Paradise found

Why is so much more commercial litigation processed in the Cayman Islands than in any of the other offshore financial centres?
The high volume and diverse nature of the commercial litigation handled by the Grand Court is driven by the country's financial services industry, which is more broadly based than those of other jurisdictions. It is also supported by a court system that sees itself as providing an essential service to the financial services industry, as well as a relatively large number of litigation lawyers and a uniquely open-door policy towards the use of foreign lawyers. These factors combine to create a culture that encourages litigants to use the Grand Court in circumstances where there is often a choice.
The Grand Court is a court of universal jurisdiction, and is not divided formally into separate divisions. Its three full-time judges, supported by visiting judges, all handle domestic litigation (mainly criminal and matrimonial), but it is commercial litigation that constitutes the bulk of their workload. The largest element probably arises out of liquidations of mutual funds, insurance companies and banks. All the major accounting firms have large departments specialising in insolvency, corporate restructuring and litigation support work. The local trust industry also generates significant contentious and non-contentious litigation.
Recognising that commercial litigation is an important part of the country's financial services industry, the Cayman Islands government has increased the court system's resources. A state-of-the-art courtroom, complete with technology allowing 'paperless trials' with realtime reporting, will be used for the first time in June for a trial that is expected to last up to six months.
The civil procedure framework is contained largely in the Grand Court Rules 1995 (GCR), which are published in a looseleaf volume and updated as necessary. Lawyers experienced with the pre-Woolf Rules of the Supreme Court (RSC) will find the GCR very familiar.
The pace of litigation is dictated by the parties. While the judiciary increasingly adopts a hands-on approach, the Rules Committee has decided that Woolf-style case management has little to offer a court system where litigants tend to be international financial services companies rather than private individuals.
The discovery rules are based on the English, rather than US, model. Discovery is currently limited to the disclosure of documents relevant to issues in the pleadings. Apart from certain rules arising out of the confidentiality laws, GCR Order 24 is essentially the same as the pre-Woolf RSC Order 24. This is about to change. Following lengthy consultation, the Rules Committee is expected to introduce a rule allowing discovery by oral examination of any party, or if the party is a body corporate, any officer thereof.
The Rules Committee has emphasised that the new rule will differ from the US and Canadian practices. The key points are: there will be no right to conduct depositions; oral discovery will take place only if the court is persuaded that an examination is necessary for disposing fairly of the matter or for saving costs; and the court will only make orders against parties. The application cannot be made until after close of pleadings and completion of documentary discovery. The order will specify the time, place and maximum duration of the examination, which need not take place in the Cayman Islands.
The new rule may diminish the need to request further and better particulars and the use of written interrogatories. However, it should not result in a trend towards US-style 'notice pleadings'. The purpose of the new rule is to test the parties' cases prior to trial, make interlocutory processes more transparent and encourage settlement. While at trial, a party will be able to use in evidence all or part of the opposing party's examination transcript (assuming relevance and admissibility), but not their own.
The economics of conducting commercial litigation underwent a significant change on 1 January this year with the introduction of a new GCR Order 62 and Guidelines Relating to the Taxation of Costs. The stated objective is that successful parties should recover from the opposing party the reasonable costs incurred in conducting the proceeding in an economical, expeditious and proper manner (unless otherwise ordered). The guidelines are essential reading for 'foreign lawyers' (defined to include English solicitors and counsel) because there are limitations on the extent to which their fees can be recovered.
The Cayman Islands offer well-established civil procedure rules, familiar Commonwealth legal principles, helpful civil registry and judicial oversight and laws catering for sophisticated international financial products. These factors make Grand Cayman an attractive forum for commercial litigation, either as the primary venue or as a respected jurisdiction for satellite litigation.
Andrew Jones QC is head of litigation and Mac Imrie an associate at Cayman Islands firm Maples and Calder

Cayman law FAQ

Foreign practitioners seeking Cayman legal advice often raise questions about the following matters:
Pre-trial relief
Norwich Pharmacal and Bankers Trust-type orders, Mareva and Anton Pillar injunctions, stop notices and interim injunctions are available.
Assistance to foreign courts
The Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978 and the Grand Court Rules 1995 give effect to letters of request for international judicial assistance in relation to foreign civil and criminal cases. Both oral and documentary evidence is frequently collected here, although discovery requests are not entertained. Examinations generally take place before a court-appointed examiner, who deals with any local law issues that arise (notably confidentiality and privilege). Case law sets out the allowable scope of letters of request, the type of information that may be sought and the uses to which it may be put.
Identifying and locating assets of Cayman companies can be difficult without some existing knowledge about the target company or sufficient grounds for pre-trial discovery and disclosure orders. Confidentiality is generally protected, although there are detailed provisions for the disclosure of information in certain cases.
Enforcement of foreign judgments and arbitral awards
Certain foreign judgments can be enforced by action at common law and this is generally the case in relation to money judgments in private commercial litigation.
Foreign arbitral awards are typically enforced under the Foreign Arbitral Awards Enforcement Law, which implements the provisions of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Enforcement methods include seizing and selling assets, garnishing bank accounts, attaching debts, charging shares and property and compelling Cayman companies and their directors to perform certain acts (such as registering share transfers or repatriating assets).
Company law and insolvency
The Companies Law (2001 Second Revision) sets out familiar and fairly comprehensive company law principles. The legislation is less complex than the UK Companies Act 1985 and the Hong Kong Companies Ordinance. Although the Companies Law does contain some statutory protection for creditors and members, they can generally rely on English common law principles. There are also numerous specific laws to meet the requirements of the international financial markets and the sophisticated vehicles and funds developed and administered here. Insolvency principles are derived from the UK companies acts and a large body of local case law. The lack of comprehensive local rules was criticised in a report by KPMG to the Cayman Islands government and it seems likely that new rules will be introduced.
Regulatory litigation and the impact of the OECD initiatives
Regulatory reform is an important developing area. Recent introductions include the Money Laundering Regulations, revisions to the Monetary Authority Law, which sets out the grounds upon which information can be provided to foreign regulators, and an Agreement For Exchange Of Information Relating to Taxes with the USA.