Cayman Islands: Enforcement of Judgments in Civil and Commercial Matters

Foreign judgments may be enforced in the Cayman Islands in one of two ways:

1. Pursuant to the Foreign Judgments Reciprocal Enforcement Act (1996) (the 1996 Act), that provides for recognition and enforcement of judgments given in the superior courts of foreign countries to which the Governor of the Cayman Islands has extended this benefit. To date, this has only been extended to certain Superior Courts of Australia and its external territories.
2. Judgments issued by jurisdictions to which the 1996 Act has not been extended may be enforced pursuant to common law principles by commencing court proceedings against the judgment debtor, where the foreign judgment is treated as the debt or liability being pursued in the action in the Cayman court, creating a domestic judgment debt which can then be enforced locally. In certain circumstances foreign in personam non-monetary judgments may also be enforced in this way.

The 1996 Act only applies to the exhaustive list of territories to which it has been extended.  To date, the benefits have only been extended to certain Australian courts by way of the Foreign Judgments Reciprocal Enforcement (Australia and its External Territories Order) 1993.

The 1996 Act further provides that if the judgments given by the Grand Court of the Cayman Islands (Grand Court) are given substantially less favourable treatment than those accorded to the judgments of the superior courts of the foreign country, the Governor may direct that no proceedings shall be entertained in the Grand Court for the recovery of any sum alleged to be payable under a judgment given in a court of that country.  To date, no such direction has been given.

Yes. Foreign judgments which are not governed by the 1996 Act may be enforced under common law principles by commencing court proceedings against the judgment debtor, where the foreign judgment is treated as the debt or liability being pursued in the Grand Court.  More detail is provided in section 4.

The Grand Court’s jurisdiction to enforce foreign judgments and orders made in personam was initially confined to judgments for a debt or definite sum of money.  However, in Bandone and others v Sol Properties Incorporated and others [2008 CILR 301] the Grand Court permitted the enforcement of an in personam non money judgment and the Grand Court is prepared to do so applying the same conditions provided the principles of comity require enforcement. This expansion continues to be a matter for judicial discretion.

There is no authority on the approach that would be taken to a non-money judgment of one of the Courts of Australia to which the benefits of the 1996 Act have been extended.  The 1996 Act expressly provides that “no proceedings for recovery of a sum payable under a foreign judgment being a judgment to which this Part applies, other than proceedings by way of registration of the judgment, shall be entertained by the Grand Court.”  Given the Part only applies to a judgment for a financial sum then arguably non money judgments from those courts will be amenable to enforcement pursuant to the common law principles.

To be registered and enforced under the 1996 Act, the foreign judgment must be:

1. final and conclusive;
2. for a financial sum;
3. handed down after the 1996 Act came into force;
4. delivered by one of the jurisdictions to which the 1996 Act applies (currently only certain superior courts of Australia and external territories); and
5. at the date of the Cayman application the foreign judgment must not already have been wholly satisfied or enforced and must still be capable of enforcement in the country of the foreign judgment.

Further, recognition may be set aside if the judgment debtor satisfies the Court that:

1. the judgment is not a judgment to which the 1996 Act applies or was registered in contravention of the provisions of the provisions of the 1996 Act;
2. the courts of the country of the original court had no jurisdiction in the circumstances of the case;
3. the judgment debtor, being a defendant in the original proceedings did not receive notice of those proceedings in sufficient time to enable it to defend the proceedings and did not appear;
4. the judgment was obtained by fraud;
5. the enforcement of the judgment would be contrary to public policy of the Cayman Islands; and
6. the rights under the judgments are not vested in the person by whom the application for registration was made.

In enforcement under the common law principles, the foreign judgment must satisfy the following criteria:

1. it must be final and conclusive;
2. it must have been given by a court with competent jurisdiction; and
3. the Defendant must have submitted to the jurisdiction of the foreign court.

Under the 1996 Act, there are three stages:

1. The Judgment Creditor must apply ex parte (i.e. without notice to the judgment debtor) to have the foreign judgment registered. The applicant must satisfy the Court that the requisite conditions (set out in the answer to question 4 above) have been met.
2. If the Court is satisfied that the conditions have been met and registers the judgment, the recognition order will need to be served on the judgment debtor and will contain a period within which the judgment debtor may apply to set aside the recognition on the basis of limited specific grounds set out in the 1996 Act. That period will depend upon factors specific to the case but will ordinarily be 14-28 days from service of the order.  The judgment cannot be enforced during this period, although interlocutory relief may be sought.
3. If there is no challenge within the prescribed period, or the Court confirms the registration upon a challenge, then the judgment creditor is entitled to treat the recognised judgment as if it were a judgment of the Cayman Islands Grand Court and it can be enforced via the available routes of enforcement under Cayman law (explained in more detail in section 6).

A foreign judgment for a monetary sum from a court not afforded the benefit of the 1996 Act may be used to present a statutory demand without formal recognition of the judgment in accordance with the 1996 Act or the relevant common law principles. A statutory demand may be served on a Cayman company as a precursor to issuing a winding up petition against that company in accordance with the relevant procedural rules.

If formal recognition is desired and registration through the 1996 Act is not available then a judgment creditor may seek enforcement under the common law by issuing a writ of summons seeking the relief obtained in the foreign judgment.  The writ must be served on the judgment debtor and if the judgment debtor fails to acknowledge service or to file a defence within the prescribed time limits then the judgment creditor may apply for default judgment.  If the judgment debtor does file an acknowledgment of service then usually the judgment creditor will proceed to seek summary judgment on the basis that the judgment debtor has no real prospect of successfully defending the action.

Once a domestic judgment is obtained, it can be enforced in the same was as any local judgment.  This includes:

1. Garnishee proceedings – a court order that is made against a third party that is indebted to the judgment debtor. Under the garnishee order the third party is legally obligated to pay the amounts owed to the judgment debtor direct to the judgment creditor instead
2. Charging Order – a court order that imposes a charge over assets in which the Borrower has a beneficial interest, including but not limited to land or shares  (effectively making the judgment creditor a secured creditor entitled to seek an order for the sale of the charged assets in order to repay the judgment debt).
3. Appointment of a receiver by way of equitable execution –a receiver is appointed over specific property belonging to the judgment debtor (for example, bank accounts) to gather in and realise the property and prevent the judgment debtor from dealing with it. In determining whether to appoint a receiver the Court will consider whether it is “just and convenient” for it to do so, having regard to the amount claimed by the creditor, the amount likely to be obtained by the receiver, and the likely costs of the appointment.
4. Presentation of a winding up petition to wind up the relevant company – although it is not necessary that a foreign judgment be recognised or formally enforced, once a local judgment has been obtained then failure to satisfy execution of that judgment provides a statutory presumption of insolvency under the Companies Act (although, strategically, presentation of a statutory demand may still be beneficial).

For recognition under the 1996 Act the affidavit in support of the application must exhibit the original foreign judgment or a verified, certified or otherwise duly authenticated copy thereof.  Where the judgment is not in English, a translation must be provided that is certified by a notary public or authenticated by affidavit.

For common law recognition the judgment need not be apostilled but must meet the standard rules of evidence (i.e. be exhibited to an affidavit and a duly evidenced translation provided if necessary).

In practice, enforcement under both the 1996 Act and the common law routes are summary procedures (as enforcement under the common law will usually involve the making of an application for summary judgment). However, enforcement under the 1996 Act is likely to be much quicker than issuing a new claim to enforce under the common law.

Under the 1996 Act, an application for registration will usually be determined 14 to 28 days (subject to judicial availability) and enforcement then being permitted upon expiration of the period permitted for the challenge.

Timing for enforcement under the common law principles will depend on a variety of factors including the response (if any of the judgment debtor) and the Court’s availability for any necessary hearings including an application for leave to serve out of the jurisdiction if necessary.  Assuming a relatively straightforward foreign judgment and no significant challenge from the judgment debtor, a reasonable time estimate may be 3 to 4 months.

In both cases the timing of actual enforcement will depend upon the method of enforcement pursued.

Yes, it is possible to apply for interim relief such as an injunction to preserve assets while the recognition and enforcement proceedings are ongoing. It is also possible to apply for disclosure relief, such as Norwich Pharmacal relief, where the judgment creditor does not have enough information about the judgment debtor’s assets available in the Cayman Islands to enforce against, seeking disclosure of documents/information on such assets from a third party who was innocently mixed up in the wrongdoing.

Recognition under the 1996 Act may only be sought within six years of the date of the foreign judgment (or where the judgment is appealed from the date of the last judgment in those proceedings).  In the absence of fraud or concealment, enforcement in accordance with the common law principles may not be brought after the expiration of six years from the date on which the judgment became enforceable.

Under section 6 of the 1996 Act there are the following specified grounds of challenge:

1. The court issuing the judgment did not have valid jurisdiction to pronounce the judgment;
2. The judgment debtor did not receive proper notice of the foreign court proceedings in time to defend them and did not appear;
3. The foreign judgment was obtained by fraud;
4. The enforcement of the foreign judgment would be contrary to public policy of the Cayman Islands;
5. The rights under the foreign judgment are not vested in the person by whom the Cayman application is made; and
6. There is a previous final and conclusive foreign judgment dealing with the same subject matter.

Pursuant to section 7 of the 1996 Act, if, on an application to set aside the registration of a foreign judgment, the applicant (judgment creditor) satisfies the registering court either that an appeal is pending, or that  it is entitled and intends to appeal against the judgment, the court, if it thinks fit, may, on such terms as it may think just, either set aside the registration under section 6, or adjourn the application to set aside the registration until after the expiration of such period as appears to the court to be reasonably sufficient to enable the applicant to take the necessary steps to have the appeal disposed of by the competent tribunal.

Enforcement under the common law principles can be challenged on the basis that the foreign judgment does not satisfy any one of the conditions set out in the answer to question 4 above. It may also be challenged on the basis that the enforcement proceedings would be obviously futile (for example where it can be sufficiently established that the judgment debtor has no enforceable assets whatsoever in the Cayman Islands). This is a high threshold to meet.

The judgment debtor may also raise a liability of the judgment creditor to pay the judgment debtor, as a counterclaim.

The procedure for enforcement will not entail a reconsideration of the merits of the judgment. Indeed, in Lakatamia Shipping Company Limited v Su [2017 (1) CILR 416] the Court determined that where there was no allegation of fraud and where the judgment debtor had chosen not to appeal the foreign decision, it was not permissible to allow an attack on the foreign award on grounds that it was tainted as this would have been to allow a collateral attack on the merits of the foreign court’s decision.

As mentioned, one of the requirements for enforcement under both routes is that the judgment debtor had submitted to the foreign jurisdiction. The Court will therefore need to determine whether the judgment creditor has sufficiently established that the judgment debtor either:

1. was registered in the foreign country when the proceedings were commenced;
2. participated in the foreign proceedings; or
3. otherwise submitted to the foreign jurisdiction (for example pursuant to a contract).

The Grand Court will generally not look behind a foreign judgment which appears to have followed proper procedure pursuant to the procedural rules of the initial court. However, failure to follow local concepts of due process may be something the Grand Court will consider in determining any challenge made on grounds of public policy/natural justice infringements. Indeed, one of the defences under section 6(1)(iii) of the 1996 Act is that the judgment debtor did not (notwithstanding that process may have been duly served on them in accordance with the law of the country of the original court) receive proper notice of those proceedings in sufficient time to enable  it to defend the proceedings and did not appear.

The Cayman Court is prepared to enforce foreign judgments obtained in default (i.e. without a substantive inter partes hearing), although they are liable to be set aside if the judgment debtor can show that he was not properly served under the laws of the foreign jurisdiction.

The Cayman Court may refuse to recognise and enforce a foreign judgment if it does not satisfy all of the requisite conditions as set out above or if it is contrary to public policy of the Cayman Islands/natural justice. However, there would need to be clear evidence that the foreign judgment was contrary to public policy/natural justice. The Court must proceed on the basis that the proper procedure was followed unless the contrary is shown and therefore does not have an unfettered discretion to decline to recognise a foreign judgment.

The foreign judgment must be in personam (i.e. enforceable against the judgment debtor wherever it is). The Court will not enforce a judgment adjudicating in rem to the title to, or the right to possession of, immovable property in the Cayman Islands, although it seems the Court can enforce in personam judgments concerning such property. Where a judgment is made in rem it must be issued where the property exists and is only enforceable in that jurisdiction.

Enforcement will not be permitted if it goes against public policy, natural justice or an existing Cayman Islands judgment. Foreign judgments in respect of taxes or other charges of a like nature will not be enforced either under the 1996 Act or under common law principles.

The Trusts Act expressly prohibits the recognition and enforcement of any foreign judgment that seeks to invalidate any trust that is governed by Cayman Islands law or seeks to affect the disposition of property from that trust by reason of the foreign jurisdiction prohibiting or recognising the concept of a trust or avoiding such by way of heirship rights, contravention of foreign law or foreign judicial or administrative action.

Yes. The mere fact that an appeal may be pending against the judgment in question does not change the nature of the judgment as being “final and conclusive”. A default judgment may also be final and conclusive even though it is liable to be set aside.

However, as set out above, the Cayman Court may adjourn an application to set aside recognition (and therefore the date on which the judgment becomes locally enforceable) on terms it sees fit if there is an appeal pending or an intention to appeal the judgment.  Under the common law principles the Court may decide to stay the enforcement of any judgment pending determination of the appeal, again subject to suitable conditions.

Yes, a judgment debtor has a right of appeal to the Cayman Islands Court of Appeal if it is unsuccessful in setting aside the recognition of a judgment under the 1996 Act or in opposing the decision to grant a local judgment based on the common law principles. No leave of the Grand Court is required but an appeal must be made within fourteen days after the judgment.

Yes. Where the foreign judgment awards interest, that sum may form part of the judgment debt to be recognised and enforced under both the 1996 Act and common law principles. Where the foreign judgment does not award interest, the domestic judgment/order will accrue interest at the standard statutory rate from the date of the domestic judgment unless otherwise ordered within the domestic judgment.

Under section 4(3) of the 1996 Act the judgment debt is to be converted into Cayman Islands dollars at the rate of exchange prevailing on the date the judgment was given in the foreign court.

In proceedings for enforcement under the common law principles the amount can be stated in the foreign currency, and the equivalent amount in United States dollars or Cayman Islands dollars would likely be expressed as well, once the domestic judgment is granted or in the subsequent proceedings for enforcement.

Yes. Such costs should be sought in the draft Order when the application for recognition of the foreign judgment is made or itemised in the writ for the common law claim. Local costs recoverability rules (including the potential exclusion of foreign attorneys’ fees) may affect the amounts that can be recovered.

Yes. The Private Funding of Legal Services Act 2020 (the PFLSA) came into force on 1 May 2021, and section 17 repeals the common law offences of maintenance and champerty and abolishes both civil and criminal liability, unless the cause of action accrued before the PFLSA came into force

Such a funding agreement must comply with the conditions prescribed by the PFLSA.

It is therefore possible that such an agreement can be made in relation to proceedings for enforcement of a foreign judgment.

Third party funders may be made subject to an adverse costs order and therefore liable for the costs incurred by the other side.

A judgment creditor should also be careful not to assign the benefit of the judgment in a way that leaves it vulnerable to a challenge that the rights under the foreign judgment are no longer vested in the person by whom the Cayman application is made.

Although no planned amendments to the legislation have been announced, it is possible that the statutory regime could be extended to jurisdictions other than Australia, and/or the UK could extend its ratification of the relevant Hague conventions to the Cayman Islands, providing more certainty and allowing for a more straightforward enforcement process.

No. It is not expected to happen in the foreseeable future.

No. It is not expected to happen in the foreseeable future.