The BVI has taken significant steps in the last decade to develop and promote its role in international arbitration. The BVI Arbitration Act (the Act), which is modelled on the UNCITRAL Model Law, came into force on 1 October 2014. In November 2016, the BVI International Arbitration Centre opened its doors with its rules based on 2010 UNCITRAL Arbitration Rules. It is a modern and technologically effective framework that was well prepared for the remote hearing requirements necessitated by the Covid-19 pandemic. Most commercial court hearings continue to be conducted remotely, although a return to in-person hearings is currently being contemplated (at least for trials). Aside from attracting parties to arbitrate in the BVI, the framework also ensures that foreign arbitral awards are recognised and enforced effectively in the jurisdiction.
BVI acceded to the 1958 New York Convention on 25 May 2014 and the Act together with the Eastern Caribbean Supreme Court Civil Procedure Rules 2000 (the EC CPR) ensure a smooth process for getting awards recognised and enforced in the territory.
The distinction between recognition and enforcement is worth highlighting. Recognition under Rule 43.10 of EC CPR ensures that a foreign arbitral award is registered so that it may be enforced as if it were an order of the BVI Court. While recognition is a prerequisite to enforcement, a successfully registered award does not necessarily need to be enforced. Recognition in itself can be used as a defence in the same or connected matter, for example, to establish res judicata or set off. Enforcement, on the other hand, entails an active step being taken by the judgment creditor to execute the judgment against the debtor.
This article sets out the procedural requirements for getting different types of arbitral awards recognised and enforced in the jurisdiction and highlights some common issues that arise in the process.
New York Convention awards
Convention awards can be recognised and enforced in the BVI either by:
- Commencing an action in the BVI Court suing on the arbitral award
- Commencing an action seeking recognition and leave to enforce the award. Such action may be pursued on an ex parte basis, but must be supported by affidavit evidence:
- Exhibiting the duly authenticated original or a certified copy of the original award (or a certified translation thereof if the award is not in English)
- Exhibiting the original or a duly certified copy of the arbitration agreement
- Giving an address for service on the person against whom the applicant seeks to enforce the award
- If the award is for payment of money, certifying the amount remaining due to the applicant
Prior to any enforcement action being taken, the resulting order must be served on the party against whom enforcement is sought. The service requirements will differ depending on whether service needs to be affected inside or outside the jurisdiction, and in the latter case an application to serve out of the jurisdiction should be made at the same time as the recognition/ enforcement action.
Grounds for refusing recognition/enforcement
The scope for challenging a Convention award is narrower than for challenging enforcement of a non-Convention award (see for example, PT Ventures SGPS SA v Vidatel Limited). The Court may only refuse to enforce a Convention award on specific grounds:
- Incapacity of a party to the arbitration agreement
- Invalidity of the arbitration agreement
- Lack of proper notice of the arbitration or appointment of the arbitrator, or where a party was unable to present their case
- The award deals with matters that do not fall properly within the scope of the arbitration
- The composition of the arbitral tribunal or the procedure employed was not in accordance with the agreement of the parties or the law of the country where the arbitration took place
- Where the award is not yet binding on the parties, or it has been set aside or suspended in the jurisdiction in which it was made
Enforcement may also be refused if the Court finds that the subject matter of the award is not capable of settlement by arbitration under BVI law or if the award contravenes the public policy of the BVI.
The burden of proof is on the party against whom the award has been made to show that one or more of the above grounds applies.
When seeking to enforce a nonConvention award, a party does not have the option, unlike when seeking to enforce Convention awards, to commence an action in the BVI High Court suing on the award. In order to enforce a non-Convention award, a party must apply for recognition and leave to enforce the award.
The grounds for refusing to enforce Convention awards summarised above, also apply to non-Convention awards. However, the Court is also able to refuse to enforce a non-Convention award if it determines that it would be “just to do so”.
This is a wide ground for refusal not available in relation to Convention awards.
Once an award is recognised and permission to enforce it in the BVI is granted, the award is enforceable in the same manner as a judgment or order of the Court. There are a number of enforcement mechanisms in the BVI where an arbitral award requires the payment of a sum of money including:
- Charging orders
- Liquidation proceedings (nonpayment of an award is a ground for insolvency as it relates to an undisputed debt)
- Appointment of a receiver
- Orders for the seizure and sale of goods
- Garnishee orders
Enforcement in the BVI often targets share interests in BVI registered companies. Helpfully, the practice has developed for a provisional charging order over BVI shares to be granted at the same time as recognition/ enforcement. This allows for the applications to be “packaged” into a cost efficient single hearing. Other interim measures such as an injunction can also be bolted on concurrently as well as the application to serve out of the jurisdiction.
Overall, the framework is extremely judgment creditor friendly and assists in ensuring that a debtor who avoids payment does not render himself judgment-proof.
This article was originally published with ThoughtLeaders4 FIRE Magazine.