Bermuda is regarded as a first-class centre for international business, including funds, trusts and, in particular, insurance and reinsurance. What makes Bermuda an attractive jurisdiction is its responsible but facilitative regulator, modern infrastructure, stable political and economic climate, English-based legal system and an unmatched collection of talent and intellectual capital in key sectors.
As a global leader in insurance and reinsurance, insurance policies and reinsurance agreements often include Bermuda governing law and arbitration clauses specifying a Bermuda seat. The Bermuda International Arbitration and Conciliation Act 1993 ("1993 Arbitration Act") is the legislation in Bermuda that provides the regime for international commercial arbitrations. It adopts the internationally renowned UNCITRAL Model Law on International Commercial Arbitration ("Model Law").
International arbitrations in Bermuda conducted under the 1993 Arbitration Act are frequently governed alternatively by the substantive laws of New York or England & Wales – a feature of what has become known as the "Bermuda Form" policy, further reflecting the international reach and usage of Bermuda international arbitration.
In Bermuda's domestic market, arbitrations are routinely used for employment, construction, sport and maritime disputes. The domestic arbitration regime is governed by the Bermuda Arbitration Act 1986 ("1986 Arbitration Act").
The international business community in Bermuda and the (re)insurance industry have felt the impact but weathered well the effect of COVID-19. Losses in the funds and trusts industry have been manageable and although reinsured losses from business interruption have been significant – impacted in part by the Financial Conduct Authority's business interruption insurance test case decided by the Supreme Court in September 2020 – the (re)insurance industry has responded responsibly to those losses and only a small number of international arbitrations have been commenced, most of which were settled at an early stage. With that said, the backlogs caused by COVID-19 to Bermuda's domestic courts have highlighted further the flexibility and efficiency of international arbitration, which has been largely uninterrupted over the course of the pandemic. Although the courts have adapted well to technology such as virtual hearings, the flexibility of the arbitration process and the availability from home of arbitrators has enabled Bermuda international arbitrations to respond quickly to the limitations placed on parties, practitioners and arbitrators and proceed as close to normally as possible, with concomitant savings in flights and hotel costs otherwise associated with substantive hearings in Bermuda. Bermuda arbitrators now commonly accept electronic filings only, without the need for hard copy filings of documents. As a result, the pandemic has had minimal impact on arbitration proceedings, particularly in comparison to the significant disruption unavoidably caused to court proceedings (with no fault of the Bermuda courts or their administrations). Bermuda as a community was relatively uninterrupted by lockdowns when compared with those observed in the USA, the UK and internationally.
Bermuda is a globally-recognised, market-leading jurisdiction for (re)insurance and insurance-linked securities (ILS), often performing the role of insurer of last resort in the most catastrophic weather-related or man-made disasters. International arbitration under the 1993 Arbitration Act is typically the preferred form of dispute resolution used in the insurance and reinsurance industry in Bermuda, although litigation is sometimes still observed in the industry.
Given the pressures facing (re)insurance companies in relation to COVID-19-related claims, we have seen a modest number of arbitrations commenced, as well as an increased number of trapped collateral disputes arising in the ILS space – and the usual pattern of coverage disputes one would expect. This has resulted in a significant increase in demand for expert industry-specific legal advice in relation to arbitrations arising within those areas. In other industries – including funds, trusts, banking and construction – the level of arbitration activity has overall been relatively flat.
We have not seen any particular industries within Bermuda that are experiencing decreased international arbitration activity in 2020-21 as a result of the COVID-19 pandemic. Litigation funders remain active and arbitration disputes have commenced regardless of the overall economic climate caused by the pandemic.
For Bermuda international arbitrations related to insurance and reinsurance, arbitration clauses provide for a variety of arbitral institutions by which the parties conduct the arbitration, including ARIAS (UK), ARIAS (US) and the London Court of International Arbitration (LCIA). Those institutions, or the Supreme Court of Bermuda, are frequently named as the appointing body for third arbitrators, as is the Appointments Committee of the Bermuda Branch of the Chartered Institute of Arbitrators (CIArb). Ad hoc arbitrations are common, as is use of the UNCITRAL Rules where no specific arbitral institution is specified. Less common in Bermuda (re)insurance arbitrations is the use of the institutions of JAMS, the American Arbitration Association (AAA) and the International Chamber of Commerce (ICC).
For domestic arbitrations, the most common arbitral institution specified is the CIArb Bermuda Branch.
No new arbitral institutions have been established in Bermuda in 2020-21 but, after many years of discussions and planning, Bermuda will soon benefit from the construction of a dedicated Bermuda Arbitration Centre building.
The Supreme Court of Bermuda has a dedicated Commercial Division, with specialist commercial judges, that deals with procedural and substantive disputes arising from international arbitrations and has frequently been required to resolve party-party deadlock on appointment of third arbitrators. The Bermuda Court of Appeal also hears applications to set aside final arbitral awards on prescribed grounds set out in Article 34 of the Model Law.
The 1993 Arbitration Act governs international commercial arbitrations and incorporates the Model Law in its entirety.
There have been no significant changes to Bermuda arbitration law in the past year, but it is conceivable that amendments will be made to Bermuda's 1993 Arbitration Act, to Bermuda arbitration clauses, or to arbitration convention and best practice to better specify arbitrators' duties of disclosure of appointments in separate but related arbitrations arising from the same insured event.
In Bermuda, under Article 7 of the Model Law, the arbitration agreement must be in writing and signed by the parties. An arbitration clause can appear in the contract or in a separate agreement. In the reinsurance realm, reinsurance agreements that fail to express a clear intent to incorporate an arbitration clause of an underlying insurance policy are at risk of failing to include that arbitration clause. However, Article 7(2) of the Model Law is regarded in Bermuda as providing that general words of incorporation by reference to an arbitration clause will suffice. See Skandia International Insurance Co et al v Al Amana Insurance and Reinsurance Co Ltd  4 Re LR 63.
All commercial disputes may be subject to arbitration in Bermuda; however, the question of whether or not a dispute is arbitrable is a question of the scope and the terms of a specific arbitration agreement (see Lenihan v LSF Consolidated Gold Holdings Ltd  Bda LR 49).
As a leading international jurisdiction for reinsurance, Bermuda and its courts ensure that a fair, reliable system of national laws enforce arbitration agreements. Where parties have agreed in the arbitration clause to hold an arbitration in a particular place, that jurisdiction will generally be held to be the curial law of the arbitration, even where the contract is agreed to be governed substantively by a foreign system of law. See Starr Excess Liability Insurance Company Ltd v General Reinsurance Corp  Bda LR 34.
Otherwise, the arbitral tribunal can rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement (Article 16(1) of the Model Law).
The arbitral tribunal can rule on a challenge to its jurisdiction, as a preliminary question or in an award on the merits (Article 16(3) of the Model Law).
If the arbitral tribunal rules as a preliminary question that it does indeed have jurisdiction, this can be challenged before the Supreme Court of Bermuda within 30 days of the ruling. There is no appeal from a decision of the Supreme Court of Bermuda under Article 16(3) of the Model Law. However, if the arbitral tribunal rules on its jurisdiction in an award on the merits, any challenge to that ruling must be brought before the Court of Appeal for Bermuda within three months of the date of the award.
Arbitral awards of jurisdictions that have subscribed to the New York Convention 1958 are enforced in Bermuda.
Bermuda law recognises the principle of separability of arbitration clauses otherwise contained in a broader contract. As such, an arbitration agreement included as a clause within a main contract is generally sufficient for the arbitration agreement to be valid and binding (see Article 16(1) of the Model Law and Sojuznefteexport v Joc Oil Ltd  Bda LR 11). An arbitration agreement will be valid even if the validity of the contract in which the arbitration clause is incorporated is being challenged.
There are no limits on the parties' autonomy to select arbitrators in Bermuda. The parties are free to determine the number of arbitrators, and to agree their qualifications and the procedure for their appointment (Articles 10(1), 11(1), 11(2) of the Model Law).
Under Bermuda's immigration policy, to encourage the use of Bermuda as an international commercial arbitration jurisdiction, arbitrators sitting in an international commercial arbitration in Bermuda and foreign advocates do not require Bermuda work permits.
There is no statutory requirement to be a national of, or licensed to practise law in, Bermuda in order to serve as an arbitrator. Domestic Bermuda arbitration agreements can and occasionally do require the appointment of arbitrators with experience practising Bermuda and/or English law.
If the parties’ chosen method for selecting arbitrators fails, or there is no method for selection and the parties fail to agree, the default provisions for appointing the arbitrator(s) are found under Article 11 of the Model Law.
The 1993 Arbitration Act refers to the Supreme Court of Bermuda as the appropriate court to appoint arbitrators failing agreement by the parties (Article 6 of the Model Law and Section 25 of the 1993 Arbitration Act). See Montpelier Reinsurance Ltd v Manufacturers Property & Casualty Limited  SC (Bda) 27 Com and S v T  SC (Bda) 9 Civ.
Under the 1993 Arbitration Act a court can intervene in the selection of arbitrators in limited circumstances such as (1) where the parties have failed to agree a procedure for appointing arbitrators, (2) where the agreed procedure is not followed and (3) where the parties are unable to agree on the arbitrator(s). A party or parties to the arbitration must apply to the court for the selection of arbitrators in such scenarios. The court will not act of its own volition.
The 1993 Arbitration Act provides that parties to an arbitration agreement can challenge the appointment of or remove an arbitrator in the following limited circumstances:
Article 12(2) of the Model Law provides that any challenge must be made to the Supreme Court of Bermuda within 15 days of a party becoming aware of the constitution of the tribunal, or after becoming aware of any circumstance which gives rise to the challenge (Article 13(2)).
Article 12 of the Model Law provides that when a person is approached in connection with his or her possible appointment as an arbitrator, he or she shall disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence. This obligation to disclose continues for an arbitrator into his or her appointment and throughout the arbitral proceedings if any information arises that the parties have not been informed of.
Bermuda, like England & Wales, has not yet responded to the conflict of interest issues thrown up by the Supreme Court decision in Halliburton Company v Chubb Bermuda Insurance Ltd UK SC 2018/0100.
Save for public policy reasons, there is generally no restriction on what can and cannot be arbitrated, though arbitration is typically used for commercial and commercially-related matters such as employment disputes.
There is a distinction in Bermuda law as to what is or is not "commercial" and thereby whether the Model Law can apply – see Kessler v Hill  Bda LR 57 (Court of Appeal).
The arbitral tribunal can rule on its own jurisdiction (Article 16(1) of the Model Law). The arbitral tribunal can rule on a challenge to its jurisdiction, as a preliminary question or in an award on the merits (Article 16(3) of the Model Law).
A tribunal can rule on its own jurisdiction as a preliminary issue or in the context of a final award. If the tribunal makes the determination as a preliminary matter, the Supreme Court of Bermuda can hear a challenge to this by any party and may decide the issue (Article 16(3) of the Model Law). There is no right of appeal from the determination of the Supreme Court.
If the decision is made on jurisdiction in a final award, any party to the arbitration can appeal to the Court of Appeal to set aside the award on limited grounds provided in Article 34(2) of the Model Law.
If the arbitral tribunal rules as a preliminary question that it has jurisdiction, this can be challenged before the Supreme Court of Bermuda within 30 days of the ruling.
If the arbitral tribunal rules on its jurisdiction in an award on the merits, any challenge to that ruling must be brought before the Court of Appeal for Bermuda within three months of the date of the award.
Questions of jurisdiction can be determined by the arbitral tribunal based on the doctrine of Kompetenz-Kompetenz, which is recognised under Bermuda law – see Christian Mutual Life Insurance Co. et al v Ace Bermuda Insurance Limited Civ App.  Bda LR 56. The grounds for a party seeking to set aside an award are found in Article 34(2) of the Model Law. A party may seek to have the award or determination on jurisdiction set aside on the grounds that it deals with a dispute not contemplated by the arbitration agreement, or that it contains decisions on matters beyond the scope of the submission to arbitration, or that either the composition of the tribunal or its procedure was not in accordance with the parties' agreement. A court hearing a challenge to an arbitrator's determination on jurisdiction will determine matters referred to in Article 34(2) de novo, but will otherwise approach the arbitrator's decision with deference.
The parties to an arbitration are generally free to agree the scope of evidence for the arbitration. Section 35(2) of the 1993 Arbitration Act states that a tribunal has full autonomy in relation to the admissibility of evidence and is not bound by the rules of evidence applicable in Bermuda. An arbitrator cannot, however, compel disclosure from a third party without the assistance of the court.
Agreements to arbitrate in Bermuda will be enforced by staying any proceedings brought in breach of the arbitration agreement, or by granting an anti-suit injunction against any foreign proceedings in breach of the arbitration agreement (see Skandia International Insurance Co & Others v Al Almana Insurance & Reinsurance Co Ltd  Bda LR 30).
If a party to an arbitration agreement is a company incorporated in Bermuda (that is, a party over which the Bermuda court has jurisdiction) and breaches an agreement to arbitrate outside Bermuda by commencing foreign court proceedings, the Bermuda court will also grant an injunction against the Bermuda company restraining it from pursuing those proceedings (see LV Finance Group v IPOC International Growth Fund Ltd  Bda LR 69; affirmed on appeal,  Bda LR 43).
As is standard with international arbitrations, the general rule is that party consent is a prerequisite for international arbitrations, and must be in writing and signed by the parties.
Unlike in most state courts, where third parties can often be joined to proceedings, the jurisdiction of an arbitral tribunal to allow the joinder or intervention of third parties to an arbitration is limited. The Model Law does not currently provide a framework for the addition of third parties to an arbitration. Generally, joining third parties can only occur with the consent of all parties concerned in the arbitration.
However, under common law there are examples of a third party that did not sign a contract being allowed to arbitrate disputes relating to a contract it is not a party to, by operation of the "group of companies" doctrine, whereby the benefits and duties from an arbitration agreement can be extended to other entities of the same group of companies.
General rules of Bermuda law in the areas of assignment, agency, succession and novation can potentially have relevance.
Preliminary or interim measures can be granted by a tribunal in Bermuda arbitrations, on application by the parties, and such relief is binding. The Bermuda court will most likely enforce arbitral rulings of interim measures.
Section 36 of the 1993 Arbitration Act and Articles 9 and 17 of the Model Law provide the tribunal with the ability to grant partial awards and interim measures. The interim measures that might be granted are akin to the court remedies of:
The Bermuda courts have jurisdiction to grant interim measures of protection, before or during arbitral proceedings (Article 9 of the Model Law). The types of interim relief which a Bermuda court can grant are set out in Section 35(5) of the 1993 Arbitration Act, and include the following.
These applications for interim relief are enforced by orders of the Supreme Court of Bermuda.
The 1993 Arbitration Act does not provide mechanics for the appointment of emergency arbitrators. When there is a need for emergency or urgent relief, Article 9 provides that the Supreme Court has the authority to grant it.
Bermuda law allows for security for costs. Article 17E of the Model Law provides the tribunal with the power to order security for costs in the context of applications for interim measures, discussed in 6.1 Types of Relief and when appropriate.
Chapter V (Articles 18 to 27) of the Model Law governs the procedure for an international commercial arbitration in Bermuda. The approach of the Model Law is based on party autonomy and permits the parties to agree the procedure to be followed. Failing such agreement, the tribunal can conduct the arbitration as it thinks fit, subject to the requirement that the parties be treated equally and that each party be given a full opportunity to present its case (Article 18 of the Model Law).
Article 19 of the Model Law determines the rules of procedure and generally stipulates that there are no procedural steps that are required by law. Article 21 of the Model Law governs the default rules on commencement of an international commercial arbitration in Bermuda. However, the practice in Bermuda arbitrations is to loosely adopt the procedures found in English/Bermuda civil procedure rules whereby pleadings are exchanged, followed by discovery, fact and expert witness statements, and then oral hearings.
There are general requirements for arbitrators to give parties proper notice of any hearing (Article 24(2) of the Model Law). Additionally, Article 18 of the Model Law provides that the arbitrators must treat the parties with equality and each party shall be given a full opportunity to present its case. Lastly, arbitrators have an ongoing duty to disclose any circumstances that will bring into question their impartiality or independence.
Bermuda counsel professionally are governed by the Barristers Code of Professional Conduct 1981. This Code of Conduct does not govern the conduct of counsel from countries other than Bermuda in attending arbitrations situated in Bermuda. While restrictions normally apply to foreign counsel appearing in Bermuda, these restrictions are relaxed for international commercial arbitrations. In particular, Section 37(3) of the 1993 Arbitration Act provides that a legal practitioner appearing in an arbitration will not breach any law regulating admission to the legal profession in Bermuda.
Article 19 of the Model Law provides that the parties are free to agree the rules of evidence and that the arbitral tribunal may receive any evidence that it considers relevant and is not bound by the rules of evidence applicable in Bermuda (see Section 35(2)). The IBA Rules on the Taking of Evidence in International Arbitration (2020) are frequently agreed to apply. The general practice is for parties to complete their pleadings and then agree to the disclosure of all non-privileged documents relevant to the issues as defined by the pleadings, and to the exchange of witness statements in advance of a hearing. In most instances, the requested documents are exchanged without significant issues, as long as they are relevant. An advantage of Bermuda arbitration is the focus on relevance rather than the English arbitration approach, mirroring the English courts' disclosure rules, that requires disclosure of all documents, helpful or unhelpful to the parties' respective cases, in their possession, custody or control. This gives rise to improved efficiency of the Bermuda arbitration process and decreased legal costs.
See 8.1 Collection and Submission of Evidence.
The rules in relation to evidence in arbitration are similar to those that apply to domestic matters.
Article 27 of the Model Law allows for the tribunal, or a party to the arbitration with the approval of the tribunal, to obtain assistance from the Bermuda court in taking evidence. The Bermuda court has the power to execute any request within its competence and in accordance with its rules on taking evidence. Generally, the involvement of the courts for the taking of evidence only relates to the taking of evidence from non-parties to the arbitration. Section 35 of the 1993 Arbitration Act allows a party to file for a subpoena to compel the production of documents or the attendance of a witness. The Bermuda courts can also make orders in relation to the examination under oath of any witness, and can issue requests for the examination of witnesses outside of Bermuda in relation to a Bermuda arbitration.
Under Bermuda law there is an implied term in an arbitration agreement that proceedings and documents produced during the proceedings, including the award, are confidential (ABC Insurance Company v XYZ Insurance Company  Bda LR 8, Ace Bermuda Insurance Ltd v Ford Motor Company  Bda LR 1, and see the Privy Council decision Associated Electric & Gas Insurance Services Ltd v European Reinsurance Co. of Zurich  1 WLR 1041). The extent of any exceptions to the confidentiality rule has yet to be considered in Bermudian case law.
Article 31 of the Model Law provides that an award shall be made in writing and shall be signed by each arbitrator. The award shall further state the reasons upon which it is based and shall state the date and the seat of the arbitration.
The tribunal will be afforded all of the remedies permitted by the law the parties have chosen to apply to the arbitration. As a matter of Bermuda law, punitive damages are generally not allowed and therefore, absent agreement from the parties, are not recoverable. The general remedies available at law in Bermuda are based on the English law concepts of remedies and damages.
Unless the parties agree otherwise, the arbitral tribunal has a general power to award interest on all or part of a monetary award, at such reasonable rate as the tribunal determines, for the whole or any part of the period between the date on which the cause of action arose and the date of the award (Section 31(1) of the 1993 Arbitration Act). Where interest is payable in Bermuda dollars, Bermuda's Interest and Credit (Charges) Regulations 1975 will apply.
Section 32 of the 1993 Arbitration Act states that, unless the parties to an arbitration agreement agree otherwise, the following costs are recoverable at the discretion of the tribunal.
Typically in a Bermuda international commercial arbitration the losing party will be ordered to pay the winning party's legal costs of and occasioned by the arbitral dispute.
There is no appeal on a point of law in Bermuda international arbitrations under the 1993 Arbitration Act.
The grounds on which an arbitral award can be set aside by the Court of Appeal for Bermuda are very limited. Article 34(2) of the Model Law sets out the following six grounds.
An application to set aside the award must be made to the Court of Appeal for Bermuda within three months of the date of the award.
There is no Bermuda authority on whether excluding or expanding the scope of appeal is permissible. Under the 1993 Arbitration Act, expansion or exclusion of grounds of appeal is unlikely to be effective. Parties often attempt to exclude grounds of appeal in arbitration agreements, but no public decisions on the effectiveness of such exclusions are available.
The 1986 Arbitration Act provides broader grounds of appeal – including the right to appeal on a point of law – should parties wish to incorporate that statute into their arbitration agreement.
There is no right of appeal of arbitral awards under the 1993 Arbitration Act on a point of law. The only grounds for judicial review of an arbitral award on application by an aggrieved party is to set aside the award, as provided in 11.1 Grounds for Appeal, pursuant to Article 34 of the Model Law.
Bermuda is a self-governing territory of the UK. The UK has extended the New York Convention to Bermuda, with no reservations. The legislation which gives effect to the New York Convention in Bermuda is in the 1993 Arbitration Act.
A New York Convention award either is enforceable in Bermuda by action or may, by leave of the court, be enforced in the same manner as a judgment or order to the same effect and, where leave is so given, judgment may be entered in the terms of the award (Section 40(1) of the 1993 Arbitration Act). The practice is to enter judgment by leave of the court. Section 48 of the 1993 Arbitration Act contains an equivalent provision for non-New York Convention awards.
A party seeking to enforce an award must show that the award is prima facie one that the Bermuda court must recognise. This is done by:
Section 42(2)(f) of the 1993 Arbitration Act provides that enforcement of a Convention award may be refused if it has been set aside by the courts of the seat of the arbitration.
Section 42(5) provides that, where an application for setting aside an award has been made, the Bermuda court may as it sees fit adjourn the proceedings and may order security for costs.
While Bermuda has not introduced equivalent legislation to the UK's Sovereign Immunity Act 1978, a party seeking relief on such grounds may seek to rely on one of the provisions for refusal of enforcement as found in Section 42(2) of the 1993 Arbitration Act.
The Bermuda Commercial Court consistently gives effect to arbitration agreements and generally rules in favour of contractual and party autonomy. The court is unlikely to encourage any behaviour of parties seeking to delay or frustrate legitimate and valid arbitration proceedings.
The Bermuda Court of Appeal has indicated that there may be rare situations where enforcement of a Convention award will be refused on public policy grounds (see In Leap Investments Ltd v Emerging Markets Special Solutions 3 Ltd  Bda Lr 38). Any public policy grounds relied upon by the Bermuda court will be based upon recognised public policy grounds as a matter of Bermuda law.
Currently Bermuda does not provide for class-action arbitration or group arbitrations. There are no reported decisions on the arbitrability of class-action or group arbitrations; however, the Bermuda courts are likely to follow English common law authorities on such issues.
See 7.3 Powers and Duties of Arbitrators and 7.4 Legal Representatives.
Litigation funding – from US and UK-based funders – is prevalent in Bermuda for impecunious claimants with meritorious claims, and there is judicial authority to support the position that such funding arrangements are valid as a matter of Bermuda law (see Stiftung Salle Modulable and Ruti Stiftung v Butterfield Trust (BDA) Ltd  BDA LR 13). There are no reported judgments dealing with third-party funding in the context of a Bermuda arbitration, although we are aware that funding is reasonably common.
Consolidation of separate arbitral proceedings is only available with the agreement of the parties.
No third party can be bound by an arbitration agreement or award without its consent. Non-parties to an agreement cannot be compelled to arbitrate. There is no provision in the 1993 Arbitration Act to compel a third party to arbitrate a dispute. Therefore the only way a third party can be compelled is by invoking the assistance of the Bermuda courts. This mechanism is provided for in Section 35 of the 1993 Arbitration Act, but it is mostly designed to compel witnesses to give testimony or produce documents, or to secure an interim remedy such as an injunction or the detention, preservation or inspection of any property which is the subject of the arbitration.
The Model Law does not currently provide a framework for the addition of third parties to an arbitration. Generally, joining third parties can only occur with the consent of all parties concerned in the arbitration.
However, under common law there are examples of a third party that did not sign a contract being allowed to arbitrate disputes relating to a contract it is not a party to, by: