CAYMAN ISLANDS Law and Practice Contributed by: Alan Bercow and Jae Shin, Appleby
3.4 Validity An arbitral clause may be considered valid even if the rest of the contract in which it is contained is invalid. Cayman Islands law: • recognises the separability of an arbitration agree - ment and provides that an arbitration agreement shall be treated as a distinct agreement from the agreement of which it forms or was intended to form part (Section 4 (5) Arbitration Act); and • provides that an arbitration agreement is not void, voidable or otherwise unenforceable only because the agreement of which it forms part is void, void - able or otherwise unenforceable (Section 4 (6)). A dispute about the validity of an agreement is arbi - trable pursuant to the arbitration agreement (Section 4 (7)) and, for the purposes of the tribunal ruling on its own jurisdiction, the arbitration clause is to be treated as an independent agreement (Section 27 (2)). 4. The Arbitral Tribunal 4.1 Limits on Selection Parties are free to select arbitrators, subject to chal - • lack of the qualifications agreed by the parties; and • a continuing duty on arbitrators to disclose circum - stances that might reasonably compromise their impartiality and independence (Section 18 Arbitra - tion Act). 4.2 Default Procedures Subject to any default appointment procedure that the parties have chosen either specifically or under their chosen rules, the statutory default procedure is appointment by the appointing authority. In the case of a sole arbitrator, appointment is made by the appointing authority at the request of a party. In the case of two or more arbitrators, appointment is made at the request of a party after the other party has failed to appoint an arbitrator within 30 days of a written request (Section 16 Arbitration Act). lenge before the court regarding: • impartiality or independence;
of letters, faxes, telegrams, electronic communica - tions or other means of communication that provide a record of the agreement (Section 4 (3) Arbitration Act). 3.2 Arbitrability All types of dispute can be submitted to arbitration by agreement unless the arbitration agreement is contra - ry to public policy or to Cayman Islands law (Section 26 Arbitration Act). The basis of arbitrability was considered by the UK Privy Council on appeal from the Cayman Islands courts in FamilyMart China Holding Co Ltd v Ting Chuan (Cayman Islands) Holding Corporation [2023] UKPC 33 in relation to the arbitrability of elements of a just and equitable winding-up petition, and specifi - cally: • subject matter non-arbitrability , where arbitration is barred because statute preserves the right of access to the courts; and • remedial non-arbitrability , where certain remedies are barred, albeit that the dispute is itself arbitrable. In this case, although the granting of a winding-up order was held to be remedially non-arbitral , disputes in a just and equitable winding-up – such as whether a party is in breach of a shareholders’ agreement or whether equitable rights arising out of the relationship have been flouted – may nonetheless be arbitrable even though only the court (and not the arbitral tribu - nal) has jurisdiction to grant a winding-up order. 3.3 National Courts’ Approach The Cayman Islands courts would be likely to take the same approach as the English courts with respect to determining the law governing an arbitration agree - ment. This approach is that, in the absence of an express choice of governing law, the arbitration agree - ment will be governed by the system of law with which it is most closely connected; however, if the parties have chosen a seat of arbitration, then as a general rule the law applicable is the law of the seat (see Enka Insat ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, as discussed in UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30).
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