Enforcement of Foreign Arbitral Awards

Stuarts Humphries’ Litigation and Dispute Resolution team advises on all aspects of the procedure for recognising and enforcing arbitral awards in the Cayman Islands as well as applications resisting the enforcement of foreign arbitral awards.

The Cayman Islands’ public policy is supportive of arbitration and the enforceability of arbitral awards. This commitment is reflected in its legislative framework, notably the Arbitration Act (2012) and the Foreign Arbitral Awards Enforcement Act (1997 Revision), which together provide a robust mechanism for the recognition and enforcement of domestic and foreign arbitral awards.

Legal Framework

The Arbitration Act (2012) (the “Arbitration Act”)

The Arbitration Act modernised the Cayman Islands' approach to arbitration, aligning it with international standards. Section 72 of the Act stipulates that a domestic arbitral award may, with permission of the court, be enforced in the same manner as a judgment or order of the court. Specifically:

• Section 72(1): "An award made by the arbitral tribunal pursuant to an arbitration agreement may, with leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect."
• Section 72(3): "Leave to enforce an award shall not be given where, or to the extent that, the person against whom it is sought to be enforced shows that the arbitral tribunal lacked jurisdiction to make the award."

The application is made by Ex Parte Originating Summons pursuant to GCR Order 73, Rule 31, supported by affidavit and accompanied by the award and the original arbitration agreement. The Court may then make an Order for the enforcement of the arbitration award which must be served on the Respondent. Following the service of the Order for enforcement, the Respondent has 14 days (or such other period as the Court orders) to apply to set aside the enforcement Order.  

In respect of challenging a domestic arbitration award, it is also possible to apply to Court to set aside awards and, indeed, it is possible in prescribed circumstances, to appeal an arbitral award on a point of law, both such applications being subject to deadlines.

The Foreign Arbitral Awards Enforcement Act (1997 Revision) (the “FAAEA”)

The FAAEA gives effect in the Cayman Islands to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) (extended to the Cayman Islands by the United Kingdom in November 1980). The effect of section 5 FAAEA is that a Convention award shall be enforceable in the Grand Court in the same manner as a domestic arbitration award. Section 7 of the FAAEA outlines the limited grounds upon which enforcement may be refused (mirroring those in Article V of the New York Convention) which include:

• that the arbitration agreement was not valid;
• that the award debtor was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case;
• that the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration;
• that the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, with the law of the country where the arbitration took place;
• that the award has not yet become binding on the parties; and
• that the award is in respect of a matter which is not capable of settlement by arbitration (such as criminal disputes and matrimonial disputes), or if it would be contrary to public policy to enforce the award.

As with a domestic arbitration award, the applicant must file an Ex Parte Originating Summons in the Grand Court supported by affidavit, again accompanied by the original award or a certified copy, the original arbitration agreement or a certified copy, and an English translation if the award or agreement is in a foreign language¹.

The order granting permission to enforce the arbitration award must be served on the Respondent. The Respondent will then have 14 days from the date of service of the Order to apply to set aside the Order for enforcement or, if the Order is to be served out of the jurisdiction, within the time ordered by the Court. The Respondent would have to prove that one of the limited grounds for refusal under Section 7 of FAAEA applied.

By way of illustration, in the case of Gol Linhas Aereas SA v. MatlinPatterson Global Opportunities Partners (Cayman) II LP [2022] (UKPC 21), the UK Privy Council (the highest appeal Court for the Cayman Islands) considered an appeal from the Cayman Islands Court of Appeal regarding whether the enforcement of a foreign arbitral award made in Brazil in the Cayman Islands under the New York Convention fell beyond the scope of the agreed arbitration terms. The Privy Council explained the approach the Court should take as follows:

“It is well established that the grounds for refusing recognition and enforcement set out in article V should be construed narrowly in the light of the New York Convention's object and purpose of facilitating the recognition and enforcement of foreign arbitral awards: see eg Cukurova Holdings AS v Sonera Holdings BV [2014] UKPC 15; [2015] 2 All ER 1061, para 34.’

The Cayman Islands Grand Court applied this principle in AGPL Investments Ltd v. Lam Global Management Ltd II (FSD 226 of 2022). In that case, the Grand Court granted permission to enforce a foreign arbitral award made by a Hong Kong-seated tribunal. Justice Kawaley emphasised that the grounds for refusing enforcement are limited and should be construed narrowly. The Cayman Islands Grand Court also highlighted that the respondent bears the burden of proving that one of the exceptions applies. Both the above Privy Council and Grand Court decisions thereby being supportive of recognition and enforcement.

Conclusion

The Cayman Islands' legal framework provides a clear and efficient process for the enforcement of both domestic and foreign arbitral awards. The courts have consistently upheld the principle of party autonomy in arbitration, ensuring that arbitral awards are enforced unless one of the limited exceptions applies. This approach reinforces the Cayman Islands' position as a pro-arbitration jurisdiction, offering a reliable forum for the resolution and enforcement of international disputes.