Bahamian Supreme Court identifies its jurisdictional limits to assist in trust arbitrational proceedings.
Recently there has been a great push to encourage arbitration of trust disputes. Indeed, the Bahamian Trustee Act specifically provides for the arbitration of trust disputes. However, in the recent decision of Matteo Volpi v Delanson Services Limited and Gabriele Volpi dated 7 August 2019 provides important clarification on the jurisdiction limits of the Bahamian Court to assist such arbitrations. Brian Simms QC and Marco Turnquest represented Delanson Services Limited.
In this case, the trust deeds in question provided that the seat of any arbitration would be the Bahamas. However, the parties to the arbitration were all resident outside the Bahamas, there were no trust assets in the Bahamas, the arbitrators were all resident outside the Bahamas, and the arbitration was not taking place in the Bahamas. Notwithstanding this, the plaintiff applied and to the Bahamian court for injunctive relief and sought to leave to serve the action and injunction on the defendants out of the jurisdiction. The plaintiff initially obtained the injunction and leave. However, the defendants applied to discharge the injunction and leave on jurisdictional grounds.
Mr Justice Ian Winder, after a detailed analysis of the law, ruled that the Bahamian Supreme Court had no such jurisdiction to allow service of the out of the jurisdiction of the action and consequently discharged the injunction he initially granted to the plaintiff. Winder J. firmly rejected the plaintiff’s invitation to engage in judicial activism to fill the “lacuna in the rules” and noted that the lack of jurisdiction to provide relief to the plaintiff in this case, “is a matter for the Rules Committee, if not parliament, but not the Supreme Court judge.”
Winder J. carried out a two-prong analysis in his judgment. Firstly, he held that section 55 of the Arbitration Act was not intended to have extraterritorial effect as argue by the plaintiff. Winder J. noted that section 55 itself was limited by its language which states that, the Court in arbitration proceedings has the same powers as it has in ordinary legal proceedings. Consequently, since the Supreme Court does not have the power to grant freestanding injunctive relief in support of legal proceedings taking place outside of the Bahamas, as held by MeesPierson (Bahamas) Limited v Grupo Torras SA 2 ITELR 29, a court in arbitration proceedings could not grant a freestanding injunction in the arbitral proceeding. Secondly, Winder J. held that Order 66 Rule 4 of the Bahamian Rules of the Supreme Court was the only provision that allowed for service out of the jurisdiction concerning arbitrations. This section only allows for service out in limited circumstances, e.g. for the appointment or removal of an arbitrator or to enforce or set aside an award. Winder J. dismissed the argument that Order 11 Rule 8 could provide a vehicle for service out of the jurisdiction of the action and injunction in this case.
Given this ruling, parties to trust arbitration agreements need to be cognizant that notwithstanding that their trust deeds may provide for the seat of any arbitration to be the Bahamas, the Bahamian court will only be able to provide limited assistance where the arbitration is not held in the Bahamas and the parties or assets are not in the Bahamas. Hopefully, the Rules Committee or Parliament will remedy this situation soon.