The Bahamas As A Centre For International Arbitration: Atlantic Tiger Or Caribbean Basin Pussycat?

Folktales of the Bahamas, some of which were passed down from the Atlantic slave trade and have tigers and cats, are told and retold with the above opening flourish which invites you to step off from reality onto a flight of fantasy and imagination, and then they close with a flourish.

The reality is that the Bahamas is already a centre of international arbitration.  But can it become an Atlantic tiger?

Many international arbitrations presently take place here. Arbitral institutions, such as the International Chamber of Commerce (ICC), increasingly go to neutral locations closer to the business rather than always expecting the business to come to them; they are locating their arbitral hearings more flexibly around the world and not in just the major metropolitan centres.[ii]  Similarly, ad hoc arbitrations take place anywhere on the planet, and some will take place off the planet in due course. 

But there are few places as naturally attractive for them as the Bahamas, even among conservative general counsel.  If you were to embark on post Covid-19 complete or partial in-person arbitral hearings, free of the crowds and distractions but with the technological infrastructure and conveniences of a modern city, would you not be tempted to place those hearings in an idyllic setting like a beautiful, balmy, biodiverse, fabled island of the Bahamas, surrounded by crystal clear waters of every shade of turquoise, green and blue? Many have done so and continue to do so in places as varied, picturesque and exotically named as Atlantis, Baha Mar, British Colonial, Fowl Cay, Emerald Bay, Pink Sands, Pelican Bay, Winding Bay[iii] and the University of the Bahamas.  With 35 of 700 islands inhabited year round, there is no end of places on them to choose from within any budget.

As global commerce expands its frontiers, it is natural that centres have grown in number and quality.  Moreover, domestic arbitration is important for most countries; international arbitration is the opposite side of the same coin, involving similar skill sets.  Therefore, with the domestic growth of alternative dispute resolution, this jurisdiction will probably also see a post Covid-19 exponential growth of international cases.

A primary example of arbi-tourism, or ADR tourism, the Bahamas has at least  10 comparative advantages: 1) strategic and naturally beautiful locations; 2) proximity to North, South and Central America; 3) it is at the crossroads of convenient air and sea transport connections with Europe and the rest of the world; 4) political neutrality and stability; 5) a sound physical and business infrastructure; 6) modern work and living conditions; 7) moderate administrative costs; 8) experienced lawyers, arbitrators, mediators, arbitration counsel, and ADR professionals; 9) other skilled human resources such as accountants, engineers, architects, quantity surveyors, marine and forensic specialists, other technical experts, interpreters and stenographers; and 10) arbitration friendly judges with a track record of enforcing arbitration agreements and awards.

The strategic advantages include convenient access, such as the  30- minute air travel time from Miami, three hours from New York, direct or relatively short connections from and to cities across the hemisphere, Europe, the Middle East and the rest of the world.  Moreover, the Bahamas has been a strategic location, in recent times, for arbitrations involving parties from Sharia law countries and the US who chose the Bahamas as a neutral and convenient venue.

Thus, for example, in 2015,  Nassau was the seat  for six cases involving private parties in US-Sharia investment fund disputes.  Arbitration clauses provided for Nassau as the seat.  While US parties did not wish to litigate in an Islamic country, Islamic parties wished to avoid US jurisdiction because of 9/11 and Patriot Act litigation, although they were still investing in US real estate and US-based life settlements.  The arbitration rules in four cases were those of the International Centre for Dispute Resolution (ICDR), and the others took place under the United Nations Commission on International Trade Law (UNCITRAL) Rules.  The approximate size of the assets ranged from US$50m to US$250m.

How do you measure whether the Bahamas is en route to becoming an ADR tiger?  As an initial benchmark, one looks for the presence of the three so-called pillars of international commercial arbitration: the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”); the UNCITRAL Model Law,; and the UNCITRAL Arbitration Rules or equivalent.  Under pressure from civil society and a dynamic maritime sector, the Bahamas signed onto the New York Convention in 2006.  The UNCITRAL Arbitration Rules are presently widely used, as well as the Rules of the major arbitral institutions.  Therefore, the first and third pillars have been in place for more than a decade.

The second pillar has been more of a challenge.  In 2009, the country modernised its Arbitration Act, 1899 but based the new legislation on the English Arbitration Act 1996, and not the UNCITRAL Model Law, which is accepted as the gold standard. 

This was a misstep or error which a Bill for an International Commercial Arbitration Act, recently tabled in Parliament seeks to correct.  That Bill reproduces almost verbatim the UNCITRAL Model Law.  A separate, companion Bill seeks not to repeal the 2009 Act, but to amend and rename it the Domestic Arbitration Act.  As a result, contrary to the example of its Caribbean Community (CARICOM) partners, whose model bill is already been declared by UNCITRAL to be UNCITRAL-compliant and who will have one unified arbitration regime for domestic and international disputes, the Bahamas will have to deal with the thorny question of what is domestic and international, and duplicate the resources and personnel to run two separate regimes.

A second overlapping, scorecard is the Ten Principles for an Efficient, Effective and Safe Seat of Arbitration of the Chartered Institute of Arbitrators (CIArb):[iv]

1. Law: As discussed above, the three pillars are present or upon the passage of the recent Bill will be a clear and modern arbitration law.

2. Judiciary: There is, no doubt, an independent judiciary experienced in international commercial arbitration and respectful of party autonomy, as evidenced by the wealth of judgments helping with interim measures and upholding arbitration agreements and awards.[v]

3. Legal expertise: With about 1,500 lawyers, and with many, like the author, experienced in international dispute resolution, a wide choice is available to those seeking representation in arbitration and before the national courts.

4. Education: A host of proactive institutions are committed to education and learning in this field, such as the Bahamas Branch of CIArb, the courses of the University of the Bahamas in ADR, arbitration and mediation, the IWHAM (ADR Centre), and the annual Arbitration and Investment Summit: Caribbean, Latin America and Other Emerging Markets (AIS) which scheduled its ninth Summit virtually for Friday, 29 January, 2020.[vi]

5. Right of representation: The right for parties to be represented in arbitration by professionals of their choice from outside the seat, is not addressed in the new Bill.  But the immigration laws will have to be amended to accommodate this.

6. Accessibility and safety: The Bahamas is exceptionally good in this regard.

7. Facilities: The full range of functional facilities is available, from the bespoke to the more modest.

8. Ethics: Professional norms are fully recognised and protected.

9. Enforceability: The Bahamas adheres to the New York Convention as discussed above.

10. Immunity: This is standard in the Bahamas.

IWHAM

So far, this article has discussed the country as the centre.  Economic activity in this field is so decentralised that little statistical information can be given. But that is expected to change.  A specific focal point with a physical presence is contemplated in the form of a social enterprise or public private partnership, called the International and Western Hemisphere Arbitration and Mediation Centre (IWHAM). The Centre is already up and running through the ADR infrastructure at UB.[vii]  However, it is expected to be incorporated as a non-profit company and to play an expanded role in both domestic and international arbitration, as the country aspires to be an Atlantic tiger.

IWHAM finds its origins in about 1999 when a six-month pilot project in mediation was run by the Bahamas Bar Association.  In the years that followed, the law firm, CIArb Bahamas, UB faculty, students, and others, and the Summits all contributed to expanding, refining and completing the project, as reflected in deliberations and Declarations of eight annual Arbitration and Investment Summits since 2013.

To quote three Declarations:

1. Nassau Declaration of the 4th Annual Arbitration & Investment Summit – Caribbean, Latin America and Other Emerging Markets, on January 22nd and 23rd, 2016

“3-Regional centres ought to be strengthened to promote and provide arbitration, mediation and other ADR across a wide spectrum ranging from basic services to red carpet concierge or bespoke services;…

8-Governments ought always to use arbitration mediation and ADR wherever possible in local disputes and in international projects, and expand a culture or mind-set of efficient dispute resolution by example”.

2. The Second Nassau Declaration issued by the 5th Annual Arbitration and Investment Summit – Caribbean, Latin America and Other Emerging Markets, on Monday, January 30th, 2017

“6-Construction adjudication legislation should be enacted and implemented to ensure that large contracts include a clause providing for mandatory and efficient dispute resolution, and the same should be strongly encouraged for smaller contracts;

7-More conferences, training seminars and collaboration should take place with national, regional and international arbitrators and arbitration centres;

8-Arbitration centres should be transparent by publishing lists and qualifications of arbitrators, and, where possible, awards, annual reports and events”.

3. The Third Nassau Declaration issued by the 6th Annual Arbitration and Investment Summit – Caribbean, Latin America and Other Emerging Markets, on January 29th, 2018

“1-Measurable steps will be taken, and an action plan developed to move forward the collaboration among national, regional and international arbitration centres begun with the “Nassau Round” of discussions held on 28th and 29th January 2018, by virtue of a closed-door meeting amongst representatives of jurisdictions;

4-The participants will propose other ways to build a framework to sustain the market and to attract international dispute resolution business to the region; and

5-The ultimate goal of the collaboration is to raise the visibility of the global marketplace for International Dispute Resolution Services”.

Therefore, by now, it should be apparent that the Bahamas is an efficient, effective and safe centre for international arbitration.  It is also a naturally beautiful, pleasant, and sophisticated seat, expanding its supporting institutions.

Can it become an Atlantic tiger?  Most certainly!

Closing Flourish:

… E bo ben,

My story’s end.

If you think it’s not true

Ask the captain of the long-boat crew.[viii]

Footnotes:

[i] B’Booky and B’Rabby: A Treasury of Slave Stories and Folktales of the Bahamas, retold by Dr. Peter D. Maynard, 2^nd ed, Bahama Vision, 2017, https://www.kobo.com/ww/en/ebook/bbooky-and-brabby.

[ii] For example, the author presided over a London Court of International Arbitration (LCIA) panel of three arbitrators while based in Nassau and also participated in hearings of Judicial Arbitration and Mediation Services, Inc. (JAMS) in Freeport, Bahamas and Miami.

[iii] https://theabacoclub.com/

[iv] https://globalarbitrationreview.com/digital_assets/9bd26b47-c325-457a-9c1f-ca775028e2b0/London-Centenary-principles.pdf

[v] E.g., Volpi v. Delanson 45 of 2019, Taino Beach v. Summit Insurance 83 of 2018, Vernes v. Lyford 210 of 2018, Therapy Beach v. Rav Bahamas 23 of 2018, Bahamas Court of Appeal, http://www.courtofappeal.org.bs/judgments.php

[vi] See http://maynardlaw.com/Conferences.html.  Contact Colin Jupp and Melinda Maynard for more information: colin.jupp@maynardlaw.com, melinda.maynard@maynardlaw.com.

[vii] See note 11 supra.

[viii] See B’Booky and B’Rabby note 2 supra.

Peter D. Maynard, PhD, FCIArb
Peter D. Maynard is Senior Partner at Peter D. Maynard Counsel & Attorneys, A full-purpose commercial firm located in Nassau, Bahamas. He is also Head of the Law Department at University Of The Bahamas. He is an Arbitrator and Mediator, and his work involves Asset Tracing And Recovery. <br> <br> Founder of The Annual Arbitration & Investment Summit 2013 – 2020 and Chair, Chartered Institute Bahamas Branch 2018 - 2019. Former member of the LCIA Counsel for Latin America and the Caribbean; Former Legal Advisor of the Ministry of Foreign Affairs Bahamas. Former economist, United Nations, New York; Guest Scholar, Brookings Institution, Washington DC; Former Acting Justice of the Supreme Court of The Bahamas.