Sep 2023

Cayman Islands

Law Over Borders Comparative Guide:

Commercial Litigation and Cross-border Enforcement

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1 . What is the structure and organisation of local courts dealing with commercial claims? What are the main procedural rules governing commercial litigation?

The Summary Court has jurisdiction over civil claims up to the value of KYD 20,000 as well as criminal jurisdiction.[1] However, as a court of unlimited jurisdiction, the Grand Court is the principal court of first instance for all civil matters. It also hears appeals from the Summary Court and certain quasi-judicial tribunals. 

The Grand Court’s jurisdiction is defined in the Constitution[2] and in the Grand Court Law.[3] Its civil case-load is broadly divided between the Civil Division, the Family Division, the Admiralty Division, and the Financial Services Division (FSD). The majority of commercial litigation concerned with international financial services takes place in the FSD, which is presided over by the Chief Justice (currently the Honourable Justice Margaret Ramsay-Hale). The judges are eminently qualified and possess extensive experience in financial service, corporate and insolvency disputes. The FSD is the mandatory division for, among other things: 

  • proceedings relating to Cayman Islands investment funds; 
  • most trust proceedings; 
  • certain actions under the Companies Act[4] (including all winding-up proceedings); 
  • all proceedings to enforce foreign judgments and arbitral awards; and
  • most actions for breach of contract or duty by or against a professional services provider.

The Cayman Islands Court of Appeal (CICA), which at present has a roster of four or more appellate judges (of whom three sit at Court of Appeal sessions), hears appeals from the Grand Court. The CICA usually sits three sessions of three weeks (approximately in April, September and November) each year. Appeals to the CICA from final judgments of the Grand Court generally lie as of right. Appeals from most interlocutory decisions require permission which may be obtained from the Grand Court or, if refused, from the CICA. To obtain permission, the applicant must show that the appeal has a realistic (as opposed to fanciful) chance of success. 

The Judicial Committee of the Privy Council (JCPC) hears appeals from the CICA. An appeal to the JCPC can be an appeal as of right, an appeal with leave of the CICA, or an appeal by special leave of the JCPC.[5]

The main procedural rules governing commercial litigation in the Grand Court and CICA are set out in the Grand Court Rules, the Court of Appeal Rules, and Practice Directions. Insolvency proceedings are governed by the Companies Act and their own bespoke set of Companies Winding Up Rules, which displaces most of the provisions of the Grand Court Rules. 


[1] In its criminal jurisdiction it corresponds to a court of a Stipendiary Magistrate in England and Wales.

[2] The Cayman Islands Constitution Order 2009.

[3] Grand Court Law, section 3. 

[4] Companies Act (2023 Revision).

[5] Cayman Islands (Appeals to Privy Council) Order 1984 as amended by the Cayman Islands (Appeals to Privy Council) (Amendment) Order 2009.

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2 . What pre-action considerations apply?

There are no codified pre-action protocols imposed on parties save for in judicial review proceedings. 

However, parties should note that the Overriding Objective of the Grand Court Rules is that all matters should be dealt with in a just, expeditious and economical way.[6] The court has considerable discretion on the issue of costs and may take pre-action conduct into consideration when making a costs order.


[6] Preamble section 1.1 of the Grand Court Rules. 

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3 . What are the main alternative dispute resolution (ADR) methods used to settle large commercial disputes?

The main alternatives to commercial litigation in the Cayman Islands Courts are arbitration and mediation. Arbitration within the Cayman Islands is governed by the Arbitration Act 2012. The Cayman International Mediation and Arbitration Centre (CIMAC) promotes the use of mediation and ADR generally in the Cayman Islands. 

While the courts are supportive of ADR, it remains relatively uncommon for large commercial disputes to be resolved by ADR. Save for certain proceedings issued in the Family Division of the Grand Court, ADR is not mandatory under the court system. The court has no jurisdiction to compel parties to attempt ADR and there are no prescribed sanctions for refusing ADR, although the court has a wide discretion to take an unreasonable refusal of ADR into account in appropriate circumstances. 

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4 . How long, on average, do court proceedings take to reach trial?

Court proceedings generally take 6 months to more than a year from initiating proceedings to reach trial. The usual procedural steps include that the: 

  • Plaintiff commences an action by issuing an originating process which may be a Writ of Summons, an Originating Summons, an Originating Motion or a Petition. 
  • Defendant is required to enter an acknowledgment of service in the prescribed form within 14 days of service of the originating process (if served within jurisdiction) or on a date prescribed by the court (if served outside of the jurisdiction).
  • Defendant is required to serve a defence within 14 days after the expiry of the time limit for filing the acknowledgment of service or the Plaintiff’s statement of claim, whichever is later. 
  • Plaintiff is required to file a Summons for Directions within 1 month of the close of pleadings, which is returnable in not less than 14 days. If a plaintiff does not take out a Summons for Directions, the Defendant may do so or apply for an order to dismiss the action. 

At the hearing of the Summons for Directions, the court will consider, amongst others, fixing a trial date and/or a timetable for future steps, giving directions in relation to disclosure, and giving directions in relation to evidence such as the exchange of expert reports and witness statements. 

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5 . What disclosure obligations apply? Are parties required to disclose unhelpful documents as well as those on which they rely?

Parties have an ongoing discovery obligation which arises at the close of pleadings. At that point, each party must serve on the other a list of all documents that are or have been in the party’s possession, custody or power relating to any matter in question between them in the action.[7]

The test of relevance in the Cayman Islands includes any document that tends to support or undermine either party’s case, including “train of inquiry” documents.

Parties are entitled to apply for discovery of particular documents.[8] A particular aspect of discovery in the Cayman Islands is that financial services litigation often calls for discovery of documents which might be said to contain information confidential to the disclosing party’s clients or former clients. This might require the disclosing party to make applications under the Confidential Information Disclosure Act in the context of giving discovery.[9] A party may also not be required to disclose a document if it is protected by privilege,[10] if it would incriminate that party or if disclosure of the document would be detrimental to the public interest.

It is to be noted that it is also possible to obtain discovery from third parties innocently or otherwise mixed up in the wrongdoing by the defendant (or potential defendant) under the Norwich Pharmacal jurisdiction.[11]


[7] O.24 r.2 of the Grand Court Rules.

[8] O.24 r.7 of the Grand Court Rules.

[9] Section 4 of the Confidential Information Disclosure Act, 2016.

[10] O.24 r.5(2) of the Grand Court Rules.

[11] See Essar Global Fund Ltd and Essar Capital Limited v. Arcelormittal USA LLC (CICA, unreported, 3 May 2021); see also Hangzhou Lingqin Investment v. Harneys Liquidation Services (Cayman) Ltd and another (unreported, 7 June 2022, FSD 65 of 2022 (MRHJ)), where the Grand Court granted a Norwich Pharmacal Order against a Cayman based registered office and corporate filing agent (the defendants).

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6 . Can witnesses be required to attend trial and face cross-examination?

At trial, evidence is given by witnesses orally and in person, under oath, through examination-in-chief, cross-examination and re-examination in open court. Witnesses will be required to give written witness statements which are to be exchanged before trial.[12]

Where expert opinion evidence is adduced at trial, expert reports will usually be exchanged simultaneously, after which a meeting of experts will often be convened on a “without prejudice” basis to identify the areas between experts that are still in dispute.[13] A party can also cross-examine an opposing party’s expert at trial on the contents of their expert report.

Information or evidence from third parties is generally only obtainable by issuing a writ of subpoena ad testificandum (a subpoena to compel a person to give oral evidence) or a writ of subpoena duces tecum (a subpoena to compel a person to provide documents).[14]


[12] O.38 r.1 of the Grand Court Rules. 

[13] O.38 r.37 and 38 of the Grand Court Rules.

[14] O.38 Part II of the Grand Court Rules.

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7 . What discretion do the courts have in making costs orders?

The overriding objective is that a successful party to any proceeding should recover from the opposing party the reasonable costs incurred in conducting that proceeding in an economical, expeditious and proper manner unless otherwise ordered by the court.[15] Although the usual rule is that costs follow the event (i.e. the losing party pays the costs of the successful party), the court has wide discretion when awarding costs. The parties’ conduct in the litigation, including any payments into court or offers of settlement,[16] may be taken into account. 

The usual costs award is on the standard basis, which means that costs will only be allowed to the extent that they are proportionate to the issues involved, were reasonably incurred, and were reasonable in amount.[17] Any doubts which the taxing officer may have on these issues are resolved in favour of the paying party. 

Although rare, costs may also be awarded on an indemnity basis. This usually requires a finding that a party has behaved improperly and means that all costs of the receiving party would be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred.[18] Any doubts which the taxing officer may have as to whether the costs were reasonably incurred or were reasonable in amount would be resolved in favour of the receiving party, leading to a higher proportion of costs recovery.


[15] O.62 r.4(2) of the Grand Court Rules.

[16] O.62 r.10 of the Grand Court Rules.

[17] O.62 r.4(10) of the Grand Court Rules.

[18] O.62 r.4(11) of the Grand Court Rules.

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8 . What are the main types of interim remedies available?

Injunctive relief 

A wide variety of injunctive relief may be obtained from the Cayman Islands Courts, including: 

  • Freezing orders (domestic and worldwide), both in aid of proceedings in the Cayman Islands and in aid of foreign court and arbitration proceedings. This restricts a party’s ability to deal with its own assets to prevent the improper dissipation of those assets before judgment and is usually coupled with an asset disclosure order to help the plaintiff identify the respondent’s assets and police the freezing order. It is available against the assets of the respondent both in the Cayman Islands and worldwide, and a worldwide freezing order may be granted where the value of the respondent’s assets in the Cayman Islands is unlikely to meet the value of the applicant’s claims. 
  • Prohibitory and mandatory interim injunctions, which restrain a party from taking a particular step or require a party to take specific action respectively. 
  • Anti-suit injunctions, which restrain foreign legal proceedings. 

Security for costs

The court may, on the defendant’s application during the course of the litigation, order the plaintiff to provide security for the defendant’s costs. The court may order security for costs if it appears that:[19]

  • the plaintiff is ordinarily resident out of the jurisdiction;
  • the plaintiff (not being a plaintiff who is suing in a representative capacity) is a nominal plaintiff who is suing for the benefit of some other person, and there is reason to believe that they will be unable to pay the costs of the defendant if ordered to do so;
  • the plaintiff’s address is not stated in the writ or is incorrectly stated; or
  • the plaintiff has changed the address during the course of the proceedings with a view to evading the consequences of the litigation; 

and, having regard to all the circumstances of the case, the court thinks it is just to do so. 

Other interim remedies 

The court may order a wide range of interim remedies including:[20]

  • an order for the detention or preservation of the subject matter of the action;
  • an order for samples to be taken;
  • an order for the sale of perishable property;
  • an order for an expedited trial; 
  • an order for the recovery of property subject to a lien against payment of money into court as security; 
  • an order for interim payment; 
  • an order for specific discovery;[21] 
  • summary judgments;[22] 
  • disposals of the case on a point of law;[23] 
  • striking out of pleadings;[24] and/or 
  • judgments in default of acknowledgment of service or defence.[25] 


[19] O.23 r.1 of the Grand Court Rules. 

[20] O.29 of the Grand Court Rules. 

[21] O.24 r.7 of the Grand Court Rules.

[22] O.14 of the Grand Court Rules.

[23] O.14A of the Grand Court Rules.

[24] O.18 r.19 of the Grand Court Rules.

[25] O.19 of the Grand Court Rules.

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9 . What approach do the local courts adopt with respect to arbitration? What arbitration law applies and is it based on the UNCITRAL Model Law?

The Cayman Islands has continued to build its reputation as an arbitration-friendly jurisdiction, which also offers a diverse toolkit of judicial measures that can be used in aid of enforcement, following the introduction of the modern Arbitration Act, 2012 (the Act). The CIMAC, which opened in 2022, is dedicated to promoting a bespoke approach to arbitration as well as to promoting the Cayman Islands as the jurisdiction of choice.[26]

The Act is based on the UNCITRAL Model Law and applies where the seat of the arbitration is the Cayman Islands. The Cayman Court will generally enforce arbitration agreements by granting a stay of legal proceedings and will enforce arbitration awards. 

Applications pursuant to the Act must be commenced in the FSD. 


[26] www.caymanarbitration.com

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10 . Can arbitrators grant interim relief?

Under the Act, the arbitral tribunal has the power to order interim measures and make preliminary orders.[27] In particular, the arbitral tribunal may, at any time prior to the issue of a final award and at the request of a party, grant an interim measure ordering a party to:[28]

  • maintain or restore the original position of the other party pending determination of the dispute; 
  • take action that would prevent – or refrain from taking action that is likely to cause – current or imminent harm or prejudice to the arbitral process; 
  • provide a means of preserving assets out of which a subsequent award may be satisfied; and
  • preserve evidence that may be relevant and material to the resolution of the dispute. 

The tribunal may require the party applying for an interim measure to provide appropriate security in connection with the measure.[29] Further, as with general injunction applications to the court, the applicant has a continuing duty of full and frank disclosure until such time as the opposing party has an opportunity to present its case.[30]


[27] Part VIII of the Act.

[28] Section 44 of the Act (and unless agreed otherwise by the parties).

[29] Section 49(1) of the Act.

[30] Section 50 of the Act.

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11 . On what grounds can an arbitration award be appealed?

With the leave of the court, and upon notice being given to the other party and the arbitral tribunal, a party to an arbitration may appeal to the court on a question of law arising out of an award made in the arbitration.[31] The section gives no scope to appeal findings of fact. An application for leave to appeal must identify the question of law to be determined and state the grounds on which leave to appeal should be granted. Leave to appeal shall be given only on the following grounds:[32]

  • if the determination of the question will substantially affect the rights of one or more of the parties; 
  • if the question is one that the arbitral tribunal was asked to determine; 
  • if, on the basis of findings of fact in the award, the decision is obviously wrong or the question of law is one of general public importance and the decision is at least open to serious doubt; and
  • if it is just and proper in all the circumstances for the court to determine the question.

At the end of the appeal process, the court may confirm, vary, set aside (in whole or in part), or remit the award back to the arbitral tribunal for consideration (in whole or in part). If the award is remitted back to the tribunal, it shall make its award within three months of the date of the order, unless the court directs otherwise.[33]

Where the award is challenged by way of an appeal, it cannot be brought until every available recourse within the arbitral process itself has been exhausted and the appeal must be brought within one month of the date of the award.[34] Security for costs may also be ordered.[35]

The parties may agree to exclude the right to appeal.[36] The Act is silent on the question of expanding the scope of appeal, but since any appeal invokes the statutory jurisdiction of the court as opposed to the consensual and contractual jurisdiction of the arbitral tribunal, it is arguable that the scope of appeal cannot be expanded by agreement.


[31] Section 76(1) of the Act.

[32] Section 76(4) of the Act.

[33] Section 76(7) and (8) of the Act.

[34] Section 77 of the Act

[35] Section 77(6),(7) of the Act.

[36] Section 76(2) of the Act.

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12 . What international conventions and agreements on enforcement of judgments or arbitral awards is your jurisdiction a party to?

Except for Australian judgments, which are subject to a statutory enforcement regime under the Foreign Judgments Reciprocal Enforcement Act (1996 Revision) (the Reciprocal Enforcement Act), foreign judgments are enforced under the common law. 

The Cayman Islands is also party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), with the reservation that, in the Cayman Islands, the New York Convention would apply “only to the recognition and enforcement of awards made in the territory of another Contracting State”. This is given domestic effect via the Foreign Arbitral Awards Enforcement Act (1997 Revision) (the FAAEA).

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13 . What types of judgments in commercial matters are enforceable and what types are excluded?

Domestic 

All types of domestic awards, judgments and orders are enforceable, whether they are final and conclusive, preliminary or interim. These include:

  • money judgments;
  • non-money judgments; 
  • default judgments; 
  • interim orders; and
  • injunctions/judgments prohibiting acts. 

There are no specific domestic judgments that are excluded from recognition and enforcement.

Foreign 

For the purposes of enforcement at common law, a foreign judgment or order is generally enforceable where it is: 

  • final and conclusive;
  • made for the payment of a sum of money;
  • made by a foreign court of competent jurisdiction; and
  • made in proceedings for compensation or damages to an injured party. 

Under the Reciprocal Enforcement Act, foreign money judgments can be enforced provided that they meet the following conditions: 

  • the judgment debtor was properly served in accordance with the law of the foreign country;
  • the judgment originates from one of the jurisdictions to which the Reciprocal Enforcement Act applies (currently applies only to Australian judgments);
  • the foreign judgment in question is final and conclusive;
  • there is a sum of money payable;
  • the foreign judgment was given after the Reciprocal Enforcement Act came into force; 
  • registration is sought within the limitation period of six years from the date of judgment; and 
  • at the date of the application, the judgment has not already been wholly satisfied or enforced, and is still capable of enforcement in the country of the foreign judgment. 

Exclusions

  • Judgments ordering or prohibiting the doing of acts/injunctions. Foreign in personam (non-money) judgments or orders are not enforceable under the Reciprocal Enforcement Act. However, they can be enforced at common law provided that the Cayman Court can be satisfied that the judgment was given by a court with competent jurisdiction, that it is final and conclusive, and that the court is required to enforce judgments of its type on the principles of comity.[37] Accordingly, non-money judgments can be recognised and enforced by way of equitable remedies, if the principle of comity requires it.
  • Declaratory judgments. These judgments cannot be enforced under the Reciprocal Enforcement Act, but can be at common law if they meet the relevant conditions outlined above.
  • Default judgments. These judgments can be enforced under the Reciprocal Enforcement Act and at common law if they meet the relevant conditions outlined above.
  • Judgments made without notice. These judgments cannot be enforced under the Reciprocal Enforcement Act, but can be at common law if they meet the relevant conditions outlined above.
  • Foreign decisions granting provisional measures. These judgments cannot be directly enforced under the Reciprocal Enforcement Act or at common law. However, the Cayman Court has jurisdiction to make interim orders (including injunctive orders and orders for the appointment of receivers) in support of foreign proceedings.[38]
  • Foreign enforcement orders and (pre-judgment) attachment orders. These judgments cannot be enforced under the Reciprocal Enforcement Act, but can be enforced at common law if they meet the relevant conditions.

As a matter of public policy, the court will not enforce a foreign judgment, whether at common law or under the Reciprocal Enforcement Act, if:

  • it is repugnant to the laws of the Cayman Islands; 
  • it relates to the penal laws of another country, or imposes punitive damages; 
  • it is a foreign tax judgment; or 
  • it adjudicates in rem on the title to, or the right to possession of, immovable property in the Cayman Islands.[39]

Under the Trusts Act (2021 Revision), a foreign judgment will not be enforced if it holds that Cayman Islands trusts or dispositions in respect of them are void or liable to be set aside either because the foreign law does not recognise the trust concept or because of heirship, matrimonial, or certain other rights that will not be enforced by the foreign court.


[37] Bandone v. Sol Properties Incorporated [2008] CILR 201.

[38] Section 11A of the Grand Court Act.

[39] Tartaglia v. Colonial Dev Corp Ltd [1996 CILR Note 4b].

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14 . What is the process for registration of foreign judgments and arbitral awards?

At common law

The procedure for enforcement of a foreign judgment at common law involves starting fresh proceedings in the Cayman Islands by filing a Writ of Summons suing for the amounts due and owing pursuant to the foreign judgment. The action must be brought in the Financial Services Division of the Grand Court. 

Once filed, the writ of summons must be served on the judgment debtor in the ordinary way. The judgment debtor has a time limit within which it must acknowledge service or file a defence, and if this is not done, the claimant can apply for judgment to be entered against the judgment debtor by default. In the event that service is acknowledged, a claimant would typically apply for summary judgment by reference to the outstanding judgment debt.

Once the judgment creditor obtains judgment in the new proceeding, the full range of domestic enforcement procedures is available.

Under the Reciprocal Enforcement Act

Where the Reciprocal Enforcement Act applies, an application must be made to register the foreign judgment via a simplified procedure. The application is made ex parte and must be supported by an affidavit:[40]

  • exhibiting the judgment or a certified copy, and, where the judgment is not in English, a notarised translation;
  • stating the name, trade or business, and last known place of abode or business, of the judgment creditor and judgment debtor;
  • stating that the judgment creditor is entitled to enforce the judgment; and
  • confirming that the judgment remains unsatisfied.

Arbitral awards

The procedure to enforce foreign and domestic awards are the same.

Whether in the case of a domestic award enforceable under the Act or a foreign award enforceable under the FAAEA, an application for leave to enforce shall be made by ex parte originating summons.[41] Once the resulting enforcement order is served on the respondent, it will have 14 days (or such longer period as the court may fix if the respondent is outside the Cayman Islands) to apply to set aside the enforcement order. The award shall not be enforced until the expiration of that period or, if an application to set aside is made, until after the application is finally disposed of.


[40] Section 4 of the Reciprocal Enforcement Act.

[41] O.73 r.31 of the Grand Court Rules. 

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15 . Once the judgment or award is registered, what are the available methods of execution?

Once judgment has been issued by the court in proceedings brought for the purposes of enforcing a foreign judgment at common law, or once such a judgment has been registered in the Cayman Islands under the Reciprocal Enforcement Act, it can be enforced in the same way as any other judgment of a Cayman Islands Court.

The most common forms of enforcement are:[42]

  • a writ of fieri facias (seizure of assets); 
  • a garnishee order (i.e. garnishment of money owed to the judgment debtor by a third party); 
  • a charging order over assets; 
  • winding-up proceedings; and 
  • the appointment of a receiver. 

Where a judgment or order requires a person to do, or abstain from doing, an act, it may be enforced by:[43]

  • a writ of sequestration against the property of that person; 
  • a writ of sequestration against the property of any director of other officer of the body (where that person is a body corporate); and/or
  • an order of committal. 

[42] O.45 r.1 and r.13 of the Grand Court Rules.

[43] O.45 r.5 of the Grand Court Rules.

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16 . What interim measures are available pending enforcement?

The court can order a variety of provisional measures pending enforcement of either domestic or foreign judgments. Interim measures include:

  • Mandatory interim injunctions (and related relief) such as:
    • Anton Piller orders;
    • orders appointing receivers;
    • orders appointing provisional liquidators;
    • orders for interim payments; and
    • orders for the detention or inspection and preservation of property.
  • Freezing injunctions.

EXPERT ANALYSIS

Chapters

Bermuda

Charlotte Donnelly
Keith Robinson
Mahogany Bean

British Virgin Islands

Kate Lan
Nicholas Lee
James Noble

Canada

Robert J.C. Deane
Sean Gallagher

China

Jessica Fei

England and Wales

Ben Bruton
Jake White
Suzanne Labi

Germany

Dr. Justus Jansen
Jamsched Amiri

Guernsey

Elaine Gray
Rebekah Johnston
Robin Gist

Hong Kong

Ian De Witt
Natalie Lam

Japan

Claire Chong
Kaori Sugimoto

Jersey

Christopher Tan
John Kelleher

Malaysia

Janice Ooi Huey Peng
Sharon Chong Tze Ying

Norway

Carl E. Roberts
Eline Hellem Langeland

Pakistan

Mansoor Hassan Khan

Saudi Arabia

Fahad AlDehais AlMalki
Salman AlAnazi
Talal AlOtaibi

Singapore

Calvin Ong
Monisha Cheong
Wendy Lin
Josephine Choo

South Korea

Daniel Chua
SeungMin Lee
Youjoun Ha

Taiwan

Angela Y. Lin
Joyce N. Chang

Thailand

Jittipong Champreechar
Napassorn Panitchewakul
Sarocha Thongperm

United Arab Emirates

Ayman Ibrahim
Hassan Al Shaqsi
Nasser Al Osaiba
Sleiman Jorr

United States

Arthur Schoen
Julia Mano Johnson
Natalie Holden

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