BAHAMAS Law and Practice Contributed by: Richard Horton and Emma Van Wynen, Alexiou, Knowles & Co.
7.4 Arrest of Vessels Subject to Foreign Arbitration or Jurisdiction While the Bahamian Supreme Court has the power to order the arrest of a vessel even where the underlying claim is subject to a foreign arbitration or jurisdiction clause, if an application is made to stay the proceed - ings the court will carefully consider the effect of such clauses and may stay the underlying proceedings if it would be inconsistent with a valid agreement to arbi - trate or exclusive foreign jurisdiction, although the vessel would probably remain under arrest. Claimants may therefore use a Bahamian ship arrest to preserve security while pursuing arbitration abroad, and the Supreme Court will generally support this, provided that the arrest does not unfairly prejudice the ship-owner. The Court will generally try to balance the claimant’s right to security against the parties’ agreement on forum/arbitration, sometimes allowing an arrest to preserve security while deferring the sub - stantive dispute to the agreed forum. If arbitration is commenced in a foreign country after a vessel has been arrested in The Bahamas, the Court will generally maintain the arrest as security for the claimant’s potential award, unless the parties apply for its release. The Supreme Court in those instances rec - ognises that the arrest is a conservatory remedy and separate from the merits of the dispute. If a valid for - eign arbitration is under way, the courts may allow the arrest to continue or require the claimant to provide alternative security depending on the circumstances. 7.5 Domestic Arbitration Institutes Despite not having a dedicated arbitration institute for maritime claims, The Bahamas is a viable seat for international commercial arbitration, including disputes involving shipping and maritime matters. Based on the UNCITRAL Model Law, arbitration in The Bahamas is governed primarily by the Arbitration Act, 2009, and for international disputes also relies on the International Commercial Arbitration Act, 2023. These statutes provide for the conduct of arbitration in The Bahamas, including the recognition and enforcement of arbitral agreements, the appointment of arbitra - tors, procedural rules and the enforcement of arbitral awards.
7.6 Remedies Where Proceedings Are Commenced in Breach of Foreign Jurisdiction or Arbitration Clauses A defendant served with proceedings in breach of a foreign jurisdiction or arbitration clause would typi - cally apply (upon notice to the other parties to the proceedings) for a stay of proceedings pursuant to Section 9 of the Arbitration Act, 2009. The application must demonstrate the existence and validity of any foreign jurisdiction or arbitration clause, and that the dispute falls within its scope. Furthermore, an appli - cation under this rule may not be made unless and until the person served with the proceedings takes the appropriate procedural steps to acknowledge the proceedings against them. For arbitration clauses, the defendant relies on the Arbitration Act, 2009 or the International Commercial Arbitration Act, 2023, requesting the court to compel arbitration. If proceedings have already been initiated in breach of a foreign court clause, the defendant may also seek an anti-suit injunction to restrain the claim - ant from continuing in the wrong forum. Where appro - priate, the defendant can additionally request costs for defending proceedings improperly commenced in breach of the agreement. The court will grant relief unless satisfied that the arbitration agreement or clause is null and void, inoperative, or incapable of being performed. 8. Ship-Owners’ Income Tax Relief 8.1 Exemptions or Tax Reliefs on the Income of Ship-Owners’ Companies The Bahamas is a tax-neutral jurisdiction that specifi - cally does not impose income, capital gains or cor - porate taxes (among others, which are irrelevant in the context of shipping). As a result, both Bahamian- incorporated and foreign-incorporated shipping com - panies enjoy full exemption from corporate income tax on vessel income without the need for a formal tonnage tax or accelerated depreciation system.
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