BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Andrew Emery and Mary-Frances Morris, Emery Cooke
• The jurisdiction joined the New York Convention in 2014, making foreign awards enforceable and BVI awards enforceable abroad. Given the jurisdiction’s reputation for large-scale insol- vencies, the use of arbitration in those insolvencies has seen an increase. The BVI courts are considered to be keen to uphold arbitration clauses although the Commercial Court has held that a creditor’s winding- up petition does not fall under the scope of an arbitra- tion clause and an application to wind up a company was allowed to continue despite an arbitration clause. In general, arbitration in the BVI is most prevalent in contexts such as: • cross-border commercial disputes, where neutrality is valued; • offshore company/shareholder disputes involving international parties; and • emerging areas such as crypto and digital-asset disputes. 3.2 Restrictions on Use of Arbitration Arbitration clauses and agreements are ultimately matters of consent. If parties agree to have any or all disputes that may arise between them decided by way of arbitration, then generally there are no restrictions on what can be arbitrated. However, there are several matters that cannot be agreed to be arbitrated. • Insolvency and liquidation proceedings – applica- tions to wind-up companies and/or appointment of liquidators. • Certain shareholder remedies involving statutory rights (ie, unfair prejudice claims under company law or derivative actions). • Matters relating to public law or regulatory matters. In short, the general rule is that matters that affect third parties or require court supervision, as set out in statute, cannot be decided by way of arbitration. Arbi- tration awards cannot bind third parties in the same way a judgment of the court can. Even where an agreement has been reached to arbi- trate, the court retains important supervisory and sup- portive roles, such as:
• granting interim relief; • enforcing or setting aside awards; and • staying court proceedings in favour of arbitration. 3.3 Advantages of Arbitration The greatest advantage of arbitration is privacy. Pleadings, skeleton arguments and most crucially, the arbitral award itself, remain private and not avail- able to the public. This allows confidential material to be submitted freely and final awards not to damage commercial relationships or reputations. In addition: • Arbitration allows the parties to nominate the arbitrator and/or panel, upon agreement. This also allows experts in certain areas/fields to be appoint- ed to arbitrate specific disputes. • Neutrality – arbitration allows parties from different jurisdictions to avoid a “home court” advantage. • Enforceability worldwide – due to the BVI signing the New York Convention, awards are enforceable in over 170 countries. Conversely, court judgments often need to seek separate recognition in each relevant country. • From an administrative point of view, arbitration offers great flexibility and affords the parties to choose arbitrators, decide procedural rules, time- lines and even language. • Finality – arbitral awards are generally final and binding. There are limited grounds for appeal or challenge which can often avoid lengthy appeal processes associated with litigation. As a result of the above, arbitrations are often more streamlined, which can result in a faster process when compared with litigation which is often at the mercy of busy court timetables. 3.4 Disadvantages of Arbitration Disadvantages of arbitration include the following. • The limited right to appeal can be a huge disad- vantage to any losing party. • Costs can be higher as the parties have to pay for the arbitrator themselves. Arbitrators’ fees can be very high and vary immensely from arbitrator to arbitrator.
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