Enforcement of Foreign Arbitral Awards in the Cayman Islands

As a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention“), the Cayman Islands has adopted a robust framework for enforcing foreign arbitral awards, encapsulated in the Foreign Arbitral Awards Enforcement Act (1997 Revision) (the “Act”). This article provides an overview of the key principles surrounding the enforcement of foreign arbitral awards in the Cayman Islands under the relevant provisions of the Act.

Statutory Framework
The Act applies to any award made in a country that is a party to the New York Convention, which encompasses the majority of the world’s trading nations.

Section 5 of the Act provides as follows:

‘A Convention award shall, subject to this Law, be enforceable in the Grand Court in the same manner as an award under section 22 of the Arbitration Law (1996 Revision) and shall be treated as binding for all purposes on the persons between whom it was made and may accordingly be relied upon by any of those persons by way of defence, set off or otherwise in any legal proceedings in the Islands and any reference in this Law to enforcing a Convention award shall be construed as including references to relying on such award.”

Process
To have a foreign arbitral award enforced in the Cayman Islands, an interested party must apply to the Grand Court. The application must be made by filing an ex parte motion, which is the standard approach for the recognition of foreign awards. A certified copy of the arbitral award and the arbitration agreement (or a certified copy of the original agreement) must be submitted with the application.

Grounds for Refusal
The Cayman Islands’ enforcement regime operates with a clear presumption of recognition.[1] However, section 7 of the Act, which largely reflects the exceptions contained in the New York Convention, provides that enforcement may be refused if the respondent is able to prove one or more of the following grounds:

• Incapacity: Enforcement will be refused if a party to the arbitration agreement was under some incapacity.
• Invalidity: Enforcement may be denied if the arbitration agreement was not valid under the law to which the parties have subjected it or, in the absence of such a choice, under the law of the country where the award was made.
• Lack of Notice: An award will not be enforced if the party against whom it is invoked was not given proper notice of the arbitration proceedings, or if they were unable to present their case.
• Non-arbitrability: Matters beyond the scope of the arbitration agreement will not be enforced.
• Composition: If the composition of the arbitral authority or the procedure were not in accordance with the arbitration agreement, then the award will not be enforced.
• Unbinding: An award which has not yet become binding on the parties or has been set aside or suspended by a competent authority will not be enforced.
• Contrary to Public Policy: Enforcement will be refused if the award is found to be contrary to the public policy of the Cayman Islands. The scope of “public policy” is interpreted narrowly, ensuring that only awards that are flagrantly inconsistent with fundamental principles of justice are denied enforcement.

Except in very limited circumstances, enforcement should be granted, ensuring that the Cayman Islands remain a favourable forum for resolving cross-border conflicts. In Al Haidar-v-Roa, FSD 32/2022 (IKJ) dated 3 February 2023 (unreported), the Honourable Justice Kawaley reiterated that: “the grounds for refusing enforcement are limited should be construed narrowly and the respondent will bear the burden at any inter partes hearing of demonstrating that such grounds are made out”.

Exequatur Procedure
The Act employs the concept of “exequatur,” a legal procedure by which a foreign arbitral award is transformed into a judgment of the Cayman Islands courts, making it enforceable as a local court judgment. The procedure involves applying to the Grand Court for an order that recognises and enforces the foreign arbitral award. Once granted, the award can be enforced in the same manner as any other court judgment through a number of different enforcement remedies.

Appeals
An unsuccessful party seeking to contest the enforcement of a foreign arbitral award may appeal the Grand Court’s decision to the Court of Appeal. However, such appeals are typically limited to issues of law, such as whether the award meets the statutory requirements for recognition and enforcement under the Act. The grounds for appeal are restricted to the same narrow grounds upon which the enforcement of the award could have been denied in the first instance.

Conclusion
The Act ensures that the Cayman Islands remains a favourable jurisdiction for the recognition and enforcement of foreign arbitral awards. By aligning its domestic laws with the New York Convention, the Cayman Islands provides a self-contained procedural mechanism for enforcing international arbitration awards, promoting the stability and certainty necessary for cross-border commercial disputes.

[1] See Application for the Enforcement of a Swiss Chambers’ Arbitration Institute Arbitration Award (unreported, 8 March 2024, Kawaley).