BAHAMAS Trends and Developments Contributed by: John F. Wilson KC, Theominique D. Nottage and Adrienne N. Bellot, McKinney, Bancroft & Hughes
making arbitration an even more attractive alter- native to settle trust disputes that are arbitrable. Ultimately, the transposition of the statutory provisions from The Trustee (Amendment) Act 2011 to the Act will allow for the greater devel- opment of jurisprudence in this specialised area of arbitration. The Bahamas is one of very few jurisdictions that has incorporated the arbitration of trust disputes by statute and is globally recog- nised as a leading jurisdiction for the arbitration of trust disputes. There is a tremendous amount of excitement and anticipation in The Bahamas’ legal and financial services sectors that this potential opportunity to resolve trust disputes outside of the typical court proceedings could lead to The Bahamas securing its position as best in class in the Americas. The local excitement for the arbitration of trust disputes only grew once the Bahamian Supreme Court had made its ruling in Gabirele Volpi v Matteo Volpi Consolidated Appeals 2020/APP/ sts/00013, 2020/APP/sts/00018 (the “Volpi deci- sion”), a very comprehensive judgment of Klein J. Not least because this case also drew inter- national attention (from international users of arbitration and global law firms alike), but also because it is anticipated that the court’s decision will fuel significant growth in this area and make The Bahamas a mecca for trust arbitration. In the recent Volpi decision, the Bahamian trust arbitration legislative regime was subjected to a rigorous analysis by Klein J. As to the facts of the case, the acrimonious dispute that led to the arbitration, and consequently the Volpi deci- sion, occurred between a father and son. At the centre of the controversy was the distribution of significant assets held by several family trusts. The trustee distributed the entirety of the trust assets to the settlor, on the ground that it was
necessary to protect the trusts’ assets. One of the beneficiaries challenged the distribution by the trustee on the grounds that it constituted a breach of the trusts and was for an improper purpose. This dispute led to arbitral proceed- ings, and consequently, litigation proceedings followed as the arbitral awards were challenged. In a 600-paragraph judgment, Klein J. upheld the awards made by an esteemed arbitration panel, led by Lord Neuberger, which set aside the exercise by the trustee of its distributive powers, distributing the entire corpus of the trust to the applicant on the grounds that the distribu- tion was in breach of trust. The judgment made clear the arbitrability of trust disputes and the scope of recourse available against Bahamas- seated awards. Klein J.’s judgment was upheld on appeal to The Bahamas Court of Appeal. Moreover, the Volpi decision, in great detail, emphasised the pro-arbitration position of the Bahamian Court in response to the “root-and- branch” attack on the arbitral awards issued by the arbitral tribunal. Klein J. addressed each of the issues raised, with specific reference to the fact that the case law in trust arbitration is “thin and underdeveloped”. Recognising that the case law is as such for trust arbitration, in his detailed approach, Klein J. emphasised the overarching principles governing the approach of the supervisory court to arbitral challenges. Reference was made to Section 3(c) of the Act, which contained the limited court intervention principle, and its paramountcy acknowledged. That is to say, Bahamian courts support arbi- tration, therefore, Bahamian courts will support trust arbitration. This is important to users of arbitration as they will want their arbitrations seated in jurisdictions where the supervisory courts will not interfere or derogate from the fundamental principles of arbitration.
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