Arbitration Law meets international standards

Changes to the Cayman Islands Arbitration Law will make arbitration proceedings faster, more efficient, less costly and protect the privacy of the parties involved. 


Arbitration, as a mechanism of binding dispute resolution, is the equivalent of litigation in the courts, but entails resolving disputes outside the courts in accordance with procedures, structures and substantive legal or non-legal standards chosen by the parties involved. As such arbitration is distinct from nonbinding forms of dispute resolution such as mediation or negotiation. 

Arbitration is becoming more recognised globally as a viable alternative to court proceedings to resolve commercial disputes. Given that parties to commercial agreements often prefer the ability to deal with legal disputes without the publicity and formality of court proceedings, the arbitration procedure can offer more flexibility and cost savings compared to litigation in the courts. 

The ability to use arbitrators who have not only expertise with the arbitration process but also with a specific subject matter, can make it attractive in complex cases, for example involving hedge funds. It is also typically a less adversarial form of dispute resolution that litigation and can thus help maintain the relationships between the parties. 

The new law will bring Cayman’s arbitration regime in line with international standards. It is based on the UNCITRAL Model Law on International Commercial Arbitration with some additional provisions to suit local conditions and other refinements taken from legislation that has been successful in comparable jurisdictions which have adopted the Model Law, including the Bahamas, Singapore and Hong Kong. 

“The introduction of the Cayman Islands Arbitration Law will see the Cayman Islands well placed as a modern and sophisticated jurisdiction in which to conduct international arbitrations,” said Jeremy Walton, head of Appleby’s Litigation and Insolvency practice group in Cayman. 

He said the law is found on three fundamental principles, including the fair resolution of disputes by an impartial tribunal without undue delay or expense, maximum party autonomy, subject only to safeguards in the public interest and limited judicial intervention. 

“For international commercial enterprises which are already attracted to using the Cayman Islands because of the quality of its dispute resolution services, these features are very likely to increase the choice of Cayman as the seat to conduct arbitral proceedings,” he said. 

In the offshore market, purchasers of financial services and products increasing take into account the quality of dispute resolution mechanisms when choosing between competing jurisdictions. 

“It must be recognised that further steps will be required in order to fully develop the Cayman Islands as an effective seat of arbitration,” Walton said. “These include public education and training for practitioners, the establishment of an arbitration centre, and the alignment of administrative policies and procedures to support implementation of the Law. It will be very interesting to see how this develops over the coming months.” 

Overall however the new arbitration legislation constitutes a significant change and also includes more provisions governing the confidentiality of proceedings than the old law.  

The new Cayman Islands Arbitration Law, 2012 will come into force on a date determined by Cabinet. 

Jeremy Walton

Jeremy Walton