The legal system in the Cayman Islands is based upon English common law but has locally enacted statutes and Orders-in-Council.
As a British Overseas Territory, in practice, the legal system has not diverged much from that of England & Wales. The Islands may adopt UK statutes but will, in the most part, create provisions which are better suited to local circumstances.
Decided case law in the English courts will be of persuasive authority and are regularly relied upon. UK Acts of Parliament & European Directives will bind the Cayman Islands when expressed to have such effect.
The Cayman Islands did not adopt the English Civil Procedure Rules in 1998, nor the equivalent version of the Eastern Caribbean CPR. Civil procedure is governed by the Cayman Islands’ Grand Court Rules (GCR).
litigation | Cayman Islands
We are specialist advocates and have significant experience in all aspects of litigation in the Cayman Islands including corporate, commercial, family law.
Introduction: Litigation in the Cayman Islands
Litigation is the main form of dispute resolution and there is no formal requirement to pursue alternative dispute resolution under the GCR. However, expressed within an ‘overriding objective’, ADR is encouraged.
Arbitration clauses are commonly found in large commercial contracts but such arbitrations are not common in the Cayman Islands.
Structure of Courts and Allocation
Small claims are dealt with in the Summary Court but for the most part, commercial disputes will be conducted in the Grand Court which comprises five Divisions:
1. The Civil Division
2. The Criminal Division
3. The Financial Services Division (FSD) (Commercial Court)
4. Family Division; and,
5. The Admiralty Division.
Specified types of claims must be brought in the FSD.
Limitation periods are prescribed by statute and in the majority of cases, time starts to run at the time when the claimant acquires the right to bring the action.
The principal limitation periods are as follows:
(a) Tort: six years from the date of the damage (save for personal injury which is 3 years);
(b) Contracts: six years from the date of the breach;
(c) Claims by a beneficiary against a trustee for fraudulent breach of trust: no limitation period;
(d) Claims for the recovery of land: 12 years from the date when the right accrued (30 years if the claim is against the Crown);
(e) Claims against the Crown in general: one year.
A party can apply by summons to strike out the other party's statement of claim or defence. A party may also apply for judgment on the basis that the pleadings either:
(a) Disclose no reasonable basis for the claim or defence; or,
(b) Constitute an abuse of process.
A party may also obtain judgment without a trial in other circumstances, such as if:
(i) The defendant has failed to file notice of intention to defend or a defence to a claim, or the claimant has failed to file a defence to a counterclaim (judgment in default);
(ii) The claimant has failed, unreasonably, to take steps to bring the case to trial (Dismissal for want of prosecution); or,
(iii) Where a party has:
(i) failed to comply with the court's rules for the disclosure or production of documents;
(ii) breached, or failed to comply with, the rules or an order of the court; or,
(iii) engaged in conduct which amounts to an abuse of process or which makes a fair trial impossible.
A freezing order is a powerful tool which the court has jurisdiction to grant if it is just and convenient to do so.
The basic test is two-fold:
(1) There must be a serious issue to be tried; and,
(2) The balance of justice in the case must be in favour of an injunction being granted, pending the trial of the case.
In the event a freezing injunction is granted, the successful party is required to give an undertaking in damages which would meet the loss suffered by the respondent if the injunction is subsequently set aside.
A freezing order is generally applied for on a ‘without notice’ basis and requires an applicant to give a full background to the case: a duty of candour exists.
An order will be granted if both:
(a) the applicant has demonstrated a strong arguable case.; and,
(b) there is evidence of a real risk that the defendant may dissipate or dispose of his assets or remove them from the jurisdiction before judgment.
Freezing orders may be granted in proceedings brought to enforce a foreign judgment or arbitral award. However, the grant of a freezing order creates no right or lien in favour of the claimant over the frozen assets; the claimant has no priority over other creditors' claims, secured or unsecured, and the defendant is usually entitled to pay his normal business, legal and living expenses from the frozen assets.
Other interim remedies
In addition to interim injunctions and freezing orders, the court may also make the following orders:
Search orders (also referred to as Anton Piller orders) allowing persons to enter a defendant's property to search for and remove property, and, to preserve it as evidence pending a trial;
Orders for the detention, inspection and preservation of property that is the subject matter of the dispute;
Orders appointing receivers to gather in and preserve property pending a trial;
Orders for interim payments where either:
1. the defendant has admitted liability; or,
2. there is a judgment on liability pending an assessment of damages.
An order appointing a provisional liquidator in company winding-up proceedings to prevent:
(a) the dissipation of the company's assets;
(b) oppression of minority shareholders; and/or
(c) mismanagement and misconduct by the company's directors.
The court may grant the following final remedies:
(c) An order requiring specific performance of a contract.
(d) An order rescinding a contract on grounds such as:
(iii) duress; or.
(iv) undue influence.
(e) Rectification of a written contract to create what the court regards as the true bargain made by the parties;
(f) An order for restitution of property where the court finds that a party has been unjustly enriched;
(g) A declaration as to the parties' rights relating to the matter in issue;
(h) An order requiring a party to provide an account of profits improperly made from a breach of trust or fiduciary duty;
(i) In breach of trust claims, an order allowing the claimant to follow, trace and recover from the trustees or a third party property that has been applied or transferred in breach of trust.
In addition to compensatory damages, the court has the jurisdiction to award:
(a) Aggravated damages, usually if the defendant is shown to have acted deliberately or out of malice towards the claimant;
(b) Exemplary or punitive damages.
"Litigation is the pursuit of practical ends, not a game of chess"
Fees and Funding
The normal course would be for litigation to be funded by the parties or their affiliate entities.
Contingency fees are not permitted and there is no legislation permitting conditional fee agreements (CFA’s). Whilst the latter was tested in Barrett v. Attorney General and CIIA in 2010, the Court of Appeal held that sums payable under a CFA were irrecoverable.
Litigation may be funded by third parties provided that the funding does not breach common law rules of unlawful interference in proceedings. There is no established practice of insuring against litigation costs.
Commencement of Proceedings
Civil proceedings in the Grand Court are commenced by one of the following methods:
(a) Writ of summons;
(b) Originating summons;
(c) Originating notice of motion; or
Most commercial claims are started by writ of summons. Unless renewed, the writ is valid for four months (six months if permission is granted to serve abroad). The writ must be served on the defendant before it expires.
If a detailed statement of claim accompanies the writ, the defendant must both:
(i) Give notice of intention to defend the claim within 14 days of service (or 28 days if service outside the jurisdiction; and,
(ii) File a defence within 14 days of filing notice of intention to defend.
If a statement of claim is not served with the writ, the defendant must file his defence within 14 days of service of the statement of claim.
Once a defence has been served, the claimant can serve a reply (and counterclaim if appropriate) within 14 days. In the event that the Defendant is counterclaiming, the claimant must file a defence to the counterclaim within 14 days and the defendant has a subsequent 14 days to serve a defence to the counterclaim.
Any reply to the defence to counterclaim must be served within 14 days; the procedures for disclosure of documents commence 14 days after the expiration of time for filing the last reply.
In the FSD, the registrar must, within three months of the commencement of the matter, issue a summons for directions scheduling a case management conference (CMC). At the CMC, the court will:
(i) Give directions for the further conduct of the case; and,
(ii) Set a timetable for the remaining pre-trial procedures.
There may be a number of CMCs in the case depending on the complexity of the claim. Subject to the discretion of the court, all applicable time limits may be varied by the parties' agreement or by the court itself.
litigation in the Cayman Islands
Once the defendant has given notice to defend a claim, a claimant may make an application for summary judgment. The court will need to be satisfied on affidavit evidence that the defence has no real prospect of success.
Similarly, a defendant can also apply for summary judgment and again, an affidavit addressing the basis of such an application is required.