What do London, Paris, New York and Tortola have in common? If the ambitions of the British Virgin Islands come to fruition, the answer will soon be that they are four of the most popular seats for international arbitration.
The foundations for the BVI's ambitions were laid on 1 October 2014, when a new Arbitration Act came into force, replacing a tired statute based on the English 1950 and 1975 Arbitration Acts. The old 1976 Act had done faithful service for nearly 40 years, but was not well suited to the demands of the international marketplace and was more appropriate for the resolution of domestic disputes. As a result, arbitrations seated in the BVI were few and far between, perhaps a handful a year if that. The old Act was largely silent on procedural issues, such as timetabling and the language of the arbitration, and on matters such as the liability of arbitrators and umpires for negligence or mistake. While most of the lacunae could be filled or supplemented by importing the common law, that was a cumbersome process. There was a clear need for a modern, user-friendly statute.
Further, not content simply to update the legislation, the BVI took a long hard look at its position in the global arbitration arena and determined that in order to put the territory firmly on the map, it should accede to the New York Convention, enabling BVI arbitral awards to be enforced under the Convention. That accession took place on 25 May 2014 (prior to its accession, while Convention awards could be enforced in the BVI, BVI awards could not be enforced under the Convention in other member states). The New Act, which is based on the UNCITRAL Model Law with some locally driven modifications, caters for modern consumers of BVI professional and corporate services, who increasingly choose to incorporate arbitration clauses in their commercial agreements, including joint venture agreements as well as the constitutional documents of BVI companies.
The stated objective of the New Act is to facilitate and obtain the speedy resolution of disputes by arbitration without unnecessary delay or expense. The Act also creates the BVI International Arbitration Centre (IAC), whose function is to put in place the infrastructure necessary for the conduct of arbitration proceedings and mediation. The role of this body will be critical to the success of the country's objectives, ensuring that the New Act goes hand in hand with the necessary infrastructure to accommodate complex multi-party arbitrations and mediations. The IAC is also able to issue guidelines for the conduct of arbitration proceedings which – although lacking the force of law – will nevertheless be considered best practice. The IAC will be responsible for maintaining a register of approved arbitrators.
The New Act applies to arbitrations under an arbitration agreement (whether or not that agreement is entered into in the BVI) provided that the place of the arbitration is in the BVI. As was the case under the old statute, no attempt has been made to categorize those disputes that are arbitrable, and the common law will therefore continue to govern this. In this regard, the BVI is firmly pro-arbitration, and its courts have expressly approved the approach taken by the English Court in Fiona Trust Corp v. Privalov & Ors: accordingly, absent express wording to the contrary, parties are to be taken to have intended all their disputes to be arbitrated. Any court proceedings commenced in breach of a valid arbitration agreement will be subject to an automatic stay.
Once the necessary infrastructure is in place, the BVI will tick all the relevant boxes and expects to be seen as a cut above many other offshore jurisdictions that have also set up international arbitration centres. It has the advantage of a well-respected commercial court, supported by the Eastern Caribbean Court of Appeal, and with an ultimate appeal to the Privy Council in London. There has sometimes been scepticism regarding countries setting up regional international arbitration centres which then merely lie dormant because the court systems necessary to enforce awards, stay court proceedings and grant interim relief are not up to the job. That is certainly not the case in the BVI, which for decades has handled complex international cases.
The BVI has its own chapter of the Caribbean Branch of the Chartered Institute of Arbitrators and some of the finest specialist litigators. Further, costs are likely to be lower than those in London, Paris and New York.
Finally, the BVI has an additional advantage: it is now a Model Law jurisdiction, with a new statute which will be comfortingly familiar to many.
* Arabella de Iorio is the Managing Partner of Maples & Calder, British Virgin Islands.