing injunctions (in addition to other interim relief) in support of main proceedings that have been commenced in another jurisdiction, provided that the foreign proceedings can give rise to a judgment that can be enforced in the Cayman Islands under any law or at common law.
The Court may order the seizure of property to preserve it as evidence pending a trial.
The court may make an order appointing receivers to take control of and preserve property pending a trial (including the appointment of receivers in aid of foreign proceedings) if it is just and convenient to do so.
The court may make an order appointing a provisional liquidator over a company pending determination of a winding-up petition to prevent:
- dissipation of the company's assets;
- oppression of minority shareholders; and/or
- mismanagement and misconduct by the company's directors.
An application can be made at any time after the time for acknowledging service has passed. An interim payment will be ordered where the claimant will be at least partially successful, and it would be unjust to delay immediate payment of that entitlement.
Security for costs
The Grand Court can order a claimant to provide security for costs where the claimant:
- Is a Cayman Islands company and there is reason to believe that its assets will be insufficient to pay the costs of the defendant, should the defendant be successful at trial;
- Is resident outside the Cayman Islands;
- Has no business or has no assets in the Cayman Islands;
- Is a nominal claimant who is suing for the benefit of some other person and there is reason to believe that he or she will be unable to pay the costs of the defendant if ordered to do so;
- Has not stated his or her address in the writ or other originating process or his or her address is incorrectly stated; or
- Has changed his or her address during the proceedings with a view to evading the consequences of the litigation.
If one or more of the above criteria is met, the court may make an order for security for costs where it thinks it just to do so having regard to all the circumstances of the case. An application for security for costs can be refused if one or more of the following applies:
- The claimant is a sovereign government or an agency of a sovereign government;
- The claim is likely to succeed at trial;
- The application has been brought too late in the proceedings;
- The defendant is using the application as a means of stifling the claimant's claim; or
- The claimant's impecuniosity was caused by the defendant's actions.
By comparison, remedies available at trial (in appropriate cases) include:
- Final injunctions
- Specific performance
- An order rescinding a contract on grounds such as:
- duress; or
- undue influence
- Rectification of a written contract
- Restitution of property where a party has been unjustly enriched
- A declaration as to the parties' rights relating to the matter in issue
- An order requiring a party to provide an account of profits improperly made from a breach of trust or fiduciary duty
- In breach of trust claims, an order allowing the claimant to follow, trace and recover from the trustees or a third-party property that has been applied or transferred in breach of trust.
Although damages are generally intended to be compensatory, the court has the jurisdiction in limited circumstances to award aggravated damages and exemplary/punitive damages.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
Defence (and counterclaim)
As stated above (question 8), a claim will normally be commenced by filing and serving a writ of summons. The claimant must serve the writ on each defendant within four months of its issuance (unless a defendant is outside the Cayman Islands, in which case the time limit is six months).
The time within which the defendant must file its defence is contingent on whether a statement of claim has been served with the writ.
If a statement of claim is served with the writ, the defendant must:
- File an acknowledgment of service giving notice of its intention to defend the claim within 14 days of service (extended to at least 28 days if the defendant is served outside the Cayman Islands); and
- File and serve a defence (and any counterclaim) within 14 days of filing the acknowledgment of service.
If a statement of claim is not served with the writ, the defendant must:
- File an acknowledgement of service within 14 days of service of the writ (extended to at least 28 days if the defendant is served outside the Cayman Islands); and
- Upon the claimant serving its statement of claim (which must be served within 14 days of service of the defendant's acknowledgement of service), the defendant must serve its defence (and any counterclaim) within 14 days.
The claimant has 14 days from service of the defence (and any counterclaim) to file a reply to the defence (and a defence to any counterclaim).
When the time has expired for the filing of any reply and defence to counterclaim, the proceedings are deemed to be closed.
All the above time limits can be extended either by agreement between the parties or by way of court order.
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
The rules for disclosure (locally referred to as 'discovery') largely mirror the practice in England and Wales prior to the implementation of the Civil Procedure Rules.
Discovery against parties or non-parties before the formal commencement of proceedings is not generally permitted but the court has the power to make orders against persons within its jurisdiction to produce documents where it can be shown that the person has become mixed up, innocently or otherwise, in wrongdoing (Norwich Pharmacal relief).
Preservation of documents
Once litigation is contemplated a party should take such steps as are necessary to preserve the documents which may be relevant to the potential dispute. Routine document destruction should be put on hold.
Following the closure of pleadings (see question 13 above), each party must prepare and serve a list of relevant documents. Although the court rules provide for these lists to be exchanged within 14 days, this rarely occurs since it is far more common for the deadline to be extended either by agreement or by court order.
Documents are disclosable if they:
- Are, or have been, in the party's (or their agent's) possession, custody or power; and
- Are relevant to any of the issues in dispute in the litigation.
A document is 'relevant' if it may support or undermine either party's case, or where it may lead the other party on a train of enquiry leading to either of those consequences.
The definition of 'documents' extends beyond physical documents to include every means by which information is stored or recorded. As such, documents include paper, electronic, audio and video files and as well as objects, property, and samples.
After the list of documents has been exchanged, each party can inspect the documents in the other party's list, except for documents subject to privilege (see below).
A continuing obligation
The obligation to disclose is a continuing one. In other words, a party has a duty to disclose documents relevant to the issues in dispute throughout the duration of the case.
Documents that fall into one of the following categories are generally protected from disclosure:
- Legal professional privilege (both legal advice privilege and litigation privilege).
- Public interest immunity, which protects documents from disclosure that would be injurious to the public interest.
- Without prejudice communications between the parties created for the purpose of genuine negotiations to settle current or contemplated litigation.
- Where disclosure would be contrary to law and thereby put the disclosing party at risk of criminal or other sanction.
Where a parties list appears to be incomplete, the opposing party can require it to produce a 'further and better' list of documents. This will often require further searches for documents to be undertaken. The court can also require a party to swear an affidavit attesting the accuracy and completeness of the list which has been produced; if the affidavit contains an untrue statement this is a contempt of court.
The court can also order discovery of specific documents if it is satisfied that the documents are likely to exist and that their production is necessary for the fair disposal of the proceedings or to save costs.
The court can also make an order requiring a party to produce documents to a judge for inspection: this may happen where, for example, a party claims it is entitled to withhold a document from its opponent and that claim is challenged.
A party's failure to comply with its discovery obligations can also lead to the court making orders for costs against the defaulting party. In addition, if the court is satisfied that relevant documents have not been disclosed it may draw inferences against the party in default as to the content of those documents and/or the party's credibility. In some cases, a defaulting party may be prevented from advancing or defending a claim until it remedies the default.
Use of documents discovered
A party may not, without agreement or the court's permission, use a discovered document for any purpose other than the litigation in which the document was provided. This obligation continues after the conclusion of the case, unless during the proceedings the document is read to or by or referred to in court. A party who uses a discovered document for a purpose unconnected with the litigation commits a contempt of court.
Discovery from third parties
Third parties resident within the Cayman Islands can be made the subject of a subpoena to produce relevant documents and testimony by a party to litigation. A party can also apply to the court for an order requiring a deposition to be taken from a person who is within the Cayman Islands in a case when the court is satisfied that it is in the interests of justice to do so.
Where a person is not resident in the Cayman Islands the court may issue letters of request to the court of the country or place where the person resides asking that court to require that person to provide evidence that is relevant to the dispute.
In addition, section 1782 of Title 28 of the United States Code permits a party to legal proceedings outside of the United States to apply to a US court to obtain documents and evidence for use in the non-US proceeding. The Cayman court has upheld the right of a party to avail itself of the 1782 procedure, although it is cautious to ensure that the taking of such foreign depositions does not amount to oppressive or abusive conduct in the context of the Cayman Islands litigation.
How is witness evidence dealt with in commercial litigation (and, in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
The normal procedure is for witness evidence to be recorded in statement form. These statements contain an attestation that the content of the statement is truthful and accurate and that it is given either as a result of matters within that persons own knowledge or, where matters are not within that person's own knowledge, the source of the witness's knowledge or belief is stated. Witness statements are normally drafted by lawyers for the parties however they should reflect the witnesses own words.
Each side is required to exchange witness statements in advance of trial. If the witness's evidence is to be relied upon at trial, the witness will generally be required to give their evidence orally in court. The witness statement(s) submitted previously will act as that person's direct evidence (or 'evidence in chief') without the need for it to be read aloud in court. The opposing party may then cross examine the witness.
If a party wishes to cross-examine a witness outside of trial, they must apply for and obtain the permission of the court.
Taking evidence in Cayman for use in foreign proceedings
The principal provisions of the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters 1970 have been extended to the Cayman Islands by virtue of the Evidence (Proceedings In Other Jurisdictions) (Cayman Islands) Order 1978.
The process is commenced by the foreign court issuing a letter of request to the Cayman Islands court seeking its assistance to obtain evidence for the purposes of a foreign civil proceeding.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
In complex cases it is not unusual for each side to instruct their own expert on one or more issues. Expert evidence is permitted at the court's discretion (since the primary role of any expert is to assist the court).
The court usually gives directions at a case management conference concerning to the number of expert witnesses permitted for each party in each area of expertise. The court may also appoint an expert directly (either with or without consensus from the parties as to the identity of the expert).
In advance of trial, each party must exchange written reports containing the substance of the expert evidence to be given, which will ordinarily include a copy of the instructions given and/or questions posed to the expert witness.
Experts owe a duty to those instructing them (to exercise skill and care) but they also have an overriding duty to help the court. This duty to the court outweighs any obligation to the person instructing or paying them. Therefore, an expert witness:
- Must give evidence honestly, independently, and objectively to help the court understand and resolve issues within his or her expertise.
- Must not omit to consider relevant facts that could detract from his or her concluding opinion.
- Must notify the court if a question or issue falls outside his or her area of expertise or if he or she has insufficient information to form an opinion.
- Must inform the court if his or her opinion changes (as result of having considered another expert's evidence or for any other reason).
The court will give directions relating to the order in which the expert reports must be served. Usually, the reports must be exchanged simultaneously.
Thereafter, the experts will often meet to help narrow down the issues in dispute. This will either take place on a without prejudice basis or pursuant to the court's direction. The court may also order that the experts submit a joint report.
A party that intends to rely on expert evidence at trial will normally have to produce the expert witness at trial for cross-examination.
An expert's fees and expenses are paid by the party who appointed (retained) him. Such costs are potentially recoverable if the court makes a costs award. The costs of court appointed experts are fixed by the court and the parties are jointly and severally liable to pay them.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
Both interim (interlocutory) decisions and final decisions are subject to appeal although statutory provisions can and do in some instances limit the scope of such appeals.
Grand Court to the Court of Appeal
The Court of Appeal Law (2011 Revision) and the various sets of Court of Appeal Rules govern appeals from the Grand Court. Subject to certain limited exceptions, for example where a statute explicitly states that the court's decision is final, it is normally possible for a party to apply to appeal a decision of the Grand Court.
There are certain circumstances where a party may not appeal unless the Grand Court or the Court of Appeal gives permission to do so. The rules on whether leave to appeal is required, or whether an appeal lies 'as of right', mirror the old Supreme Court Rules in England and Wales. To obtain leave, the appellant will generally have to show that the appeal has a realistic (as opposed to fanciful) prospect of success.
Ordinarily, an appeal must be brought by filing a notice of appeal within 14 days from when the relevant order was entered. If leave to appeal is required, the notice of appeal must be filed within 14 days of that grant of leave.
Even if leave is granted, it should be noted that the Court of Appeal will be reluctant to overturn a finding of fact, particularly where such finding is based on the assessment of the credibility of witnesses by the lower court. The Court of Appeal will also be reluctant to interfere with the exercise of discretion by the judge of the lower court unless:
- The judge misdirected himself on the principles to be applied in the exercise of his discretion.
- The judge took account of factors that should not have been considered or failed to consider relevant factors.
- The decision was not a reasonable exercise of discretion.
Court of Appeal to the Judicial Committee of the Privy Council
The final appellate court is the Privy Council in England. Appeals from the Court of Appeal to the Judicial Committee of the Privy Council in London are covered by the Cayman Islands (Appeal to Privy Council) Order 1984 (as amended) and the Judicial Committee (Appellate Jurisdiction) Rules 2009 (as amended).
What are the rules governing enforcement of foreign judgments?
The Foreign Judgments Reciprocal Enforcement Law (1996 Revision) provides a statutory framework for the enforcement of foreign judgments in the Cayman Islands. However, this statute only applies to judgments from Australia and its External territories.
Judgments from elsewhere in the world are enforced pursuant to common law rules. At common law, foreign judgments are enforceable if the following four criteria are satisfied:
- The court issuing the judgment had personal jurisdiction over the defendant (because the defendant was either ordinarily resident in that country at the time proceedings were begun, appeared as a party in the proceedings, voluntarily participated in them (other than solely to challenge jurisdiction) or submitted to the jurisdiction of the foreign court;
- The judgment is final and conclusive;
- The judgment has not been obtained by fraud or in breach of natural justice; and
- The judgment is not contrary to public policy.
Historically, it was thought that the court would only enforce foreign judgments for liquidated sums at common law however the case of Bandone v Sol Properties  CILR 301 confirms that in certain circumstances the courts will enforce foreign non-monetary orders and judgments.
Procedurally, the Claimant will need to issue a writ asserting a right of action arising from the foreign judgment. The courts will not normally concern itself with the merits of the claim that resulted in the foreign judgment therefore summary judgment is commonly obtained by the judgment creditor against the judgment debtor. Once the Cayman Islands' court has granted judgment in the judgement creditor's favour, the foreign judgment may be enforced in the Cayman Islands.
Once enforceable, all the regular enforcement mechanisms become available including:
- Charging orders over land or other assets;
- Insolvency proceedings;
- Appointment of a receiver or sequestrator;
- Writ of fieri facias(i.e. a writ leading to an order directing the court bailiff to seize assets to satisfy the judgment debt);
- Garnishee proceedings (which requires a third party who owes money to the judgment debtor to pay it to the judgment creditor instead).
Can the costs of litigation (e.g. court costs, as well as the parties' costs of instructing lawyers, experts and other professionals) be recovered from the other side?
The overriding objective states that a successful party to any proceeding should recover from the opposing party the reasonable costs incurred by him in conducting that proceeding in an economical, expeditious and proper manner unless otherwise ordered by the court. This means that the winning party is indemnified for the cost and expenses incurred in vindicating or defending its rights. If the court sees fit to make any order as to the costs of the proceedings, the court shall order the costs to follow the event, except where it appears to the court that in the circumstances of the case some other order should be made.
Only hourly fees and disbursements are recoverable. Contingency fees, conditional fees and brief fees are not recoverable at the time of writing (however the Private Funding of Legal Services Bill 2020 is currently making its way through Parliament therefore changes are expected early in 2021). The maximum recoverable hourly rates for litigation before the Financial Services Division of the Grand Court are higher than those for other commercial proceedings. There are also rules limiting the recoverability of legal fees and disbursements in relation to foreign attorneys.
Costs are not usually quantified or payable until the conclusion of the matter. However, the court can make interim costs orders in certain circumstances.
When considering whether to make a costs order, the court will typically consider:
- the parties' conduct during the litigation;
- any payments into court; and
- any settlement offers made.
Where a payment into court, or an offer of settlement, exceeds the amount the claimant ultimately recovers on determination claim, the court will ordinarily refuse the claimant any of its costs after the date that the payment or offer was made.
Costs awards can be made on either the standard basis or the indemnity basis. Where costs are awarded on the standard basis, the legal fees recoverable by a successful litigant are limited by rules prescribing the maximum recoverable hourly rates of the engaged attorneys.
Indemnity costs (as opposed to standard costs) may be awarded where one party has conducted itself improperly, negligently, or unreasonably. In such circumstances, legal fees and disbursements will only be limited by what is reasonable and will ordinarily result in full recovery of most commercially reasonable rates.
Interest is payable from the date of a costs award. The rate is prescribed by the Judgment Debts (Rates of Interest) Rules.
Arbitration and mediation
In respect of arbitration or mediation proceedings, the parties generally agree costs in the terms of reference.
For arbitration, it is common for parties to agree in advance that the loser shall pay. If the parties do not agree, the Arbitration Law provides that costs are in the discretion of the arbitral tribunal.
In mediation, it is usual for the costs to be split equally between the parties.
What, if any, are the collective redress (e.g. class action) mechanisms?
Class actions for collective redress are known as representative proceedings (or derivative actions in the case of shareholders of a company).
The Grand Court Rules (Ord. 15 rr.12 and 12A) allow a representative to bring proceedings on behalf of other persons where those other persons have the same interest in any proceedings. This includes instances where the identity of a class or members of the class cannot be ascertained or readily ascertained or a person in that class cannot be found.
A representative action will not be entertained by the court where the relief claimed is not beneficial to all the represented parties or where there are differing interests among the members.
Decisions in such proceedings are binding on all members of the representative group but cannot be enforced against a person not party to the proceedings without the leave of the Court.
What, if any, are the mechanisms for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings?
The broad policy of the law is that where there are multiple claims there should be as a few actions and as few parties as possible, however the courts resources will be more efficiently utilised if all the parties to a dispute are before the court so that its decision will bind all of them.
Accordingly, where the presence of a third party before the court is necessary to ensure that all matters in dispute are effectively dealt with, the court may, of its own motion or by application from one of the parties, add the third party as a proper party to the proceedings even though there is no cause of action against that party. For example, an insurer can be joined to proceedings for the purposes of the claimant or the defendant obtaining an order that the third party pays all or a proportion of another party's costs in circumstances where the insurer and not the defendant has exclusively controlled and directed the litigation.
Similarly, to preserve the time and resources of the court and the parties, the court may also order two or more causes or actions to be consolidated or order that they be tried at the same time where it appears to the court that some common question of law or fact arises in both or all of them, the rights or relief claimed are in respect of or arise out of the same transaction or series of transactions, or for some other reason it is desirable to make that order.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
The funding of litigation in the Cayman Islands in currently undergoing significant change.
Litigation has traditionally been funded by the parties or their affiliate entities. This is because the common law rules in respect of champerty and maintenance have not been abolished by statute, as they have been in England. Accordingly, any third-party funding of proceedings in the Cayman Islands has required very careful consideration to ensure that it does not infringe these rules.
The Grand Court has, in recent years, shown a willingness to consider and approve third-party funding in certain cases (see decisions in Company v A Funder [2017 (2) CILR 710] and in Trustee v The Funder (unreported)) if safeguards are in place and that tests like those applicable in England and Wales are satisfied.
In December 2020, Parliament passed the Private Funding of Legal Services Bill 2020. Although the law is not yet finalised or in force, it is anticipated that it will allow for US style contingency fees, UK style conditional fees and third-party funding agreements. Further updates to this guide will be made available in early 2021.
What, in your opinion, is the main advantage and the main disadvantage of litigating international commercial disputes?
The Cayman Islands is a politically stable, tax neutral and established financial centre. It is the destination of choice for many commercial sectors including investment funds, insurance, shipping, aviation, energy, and all manner of commercial activities including a wide variety of online activities, trades, and businesses.
The legislative framework and court system are modelled on the United Kingdom. The rules and case law from England & Wales (persuasive but not necessarily binding in the Cayman Islands) are well established but sufficiently flexible to be tailored by the local legislature and judiciary to meet the needs of commercial enterprise.
The judges have repeatedly shown themselves capable of resolving the most technical and valuable claims. The highest court of appeal is The Privy Council in London. The quality of professional service providers is world class.
Litigating in Cayman can sometimes offer additional causes of action or remedies not available in another jurisdiction whilst simultaneously recognising and applying the laws of another jurisdiction and may therefore offer some tactical advantages.
What, in your opinion, is the most likely growth area for disputes for the next five years?
The size and value of litigation in the Cayman Islands has grown substantially over the past 5-10 years and shows no sign of slowing down. Third party funding reform currently working its way through Parliament (see question 22 above) has the potential to create a further massive increase in commercial litigation.
The aviation and energy sectors, having been worst affected by the global pandemic, are expected to restructure, and will therefore require significant legal assistance in 2021.
What, in your opinion, will be the impact of technology on commercial litigation in the next five years?
Disclosure review exercises are most likely to be affected as Technology Assisted Review (TAR) and other automated techniques are adopted by parties and the courts. Automated processes, such as intelligent research tools and "smart" contracts will continue to grow in importance.
How have the courts in your jurisdiction dealt with the COVID-19 pandemic and have you seen particular types of disputes arise as a result of the pandemic?
The Cayman Islands Courts adapted quickly by implementing and/or enhancing the measures below to ensure the continued administration of justice:
- Video linked court hearings;
- Electronic filing of court documents (with originals to follow);
- Electronic court bundles; and
- Electronic payments.
Adjustments to court procedure and protocol were issued by the Ministry of Justice on its website to enable court users to obtain guidance on this new regime.
Types of dispute
As a result of the Covid-19 pandemic, the following types of dispute and requests for advice have been commonplace:
- Breaches of commercial contracts;
- Implications of force majeure clauses;
- Insolvency advice and litigation;
- Parties to existing litigation have sought interim remedies such as interim injunctions, security for costs and extensions of court deadlines.
Originally published by Legal 500 Litigation Country Comparative Guide.
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.