BAHAMAS Trends and Developments Contributed by: Theominique D. Nottage, McKinney, Bancroft & Hughes
itself, fall within the scope of a properly drafted arbitra - tion clause, and that Bahamian courts regard finality as a feature of the bargain rather than a technicality to be circumvented by a well-resourced party. The Volpi case matters because it confirms the enforceability of trust arbitration clauses, gives trustees confidence that awards will not easily be reopened, provides cer - tainty for HNWI establishing Bahamian trusts, and positions The Bahamas as one of the leading juris - dictions for the arbitration of trust disputes. While other offshore jurisdictions have struggled with the arbitrability of trust disputes, The Bahamas, through its jurisprudence and legislative amendments (to be discussed below), has taken the lead. Guidance from the Privy Council: RAV Bahamas v Therapy Beach Club Another notable case emanating from Bahamian courts and forming part of arbitration-related juris - prudence is the case of RAV Bahamas Ltd v Therapy Beach Club Incorporated [2021] UKPC 8 (the “RAV Bahamas case”). In this case, RAV Bahamas leased land on the island of Bimini to Therapy Beach Club for a restaurant and beach club for a period of three years with an option to renew for three years subject to rents being agreed. RAV Bahamas constructed the restau - rant and beach club, but Therapy Beach Club alleged that the work was not properly completed. Prior to the expiration of the lease, RAV Bahamas demolished the restaurant and beach club and evicted Therapy Beach Club while related court proceedings were still pending. The parties referred the resulting dispute to ad hoc arbitration before a sole arbitrator, who was a Retired Justice of the Bahamian Supreme Court. The sole arbitrator found that RAV Bahamas had wrongfully evicted Therapy Beach Club and awarded the latter damages totalling BSD9,670,000, compris - ing BSD6.8 million for consequential loss of prof - its over six years (including the three-year optional renewal period), BSD370,000 in special damages and BSD2.5 million in exemplary damages. The sole arbi - trator calculated the loss of profits by accepting the expert evidence submitted by Therapy Beach Club which calculated the loss at BSD12 million. The sole arbitrator then reduced it by one-third to exclude a rejected claim, and by a further 15% because the expert’s figures were based on memory without docu -
mentary support. Consequently, RAV Bahamas chal - lenged this award. RAV Bahamas challenged the award under Section 90 of the Arbitration Act 2009 (which is the Bahamian equivalent of Section 68 of the English Arbitration Act 1996) on the grounds of serious irregularity. The main complaints were that (i) the arbitrator failed to address whether Therapy Beach Club was entitled to dam - ages for the renewal period, given that no notice of renewal had been given and the renewal clause was arguably uncertain and unenforceable, and (ii) the sole arbitrator’s one-third and 15% deductions were not supported by evidence and the parties were not given the opportunity to make representations in relation to the quantum of damages. In the Privy Council’s decision, the challenge by RAV Bahamas was allowed. The Privy Council held that, while it is good practice to make separate and express allegations, consideration and findings of substantial injustice, this is not a mandatory requirement of Sec - tion 90 of the Act – “Undue formalism should not be required” (Paragraph 72). It was further held that it is sufficient that substantial injustice be established and found as a matter of substance. Thus, it was found that the sole arbitrator’s failure to address the lease renewal issue constituted a serious irregularity caus - ing substantial injustice. Similarly, the fact that the one-third deduction was made without giving parties an opportunity to address it also constituted an irregu - larity. While the 15% deduction was acceptable as the weakness in the expert evidence was apparent, the matter was remitted to the sole arbitrator accordingly. As Section 90 of the Arbitration Act 2009 is materially identical to Section 68 of the English Arbitration Act 1996, the RAV Bahamas case has become required reading well beyond The Bahamas – it is now the leading modern statement on serious irregularity chal - lenges generally and cited regularly in English-seated arbitrations. For Bahamian practitioners, the case is a useful two-sided lesson: it lowers the pleading bar for a genuinely meritorious serious irregularity challenge, while confirming that the substantive threshold – an irregularity that is self-evidently unfair, not merely an alleged error of law dressed up as procedural unfair - ness – remains a high one. To the global community, it
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