1. What legislation applies to arbitration in your country? Are there any mandatory laws?
The Arbitration Act 2012 (the “Act“) applies to arbitrations seated in the Cayman Islands. Further, the Foreign Arbitration Awards Enforcement Act 1975 (1997 Revision) (the “Foreign Enforcement Act“), which implements the New York Convention in the Cayman Islands, applies to arbitration awards made in a state which is party to that convention (other than the Cayman Islands). Mandatory provisions of these acts include stays of court proceedings, application of limitation law, the duties of and challenges to of arbitrators, challenges to awards, and enforcement of awards.
2. Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
The Cayman Islands is a party to the New York Convention as a United Kingdom overseas territory. The UK submitted a notification to extend territorial application to the Cayman Islands in 1980 limited to the enforcement of awards made in another convention state.
3. What other arbitration-related treaties and conventions is your country a party to?
The Cayman Islands has ratified the 1927 Geneva Convention on the Execution of Foreign Arbitral Awards, and has had three bilateral investment treaties extended to it by the UK (with Belize, Panama and St Lucia). Although largely redundant due to the Enforcement Act, some of the provisions of the Arbitration (International Disputes) Act 1966 (providing for recognition or enforcement of ICSID awards) were extended to the Cayman Islands by the UK by the Arbitration (International Investment Disputes) Act 1966 (Application To Colonies Etc.) Order 1967.
4. Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?
The Act is in part based on the UNCITRAL Model Law and in part on the English Arbitration Act 1996. Significant differences from the Model Law include: the default number of arbitrators (being a single arbitrator under the Act), severability of the arbitration agreement (there are more extensive provisions under the Act), appeal on a question of law (there is power for the court to grant leave to appeal in certain circumstances under the Act, but there is none under the Model Law), and the time limit for applying to the court to set aside an award (30 days under the Act, three months under the Model Law).
5. Is there a specialist arbitration court in your country?
Arbitrations applications are dealt with in the Financial Services Division (the “FSD“) of the Grand Court of the Cayman Islands. Judges in the FSD are experienced in dealing with arbitration matters.
6. Are there any impending plans to reform the arbitration laws in your country?
There are no such impending plans.
7. What arbitral institutions (if any) exist in your country? When were their rules last amended? Are any amendments being considered?
The Cayman International Mediation and Arbitration Centre (“CI-MAC”) which was established in 2022 provides efficient and flexible dispute resolution services and support for arbitration and mediation. Its rules were last amended in 2023 and are up to date.
8. What are the validity requirements for an arbitration agreement under the laws of your country?
An arbitration agreement must be in writing and be contained in either a document signed by the parties or an exchange of (amongst other things) letters or electronic communications or other means of communication that provide a record of the agreement (s 4(3) of the Act).
9. Are arbitration clauses considered separable from the main contract?
Yes – s 4(5) of the Act provides that an arbitration agreement shall be treated as a distinct agreement from the agreement of which it forms or was intended to form part. Further, for the purposes the tribunal ruling on its own jurisdiction, the arbitration clause is to be treated as an independent agreement (s 27(2) of the Act).
10. Do the courts of your country apply a validation principle under which an arbitration agreement should be considered valid and enforceable if it would be so considered under at least one of the national laws potentially applicable to it?
Yes – s 4(5) of the Act provides that an arbitration agreement shall be treated as a distinct agreement from the agreement of which it forms or was intended to form part. Further, for the purposes the tribunal ruling on its own jurisdiction, the arbitration clause is to be treated as an independent agreement (s 27(2) of the Act).
11. Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
The arbitral tribunal has no power to order the consolidation of different arbitral proceedings or the holding of concurrent hearings (unless the parties agree to confer such power on the tribunal); the parties may agree consolidation of proceedings or concurrent hearings (s 39 of the Act).
12. In what instances can third parties or non-signatories be bound by an arbitration agreement? Are there any recent court decisions on these issues?
There is some limited scope for third parties or non-signatories to be bound as the Act (s 2(1)) defines a “party” to include “any person claiming through or under” a party to an arbitration agreement or to the arbitration proceedings. Non-parties can exercise rights under a contract, including the right to arbitrate, where they have acquired or have the benefit those rights such as by means of assignment or novation, agency or subrogation. The Contracts (Rights of Third Parties) Act 2014 extends the right of party identified in a contract or given an express right to enforce it to an arbitration agreement (s. 11).
13. Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
S 26 of the Act provides that a dispute is non-arbitrable where an arbitration agreement is contrary to public policy or is otherwise contrary to Cayman Islands law. In a decision on appeal from the Cayman courts, FamilyMart China Holding Co Ltd v Ting Chuan (Cayman Islands) Holding Corporation [2023] UKPC 33, in the context of whether elements of a just and equitable winding up were arbitrable, the UK Privy Council considered two types of non-arbitrability: subject matter non-arbitrability where statute preserves the right of access to the courts, and remedial non-arbitrability where the parties have the power to refer matters to arbitration but cannot confer on the arbitral tribunal the power to give certain remedies. The Privy Council held that although the granting of a winding-up order is remedially non-arbitral, in a just and equitable winding up there may be discrete disputes, such as whether a party is in breach of a shareholders’ agreement or whether equitable rights arising out of the relationship have been flouted, which can be referred to arbitration notwithstanding that only the court has jurisdiction to grant a winding up order.
14. Are there any recent court decisions in your country concerning the choice of law applicable to an arbitration agreement where no such law has been specified by the Parties?
As mentioned at answer 10 above, the Cayman Islands courts would be likely to take the same approach as the English courts namely that in the absence of an express choice of the law to govern the arbitration agreement, it will be governed by the system of law with which it is most closely connected, but if the parties have chosen a seat of arbitration then as a general rule the law applicable is the law of the seat (see Enka Insat ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, as recently discussed in UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30)).
15. How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?
S 55 of the Act provides that the tribunal shall decide a dispute in accordance with the law chosen by the parties as applicable to the substance of the dispute, or in the absence of such choice or where the chosen law cannot apply, by the conflicts of laws rules which the tribunal considers appropriate. The tribunal also has power to decide the dispute in accordance with such other considerations as are agreed by the parties or determined by the tribunal. The tribunal is required to have regard to (a) any contractual provisions relating to the substance of the dispute, (b) the normal commercial or trade usage of any undefined terms of the contract, (c) any established commercial or trade customs or practices, and (d) any other matter which the parties agree is relevant.
The conflicts of law rules are the common law rules and in the absence of an express choice of law the tribunal would first evaluate whether the parties had made an implied choice as to the law applicable to the substance, and if no such implied could be found, which system of law on an objective enquiry has the closed and most real connection to the agreement.
16. In your country, are there any restrictions in the appointment of arbitrators?
There are no specific restrictions on the appointment of arbitrators, but the Act recognises and gives effect to the principles of arbitral impartiality and independence, requiring disclosure both before appointment and on a continuing basis of circumstances which might reasonably compromise their impartiality and independence (s 18 of the Act)(see further answer 19 below).
17. Are there any default requirements as to the selection of a tribunal?
The default number of arbitrators, where the parties have not determined the number, is a single arbitrator (s 15 of the Act). Default appointment of arbitrators is made by the appointing authority. This applies: in an arbitration with a sole arbitrator, in default of agreement as to the rule for appointment; in an arbitration with two or more arbitrators, where a party fails to appoint an arbitrator within 30 days of a request to do so (s 16 of the Act). The appointing authority is chosen by the parties or in default is appointed by the court.
18. Can the local courts intervene in the selection of arbitrators? If so, how?
Yes, by upholding a challenge to an arbitrator (see answer 19 below).
19. Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge?
Yes. The grounds for challenge are justifiable doubts as to their impartiality and independence, or lack of the qualifications agreed by the parties (s 18 of the Act). The challenge is first made to the arbitral tribunal, and if unsuccessful the challenge may be renewed before the court (s 19 of the Act).
20. Have there been any recent developments concerning the duty of independence and impartiality of the arbitrators, including the duty of disclosure?
No.
21. What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
Where an arbitrator ceases to hold office, the parties may agree whether and if so how the vacancy shall be filled, whether and to what effect the previous proceedings should stand, and whether any previous appointment made by that arbitrator either solely or jointly. In default, the default appointment rules described in answer 17 apply (s 23 of the Act).
22. Are arbitrators immune from liability?
Arbitrators are not liable for negligence as arbitrator, or any mistake of law, fact or procedure. Arbitrators are liable for any act or omission done in bad faith (s 25 of the Act).
23. Is the principle of competence-competence recognised in your country?
Yes. The tribunal may rule on its own jurisdiction, including any objections to the existence or validity of the arbitration agreement (s 27 of the Act). In Al-Haidar v Rao (unreported 15 April 2024) the Cayman court took into account that “the competence-competence principle forms part of Cayman Islands law“.
24. What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
In international arbitrations, the court is obliged (on application by a party) to stay the litigation proceedings, unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed, or that there is no dispute between the parties (s 4 of the Foreign Enforcement Act).
25. What happens when a respondent fails to participate in the arbitration? Can the local courts compel participation?
Appointment of arbitrators can be made under the default provisions referred to at answer 17. The tribunal has the power to proceed to an award on the evidence before it (s 39 of the Act). The court has power to issue a subpoena against a party to appear or produce documents, but no power to compel participation (s 41 of the Act).
26. Can third parties voluntarily join arbitration proceedings? If all parties agree to the intervention, is the tribunal bound by this agreement? If all parties do not agree to the intervention, can the tribunal allow for it?
Third parties cannot unilaterally join arbitration proceedings. The parties may agree to the consolidation of arbitral proceedings with other arbitral proceedings. The tribunal has no power to order consolidation unless the parties agree to confer such power on the tribunal (s 36 of the Act).
27. What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
The tribunal has power to order interim measures to maintain or restore a party to their original position pending determination of the dispute, restrain a party from taking action which could harm the arbitral process, preserve assets our of which an award may be satisfied, and preserve evidence (s 44 of the Act). The tribunal also has powers (subject to an agreement to the contrary) to order (among other things) security for costs (s 38(2) of the Act). The court has powers to order relief including an interim injunction and orders for the preservation of evidence but may only do so to the extent that the tribunal has no power or is unable for the time being to act effectively (s 43 of the Act). The courts will order relief in support of arbitrations seated elsewhere. The courts will in appropriate circumstances issue interim measures before the tribunal has been constituted.
28. Are anti-suit and/or anti-arbitration injunctions available and enforceable in your country?
The courts have the power to grant anti-suit injunctions restraining a party from commencing or pursuing proceedings in another jurisdiction in breach of an arbitration agreement (re BDO Cayman Limited concerning Argyle Funds SPC Inc [2018] 1 CILR 114).
29. Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence? Can local courts compel witnesses to participate in arbitration proceedings?
The tribunal has the power (in the absence of party agreement) to conduct the arbitration in such manner as it considers appropriate, including the power to determine the admissibility, relevance, materiality and weight of any evidence (s 29 of the Act).
The courts have the power to issue a subpoena to compel a witness to attend and give evidence, and produce specified documents (s 40 of the Act).
30. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?
Counsel and arbitrators who are Cayman attorneys are subject to the Code of Conduct for Cayman Islands Attorneys-at-Law. Arbitrators are required by s 28 of the Act to act fairly and impartially and to allow each party a reasonable opportunity to present their case.
31. In your country, are there any rules with respect to the confidentiality of arbitration proceedings?
Arbitral proceedings are expressly private and confidential, as are (among other things) statements of case, evidence and awards (s 81 of the Act). The CI-MAC rules also provide that arbitral proceedings conducted under those rules are confidential.
32. How are the costs of arbitration proceedings estimated and allocated? Can pre- and post-award interest be included on the principal claim and costs incurred?
The costs of the arbitration are in the discretion of the tribunal, unless a contrary intention is expressed (s 64 of the Act).
The tribunal may (subject to any agreement of the parties) award interest on the whole or any part of an award (which may include costs) up to the date of the award. Unless the award otherwise directs, post-award interest is statutory and runs at the same rate as in respect of judgment debts (s 58 of the Act).
33. What legal requirements are there in your country for the recognition and enforcement of an award? Is there a requirement that the award be reasoned, i.e. substantiated and motivated?
A domestic award may be enforced, with leave of the court, in the same manner as a court judgment or order to the same effect (s 72(1) of the Act).
New York Convention awards may recognised and enforced under the Enforcement Act in the same manner as a domestic award (s 5). Originals or duly authenticated copies of the award and the arbitration agreement are required, together with certified translations if in a language other than English (s 6 of the Enforcement Act). The court has confirmed that the pro-enforcement policy of the New York Convention is well recognised by the Cayman Court and understood (most recently in In the matter of an application for the enforcement of a Swiss Chambers’ Arbitration Institute arbitration award dated 18 December 2017 (unreported, 8 March 2024)). Awards from any foreign state (regardless of whether or not it is a signatory to the New York Convention may also be enforced in the Cayman Islands).
An award must (unless the parties have agreed otherwise) set out the reasons upon which it is based (s 63 of the Act).
34. What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?
The application for enforcement is made on an ex parte basis (Order 73, rule 1 of the Grand Court rules), which is likely to be decided upon within approximately two months. The respondent may apply to set aside the order and enforcement is suspended until that application is disposed of. Timing depends on the complexity of the challenge.
35. Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?
The grounds for refusal of enforcement of a convention award are those contained in Article V of the New York Convention, which are given effect in the Cayman Islands by section 7 of the Enforcement Act. These grounds include: party incapacity, invalid arbitration agreement, failure to give proper notice, party unable to present their case, the award deals with a difference outside the terms of submission to arbitration or contains decisions on matters beyond the scope of that submission, the composition of the tribunal or arbitral procedure was not in accordance with the parties’ agreement, the award is not yet binding or has been set aside or suspended, the award contained decisions which were not arbitrable, and enforcement would be contrary to public policy.
Domestic awards can subject to challenge on most of the same or similar grounds as well as fraud, corruption or misconduct on the part of the arbitrator, or breach of natural justice (s 75 of the Act) or in certain circumstances to appeal (s 76 of the Act) (see also answer 37 below).
36. Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
The parties can agree on the available remedies, in default of which the tribunal can award any remedy or relief that could have been awarded had the dispute proceeded in court (s 57 of the Act).
37. Can arbitration awards be appealed or challenged in local courts? What are the grounds and procedure?
Arbitration awards may be set aside by the court on the following grounds (s 75 of the Act): (i) party incapacity, (ii) invalid arbitration agreement, (iii) failure to give proper notice, party unable to present their case, (iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of that submission, (v) the composition of the tribunal or arbitral procedure was not in accordance with the parties’ agreement, (vi) the award was induced or affected by fraud, corruption or misconduct on the part of the arbitrator, (vii) breach of natural justice, (viii) the subject matter of the dispute was not arbitrable, or (ix) the award is contrary to public policy. A dispute not falling within the terms of the submission to arbitration (iv above) has been held to be “effectively the same as saying that the tribunal did not have substantive jurisdiction to determine the issue in dispute” (Appalachian Reinsurance (Bermuda) Ltd v Mangino, Hall, Tobin and Greenlight Reinsurance Ltd [2014] 1 CILR 152).
An appeal may be brought with the leave of the court on a question of law arising out of the award. Conditions for the grant of leave include that the determination of the question will substantially affect the rights of one or more of the parties, and the question is one of general public importance (s 76 of the Act).
In both cases, a prerequisite to an application or appeal is that the applicant has first exhausted every available arbitral process of appeal or review and for correction of the award. The time limit in both cases is one month from the award or notification of arbitral appeal or review (s 77 of the Act).
38. Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
The parties can agree to exclude a right to apply for leave to appeal against an award (s 76(2) of the Act), but not the right to challenge the award under section 75 of the Act.
39. In what instances can third parties or non-signatories be bound by an award? To what extent might a third party challenge the recognition of an award?
Non-parties or non-signatories cannot be bound by an award. Arbitration is a contractual remedy to which only the parties to the arbitration agreement can be bound. However, a party claiming through or under a party to an arbitration agreement is deemed to be a party (s 2 of the Act). Further, in a dispute about whether a company was a non-party, the UK Privy Council upheld a decision of the Cayman Islands Court of Appeal, which had held (among other things) that a respondent was precluded by issue estoppel (a decision of the Brazilian court) from resisting enforcement on the ground that it did not agree to arbitration (Gol Linhas Aereas v MatlinPatterson Global Opportunities Partners (Cayman) II LP [2022] UKPC 21).
40. Have there been any recent court decisions in your jurisdiction considering third party funding in connection with arbitration proceedings?
The Cayman Courts have decided in proceedings regarding enforcement of an arbitral award that a funding agreement should be permitted provided that it satisfied certain criteria (A Company v A Funder [2017] 2 CILR 710). In Arnage Holdings Ltd and others v Walkers (a firm) (unreported, 27 July 2023) the court ordered disclosure of the identity of funders in court proceedings.
41. Is emergency arbitrator relief available in your country? Are decisions made by emergency arbitrators readily enforceable?
The Act does not provide for emergency arbitrator relief. The CI-MAC rules do provide for emergency arbitrator relief, but further provide that decisions made by emergency arbitrators will not bind the tribunal (once it is constituted) which will have power to reconsider, modify, or vacate any interim order or award issued by the emergency arbitrator, including their ruling on their own jurisdiction.
Enforceability of emergency arbitrator relief has not yet been tested in the Cayman Courts, but the court could order its own interim measures under s 54 of the Act.
42. Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?
The Act does not differentiate between lower and higher value claims. CI-MAC does not have a simplified or expedited procedure for lower value claims.
43. Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?
The Cayman Islands are a diverse and multicultural society, which resonates through legal and professional life. Specifically, CI-MAC has a diversity, equity and inclusion policy, and works with partners to develop a framework and take actionable steps towards increasing diversity, equity, and inclusion in Alternative Dispute Resolution.
44. Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
No.
45. Have there been any recent court decisions in your country considering the issue of corruption? What standard do local courts apply for proving of corruption? Which party bears the burden of proving corruption?
No.
46. What measures, if any, have arbitral institutions in your country taken in response to the COVID-19 pandemic?
The CI-MAC rules post-date the pandemic, but provide for virtual hearings (see answer 47 below).
47. Have arbitral institutions in your country implemented reforms towards greater use of technology and a more cost-effective conduct of arbitrations? Have there been any recent developments regarding virtual hearings?
CI-MAC has embraced technology and in particular has a virtual platform for virtual or hybrid hearings, real time court reporting, transcription, translation and interpretation, document management system, and other technology advisory services.
48. Have there been any recent developments in your jurisdiction with regard to disputes on climate change and/or human rights?
No.
49. Do the courts in your jurisdiction consider international economic sanctions as part of their international public policy? Have there been any recent decisions in your country considering the impact of sanctions on international arbitration proceedings?
Yes, the Cayman Islands has in force the UK sanctions regime as extended to the Cayman Islands. There are currently 34 sanctions regimes in force the Cayman Islands which include financial sanctions measures. There have been no recent decisions considering the impact of sanctions on international arbitration proceedings, but in court proceedings the Cayman Court refused to grant an adjournment because counsel for one party was unable to receive payment from their client, a sanctioned entity, as their licence had not yet been granted (re the MF Trust, unreported, 15 March 2022). The court took into account the overriding objective of dealing with court matters in a just, expeditious and economical way, which is echoed in s 3(3) of the Act which provides that the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without undue delay or undue expense.
50. Has your country implemented any rules or regulations regarding the use of artificial intelligence, generative artificial intelligence or large language models in the context of international arbitration?
No.
