Caribbean Commercial Arbitration: Significant Progress For Trade, Commerce And Economic Development

Caribbean countries need to trade because they are far from being self-sufficient. Also, they need foreign investment. Therefore, the resolution of commercial disputes – including trade and investment disputes – must be expeditious and cost-effective.

Having effective and efficient dispute resolution creates confidence for trading and for investing parties and reduces risk. In turn, it reduces the real costs of transacting cross-border.

Arbitration offers numerous advantages over courts for commercial parties, particularly across borders. Using arbitration effectively is key.

Moreover, courts in the Caribbean (as in many other places) are backlogged. The COVID-19 pandemic increased backlogs. Court procedures and processes are quite standardised – often not readily adaptable for expeditious and cost-effective dispute resolution.

Arbitration can result in faster and often less expensive adjudicated resolution of commercial disputes: An arbitral tribunal decides the dispute, using less formal, customised and often expeditious procedures that fit both the parties’ needs and the dispute.

In 2023, we are seeing various initiatives to increase the effectiveness of arbitration in leading Caribbean jurisdictions and lay the groundwork for its increased use throughout the region.

Commercial arbitration is growing in many parts of the Caribbean, with increasing buy-in. Transactional and litigation lawyers are becoming more familiar and comfortable with it. Businesspeople are realising that their commercial contracts often should provide for dispute resolution by arbitration.

Recommendations Of ITA’s Caribbean Task Force

The Institute for Transnational Arbitration (ITA) recently published the Final Report and Recommendations of the ITA Caribbean Task Force, with recommendations on how the ITA can assist to develop and enhance arbitration in the Caribbean.[1]

This will benefit not only the efficient and effective resolution of commercial disputes but, in turn, the economies of Caribbean countries, by facilitating trade and commerce – nationally, regionally, and internationally.

After broad consultation with a wide range of stakeholders throughout the Caribbean, the report recommends five “initial ITA priorities in and for the Caribbean”:

• Capacity building in arbitration among legal practitioners throughout the Caribbean.
• Raising the profile of Caribbean arbitration in the Americas.
• Judicial education and training in arbitration.
• Assisting legal educators in the Caribbean to provide arbitration education and training.
• Modernising arbitration laws in Caribbean countries that have not done so.

The report focuses on opportunities that exist as arbitration becomes more prominent in the region, and Caribbean arbitration practitioners become more active and prominent internationally.

As the Report explains: “… ITA desires to team up with Caribbean practitioners and organisations to support their initiatives, create opportunities and identify synergies. … ITA is not looking to come to the Caribbean to tell people what to do or how to do it, but rather to support existing and new initiatives, and undertake initiatives (perhaps together with others) that practitioners and others in the Caribbean would like to pursue. Finally, we worked to build an understanding of and support for the roles that the America’s Initiative may be able to play in the development of arbitration in the Caribbean.”

Modernising Caribbean Arbitration Laws
Historically, arbitration laws in most Caribbean countries were based on English arbitration laws which England updated long ago. Those laws did not reflect the modern view that arbitration is an independent dispute resolution process that courts should support, and in which they should intervene minimally, and only on the limited grounds expressly specified.

Bermuda modernised its arbitration law in 1993 but Caribbean jurisdictions continued with their old laws for almost another 15 years. Since then, one by one, Caribbean jurisdictions have been introducing modern arbitration laws – either for all arbitrations or for international arbitrations – largely based on a model arbitration law developed by the United Nations Commission on International Trade Law (UNCITRAL).

Barbados adopted the UNCITRAL Model Law for international arbitrations in 2007. After Dominican Republic modernised in 2008, the Cayman Islands adopted a modern law in 2012, BVI in 2013-14, and Jamaica in 2017. The Bahamas updated its arbitration law in 2009 and adopted a modern international arbitration law in 2023.

CARICOM, the Caribbean Community and Common Market, with support from Canada’s IMPACT Justice, developed a model arbitration law for the Caribbean based on the UNCITRAL Model Law. The CARICOM Model Bill, approved in mid-2021, was refined as the IMPACT Justice Model Arbitration Bill, 2022.

Trinidad and Tobago is modernising its law with the Arbitration Bill, 2023 that will come into force upon proclamation. Its Attorney General and Minister of Legal Affairs explained the importance of a modern arbitration law, which hopefully Caribbean jurisdictions with outdated arbitration laws will heed.

“This Bill is of great importance ... It can breathe new life into our commercial climate and attract business, international business, and promote the ease of doing business in our jurisdiction … [T]he aim is to introduce a legal framework which facilitates the use of arbitration [for] resolving disputes … [U]pdating our current legislation will largely benefit trade and commerce in Trinidad and Tobago by signalling to the local and the international community that we have met the goal standard, the international benchmark in this era...

“A modern arbitration regime will signal to the international community that we are a jurisdiction that is well-suited for international trade, business and foreign investment, with increased ease of doing business within our jurisdiction. An updated arbitration Act will herald the requisite recognition that disputes can be resolved through a modern, efficient, and internationally recognised arbitration procedure that can be utilised in respect of transnational contracts.

“There will be savings for our local court system since the significant benefit of resolving commercial disputes through arbitration allows the [courts] to concentrate on other commercial disputes and, therefore, saves the time and resources available to the local courts ... Foreign international companies considering whether to invest or do business in Trinidad and Tobago will be more inclined to do so if there is modern legislation that facilitates arbitration ... Further, it will be attractive to foreign investors … and companies if there is a mechanism to settle disputes through arbitration rather than expensive, time-consuming litigation in the courts.

“Local companies are also increasingly turning toward arbitration given the advantages over litigation where time and cost are concerned.”

Guyana proposed to enact its new arbitration law in 2023 based on the IMPACT Justice Model Bill. Since early 2022, it has been conducting education and training to familiarise stakeholders with arbitration.

New York Convention
One widely recognised advantage of arbitration is that arbitral awards are easier to enforce internationally than court judgments. Under the New York Convention (1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards), courts of contracting states must give effect to arbitration agreements, and they must recognise and enforce arbitration awards.

Sixteen of the 172 contracting states are from the Caribbean, an increase from 10 in 2000. All Caribbean countries should join the New York Convention to attain the economic benefits of arbitration.

Chartered Institute Of Arbitrators
The Chartered Institute of Arbitrators, which provides arbitration training, programming, and professional designations, is active in several Caribbean jurisdictions and expanding to others.

Arbitration Institutions And Hearing Centres

A few leading Caribbean jurisdictions have established arbitration centres that administer arbitrations, perform other functions (eg appointing arbitrators), and may operate arbitration hearing centres.

The Jamaican International Arbitration Centre was established in 2015. BVI’s International Arbitration Centre, with the leading physical facility in the Caribbean, began operations in 2017. Other jurisdictions have established arbitration institutions and various forms of hearing centres.

Early in 2023, the Cayman Islands Mediation and Arbitration Centre was established as a joint venture with Toronto-based Arbitration Place, with facilities for in-person, virtual and hybrid arbitration hearings and mediation.

Increasingly Caribbean arbitration facilities and institutions are cooperating and coordinating, on the credible theory that “a rising tide lifts all boats”.

Growing Acceptance Of Arbitration

Slowly, the acceptance in the Caribbean of using arbitration is growing. Caribbean litigators, having ‘grown up’ using courts, may be concerned – unnecessarily – that they might not be as effective in arbitration. While arbitration differs from court litigation (especially when taking advantage of arbitration’s benefits), seasoned litigation counsel readily adapt. Often younger litigators have been exposed to arbitration and are more comfortable with it.

Contract Negotiators And Drafters
Those in the Caribbean who negotiate and draft commercial agreements may need to become more familiar with arbitration clauses, and arbitration’s benefits, practice and customs, so that their clients garner maximum benefits from it.

Bahamas Trust Arbitration

The Bahamas has had world-leading laws for arbitrating trust disputes. In 2023, it expanded its support for trust arbitration, moving trust arbitration provisions to its existing Arbitration Act (when it brought in its International Commercial Arbitration Act 2023).

The provisions enable arbitration of trust disputes, with provisions concerning interpretation, separability of arbitration agreements, stays of court proceedings, commencing arbitrations, improper disclosure of confidential information, legal representation in trust arbitrations, powers of arbitral tribunals, remedies, and costs. 

Settlors can determine in trust instruments how disputes will be resolved (subject to public interest safeguards). Arbitral tribunals may exercise all court powers regarding the administration, execution, or variation of, or the exercise of any power in relation to, a trust. These powers include appointing one or more people to represent the interests of any person, including a person unborn or unascertained, or a class.

This initiative is part of The Bahamas strengthening itself a well-regulated international financial centre, with leading trust product offerings.

Looking Forward

With the growing acceptance and development of commercial and other arbitration in the Caribbean, and pending initiatives to enhance it, Caribbean countries and their people should increasingly benefit economically from more and improved trade, commerce, and investment, and from more efficient and effective dispute resolution and enhanced commercial justice.

However, to achieve these significant potential benefits, governments, the business sector, arbitration and other organisations, civil society and others will need to focus, in a sustained manner, on doing the things that need to be done, and doing them in a timely and effective manner.

[1] https://www.cailaw.org/Institute-for-Transnational-Arbitration/Americas-Initiative/caribbean-task-force.html and Microsoft Word - Caribbean Task Force Report^J 8 June 2023 - DRAFT^M CH comments - BL_TDN^M CH_BL (cailaw.org).

The Honourable Barry Leon
Independent Arbitrator and Mediator. Independent Consultant and Professional Services Provider (independent corporate director; independent corporate meeting chairman; consulting to professional services firms in senior supporting roles and providing strategic and tactical advice and assistance). Commercial disputes experience as arbitrator, judge (Presiding Judge, BVI Commercial Court, 2015 - 2018), mediator and counsel includes corporate and commercial, contract, shareholder and business breakup, joint venture, insurance, IP, technology, expropriation, natural resources, construction, and executive employment disputes.