BAHAMAS Trends and Developments Contributed by: Theominique D. Nottage, McKinney, Bancroft & Hughes
Tested by the Courts, Trusted by Statute: The Bahamas’ Arbitration Regime Comes Into Its Own Introduction Over the past few years, arbitration in The Bahamas has developed considerably, transitioning from an overlooked dispute resolution mechanism in the shad - ow of the national court system, to one that is at the forefront and part of both local and global commen - tary. The Bahamas, a jurisdiction long known for its arsenal of financial services products, has become the setting for two of the most closely watched disputes in the offshore arbitration world involving (i) a head - line confrontation between the Government of The Bahamas and the quasi-governmental and munici - pal authority of The Bahamas’ second city – Free - port, and (ii) a family battle over a multibillion-dollar trust. These matters, together with recent Supreme Court and Privy Council jurisprudence and legisla - tive updates in 2023 and 2025, give The Bahamas something rare among small offshore financial cen - tres – a genuine, tested body of arbitration-related jurisprudence and a position as a jurisdiction actively shaping modern arbitration jurisprudence in several important respects. This Trends and Developments article considers what the courts and tribunals have decided, legislative improvements and key takeaways for those doing business in or through The Bahamas. The Government of The Bahamas (GoB) versus the Grand Bahama Port Authority (GBPA) arbitration: public authorities under the microscope While arbitration is most frequently utilised as a dis - pute resolution mechanism for private commercial contracts, the most consequential development in 2026 has nothing to do with private parties at all. The arbitration between the GoB and the GBPA concerned the Hawksbill Creek Agreement (HCA), the 1955 agreement between the GoB and the GBPA that not only created the city of Freeport as a 50,000-acre free trade zone, but also granted the GBPA wide-ranging authority over licensing, immigration, customs, utili - ties and development approvals within Freeport. The long-brewing dispute arose from the GBPA’s disagree - ment with the GoB as to the scope of the GBPA’s rights under the HCA (particularly in relation to the imposition and collection of fees), the extent of the GoB’s regulatory powers, and the financial obligations between the GBPA and the GoB.
In 2024, the dispute came to a head, and under the Arbitration Act 2009, the GoB commenced arbitral proceedings against the GBPA seeking, inter alia, BSD357.144 million (by the GoB’s account) from the GBPA for administrative expenses incurred in the Port Area (Freeport) between 2018 and 2022 along with pre- and post-award interest. The GBPA denied any liability to the GoB and made a substantial counter - claim against the GoB with allegations that the GoB (through successive administrations) had breached various provisions of the HCA, either through legis - lation or through its policies, ultimately affecting the rights of the GBPA, and as a result, the GBPA was entitled to damages and/or declaratory relief. The arbitral proceedings were presided over by a three-member arbitral tribunal comprising a former Chief Justice of the Cayman Islands and two senior English jurists. A Partial Final Award was issued on 27 February 2026, with the arbitral tribunal dismiss - ing the GoB’s headline claim for BSD357.144 million in its entirety while the majority of the GBPA’s claims against the GoB were also dismissed save for one narrow point, namely that the GoB failed to approve proposed environmental bye-laws for Freeport that the GBPA had first proposed two decades ago. Even with this limited success, the arbitral tribunal lim - ited any damages that the GBPA could claim for the GoB’s breach of the HCA to losses suffered after 5 May 2018 on the basis of the six-year limitation period and invited the parties to make further submissions on damages, leaving that and the allocation of costs to a later phase. The public reaction to the GoB and GBPA arbitration illustrates why this case matters well beyond its mon - etary stakes. The Bahamas’ Prime Minister, the Hon. Philip E. Davis KC, described the arbitration to Parlia - ment as a “game changer” that confirmed that Free - port’s licensees are ultimately subject to Bahamian sovereignty, while the GBPA told its own licensees that the award “did not fundamentally alter the status quo” and left the existing governance framework – the HCA – intact. Both perspectives of the arbitration can be true at once, but for arbitration practitioners, three things stand out. Firstly, the GBPA, created more than 70 years ago, was required to submit to binding arbi - tration over matters of public governance, signalling
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