BAHAMAS Trends and Developments Contributed by: John F. Wilson KC, Theominique D. Nottage and Adrienne N. Bellot, McKinney, Bancroft & Hughes
The Bahamas: A Trust Arbitration Haven Long considered an offshore safe haven, The Bahamas continues to set trends as a leading offshore jurisdiction with the increased use of not only commercial arbitration, but also the increased use of trust arbitration as a comple- ment to its diverse cache of financial services products. With legislative provisions for trust arbitration first introduced by virtue of The Trustee (Amend- ment) Act 2011, The Bahamas has always been well positioned to establish itself as a haven for the arbitration of trust disputes. Since the statu- tory introduction of trust arbitration more than a decade ago, The Bahamas has strengthened its legislative framework to support arbitration, generally, and more so particularly, for trust arbi- tration. In 2023, The Bahamas amended its existing 2009 Arbitration Act (the “Act”) to, inter alia, also support the arbitration of trust disputes. For instance, by virtue of the Arbitration (Amend- ment) Act 2023, the defined terms of the Act were expanded and now an administration question is contemplated in the definition of an arbitration agreement. Besides this, the terms “administration question”, “person under dis- ability”, “power holder”, and “protector” are all expressly defined, while the scope of application of the Act has been broadened to cover trust arbitration. This is important, as it allows for leg- islative provisions for trust arbitration to be con- sidered pursuant to the foundational principles of arbitration as contained in the Act. Undoubtedly, trust arbitration does not always neatly fit within the context of commercial arbi- tration, but the amendments do, to an extent, consider the distinction between a dispute mechanism designed for disputes arising from
commercial relationships and how that dispute mechanism can function for disputes arising from fiduciary relationships. For example, Sec- tion 7 of the Act has been amended to disapply the doctrine of separability for the arbitration of trust disputes. The doctrine of separability is a fundamental concept in arbitration that an arbitration clause within a contract is treated as a separate and distinct agreement from the main underlying contract. Of course, the doctrine of separability could not consider an arbitration clause in a trust instrument as a separate and distinct agreement from the trust instrument. The nature of obliga- tions under a trust instrument greatly differs from that of a contract, insofar as it relates to the con- sideration of legal versus equitable obligations as well as privity of contract. Accordingly, that doctrine could not be properly applied in the context of trust arbitration. Additionally, to ensure that the arbitration pro- cess can adequately resolve any trust dispute, the Act confers on an arbitrator all the powers of the court which were formerly the exclusive jurisdiction of judges on the equity side of the court in relation to the administration, execution or variation of a trust or the exercise of any pow- er arising under a trust. The express conferment of such powers ensures that the arbitral tribunal is vested with all the powers needed to effec- tively resolve and remedy any trust dispute and enable an award to bind the trust estate and all beneficiaries. Further, the Bahamas is a party to the 1958 New York Convention and has incorpo- rated the same by virtue of The Arbitration (For- eign Arbitral Awards) Act 2009. This can accord- ingly give all relevant parties in a trust arbitration dispute confidence that any award arising from the arbitration will be enforced and recognised as though it were a judgment of the court, thus
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