Bringing a claim - initial considerations

Key issues to consider

What key issues should a party consider before bringing a claim?

The key legal issues that a party should consider before commencing a claim are as follows:

  • Does the plaintiff have a cause of action which is recognised in the Cayman Islands?
  • Is the cause of action time-barred due to the application of a limitation period?
  • Does the Grand Court have jurisdiction over the prospective parties to the dispute?
  • Does the Grand Court have subject-matter jurisdiction over the proposed cause of action?
  • will a Grand Court judgment be enforceable in other foreign jurisdictions where the defendant may have assets?
Establishing jurisdiction

How is jurisdiction established?

The Grand Court must have jurisdiction over both of the prospective parties to the proceedings, as well as the subject matter of the dispute between them. Subject-matter jurisdiction may be established automatically due to the nature of the dispute or where there is shown to be a sufficient connection between the cause of action and the Cayman Islands. 

The Grand Court automatically has jurisdiction over natural persons which are resident or domiciled in the Cayman Islands and non-natural persons being registered or incorporated in the islands. It is also possible for the Grand Court to be conferred jurisdiction in a contract, deed or trust under which the parties agree to refer disputes arising under or in connection with the relevant instrument to the Grand Court, notwithstanding that they are not resident or domiciled in the jurisdiction.  

The Grand Court must also be competent to determine the subject matter of the dispute before it. Subject-matter jurisdiction in some instances arises because of the locus of the subject matter falling in the Cayman Islands. However, simply because a dispute involves a company registered in the Cayman Islands, it does not mean that there will automatically be sufficient connection between the jurisdiction and the subject of the dispute to found jurisdiction in the Grand Court.

Plaintiffs can restrain defendants from bringing overlapping proceedings in another jurisdiction by seeking an anti-suit injunction to prohibit defendants from pursuing the overseas proceedings in question.   

Preclusion

Res judicata: is preclusion applicable, and if so how?

The doctrine of res judicata applies in appropriate proceedings in the Grand Court. As a result, an issue that has been litigated in a competent foreign court and which has rendered a decision that is final and conclusive on the merits of the dispute, cannot be re-litigated in the Grand Court. The principle applies equally to judgments and orders of the court that are entered into by consent between the parties, as well as to proceedings in which a court makes a determination. 

For res judicata to apply, the foreign proceedings must:

  • be made by a court of competent jurisdiction;

  • be between the same parties; and

  • concern the same subject matter. 

Res judicata is not available between civil and criminal proceedings (even where they are premised on the same facts), as the civil standard of proof is lower than that of the criminal standard and the formulation of allegations in criminal and civil proceedings invariably differ, thus preventing the pertinent issues from coinciding.

Applicability of foreign laws

In what circumstances will the courts apply foreign laws to determine issues being litigated before them?

Foreign law is a matter of fact in the Cayman Islands, provable by expert evidence placed before the Grand Court. In the absence of evidence being advanced to the contrary, the Grand Court will proceed on the assumption that the foreign law is the same as Cayman law.

Where the proper law of a dispute is the law of a jurisdiction other than the Cayman Islands, the Grand Court will apply that foreign law. Whether a foreign law is the proper law of the dispute will depend on the nature of the dispute. 

In seeking to apply foreign law to a dispute, a party can gain tactical advantages, including: 

  • availing itself of a cause of action that is unavailable under Cayman law;
  • permitting a higher damages award than would otherwise be available from the Grand Court; and
  • securing the benefit of a shorter limitation period to preclude in its entirety the cause of action from being advanced.
Initial steps

What initial steps should a claimant consider to ensure that any eventual judgment is satisfied? Can a defendant take steps to make themselves ‘judgment proof’?

If there are reasonable grounds to believe that a prospective defendant may dissipate assets before judgment can be obtained, plaintiffs may seek interim relief from the Grand Court, including:

  • an interim freezing and disclosure order (see ‘When is it appropriate for a claimant to consider obtaining an order freezing a defendant's assets? What are the preconditions and other considerations?’);
  • the appointment of interim receivers to assets and property in the jurisdiction; and
  • a Chabra injunction (see ‘What other forms of interim relief can be sought?’). 
Freezing assets

When is it appropriate for a claimant to consider obtaining an order freezing a defendant’s assets? What are the preconditions and other considerations?

A freezing order (ie, a Mareva injunction in the Cayman Islands) may be granted by the Grand Court as an interim measure, restraining the respondents from disposing of or dealing with their assets or assets that are alleged to be the beneficial property of the plaintiff, pending the outcome of trial. It must be demonstrated that:

  • the plaintiff has a good arguable case on the merits of its underlying claim;
  • refusing to grant the injunction would involve a real risk that a judgment or award in favour of the applicant would remain unsatisfied (ie, that the defendant’s assets will be dissipated); and
  • it is just and convenient, in all the circumstances, for the court to grant the injunction.

The risk of dissipation is assessed on a case-by-case basis and is more easily established where the Mareva injunction is sought in support of an underlying proprietary claim. 

Pre-action conduct requirements

Are there requirements for pre-action conduct and what are the consequences of non-compliance?

There are no codified pre-action protocols which are applicable in the Cayman Islands. However, the Overriding Objective of the Grand Court Rules is that all matters should be dealt with in a just, expeditious and economical way. Consequently, the court has a wide discretion when it addresses the question of costs, and a party's pre-action conduct may be considered when making an appropriate costs order.

Other interim relief

What other forms of interim relief can be sought?

Interim remedies are available throughout the lifecycle of a claim and in some circumstances may be sought before proceedings are commenced. Interim remedies available from the Grand Court include: 

  • summary judgment;
  • strike out;
  • security for costs;
  • injunctive relief (eg, antisuit, mandatory or prohibitory and including Chabra relief);
  • Anton Pillar orders for the search and seizure of property;  
  • attachment or interim payment orders; and
  • the appointment of receivers to preserve property pending trial, which may include the appointment of receivers in aid of foreign proceedings.
Alternative dispute resolution

Does the court require or expect parties to engage in ADR at the pre-action stage or later in the case? What are the consequences of failing to engage in ADR at these stages?

Parties involved in matters listed in the Civil Division or the Financial Services Division of the Grand Court need not engage in ADR. The court has no jurisdiction to compel parties to resort to arbitration or mediation before proceeding to litigate, but the judiciary and the courts are supportive of ADR in principle.  

Claims against natural persons versus corporations

Are there different considerations for claims against natural persons as opposed to corporations?

Where an action is taken against a natural person rather than a corporate entity, a significant consideration for a plaintiff will be the available resources of the defendant to meet any judgment awarded in the plaintiff’s favour.  

Corporations could potentially have insurance policies which may be relied on to fund the defence of litigation or satisfy claims brought against it for damages. The existence of an insurance policy or the presence of an insurer which may have a right to conduct the litigation will affect the dynamics of the proceedings due to the reduction in the financial exposure assumed by the named defendant. 

Whether a defendant is a natural or non-natural person is also likely to affect the ease with which they may be found and served out of the jurisdiction.     

Class actions

Are any of the considerations different for class actions, multi-party or group litigations?

It is possible for representative actions to be brought in the Grand Court. However, a representative action is sustainable only where the interests of the participants to the action are aligned. Where that is not the case, a defendant could successfully challenge an action on the basis that the interests of the plaintiffs are not sufficiently aligned.   

The additional time required to formulate a class and establish a case in respect of each proposed member of that class places greater emphasis on correctly identifying the limitation period applicable to the proposed action.

Third-party funding

What restrictions are there on third parties funding the costs of the litigation or agreeing to pay adverse costs?

The laws of champerty and maintenance are currently still in force in the jurisdiction. Notwithstanding this, the Grand Court will permit third-party funding of litigation, provided that the terms of funding do not: 

  • corrupt public justice;
  • undermine the integrity of the litigation process; or
  • give rise to a risk of the abuse of process.

The Grand Court will consider the following factors before approving third-party funding arrangements:

  • whether the funder was able to control the litigation;
  • the extent to which the funder could terminate the funding agreement at will or without reasonable cause;
  • the prejudice which may be suffered by a defendant if the funder would not be liable to meet adverse costs orders;
  • the profit which may be made by the funder; and
  • whether the funder is regulated by a professional body with its own rules of conduct (eg, the UK Association of Litigation Funders). 

As regards funding arrangements between an attorney and their client, contingency fee arrangements are not permitted to fund litigation conducted within the jurisdiction. It is possible for an attorney to be engaged in respect of litigation conducted within the jurisdiction on a conditional fee basis.