Caribbean international financial centres (IFCs) are more than simply attractive places to seal a business deal over lunch at your favourite beachfront restaurant. These jurisdictions are positioning themselves to be venues for the satisfactory and efficient settlement of disputes when business deals go awry. International arbitration - where parties to a dispute elect for an arbitral tribunal to privately settle disputes between them without recourse to courts of law - has become a preferred dispute resolution method for claims arising from cross-border business transactions. Statistics published by the major international arbitration centres reveal a general upward trend in arbitration filings , and agreement to arbitration has become commonplace in international commercial contracts.
Many factors account for the growing popularity of international arbitration, whether institutional or ad hoc. Parties avail themselves of a neutral forum and have greater flexibility and control over the proceedings than they would litigating before either party’s domestic courts. Parties can select arbitrators with specialist knowledge, which is especially valuable in highly technical commercial disputes. The ability to keep proceedings confidential means sensitive information can be kept out of the public domain. Moreover, arbitration is generally less costly and time-consuming than litigation. Arbitral awards are final and generally cannot be appealed. They are binding, recognisable and easier to enforce in foreign courts than are other courts’ judgements, thanks to the New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 which has over 160 parties.
International arbitration is no longer the exclusive domain of major metropolitan centres like London, New York, and Paris. Burgeoning competition from newer centres, such as Singapore, Hong Kong, and Mauritius, means negotiating parties are increasingly spoilt for choice in selecting a seat of arbitration in their contracts.
These trends bode well for Caribbean IFCs which in recent years have added international arbitration, particularly of the commercial kind, to their suite of services on offer. Three Caribbean IFCs – The British Virgin Islands (BVI), Barbados, and Cayman Islands – now have dedicated international arbitration centres. However, being new and relatively untested, none has yet attained the reputation and case load to rival established onshore centres. But can they? This article argues that Caribbean IFCs’ international arbitration centres have all the ingredients to be attractive alternatives to those in established centres.
International Arbitration In The Caribbean
The choice of venue is an important component of any arbitration clause because it determines the applicable arbitration law and the place where the arbitral award will be deemed to be made. The choice of venue is influenced by a number of factors. Chief of these is the history and experience of the arbitration institution, such as the yearly number of cases filed and value of awards. On this front, Caribbean IFCs’ arbitration centres may at first appear to be at a disadvantage due to their newer vintage.
Until recently, no dedicated international arbitration centre existed in the region. The BVI was the first Caribbean IFC to do so when its BVI International Arbitration Centre (BVIAC) opened in 2013. Discussions between Invest Barbados (Barbados’ lead investment promotion agency) and the London Centre for International Arbitration (LCIA) started in 2007 around establishing a Caribbean branch of LCIA in that jurisdiction but did not advance beyond the signing of a Memorandum of Understanding.[i] Efforts to establish formal links with the International Centre for Dispute Resolution (ICDR) in New York also failed.[ii] Fortuitously, a combination of private and public efforts eventually led to the establishment in 2017 of the Arbitration and Mediation Centre of the Caribbean (AMCC) – a not-for-profit private centre in Barbados.[iii] The Cayman Islands, with its Cayman International Arbitration Centre (CIAC) in 2019, is the newest, while Bermuda[iv] and The Bahamas have each commenced and/or announced plans to establish their own centre.[v]
While these regional arbitration centres are much younger than their more established counterparts, Singapore and Mauritius have proven that in time, with the right policies and approach, a small State can build a reputation as a choice venue for arbitration within its region and, increasingly, further afield. The Singapore International Arbitration Centre (SIAC), for example, was founded in 1991 and by 2019 saw a record 479 new case filings, rivalling the case loads of some older centres.[vi] Mauritius’ International Arbitration Centre (MIAC) was established in 2011 as a joint venture with the LCIA and since July 2018 has been operating as an independent centre with a growing reputation in Africa and beyond.
Why The Caribbean?
Caribbean IFCs possess a number of advantages which make them well-poised to be global arbitration venues of choice in the near future.
First, let us look at the arbitration centres themselves. All three are independent, not-for-profit institutions with modern and bespoke arbitration rules governing the composition of the arbitral tribunal, the conduct of proceedings, and awards. In addition to administering arbitrations under their own rules, the centres also have the capability to administer and/or act as appointing authority in ad hoc proceedings under the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules. Their administrative fee schedules compare favourably to other established centres, while their rosters of arbitrators reveals highly qualified professionals from the Caribbean and the world, assuring disputants that competent arbitrators will hear their disputes. State of the art meeting facilities, simultaneous interpretation facilities, and technological capability make for the efficient hearing of disputes both face-to-face and remotely. Mediation and conciliation services are also on offer.
Barbados, The BVI, and the Cayman Islands each boast a modern, updated legislative framework for international commercial arbitration as the best practices under the UNCITRAL Model Law on International Commercial Arbitration of 1985 (as amended in 2006) are enshrined in all three countries’ acts governing international commercial arbitration.[vii] For instance, Courts are specifically barred from interfering in the arbitration of a dispute unless where provided for under the Act. This is buttressed by their long established legal systems based on English common law, a tradition of rule of law, and an impartial and independent judiciary - necessary comforts for cases where the parties require court intervention at any time during the arbitration.
Additionally, Parties are free to choose the counsel they wish, regardless of nationality, and persons wishing to provide arbitration services may do so without requirements for work permits to be sought. Parties can be assured of recognition and enforcement of their awards by the domestic courts. Barbados is a signatory to the New York Convention (1958) and ratified it domestically via the Arbitration (Foreign Arbitral Awards) Act (Cap 110A of the Laws of Barbados), while The United Kingdom has extended the Convention’s applicability to the Cayman Islands and the BVI.
Each jurisdiction has a pool of competent and experienced legal experts with a growing appreciation of alternative dispute resolution (ADR) thanks to increased training and ADR awareness. The Chartered Institute of Arbitrators (CiArb) now has a Caribbean branch, as well as a chapter in each of these jurisdictions. Their human resource pools also include other professional services providers with deep experience serving international business clients.
Geographically close to the North, South and Central American mainlands, Caribbean IFCs’ arbitration centres potentially stand to benefit from the trend of parties to US-related international commercial contracts choosing non-US seats of arbitration, as well as parties from Latin American countries preferring to have their disputes settled by arbitration outside of their countries where there may be political instability or doubts about judicial independence. The Caribbean’s strategic geographic location makes these jurisdictions easily reachable and well connected by air to most major hubs, and its similar time zones to major mainland cities makes holding online hearings and meetings easier, where necessary.
Their modern communications networks and high levels of technological connectivity, as well as world-class tourism infrastructure, such as airports, hotels, and private villas, means that persons travelling to provide arbitration services will be as comfortable as they would be in any metropolitan country with the added bonus of year-round sunshine and beautiful beaches.
Reputations, however, cannot be built over night. Each will need to prove itself as a well-run, neutral, efficient, and cost effective centre, while keeping its legislative framework and arbitration rules up to date with international best practices. However, once this is done, Caribbean IFCs have all the ingredients necessary to make them established global centres of choice for international commercial arbitration in years to come.
[i] Key Note address by the Rt. Hon. Sir Dennis Byron, President, Caribbean Court of Justice (CCJ) on the occasion of the launch of the Arbitration and Mediation Court of the Caribbean Barbados Thursday, October 12, 2017 http://ciarbcaribbean.org/resources/articles/2017.10.12.SirByron.AMCC.pdf.
[iv] Update on the Ottiwell Simmons Arbitration Centre
[v] Bahamas Still Committed to Becoming International Arbitration Centre https://bit.ly/2yxRELy
[vi] Singapore International Arbitration Center. Annual Report 2019. https://www.siac.org.sg/images/stories/articles/annual_report/SIAC%20Annual%20Report%202019%20(FINAL).pdf.
[vii] Barbados’ International Commercial Arbitration Act of 2007, which came into force by proclamation in January 2009, only applies to international commercial arbitration. Domestic and non-commercial international arbitration remain covered by the Arbitration Act (Cap 110). The Cayman Islands Arbitration Law was passed in 2012. The BVI Arbitration Act, the newest of the three Acts, is the only one which specifically establishes an arbitration centre.
Alicia D. Nicholls is an international trade consultant with over a decade of experience providing bespoke trade research and advisory services to a variety of clients. She is currently a research fellow and part-time lecturer with the University of the West Indies. Miss Nicholls is the founder of the Caribbean’s leading trade policy and development blog, www.caribbeantradelaw.com, since 2011. She also presents regularly at both regional and international academic and industry-related conferences and webinars. While she maintains an interest in all issues affecting Caribbean trade and trade policy, her specific research focuses primarily on global financial regulation and small States, foreign investment law and policy and international business.