CAYMAN ISLANDS Law and Practice Contributed by: Sam Dawson, Peter Sherwood and Denis Olarou, Carey Olsen
11.2 Factors Considered When Awarding Costs The court has wide discretion when awarding costs. The parties’ conduct in the litigation, including any payments into court or offers of settlement may be taken into account. The usual costs award is on the standard basis, which means that costs will only be allowed to the extent they are proportionate to the issues involved, were reasonably incurred, and were reasonable in amount, with any doubts that the taxing officer may have on these issues resolved in favour of the paying party. If costs are awarded on an indemnity basis, all costs shall be allowed except insofar as they are of an unrea- sonable amount or have been unreasonably incurred (and any doubts which the taxing officer may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party). This tends to lead to a higher proportion of cost recovery. However, indemnity basis costs are rarely awarded and usually require a finding that a party behaved improperly. 11.3 Interest Awarded on Costs Interest is payable on costs and runs from the date of the costs order. It is calculated according to the rates set out in the Judgment Debts (Rate of Interest) Rules. 12. Alternative Dispute Resolution (ADR) 12.1 Views of ADR Within the Country Mediation is gaining traction as a method of ADR in the Cayman Islands. However, it remains relative- ly uncommon for large commercial disputes to be resolved by ADR. 12.2 ADR Within the Legal System Save in respect of certain proceedings issued in the Family Division of the Grand Court, ADR is not made compulsory by the court system. There are no pre- scribed sanctions for unreasonably refusing ADR. However, as the court has a wide discretion in con- sidering cost awards, it is conceivable that it might be
persuaded to take unreasonable refusal of ADR into account in appropriate circumstances. Further, in a recent development in August 2022, the Grand Court introduced Practice Direction No 3 of 2022, which provides that a matter, including a Finan- cial Services Division matter, may be referred to judi- cial mediation by the Court at any stage in the pro- ceeding. It remains to be seen how this new Practice Direction is implemented in practice, but it underlines the increasing importance that ADR is likely to play in the future. 12.3 ADR Institutions The Cayman Islands Association of Mediators and Arbitrators (CIAMA) promotes the use of mediation (and ADR generally) in the Cayman Islands. For a detailed treatment of the subject of arbitration in the Cayman Islands, please see the Cayman Islands Law and Practice chapter in the Chambers Interna- tional Arbitration Guide 2025. Domestic arbitration is governed by the Arbitration Act, 2012. Enforcement of foreign arbitral awards is governed by the Foreign Arbitral Awards Enforcement Act (1997 Revision). 13.2 Subject Matters Not Referred to Arbitration Most matters are arbitrable. One significant exception is matters related to insolvency. 13.3 Circumstances to Challenge an Arbitral Award The award may be appealed on a point of law. In addi- tion, the award may be set aside on the basis that the tribunal lacked jurisdiction as well as on the basis of certain serious procedural irregularities and on the basis that the award is contrary to public policy. 13. Arbitration 13.1 Laws Regarding the Conduct of Arbitration
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