Table of Contents
- Introduction
- Background
- Key provisions of the International Commercial Arbitration Bill 2018
- Conclusion
Introduction:
In the present Post Covid-19 climate, international commercial arbitration is poised to increase its popularity as a mechanism for the resolution of commercial disputes. Today, The Bahamas is in full gear to reinforce its footprints in the Americas as a seat and venue of choice by the imminent enactment enactment of the International Commercial Arbitration Bill 2018, (“Bill 2018”).
The Bill 2018 is based on the UNCITRAL (United Nations Commission on International Trade Law) Model Law and entrusts certain powers to the Permanent Court of Arbitration. (“PCA”) based in the Hague. This new approach mirrored to a certain extent on the Mauritius International Arbitration Act 2013[1], will be the first of its kind to provide certain powers to the PCA in the Caribbean region. The seeds for the proposed legislation were sown several years ago and it is interesting to briefly examine the historical background that led to the proposed Bill 2020 in The Bahamas despite having a relatively new Arbitration Act of 2009[2].
Background:
In 2009, The Bahamas sought to update its antiquated arbitration laws[3] by enacting the 2009 Act (“BAA Act”), which is based on the UK Arbitration Act 1996[4]. It was during such time that UNCITRAL legal team led by Corinne Montineri along with strategically positioned key stakeholders in The Bahamas commenced a two-decade journey by providing technical support to successive governments of The Bahamas. The primary objective of the collaborative efforts of UNCITRAL and the Bahamian advocates was for The Bahamas to become a Model Law jurisdiction by implementing UNCITRAL Model Law on International Commercial Arbitration 1985, as amended in 2006 (the “Model Law”). As we already know that the Model Law was developed to address disparities in national laws on arbitration – disparities which are a frequent source of concern in international arbitration, where at least one of the parties is, and often both parties are, confronted with foreign and unfamiliar provisions and procedures.
The Bahamas being geographically situated between North and South America just 50 miles from the coast of Florida is surrounded by civil law jurisdiction countries. Although it offers an ideal venue to establish a regional hub, it is not sufficient to attract potential international end users to include The Bahamas as a seat of arbitration when drafting contracts. This is due in part to the uncertainty regarding the local laws by transactional lawyers from civil jurisdictions when advising their clients about the arbitral process and the selection of the seat of arbitration. In that respect, the UNCITRAL Secretariat recommended that the Government of The Bahamas considers, in any revision to the BAA, using the Model Law, which provides for an international commercial arbitration regime that reduces or eliminates the uncertainty highlighted above, and provides a comprehensive legislative text that is known and acceptable to international parties from different legal backgrounds. This was further advocated by Professor Jan Paulsson who was consultant to The Bahamas Financial Services in 2016. Therefore, acting upon the advise of the experts, on 21 November of 2018, The Bahamas International Commercial Arbitration Bill 2018 was tabled in the House of Assembly for consideration and parliamentary review.
Key Provisions of International Commercial Arbitration Bill, 2018
The Bill 2020 is based totally on the UNCITRAL Model Law as amended and is divided into eight parts having fifty-one sections. It reflects the intent of the government of The Bahamas to recalibrate its national agenda to become a seat/place of choice in the arbitral community.
One of the most striking and unique features of the proposed Bill is the Role of the PCA. Section 8 refers to the PCA as the authority empowered to function as a default authority and set aside awards without any form of provision for an appellate mechanism.[5]
Interestingly, there has arisen an inconsistency to the point of reference of "Authority" under section 8 of the Bill. This inconsistency has given rise to a conflict between Section 8 that empowers the PCA to set aside awards and section 48(2) of the Bill where such powers are reserved only to the Supreme Court of The Bahamas including an appropriate body or organ of the judicial system of a foreign court.[6] The ADR Legislative Reform Working group based in the Bahamas is presently working to eliminate such inconsistencies. However, it would be interesting to see whether The Bahamas will expand the powers of the PCA to set aside awards that are normally reserved for domestic courts.
But, on an overall remark, the participation of the PCA is going to be very valuable in making The Bahamasan Arbitration friendly regime and provide consistency in its arbitral process and decisions.
A glimpse of a few other provisions the upcoming legislation has been drawn below:
The Bill contains the general provisions that are set out in the definition and interpretation of key terms under the Bill. The Bill further provides that this Act (currently Bill) shall be based on the Model Law. It is also interesting to note that, while defining the term ‘arbitral tribunal’, the Bill takes into consideration the over debated concern of ‘Emergency Arbitrator’ and this reflects the vision of the Policy Makers given effect by the draftsmen and their desire to make The Bahamas user friendly seat for practitioners.
The other remarkable feature of the Bill has been set out under Section 10 which provides that all agreements subject to the arbitration clause brought before a court shall be referred to arbitration and that arbitral proceedings may be commenced or continued while a matter is pending before the court. This reflects the intention of the draftsman to ensure that there is a legislative mechanism for speedy and cost-effective resolution of disputes.
The Bill also respects the principle of party autonomy as well as the rule of competence-competence i.e., the power of the arbitral tribunal to decide its own jurisdiction to try any matter.
The most interesting aspect of this Bill has been set out in Part-IV that provides for ‘Interim measures and Preliminary Orders’. Under this Part the arbitral tribunal has the power to grant interim measures. Section 20 sets out the conditions under which such an interim measure can be sought from the appropriate forum. According to Section 21 of the Bill, interim measures may also be applied for by way of preliminary orders under which a party may, without notice to any other party, make a request for an interim measure together with an application for preliminary order directing a party not to frustrate the purpose of the interim measure requested.
The Bill also addresses due process to ensure that each party gets an opportunity to benefit from a fair hearing before the arbitral tribunal. The ‘Recourse against Award’ provision has been duly covered under Section 48 where it outlines that an application for setting aside awards can be made by either of the parties on the grounds of:
- incapacity;
- agreement being invalid under laws of The Bahamas;
- the notice of appointment of arbitrator or arbitral proceedings remain unserved to either of the parties;
- the award deals with dispute not contemplated in the agreement; or
- the composition of the tribunal was not in accordance with the terms of agreement.
Therefore, under one or more of the above reasons, an application for setting aside an award can be made before a court. Similar grounds have also been provided under the Bill to refuse ‘Recognition and Enforcement of Awards’
Further, Section 51 is a kind of reservation clause where the ‘Rules Committee’ reserves the right to make rules under this Act (Currently Bill) as and when required.
Conclusion:
Today, The Bahamas has an opportunity to become a preferred international arbitration venue in the Caribbean region an amended International Commercial Arbitration Bill 2020 is scheduled to be tabled in Parliament by the Minister of Financial Services, Elsworth Johnson in the coming months. Chief Justice Sir Brian Moree QC applauded and called The Bahamas’ move towards becoming an international center for arbitration and alternative dispute resolution (ADR) is not only important for the commercial life and economy of the country, but is also a critically important part of the administration of justice and the court system.[7]
The ongoing debates in The Bahamas reminded me of a leading Jamaican arbitrator J.M. Stoppi, who in 2001, lamented the dearth of modern Caribbean regulation of arbitration and stated his hope for eventual reform. Twenty years later, we have witnessed much of an awakening of ADR legislative reforms in certain jurisdictions in the region, but it must be said that there remains a lot more work to be done the trenches to boost and strengthen domestic and international ADR mechanisms.
