New Arbitration Legislation Passed
July 2010
Introduction
The Arbitration Act (42/2009) and the Arbitration (Foreign
Arbitral Awards) Act (43/2009) came into force on May 20 2010. Both
acts are the result of The Bahamas' commitment to adhere to the
recommendations of the United Nations Commission on International
Trade Law (UNCITRAL) in order to develop uniformity and
harmonization in the law relating to arbitral procedures on a
domestic level, as well as the specific needs of international
commercial arbitration practice.
Once a party has established the existence of an 'arbitration
agreement' - defined in both acts as "a separate agreement or an
arbitration clause contained in an agreement"- the provisions of
the acts can be relied on to address all disputes or certain
specified disputes set out in an arbitration agreement.
Arbitration Act 2009
The Arbitration Act 2009 is based on the UNCITRAL Model Law on
International Commercial Arbitration 1985 and its amendments, which
were adopted in 2006.
The act provides a framework for:
- Domestic arbitration proceedings;
- The make-up of the tribunal to hear disputes; and
- The application of laws or rules that will determine the arbitration dispute.
The act also allows parties in certain instances to apply to the Bahamian court to:
- Assist in proceedings;
- Police proceedings; and
- Decide on the legitimacy of arbitration agreements and the subsequent proceedings.
The act also gives the court the power to stay proceedings brought in the Bahamian court to an arbitration agreement pursuant to which the parties had already expressly agreed would be decided.
Role of Bahamian court in arbitral disputes
Pursuant to the provisions of the Arbitration Act, on application
to the Bahamian court, parties may seek to:
- Appoint an arbitrator when the agreed method of appointment has failed;
- Obtain evidence from witnesses;
- Apply interim measures arising out of an arbitration tribunal's ruling.
The act also provides, upon application by a party to arbitral proceedings, methods of policing arbitral proceedings:
- In instances where there is a need for the termination of an arbitrator;
- In instances where a party questions the substantive jurisdiction of the arbitration tribunal to sit on the proceedings or make an award;
- In order to challenge an award as result of a serious irregularity having taken place; and
- In order to enforce arbitral awards in the same manner as a Bahamian Supreme Court award.
Arbitration (Foreign Arbitral Awards) Act 2009
On becoming a contracting state to the New York Convention on
the Recognition and Enforcement of Foreign Arbitral Awards, The
Bahamas was obliged to create legislation to enact the convention
and its provisions regarding the recognition and enforcement of
so-called 'convention awards' which are made in the territory of
another contracting state, and to enforce them in accordance with
the rules of procedure of the territory where the award is relied
upon.
The Arbitration (Foreign Arbitral Awards) Act 2009 and the New
York Convention define a 'convention award' as "an award made
pursuant to an arbitration agreement in a state other than the
Bahamas that is a party to the New York Convention".
The act provides that, upon production of the authenticated
original award and original arbitration agreement, convention
awards may be enforced in The Bahamas in the same manner as
judgments or orders of the Bahamian court. Upon obtaining the leave
from the Bahamian court, all relief and remedies available pursuant
to Bahamian law may be utilized to enforce a convention award
against a party's assets that are in the jurisdiction.
Discretion of court
As with all contracting states, the recognition and enforcement of
a convention award by the Bahamian courts can be refused only in
the specific instances set out in the convention, which are
incorporated into Bahamian law by the act. Recognition and
enforcement may be refused if:
- The arbitration agreement was invalid under the law to which the parties subjected it;
- A party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings; or
- The award deals with subject matter not contemplated by or not falling within the terms of the submission to arbitration.
Furthermore, recognition and enforcement can be refused for public policy reasons in the contracting state.
Comment
The enactment of both arbitration acts confirms The Bahamas'
commitment to modernizing its legal regime related to international
trade by developing and improving its legal framework. By enacting
this legislation, The Bahamas has reinforced its reputation as a
jurisdiction in which international commercial trade agreements can
be relied upon and enforced.
