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 (i) recognises the separability of an arbitration agreement and provides that an arbitra - tion agreement shall be treated as a distinct agree - ment from the agreement of which it forms or was intended to form part (Section 4 (5) of the Arbitration Act), and (ii) provides that an arbitration agreement is not void, voidable or otherwise unenforceable only because the agreement of which it forms part is void, voidable or otherwise unenforceable (Section 4 (6)). A dispute about the validity of an agreement is arbitrable 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)). Parties are free to select arbitrators, subject to chal - lenge before the court on the ground of lack of impar - tiality or independence, or lack of the qualifications agreed by the parties, with appointed arbitrators being under a continuing duty to disclose circumstances which might reasonably compromise their impartiality and independence (Section 18 of the Arbitration Act). 4.2 Default Procedures Subject to any default appointment procedure which the parties have chosen either specifically or under the rules they have chosen, the statutory default pro - cedure 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 of the Arbitration Act). The appointing authority is either chosen by the parties or designated by the court in default of agreement (Sec - tion 2 (1) of the Arbitration Act). Where the parties fail to determine the number of arbitrators, the default is a single arbitrator (Section 15 of the Arbitration Act). There are no default provisions applicable to multi - party arbitrations. 4. The Arbitral Tribunal 4.1 Limits on Selection
a record of the agreement (Section 4 (3) of the Arbitra - tion 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 of the 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 specifically 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 tribunal) has jurisdiction to grant a winding- up order. This principle was re-affirmed in Peakwave Investment Management Ltd v Energy Evolution GP Ltd (2026), CIGC (FSD) where the court also held that it had jurisdiction to appoint provisional liquidators notwithstanding the stay of a winding-up petition in favour of arbitration. 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, but 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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