Litigation

As a British dependent territory the legal system in the Cayman Islands is based upon that of the United Kingdom and the common law of the United Kingdom has general application unless there are specific statutory provisions which provide otherwise. The rules of practice which apply to civil litigation are contained in the Supreme Court Practice (The White Book) of the United Kingdom unless local Cayman rules or statutory enactments provide otherwise.

The Court System

The Cayman Islands consists of a four-tier Court system:

The Summary Court.

This Court has similar jurisdiction to the Magistrateís Court in the U.K. and its civil jurisdiction is limited to CI$2,000.00.

The Grand Court.

This Court has similar jurisdiction to that of the High Court in the U.K. and is presided over by a single judge. This is the Court in which most litigation is instituted.

The Court of Appeal.

This Court has jurisdiction parallel to that of the Court of Appeal in the U.K. and typically sits with three judges chosen from a panel, however a single judge may preside in certain instances.

Privy Council

. This is similar to the House of Lords in the U.K. and is the only court which does not sit in the Cayman Islands. It is the final Court of Appeal and is seated in London.

Considerations Prior to the Commencement of Litigation

Prior to commencing litigation proceedings with cross-border implications, careful consideration should be given to a number of issues which may impact considerably on the outcome of the proposed litigation. The following is a list of some of the more critical issues which should be considered prior to commencement of litigation:-

The jurisdiction of the Court where the litigation is to be commenced and whether the country under consideration is a convenient forum to commence such litigation. The estimated cost of the litigation. Does the litigation arise from a contract and if so does the law of any particular country apply to the resolution of the dispute by virtue of the contractual terms? What is the status of the relevant parties? Are they corporate or individual? Are they foreign and if so, what specific rules apply? What is the domicile of the relevant parties, what rules apply relative to the service of the pleadings on these parties and how can service be effected? What is the nature of the evidence to be called? Are witnesses located in foreign countries and do they speak foreign languages? Are they able to travel? Are the documents on which reliance is sought in a foreign language and if so, what are the difficulties in interpretation? If the litigation is likely to result in a monetary award, where are the assets located and what power does the Court have to grant orders to ensure that these assets will be available for satisfaction of a successful judgment? Does the Court have the necessary powers to grant discovery and to what extent and at what stage of the proceedings? Do any statutory limitations apply to any specific part of the proposed litigation which may cause an important and relative part of the claim to be barred from consideration by the Court? The likelihood of an application for security for costs being made and the amount of the award which may be made in that regard. In the event of a successful judgment, to what extent can the judgment be enforced and in which jurisdictions? Depending on the size of the proposed litigation and the extent of its cross-border implications, who will act as lead solicitors to direct the various stages of the litigation and which attorneys should be retained in the relevant jurisdictions in the event relief has to be sought in that jurisdiction? At what stage should opinions be sought from Counsel as to the likelihood of success? Is a judgment available in foreign currency and if so, are they any exchange control regulations which exist that may make it impossible or difficult to repatriate the proceeds of the judgment? The right of appeal to a competent court, and the time which it may take to have appeals adjudicated.

The above is not a comprehensive list and does not allow for a detailed examination of all the issues to be considered, however it is hoped that a brief overview of a few of the factors to be considered will assist those who might be faced with a dispute to resolve. In addition, the above list does not address methods of alternative dispute resolution although many of the considerations for cross-border litigation apply equally to cross-border arbitration where the party as a choice of forum.

Jurisdiction, Forum Convenience & Service

The Cayman Islands applies Order 11 of the U.K.ís White Book as a guide in determining whether the Court should accept jurisdiction and make an Order for service on parties outside the jurisdiction. In some cases the Court may decide that it is not the most convenient forum for the litigation and will not exercise its jurisdiction.

Personal service is normally required but the Court will allow out of jurisdiction or substituted service in certain instances. An examination of these issues is critical as a party may institute proceedings and find that the Court will not exercise its jurisdiction or be able to obtain leave to serve parties out of the jurisdiction.

Injunctive Relief

The Courts have full discretionary power to grant injunctive relief and Mareva injunctions are regularly granted in order to ensure that assets are preserved in appropriate cases. The U.K. rules and cases apply to these considerations and an undertaking in damages is normally required when injunctive relief freezing assets is applied for and obtained.

Evidence of witnesses not in the Jurisdiction

The Hague Convention of Taking of Evidence Abroad has been extended to the Cayman Islands and is available to parties. The Cayman Court will assist foreign courts in appropriate cases to gather evidence and letters rogatory are not uncommon.

Discovery

Discovery is available after the close of pleadings and the same rules that apply in the U.K. apply to the Cayman Islands with some variations. Parties must disclose all documents in their possession and/or under their control. Premature discovery is available in certain cases on the same principles that apply in the U.K.

Enforcement of Judgments

The Foreign Judgment Reciprocal Enforcement Law (1996 Revision) establishes a mechanism for the registration and enforcement of foreign judgments in any foreign country which affords reciprocity of treatment as regards judgments of Cayman courts. This Act has not been widely used by many countries. Cayman judgments are enforceable in the U.K. by virtue of the Reciprocal Enforcement of Judgments (Administration of Justice 1920 Part 2) Amendment (Order 1985).

With the above exceptions, monetary judgments of foreign courts are enforceable in common law by issuing new proceedings in the Cayman Islands using the judgment as evidence of debt.There are some very limited restrictions on the enforcement of foreign judgments in the Islands, for instance where judgments are obtained for amounts which are due to tax authorities.

Defences to an action to enforce a foreign judgment are available but are very limited. It is essential to obtain opinions as to the enforceability of any possible judgment which is obtained in country A where it is anticipated that its enforcement may be necessary in country B or C.

It is worth noting that both the U.S.A. and the Cayman Islands are parties to the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards.

Security for Costs

Foreign plaintiffs are often required to give security for costs and such security is normally in the nature of a cash bond or bankerís guarantee. The amount of the security varies depending on the nature of the case and any application should be accompanied by a proforma bill of costs.

Repatriation of Judgment Sums

There are no exchange control regulations in the Cayman Islands and monetary judgments may be obtained in foreign currencies.

Statute of Limitations

The Cayman Islands has a statute of limitations which provides for bars on certain types of relief. The time bar varies depending on the type of relief which is sought and careful considerations should be given to ensure that the proposed claim is not statute-barred.

Conclusion

Litigation with international implications should only be commenced after every effort to resolve the dispute has been exhausted. It is complicated, expensive and requires professionals who are not only competent but capable of handling the paperwork which is generated at an amazing pace.

The content of this article is intended to provide a general guide to th esubject matter. Specialist advice should be sought a bout your specific circumstances.