International Arbitration 2019

Last Updated August 08, 2019

Bermuda

Law and Practice

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Conyers is one of the world’s leading offshore law firms. Founded in 1928, its worldwide team of lawyers in six key offshore jurisdictions are highly trained and experienced in international and cross-border transactions and dispute resolution, none more so than its International Arbitration Group. The group – which has members from the firm's offices in Bermuda, BVI, Cayman and Hong Kong – is spearheaded by the experienced arbitrator and dispute resolution specialist, Jeffrey Elkinson.

Arbitration has a long history in Bermuda as a means of dispute resolution. Arbitration was required under the War Department Land Act 1904 which statute set out extensive provisions about the use of arbitration in respect of the acquisition of land by His Majesty’s Principal Secretary of State for the War Department. Arbitration was the means for resolving any dispute with a person whose land was being acquired in relation to the acquisition and to the price. It also provided for the payment of compensation where the land value was in any way diminished by its use for military purposes.

The first arbitration statute dealing with arbitration generally was the Arbitration Act 1924, based on the English Arbitration Act 1889. Domestically, labour disputes were dealt with in arbitration under enactments specifically enacted since 1945. The general law relating to arbitration in Bermuda was updated under the Arbitration Act 1986. In 1993, the Model Law was adopted and enacted under the Bermuda International Conciliation and Arbitration Act 1993. Both statutes continue to operate in Bermuda. The Arbitration Act 1986 is primarily for domestic arbitrations but it is also applicable for 'international' arbitrations if the parties expressly or by implication exclude the Bermuda International Conciliation and Arbitration Act 1993. Bermuda is home to major reinsurance and insurance companies and they utilise arbitration in their disputes, but many choose to use London rather than Bermuda as the forum. This is due to the popularity of the 'Bermuda Form' which provides for their disputes to be determined in London under New York law. However, international arbitration disputes do take place where Bermuda is chosen as the seat or venue and parties are free to choose either a dedicated centre or utilise venues such as hotels. Given that Bermuda is home to many international companies, applications for the enforcement of New York convention awards are a regular occurrence in the Bermuda courts.

There are no discernible trends or issues affecting arbitration in Bermuda at this time, except for the notable absence of any volume of reinsurance disputes. The industry has become more sophisticated and it is noticeable that there are less disputes over reinsurance contracts.

Bermuda is home to many of the leaders of the insurance and reinsurance market – as such it is inevitable that there are international commercial arbitrations generated, as these are sophisticated industries which will have arbitration provisions in their commercial arrangements.

The most commonly used institutions for international arbitration in Bermuda are LCIA, AAA and ICC. This likely relates to historical drafting. Where there is provision in the arbitration clause for the appointment of the panel locally, this is done by the Chartered Institute of Arbitrators (Bermuda Branch) Appointments Committee.

Bermuda was a relatively earlier adopter of the Model Law. It became law on 29 June 1993. Bermuda is an overseas territory of the United Kingdom of Great Britain and Northern Ireland and the Model Law was adopted on its behalf by the United Kingdom. The enacting legislation is the Bermuda International Conciliation & Arbitration Act 1993 and the Model Law is set out as a schedule to the Bermuda International Conciliation and Arbitration Act 1993. Section 23 of the Bermuda International Conciliation and Arbitration Act 1993 states that: “the Model Law has the force of law in Bermuda”. 

Bermuda has not adopted any of the 2006 amendments to the Model Law. It remains in its original form.

Bermuda’s domestic legislation is contained in the Arbitration Act 1986, but while this statute is primarily used for domestic disputes it can also be used for international disputes where the parties express that they wish this statute to apply and either expressly or by implication exclude the application of the Bermuda International Conciliation and Arbitration Act 1993. The Arbitration Act 1986 is a combination of older English arbitration statutes, in particular the Arbitration Acts 1950, 1975 and 1979.

The Model Law as it is presently in force in Bermuda does not diverge in any significant way from the model put forward by UNCITRAL in 1985.

There have been no significant changes to the arbitration law in Bermuda since the enactment of the Model Law in 1993 and there are none contemplated.

The legal requirements for an arbitration agreement to be enforceable under the laws of Bermuda are essentially the minimum requirements that would enable it to be enforced under the New York Convention and the Recognition and Enforcement of Arbitral Awards done in New York in 1958 (the New York Convention). That is, it should be in writing and record the agreement of the parties to have their dispute determined by a third party. There are no formal legal requirements for an arbitration agreement and the often-quoted example of the shortest arbitration clause is 'Arbitration, London'.

The New York Convention provides that the contracting state shall “recognise an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration”. The form of an arbitration agreement under the Model Law is set out in Article 7 and is more expansive than that in the New York Convention as it has the additional words “other means of telecommunication which provides a record of the agreement”. It also provides that an arbitration clause can be incorporated by reference to another document.

There is usually no limitation under the common law as to what type of dispute may go forward to arbitration save for those where there are public law consequences. Article 7 (1) of the Model Law sets out that the parties may refer any disputes in respect of “a defined legal relationship, whether contractual or not”. Under the 1986 Arbitration Act, it broadly states that any differences capable of settlement by arbitration may be included in an arbitration agreement (Section 2). The applicable law would be that of the arbitration agreement to determine whether a matter is arbitrable, but regard should also be had to the place of enforcement. For example, a dispute about interest due and owing would be arbitral under Bermuda law but enforcement would not be possible in a country where Sharia law is practiced. The usual examples for those matters with public law consequences are bankruptcy or, as regard to intellectual property, a trade mark or a patent. The actual ownership of the trade mark or patent is arbitrable, however. Article 34 (2)(b)(i) sets out that an award may be set aside by the court if the party making the application furnishes proof that “the subject matter of the dispute is not capable of settlement under the law” It further provides that it may be set aside if “(ii) the award is in conflict with the public policy”. 

The concept of what is arbitrable is usually considered in the light of whether it is public justice and whether it is a matter which should not be dealt with in arbitration with the cloak of privacy and confidentiality which accompanies that process. Bermuda follows English law in relation to determining whether or not a dispute is arbitrable, starting with the assumption when construing the arbitration clause that the parties intended to have all disputes arising out of their relationship determined in the same forum as stated in Fiona Trust & Holding Corporation & Others v Privalov & Others [2007] UK HL 40. As with other jurisdictions, there is a pro-arbitration approach by the Bermuda courts and the statutory regime in Bermuda, both under the Bermuda International Conciliation and Arbitration Act 1993 and the Arbitration Act 1986, provides for an application which can be made to the Supreme Court of Bermuda to stay the court proceedings taken in breach of an agreement to arbitrate and mandate that the parties proceed to honour their agreement to arbitrate. 

In Bermuda, an injunction lies to prohibit or restrain foreign proceedings in breach of an arbitration clause. The Angelic Grace [1995] 1 Lloyds Law Reports 87 was relied on in the case of IPOC International Growth Fund Limited v LVFG Finance Group & OAO CT Mobile [2007] BDA LR 43. In that case, the defendant had commenced proceedings in Russia contrary to the arbitration agreement in which an award had already been made. IPOC International Growth Fund Limited, the defendant in the proceedings, was registered in Bermuda, giving the court in personam jurisdiction. The Supreme Court’s decision to grant an injunction was upheld by the Bermuda Court of Appeal.

Bermuda recognises the doctrine of separability and that an arbitration agreement, while expressed within a contract, has its own independent existence which can survive the determination of the contract in which it was contained. There are no express statutory provisions concerning this but the position is exemplified by the principle of 'competence-competence'.  Bermuda cases often cite the UK Court of Appeal and House of Lords decisions in Fiona Trust & Holding Corporation & Others v Privalov & Others where it was held that the validity, existence or effectiveness of the arbitration agreement is unrelated to those same factors in the underlying substantive contract. The Bermuda Court of Appeal in the case of Sojuznefteexport (SNE) v Joc Oil Limited [1987] Bda LR 25 considered the application for the enforcement under the New York Convention of an arbitral award given in the USSR where the argument being raised was that, under the law of the USSR, a contract for the foreign sale of oil required the signature of two authorised officials. The particular contract under which the arbitration had taken place had only been signed by one official. The court allowed enforcement on the basis that while the underlying agreement was a nullity, the lack of formality did not invalidate the arbitration agreement. The arbitration clause was separable and binding.

There are no limits on a party’s autonomy to select the arbitrator it wishes to have to determine its dispute. The parties can also determine the extent of the proposed arbitrator or arbitrator’s jurisdiction. The arbitration agreement makes provision for the appointment of an individual as an arbitrator and that appointment is then given recognition under the relevant statute, either the Bermuda International Conciliation and Arbitration Act 1993 or the Arbitration Act 1986. Section 4 of the Arbitration Act 1986 makes the appointment of the arbitrator irrevocable, except by leave of the court. There is no clear expression of this in the Model Law but it is generally accepted that once validly appointed then the parties can only remove the arbitrator by either getting the arbitrator’s agreement or by way of a court application. Article 11 (1) of the Model Law sets out that no person is precluded from acting as an arbitrator by reason of his nationality, unless otherwise agreed by the parties. There are no legal restrictions as regard to qualifications. However, where qualifications are specified, the arbitrator can be removed where the arbitrator is determined not to have satisfied those qualifications. The importance of appointing an arbitrator in accord with the specified qualifications cannot be doubted as otherwise the failure to do so could lead to a challenge on enforcement.

If the parties do not specify how the tribunal is to be formed, then the default provision under the Model Law is three arbitrators (Article 10). Under the Arbitration Act 1986, it is one arbitrator. The Arbitration Act 1986 provides that where it is expressed that there will be three arbitrators, unless there is a contrary intention expressed in the agreement, it is the award of any two arbitrators which will be binding and, in the event that the two arbitrators cannot agree, the award of the arbitrator appointed by the two arbitrators to be chairman shall be binding.

Under Article 11 (3) of the Model Law, where the two party appointed arbitrators fail to agree on the appointment of the third within 30 days of their appointment, application can be made to the Supreme Court of Bermuda, being the designated authority under Article 6 of the Model Law, to appoint the third. The court can also assist where one party fails to appoint their own arbitrator (Article 11 (4) of the Model Law).

The Supreme Court of Bermuda being the appointed court often has applications before it to appoint the third arbitrator where the parties are unable to agree. In the case of Albert Theodore Powers and Anglo Swiss Finance Limited v Sustainable Holdings Limited & Capital Fisher Partners Limited [2010] BDA LR 60 the position taken by the respondent was that there was no provision in the arbitration agreement for securing the appointment of the third arbitrator. The UNCITRAL Arbitration Rules had been agreed as being applicable to the dispute and Article 7 (2) of those Rules provide as a default that application can be made to the Secretary General of the Permanent Court of Arbitration at The Hague for the appointment of a chairman. It was submitted on behalf of the applicant that this was a cumbersome procedure and would take too long. The court declined to make any order whereby it would appoint the arbitrator and held that the parties were bound by their agreement to be subject to the UNCITRAL Rules so that the parties were bound to make the application to the Permanent Court of Arbitration.

Section 15 of the Arbitration Act 1986 establishes the authority of the court to appoint an arbitrator or an umpire. These four instances are:

  • where an arbitration agreement provides for a single arbitrator and the parties have not since the dispute has arisen agreed to the appointment of an arbitrator;
  • if the appointed arbitrator dies, is incapable of acting or refuses to act and there is no agreement or procedure to appoint a substitute;
  • where the parties have two appointed arbitrators but do not appoint an umpire or a third arbitrator;
  • where an appointed umpire or third arbitrator dies, is incapable of acting or refuses to act, and there is no procedure in the agreement to appoint a substitute the parties do not agree to one.

The Bermuda International Conciliation and Arbitration Act 1993 gives the court power to appoint an arbitrator where a third party or institution which is given the power to do so refuses to make the appointment or fails to do so within the time specified.

The main limitation on the court in dealing with an application to appoint an arbitrator is where there is another process which the parties have agreed to. It is only when the parties agreed appointment procedure has broken down, as occurred in the case of Montpelier Reinsurance Limited v Manufactures Property & Casualty Limited [2008} BDA LR 24, that the court will make the appointment.

It is often the case that a party wishes to challenge and remove an arbitrator, particularly in circumstances where there are justifiable doubts as to the arbitrator’s impartiality or independence. The procedure is provided for in the Model Law under Article 13 whereby the parties are initially given autonomy to determine the procedure. If the parties can agree on a procedure but it turns out that the outcome is unsatisfactory for one of the parties, then the challenging party has 30 days after notice of the decision rejecting the challenge to apply to the court. The arbitral tribunal can in any event continue with its function pending the outcome of the challenge. Under the Arbitration Act 1986, a party who wishes to challenge and remove an arbitrator has the right to proceed directly to the court under Sections 34 or 35. Where it is an institutional arbitration, the challenge is made under the Rules of the Institution or under the UNCITRAL Rules where the institution has acted as the appointing authority.

An arbitrator who is appointed as an arbitrator has not only a duty to make full disclosure before his appointment of any possible matters that may impact his or her impartiality or independence but has a continuing duty to do so. Often it can be personal, social or professional relationships that can give rise to a suggestion of a lack of impartiality or independence and it is the duty of the arbitrator to disclose any such relationships.

Arbitrators, particularly when appointed by an institution, are required to state that they are in a position to deal with the matter impartially. Soft laws such as the IBA Guidelines on Conflicts of Interest and International Arbitration have been in existence since May 2004 and are introduced with what one would expect to be an internationally accepted principle: “Every arbitrator shall be impartial and independent of the parties at the time of accepting an appointment to serve and shall remain so during the entire arbitration proceedings until the final award has been rendered or the proceedings are otherwise finally terminated”.

Article 11 (5) of the Model Law sets out that the court or other authority “in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and, in the case of a sole or third arbitrator, shall take into account as well the advisability of appointing an arbitrator of a nationality other than those of the parties”.

Article 12 also provides that “when a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties unless they have already been informed of them by him”.

By corollary, Article 35 of the Arbitration Act 1986 in setting out that the court can give relief where the arbitrator is not impartial, requires that the arbitrator should be impartial and the consequence of this failure is removal.

Bermuda is a pro-arbitration jurisdiction, but there are some matters that are not arbitrable because third parties may be affected by the decision and it is simply inappropriate for the matter to be determined privately. As set out above in 3.2 Arbitrability, the concept of arbitration is that it may only deal with differences capable of settlement by arbitration and that excludes matters where there are public law consequences. Planning matters, validity of trademarks and patents and criminal matters are obvious examples. Any award made would be unenforceable.

An important aspect of international commercial arbitration is the ability of the tribunal to rule on its own substantive jurisdiction. The tribunal itself determines the issue as to whether or not there is a valid arbitration agreement and, on the basis that there is, whether or not the tribunal has been properly constituted. This can also extend into whether the matters that are before the tribunal are properly submitted in accordance with the arbitration agreement. The Model Law provides at Article 16 that the dispute should be determined by the tribunal the parties have chosen and so the tribunal, whose jurisdiction and establishment is being challenged, is the determinative body as to whether there is or is not any validity to the challenge being made. The heading of Article 16 of the Model Law is 'Competence of Arbitral Tribunals to Rule on its own Jurisdiction'. This is the principle of 'competence-competence' and the Model Law enshrines the principle in Article 16 that an arbitration clause which forms part of the contract shall be treated as an independent agreement, independent of the other terms of the contract. If the result is that the contract is null and void, it does not mean that the arbitration clause is invalid. The Bermuda case of Sojuznefteexport (SNE) v Joc Oil Limited [1987] Bda LR 25 is a clear demonstration of where an agreement to arbitrate was held to be valid in circumstances where there was no valid underlying contract.

In relation to the Arbitration Act 1986, the decision in Harbour Assurance Company (UK) Limited v Kansa General International Insurance Company Limited [1993] 1 Lloyds Report 455 upholds this principle and the issue would be whether when some impropriety or other matter affects the main agreement, and whether the alleged impropriety also taints the arbitration agreement. If it does not, then there is no basis for saying the arbitration agreement is invalid.

Until late in the 20th century, the courts in many common law countries were empowered by statute or precedent to exercise a general supervisory jurisdiction over arbitration. One component of this jurisdiction allowed the losing party to challenge an arbitrator’s decision by judicial review of arbitral awards for error of law on the face of the award. The landmark case of Heyman v Darwins [1942] AC 356 rejected the theory that an arbitration clause is terminated by breach of the contract of which it forms part.

As the century progressed, the courts took a more pro-arbitration approach and the concept of 'one-step' adjudication was enunciated by Lord Hoffman in Harbour Assurance Company (UK) Limited v Kansa General International Insurance Company Limited [1993] 1 Lloyds Report 455.

Article 5 of the Model Law sets out the extent of court intervention and expresses that where an arbitration proceeding is governed by the Model Law, no court shall intervene except where so provided in the Model Law. The Model Law allows for court intervention under:

  • Article 11 (3) where the arbitrators have failed to agree on a third arbitrator;
  • Article 11 (4) where there is a failure to appoint under the appointment procedure agreed upon by the parties;
  • Article 13 (3) in relation to challenges of arbitrators not being successful, the challenging party may request within 30 days of having been notified of the rejected challenge for the court to decide on the challenge;
  • Article 14 deals with a further application to the court, where it becomes impossible for an arbitrator to continue as arbitrator, for the court to decide on the termination of the arbitrator’s mandate;
  • Article 16 (3) provides for an application to the court where a party is dissatisfied with the decision of the arbitration tribunal in respect of its jurisdiction; and
  • Article 34 (2) providing for an arbitral award to be set aside by the court.

Under the Arbitration Act 1986, the Bermuda Supreme Court can intervene in the arbitration process much more so than under the Model Law. An appeal can lie to the Bermuda Court of Appeal on any question of law arising out of an award and on the determination of the appeal the Court of Appeal may either confirm, vary or set aside the award or remit the award to the reconsideration of the arbitrator or umpire parties to the arbitration agreement. The court can also attach such conditions as it thinks appropriate for the grant of leave. Leave also will be granted by the Supreme Court for an appeal if the arbitrator or umpire does not state or sufficiently state the reasons for the award, so that if an appeal should be brought there should be sufficient detail to enable the Court of Appeal to consider any question of law arising out of the award.

The party may also apply to the Supreme Court with either the consent of the arbitrator or with the consent of all the other parties to determine any question of law arising in the course of the arbitration. However, the Supreme Court cannot entertain any such application unless it is satisfied that such determination would substantially save costs and the question of law is one which the Supreme Court would likely have given leave to appeal on. The Supreme Court has also the power under the Arbitration Act 1986 to grant interlocutory orders concerning parties to the arbitration who fail to comply with times specified by an arbitral order such that the court may empower the arbitrator or umpire to allow the arbitration to be dealt with in the same manner as a court hearing where a party fails to comply with an order of the court or a requirement of the rules of the court. So, under Section 32 (2) of the Arbitration Act 1986, a party who fails to appear or fails to do an act within a specified time, could risk an adverse order from the arbitrator which would have judicial support.

The court may also remove an arbitrator where the arbitrator or umpire has misconducted himself or the proceedings. The award can be set aside in such circumstances and also in the circumstances where it is shown that the award has been improperly procured. Section 38 of the Arbitration Act 1986 gives the power to the court to extend time for commencing an arbitration where the time fixed by the parties’ agreement has expired. The court also has a power to make an order terminating arbitration proceedings where there has been undue delay by a claimant. However, it has to be shown that the delay was intentional and vexatious or that there has been an inexcusable delay likely to have caused serious prejudice.

A challenge can be mounted to contest the jurisdiction of the panel. In relation to impartiality or independence, a party should make the challenge as soon as they become aware of any justifiable doubts. Further, a party may only challenge an arbitrator appointed by him/her or in whose appointment he/she participated only for reasons of which he becomes aware after the appointment has been made (Article 12(2) of the Model Law). Under Article 13 of the Model Law, a party who intends to challenge an arbitrator shall, absent agreement, make the challenge within 15 days after becoming aware of any circumstance which gives rise to justifiable doubts about the impartiality or independence of the arbitrator. If the challenge is to the award made, than application needs to be made to the court within three months from the date the party receives the award (Article 34 (2) of the Model Law).

There is no de novo hearing under either the Arbitration Act 1986 or the Model Law. Under the Arbitration Act 1986, an appeal can only lie to the Court of Appeal on a question of law arising out of the award and that appeal can only take place with the leave of the Supreme Court which must be satisfied that the determination of the question of law would substantially affect the rights or one or more of the parties to the arbitration agreement. Under the Model Law, any complaint about the arbitration award is limited to those matters set out in Article 34 (2) which reflect those grounds set out in the New York Convention. namely that: 

  • a party to the arbitration agreement was under some incapacity or the agreement is not valid under the law to which the parties have agreed or, absent any indication of the law governing the arbitration agreement, under the law of Bermuda;
  • the party making the application was not given proper notice of either the appointment of the arbitrator of the arbitral proceedings or was otherwise unable to present its case;
  • the award deals with a dispute not contemplated by the agreement to arbitrate or dealt with decisions or matters beyond the scope of the agreement;
  • the composition of the arbitral tribunal or the arbitration proceeding was not in accordance with the agreement of the parties;
  • The subject matter of the dispute is not capable to settlement by arbitration under the law of Bermuda; or
  • The award is in conflict with the public policy of Bermuda.

The approach of the courts in Bermuda towards a party who commences court proceedings in breach of an arbitration agreement is to effectively ensure that the parties’ agreement to arbitrate is adhered to. Article II (1) of the New York Convention obliges contracting states to recognise an agreement in writing to arbitrate.  Bermuda courts will, in all cases where it appears to the court to be just and equitable to do so, grant injunctions to restrain foreign proceedings in breach of an arbitration agreement. The Angelic Grace [1995] 1 Lloyds Law Reports 87 is still good law in Bermuda and anti-suit injunctions will be granted in favour of arbitration. See IPOC International Growth Fund Limited v LVFG Finance Group and OAO CT Mobile [2007] Bda LR 43. In Ace Bermuda Insurance Limited v Continental Casualty Company [2007] Bda LR 38, an injunction was granted by the Bermuda Supreme Court in circumstances where there was a contractual provision between the parties for performance of the agreement to take place in Bermuda and be subject to Bermuda law. Whil Continental Casualty Company was based in the United States, Ace Bermuda Insurance Limited sought and obtained an injunction and service of the proceedings out of the jurisdiction in favour of enforcing the arbitration agreement contained in the policy of insurance. The Bermuda court ordered an injunction to restrain Continental from continuing litigation in the United States in favour of arbitration.

The Arbitration Act 1986 has stay provisions in respect of any litigation commenced in breach of an arbitration agreement. If it is a domestic arbitration, the court has a discretion whether to stay the litigation or not but in respect of international arbitration, it is a mandatory stay preventing the party from proceeding with the court proceedings in Bermuda and requiring them to honour their arbitration agreement. The application for a stay must be taken before the party takes a step in the proceedings. Further, even if there is effectively no dispute, the Bermuda court will require a party to arbitrate if the court proceedings are taken in breach of the arbitration agreement. In Raydon Underwriting Management Company Limited v North American Fidelity and Guarantee [1994] Bda LR 65, an application was made under Article 8 of the Model Law to stay the summary judgment proceedings the Plaintiff had brought for the sum in excess of BMD3 million. The plaintiff justified bringing the court proceedings on the basis that there was no defence to the claim. The Bermuda court, quoted Lord Justice Templeman in Ellerine Brothers (PTY) Limited v Klinger [1982] 1 WR 13 where he said, “There is a dispute until the defendant admits that the sum is due and payable”.

The general concept of arbitration is that it arises from the agreement of the parties. Bermuda does not contemplate an arbitral tribunal assuming jurisdiction over individuals or entities which are not parties to the arbitration agreement. However, a party can always allow itself to be joined into an arbitration if that is what the parties to the arbitration agreement wish and the tribunal accedes to the request. However, a tribunal would not have the power to make an order absent such agreement. There is no statutory provision in Bermuda which assists the arbitral tribunal or any of the parties to the arbitration to compel a third party to be joined to the arbitration. However, a third party may have rights which arise under a particular contractual arrangement that exists between them. In Ace Bermuda Insurance (Bermuda) Limited v Continental Casualty Company [2007] Bda LR 8 and [2007] Bda LR 38, a defendant as an insurer and a third party were intending to litigate but the plaintiff, Ace Bermuda Insurance Limited, a Bermuda reinsurer, insisted that its rights under the policy of insurance were dealt with by way of arbitration. Section 4, as read with Section 11 of The Contracts (Rights of Third Parties) Act 2016 gives parties to a contract the right to confer those rights on third parties on the same terms and conditions of the contract and the right of the third party to enforce in its own right and term of the contract, which may include the right to arbitrate.

Under the Model Law, unless the parties have agreed otherwise, the arbitral tribunal may, at the request of a party, order any party to take such interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute. The extent of the relief which can be awarded can be very wide as long as it is an order that maintains the status quo. The arbitral tribunal may require any party to provide appropriate security in connection with the grant of such a measure. The point of interim measures is to grant on a temporary basis an order which will preserve the party’s rights and position pending a final resolution of the matters in dispute. The grant of such measures is intended to have a binding effect on the party albeit that there is limited enforcement if the party chooses to breach the order. The ultimate sanction would be in relation to how the tribunal believes the breach of their order affects the substance of the dispute. It is doubtful that a tribunal in Bermuda would grant preliminary measures on an ex parte basis either before or after the tribunal has been formed.

The courts can play a significant role in the grant of preliminary or interim relief to assist an arbitration. Article 9 of the Model Law expresses that it is not incompatible with an arbitration agreement for a party to request from a court, before or during arbitral proceedings, an interim measure of protection and for a court to grant such a measure. Under the enabling act to the Model Law, the Bermuda International Conciliation and Arbitration Act 1993, Section 35 (5) gives express power to the court to make orders in respect of “the preservation, interim custody or sale of any other subject matter of the arbitration”. Under this section, the court is also given power to secure the amount in dispute, the detention, preservation or inspection of any property or thing which is the subject of the arbitration or as to which any question may arise. Assistance can also be given by the ordering of interim injunctions or the appointment of a receiver.

Similarly, the Arbitration Act 1986 expressly empowers the court to grant interim measures in support of an arbitration.

In respect of the use of emergency arbitrators, there is no legislative basis for this. The only recourse to a party wishing to commence an arbitration quickly would be to obtain an injunction from the court to attempt to hold the status quo pending the appointment through the process provided for in the arbitration agreement.  Of course, this could include a reference to some institutional rules which would allow for the appointment of emergency arbitrators.

Neither the Arbitration Act 1986 nor the Bermuda International Conciliation and Arbitration Act 1993 expressly provide for securing a mandatory sum that would act as security in the event that the losing party was unable to pay the costs of the arbitration. While the arbitral tribunal has no jurisdiction to order security for costs, the parties could provide for such jurisdiction within their arbitration agreement or by their choice of institutional rules. For example, Article 25 (2) of the LCIA Rules gives an arbitral tribunal the power to order a party to provide security for the legal or other costs of any party.

The national courts themselves have power to order security for costs in certain circumstances as specified in Order 23 of the Rules of the Supreme Court of Bermuda 1985. The primary basis for seeking security for costs is that the claimant is ordinarily resident out of the jurisdiction or that the claimant is a nominal plaintiff.

There are no specific rules specified in the Bermuda statutes concerning arbitration and the parties are free to choose what rules they wish. Article 19 of the Model Law specifies that, subject to the provisions of the Model Law, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. Failing such agreement, the tribunal may conduct the arbitration in such manner as it considers appropriate. Section 19 of the the Arbitration Act 1986 provides that unless a contrary intention is expressed in the agreement, the arbitration proceedings shall be governed by the procedural law of Bermuda.

The procedural law of Bermuda is usually that which the parties agreed to, subject to any restrictions imposed on them by law. In arbitral proceedings in Bermuda under the Model Law, the primary obligation established under Article 18 is that the parties shall be treated with equality and each party should be given a full opportunity of presenting its case. It is clearly intended under the Model Law that the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings and it is only absent such agreement that the tribunal conducts the arbitration in such manner as it considers appropriate (Article 19). Articles 23 through 25 establish the basic procedure concerning the filing of a statement of claim and a statement of defence.  Unless the parties have agreed otherwise, the arbitral tribunal makes the decision whether to hold oral hearings for the presentation of evidence or for oral argument or whether it is a documents only arbitration. Article 25 deals with the failure of a claimant to provide a statement of claim (the arbitral tribunal shall terminate the proceedings), or where the respondent fails to provide his statement of defence (the arbitral tribunal continues on the basis that everything remains in issue), or a party fails to appear at a hearing or produce documents (arbitral tribunal may continue the proceedings and make an award on the evidence before it).

Under the Arbitration Act 1986, Section 20 provides for the conduct of proceedings and how witnesses should be dealt with. It establishes that the arbitrator or umpire shall have the power to examine witnesses under oath and that the arbitrator or umpire has the power to administer the oath.

The primary obligation of an arbitrator as imposed by the Model Law is to treat the parties equally and give each party a full opportunity of presenting their case.  This duty also encompasses the obligation to disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence. An arbitrator has a continuing duty to disclose any circumstances to the parties which are likely to raise doubts as to his or her impartiality or independence. While not expressed, it is clear that the obligation of the arbitrator is to ensure that the matter proceed so that the end result will be an enforceable award.

The primary obligation of an arbitrator as imposed by the Model Law is to treat the parties equally and give each party a full opportunity of presenting their case. This duty also encompasses the obligation to disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence. An arbitrator has a continuing duty to disclose any circumstances to the parties which are likely to raise doubts as to his or her impartiality or independence. While not expressed, it is clear that the obligation of the arbitrator is to ensure that the matter proceed so that the end result will be an enforceable award.

Under Article 19 of the Model Law, the parties are free to agree on the procedure to the followed by the tribunal in conducting the proceedings. Absent agreement, the tribunal may conduct the arbitration in such manner as it sees fit subject to the other provisions of the Model Law. This wide power is bolstered by Section 35 of the Bermuda International Conciliation & Arbitration Act 1993. It gives the arbitral tribunal express powers to examine witnesses on oath or affirmation, the power to administer oaths and to receive any evidence that the tribunal considers relevant. It further provides that unless the parties have agreed otherwise, the tribunal shall not be bound by rules of evidence applicable in Bermuda. The Evidence Act 1905 sets out in detail rules concerning evidence in civil proceedings, including hearsay evidence, evidence of opinion and expert evidence but this does not necessarily bind the arbitration tribunal unless the parties have otherwise agreed. Article 28 (1) of the Model Law provides that the arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties to be applicable to the substance of the dispute. One general rule of law is that he who alleges must prove and to that extent Bermuda law would expect that the burden of proof would lie with the claimant. This would dictate that the submission of evidence concerning the claim would be in the first instance with the claimant and would follow the general practice in international arbitration. As set out in Article 23 of the Model Law, the claimant states the facts supporting his claim in a statement of claim, sets out the points at issue and the relief or remedy sought. The respondent sets out in his or her statement of defence the answers to these particulars. The parties can submit with their statements all documents they consider to be relevant or add a reference to the documents or other evidence they will submit.

It is up to the tribunal to decide whether to hold oral hearings for the presentation of the evidence and whether there will be oral argument. The parties can make an agreement to have, for example, a documents-only arbitration. At any stage of the process, a party can apply to the tribunal for further disclosure of documents. However, insofar as the documents are in the possession of third parties, the parties and/or the tribunal would have to rely upon Article 27 whereby an application can be made for state assistance in taking evidence. Section 35 of the Bermuda International Conciliation & Arbitration Act provides for writs of subpoenas ad testificandum or a writ of subpoena duces tecum in order to have witnesses or documents brought to the arbitration hearing. Under the Arbitration Act 1986, the arbitral tribunal will again need the assistance of the court not only for compelling witnesses or documents to be brought before the tribunal but also in relation to the court giving assistance to the arbitration by making orders in respect of:

  • discovery of documents and interrogatories;
  • the giving of evidence by affidavit;
  • payment into court;
  • examination on oath of any witness before an officer of the court, or the examination of a witness out of the jurisdiction;
  • preservation, interim custody or sale of any goods which are the subject matter of the arbitration;
  • securing the amount in dispute in the arbitration;
  • the detention, preservation or inspection of any property relating to the arbitration;
  • interim injunctions or the appointment of a receiver

As noted above, while under the Arbitration Act 1986 the general rules of evidence could be considered by the arbitral tribunal, they are specifically excluded by the Bermuda International Conciliation & Arbitration Act 1993. However, the general standard of proof described as either the “balance of probabilities” or the “preponderance of the evidence” applies.

The tribunal has very limited powers of compulsion whether it is under the Arbitration Act 1986 or the Bermuda International Conciliation & Arbitration Act 1993; both rely on applications to the court as noted above in 8.1 Collection and Submission of Evidence. The power to obtain documents and to compel witnesses to attend lies with the court and its ability to issue subpoenas with the power of the state available to sanction any disobedience. Arbitrators can certainly make orders seeking production of documents and requesting witnesses to attend but their primary sanction is the announcement of their intention to draw an adverse inference from the failure to produce a particular document or witness.

The Arbitration Act 1986 makes no reference to confidentiality of the arbitral process and the only mention under the Bermuda International Conciliation & Arbitration Act 1993 is in respect of the reporting of proceedings in any court, heard otherwise than in open court, where the court may give a direction as to what information relating to the proceedings may be published. The court will not give a direction permitting information to be published unless all the parties to the proceedings agree and that the court is satisfied that the information if published would not reveal any matter, including the identity of any party to the proceedings, which any party to the proceedings reasonably wishes to remain confidential.

The general principle of privacy in arbitral proceedings is upheld in Bermuda. The case of Dolling-Baker v Merrett [1990] 1 WLR 1205 is often cited in relation to the implied obligation to preserve the confidentiality of the process. Not only is the arbitration private and confidential, but all information connected to it is also to be regarded as confidential. The English Court of Appeal decision in Ali Shipping Corporation v Shipyard Trogir [1999] 1 WLR 314 is regarded as expressing the Bermuda law position on this; there is an obligation of confidentiality implied into arbitration agreements as a matter of law. This position has been affirmed by the Privy Council in the Bermuda case of Associated Electric & Gas Insurance Services Limited (AEGIS) v European Reinsurance Company of Zurich [2003] UKPC 11.  The Privy Council distinguished arbitration from commercial litigation by stating “commercial arbitrations are essentially private proceedings”.

Any documents produced in the course of the arbitral proceeding to a party cannot be disclosed or relied upon in subsequent proceedings by the party to whom the document was disclosed. The party who receives the document has an implied duty of confidentiality. There can be exceptions to the obligation to keep the process and any documents used in the process confidential. Firstly, parties can agree that their proceedings will not be confidential. Then are those cases where it is in the interests of justice, required by law or required to establish or protect a party’s legal rights. These exceptions are recognised in the English Court of Appeal case of Emmott v Michael Wilson & Partners Limited [2008] EWCA Civ 184.

Under the Model Law, the form and contents of the award are clearly set out and it is the obligation of the arbitral tribunal to ensure that the award complies with the basic requirements to limit or even eliminate any risk that the award could be unenforceable.

The form and contents of the award are that:

  • the award shall be in writing, signed by the arbitrator or arbitrators;
  • the award shall state the reasons on which it is based, unless the parties have agreed that no reasons are to be given or it is an award pursuant to a settlement, in which case the settlement is recorded in the form of an arbitral award on agreed terms;
  • the award shall state its date and place of arbitration as either had been determined by the parties or, in the absence of agreement, as determined by the tribunal (Article 20 (1)) – the award is then deemed to have been made at that place;
  • once the award is made, a copy duly signed is delivered to each party.

The arbitral proceedings are effectively terminated by the delivery of the final award, save for possible correction or interpretation within 30 days of receipt of the award.

There is no time specified under the Model Law in which an award should be made. It may be that the parties have agreed a specific timetable. Under the Arbitration Act 1986, the arbitrator is given power to make the award at any time (Section 21). If there is a limited time for making an award, that time can be enlarged by order of the court whether the time has expired or not (Section 21 (2)). The court can remove an arbitrator who fails to use “all reasonable dispatch” in making an award and, if the arbitrator is removed he is not entitled to receive any remuneration in respect of his services. An additional time limit appears when there has been an appeal to the Court of Appeal on a question of law arising out of an award under the Arbitration Act 1986.  If the award is subsequently remitted to the arbitral tribunal, then the tribunal has three months to make the award after the date of the court order (Section 29 of the Arbitration Act 1986).  This is subject to the court ordering a different time period.

Under the Arbitration Act 1986, the only remedy referenced is specific performance deeming that, unless it is expressed to the contrary, an arbitrator shall have the power of the court to order specific performance in any contract. However, it cannot be a contract relating to land or any interest in land. The Model Law and its enabling statute make no reference whatsoever to the nature of the remedies to be available in an arbitration. Other than the reference to specific performance under the Arbitration Act 1986, there is essentially no limitation on the nature of the remedy that may be ordered by the arbitration tribunal.  To that extent, it would be expected that an arbitral tribunal could make an award of damages which would be an award in the same currency as sought. It could order injunctive relief, declaratory relief and any other appropriate remedy which would give relief to the claiming party.

If Bermuda law is the substantive law of the contract, there can be no claim for punitive damages. However, Bermuda law recognises that it can be appropriate to award aggravated or exemplary damages. The categories of conduct are set out in the case of Rookes v Barnard [1964] AC 1129 where there is:

  • abuse of power by servants of the government;
  • conduct that was motivated by pursuit of profits; and
  • where those damages are expressly authorised by statute.

Punitive damages would not be awarded under Bermuda law but if the tribunal sitting in Bermuda was applying the substantive law of a US state, then there is no basis as to why it could not award punitive damages. However, the issue would be whether on enforcement under the New York Convention the enforcing state’s public policy would allow enforcement.

Both Bermuda statutory regimes in relation to arbitration provide for the recovery of costs. Section 32 of the Bermuda International Conciliation and Arbitration Act 1993 provides that in Model Law arbitrations the costs of the arbitration shall be at the discretion of the tribunal unless the parties have otherwise agreed. The section specifies what the word 'costs' comprises and includes the fees and expenses of the arbitrator, the cost of expert advice and other assistance required by the tribunal. It also includes legal fees and expenses of the parties, their representatives, witnesses and expert witnesses, administration fees and expenses of arbitral institutions and any other expenses in connection with the arbitral proceedings. It is left to the arbitral tribunal’s discretion as to who will pay the costs and in what proportions. However, absent an agreement otherwise, commercial arbitrations in Bermuda would utilise the English rule of costs and unless there were reasons to exercise their discretion otherwise, the successful party would be awarded their costs. The tribunal is given power to assess the amount of costs to be paid.

Under the Arbitration Act 1996, the position is similar under Section 26 of that statute. Section 26 (3) of the Arbitration Act 1986 invalidates any agreement contained within an arbitration clause which provides that each party bear their own costs. It is perfectly acceptable to make this arrangement subsequent to the dispute arising but any agreement prior to the dispute arising is invalidated. As regard to assessment of costs, unless the award specifies otherwise, these will then fall to be 'taxed' by the court, meaning that the successful party will have to create proper bills of costs in the format expected by the court and then have to justify them in the same manner as a party would at the end of litigation. However, the arbitral tribunal can direct in the award that they reserve the power to deal with the costs and thus avoid the parties having to proceed to have those costs assessed in the court.

In relation to interest, where there is a breach of contract and there is deprivation of money for a period of time, then the loss includes interest on the sum up to the time the award is made and thereafter until the money is actually paid to the claimant.

Section 31 of the Bermuda International Conciliation and Arbitration Act 1993 provides that the tribunal can award interest at such reasonable rate as the arbitral tribunal determines and can be on the whole or any part of the damages awarded. The Arbitration Act 1986 also makes express provision for interest to be awarded under Section 28 (2). Again, the arbitral tribunal can award interest at such rate as it may determine up to the date of the award and thereafter the rate of interest would be the prevailing rate as determined by the Interest & Credit Charges (Regulation) Act 1975 which, under Section 10 of that Act, is presently 3.5%. However, this only relates to Bermudian currency and if in foreign currency, which is anything other than the Bermuda dollar (BMD) which is currently equivalent to a US dollar (USD) in value, then the amount of interest awarded can be greater.

Under the Model Law, there is effectively no appeal and the appropriate remedy against the award is setting it aside as provided for in Article 34 (2) of the Model Law. The grounds for doing so are similar to those grounds for refusal or enforcement of an award under the New York Convention so the party making the application to the Bermuda Court of Appeal must set out proof either that:

  • a party to the arbitration agreement referred to in Article 7 was under some incapacity, the said agreement is not valid under the law to which the parties have subjected it to or, if the law is not specified, under the law of Bermuda; or
  • the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present its case; or
  • the award deals with a dispute not contemplated by or not being within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submissions to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or
  • the composition of the arbitral tribunal or the arbitral procedure was not in accord with the agreement of the parties, unless such agreement was in conflict with the provision of the Model Law from which this parties cannot derogate or failing such agreement was not in accordance with the Model Law; or
  • the court finds that:
    1. the subject matter of the dispute is not capable of settlement by arbitration under the law of Bermuda, or
    2. the award is in conflict with the public policy of Bermuda.

Under the Model law, a party would have to issue an originating process to have the application to set aside the award heard by the Court of Appeal. The application would be supported by an affidavit setting out the evidence that would support an order for setting the award aside. The matter would be dealt with confidentially by the court and heard in camera.

Under the Arbitration Act 1986, the only appeal under that statute is to the Court of Appeal on a question of law arising out of the award. However, the matter can only be heard by the Court of Appeal if leave is granted by the Bermuda Supreme Court which will only grant leave if the determination of the question of law substantially affects the right of one or more parties to the arbitration agreement. The Supreme Court, in determining whether to grant leave, will review the award to see if it sufficiently (or at all) sets out the reasons for the award. If it does not, it can send the matter back to the arbitral tribunal to state the reasons in sufficient detail so as to enable the Court of Appeal, if leave were to be granted, to consider any question of law arising out of the award. This is under Section 29(5) of the Arbitration Act 1986. Judicial review of the award can be excluded by agreement under Section 29 of the Arbitration Act 1986 although that same provision provides that the parties can revoke the exclusion agreement if they both agree to do so. Confidentiality in respect of these proceedings is not guaranteed and both the Supreme Court and the Court of Appeal may, if they consider it necessary, expedient or that publicity would prejudice the interest of justice, order that those proceedings be conducted other than in open court.

There is no deferential or de novo hearing on the merits. The Model Law is restricted to setting aside only on those matters set out in Article 34 (2) and the Arbitration Act 1986 provides that it is only on a question of law. The test for the grant of leave and on hearing the matter in the Court of Appeal is the same test, namely whether the arbitrator was “obviously wrong”.

The New York Convention was extended to Bermuda by the United Kingdom on 14 November 1979. The reservation has been entered limiting the application of the convention to the recognition and enforcement of awards made by the territory of another contracting state. The New York Convention also forms part of the Bermuda International Conciliation and Arbitration Act 1993. It is set out in Part IV of the statute and Section 40 provides for the effect of a Convention award, which is that it is enforceable in Bermuda either by action or, with leave of the court, enforced in the same manner as a judgment or order of the Bermuda court. The Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965 has also been extended to Bermuda.

The procedure is that the Supreme Court of Bermuda has the power to hear an ex parte application for leave to enforce. The application must be supported by an affidavit exhibiting the arbitration agreement and the original award, stating the name and usual or last-known place of business of the applicant and the person against whom it is sought to enforce the award and stating whether the award has not been complied with or the extent to which it has not been complied with. The Bermuda Rules of the Supreme Court 1985, Order 73 Rule 10 then provide that the order made by the court can be served out of the jurisdiction without leave. The order will incorporate a time period within which the responding party must seek to set aside the order and failing that, the order shall be final. The fact that the award has been set aside at the seat or that there is an application pending to set it aside will not be relevant in the court’s consideration of whether to enforce it or not – see LAEP Investments Limited [2015] Bda LR 35.

The general approach of Bermuda courts towards the recognition and enforcement of arbitration awards is the pro-enforcement approach so common in many jurisdictions. The former Chief Justice, Ian Kawaley, in the case of Sampoerna Strategic Holdings Limited v Hua Wei Tech Investment Co. Ltd. and Hua Wei International PTE Limited v Sampoerna Strategic Holding s Limited [2014] Bda LR 108, reviewed the statutory regime in Bermuda and how the Bermudian courts have on many occasions stressed the strong public policy in favour of enforcing foreign arbitral awards. He said that this was reflected in the statutory scheme.  While there has been no foreign arbitral award refused on the basis of public policy in Bermuda, the likelihood is that Bermuda would follow the English courts which have held that any argument for the court to refuse recognition on public policy grounds should be approached with extreme caution. The public policy exception should be construed narrowly – see IPCO (Nigeria) Limited v Nigerian National Petroleum Corporation [2005] EWHC 726.

It is unusual to have a class action or a group arbitration in international arbitration. Even though these two forms are distinct, the fundamental basis of arbitration is such that it leans heavily towards arbitration in the matter taking place. For a class action arbitration, where a party brings a claim in his/her name on behalf of himself/herself and on behalf of all others who are similarly situated, there is simply no legal foundation for a tribunal to find jurisdiction. Dealing with the issue of whether there is an agreement in writing, this would present an enormous hurdle for the party bringing the class action arbitration to surmount. This is not to say that it is not impossible, which may be why many consumer agreements in the USA include language in the arbitration provision which prevents consumers from asserting a class action claim in arbitration.

Group arbitration, on the other hand, is effectively where individual parties with a cause of action wish to present their claims together as a group on the basis that there is commonality in their claims; they wish to have their individual arbitrations consolidated so that they could present their claims as a group. Section 9 of the Arbitration Act 1986 only provides for consolidation of arbitrations in relation to two or more arbitration proceedings which have identical parties. The issue in group arbitrations is that the parties are not identical. The only commonality relates to the identity of the respondent and the issues involved. The only possibility of the arbitration moving forward where there are group claimants would be where the respondent, with the consent and approval of the arbitration tribunal, agrees to such a course. This would be the same situation if the arbitration was under the Model Law.

In an arbitration, both the tribunal and the professional representatives before it are bound to adhere to certain ethical standards. As regard to the tribunal, these could be the ethical codes of the respective appointing institutions; all the reputable institutional bodies have ethical guidelines. Additionally, the arbitration clause itself may introduce some ethical standard, possibly by reference to the IBA Guidelines on Conflict of Interest.

As referred to in 4.4 Challenge and Removal of Arbitrators and 4.5 Arbitrator Requirements above, arbitrators have a duty to be impartial and independent and that is a continuing duty. The obligation is to make full disclosure before appointment of all matters which may impact their impartiality or independence. This also includes an obligation to ensure that in taking on the appointment the arbitrator has sufficient time to be able to focus on the matters arising in the arbitration and to deliver a timely award. As regard to arbitrators, misconduct and breach of ethical duties may be the subject of judicial scrutiny on either a review of the award under Article 34(2) of the Model Law or on enforcement under the New York Convention (see 11.1 Grounds for Appeal and 12.1 New York Convention above). An arbitrator who does not behave appropriately – for example, by not giving the parties a proper opportunity to be heard or even in some way acting dishonestly by favouring, whether for payment or otherwise, one party over the other – puts the validity of the award at risk.

Arbitrators and counsel who are members of the Chartered Institute of Arbitrators would be subject to sanction by that institute for any ethical breaches. Counsel to the arbitration who are practising attorneys would also be subject to their Bar Code of Professional Conduct in their qualifying jurisdiction.

Whether one of the parties in an arbitration is funded by a third party is not always a fact known to either the other party or to the tribunal. There is no automatic disclosure of the existence of a third-party funding agreement. If this fact does become known, then the question which is raised is whether this entitles the other party to ask for security for costs. As set out in 6.3 Security for Costs above, neither the Arbitration Act 1986 nor the Bermuda International Conciliation and Arbitration Act 1993 provide for securing a mandatory sum that would act as security in the event that the losing party was unable to pay the costs of the arbitration. However, there is no prohibition against third-party funding in Bermuda and the then Chief Justice Ian Kawaley, in a decision in the case of Stiftung Salle Modulable Rutli Stiftung v Butterfield Trust (Bda) Ltd. [2014) BDA LR 13, approved of the practice and further suggested that such funding arrangements in civil litigation should be encouraged.

There is no known case in Bermuda where the costs of the arbitration award which could not be paid by the loser were ordered to be paid by the third-party funder.

Specific provision is made under Section 9 of the Arbitration Act 1986 for arbitrations to be consolidated but there must be identical parties and common questions of law and/or fact arising in the arbitrations that are requested to be consolidated. The court may order the arbitrations to be heard at the same time or one immediately after the other, or it can order a stay of any one of them until determination of any of the others. The court can also appoint the arbitral tribunal if there is no agreement amongst the parties as to which tribunal should hear the consolidated proceedings. There is no equivalent provision for consolidation under the Model Law.

See 5.7 Third Parties, above.

Conyers

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Conyers is one of the world’s leading offshore law firms. Founded in 1928, its worldwide team of lawyers in six key offshore jurisdictions are highly trained and experienced in international and cross-border transactions and dispute resolution, none more so than its International Arbitration Group. The group – which has members from the firm's offices in Bermuda, BVI, Cayman and Hong Kong – is spearheaded by the experienced arbitrator and dispute resolution specialist, Jeffrey Elkinson.

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