The Cayman Islands is a leading offshore financial center where the courts are used to dealing with a significant volume of high-value, often multijurisdictional, proceedings.
This type of complex litigation is apt to give rise to related and overlapping claims to grapple with, often as a matter of case management.
This article explores the development of the approach of the courts of the Cayman Islands to case management stays in this context, and suggests that there has been a recent positive shift toward a more robust case management style.
This shift has seen the courts become increasingly willing to stay claims in the interests of fairness, efficiency and proportionality.
These versatile and progressive case management methods further enhance the reputation of the Cayman Islands as a jurisdiction in which court-adjudicated dispute resolution is in keeping with modern business needs and the expectations of a leading offshore financial center.
The question of a case management stay often arises in circumstances where two or more sets of proceedings are afoot that are related in a material way.
These related claims will usually be in different courts, often in different jurisdictions, but occasionally, in the same court.
A variety of factors are at play warranting consideration of a stay of one of the claims in favor of the other(s), including dealing with matters efficiently and at proportionate cost, and importantly avoiding, or at least minimizing, the risk of inconsistent judgments.
In the Cayman Islands, the power to grant case management stays is found in the courts’ general powers of case management, which provide the court with an armory of powers to actively manage proceedings to further the overriding objective of dealing with cases justly.
Decisions on case management stays by the courts of the Cayman Islands are plentiful, particularly in the context of winding up petitions when there are often related foreign proceedings in play.
As there is no statutory test, the courts of the Cayman Islands will look to common law for guidance on when to deploy these case management powers, to impose a stay to regulate concurrent proceedings.
As is common in the Cayman Islands, this includes looking to decisions of the courts of England and Wales.
DEVELOPMENT OF CAYMAN ISLANDS APPROACH
In this area, the Cayman Islands courts have indeed looked to the English common law, with the two leading Cayman Court of Appeal decisions, AHAB v. Al-Sanea in 2010 [1] and Re Nanfong International Investments Ltd. in 2018 [2] following the approach adopted by the Court of Appeal of England and Wales in Reichhold Norway ASA v. Goldman Sachs in 2000, [3] where it was stated that “stays are only granted in cases of this kind in rare and compelling circumstances.”
Nanfong involved the existence of concurrent proceedings in different jurisdictions: Cayman and Samoa. In Nanfong, the Cayman Court of Appeal confirmed that “the proper approach is to apply the principles identified in Reichold without qualification.”
Factors considered by the Cayman Court of Appeal in reaching its decision were the risk of inconsistent decisions, the benefit to the Cayman Court of having a Samoan court’s decision on certain Samoan law matters, any potential disadvantage to the plaintiff, potential duplication of costs and the temporary nature of a case management stay.
As we will see, in two recent decisions of the Grand Court of the Cayman Islands, while the approach in Nanfong, and, therefore, Reichhold, has been applied — as would be expected given that a decision of the Court of Appeal is binding on the Grand Court — the court’s approach to concurrent claims and how they should be viewed in a more modern context does suggest a shift in approach, geared toward the granting of case management stays in appropriate circumstances.
This shift is explicit in the recent decision of New Silk Route Advisers LP, on Feb. 10, [4] in the Grand Court by Justice David Doyle.
In that case, Justice Doyle granted a stay of the Cayman Islands’ proceedings until the determination of proceedings commenced in New York one year before.
The court granted the stay as the New York proceedings were well advanced, and their determination would “significantly assist this court in the fair, just and cost-effective determination of the issues which arise.”
Other relevant factors included saving time and cost for the parties and the best use of court resources. Justice Doyle ended his judgment with an important statement on the manner in which the Cayman Court’s approach to case management stays has developed in the 20 years since Reichhold was decided, stating:
I should add that active judicial case management has moved on considerably since … Reichhold. It may be that Lord Bingham’s ‘rare and compelling circumstances’ comments in Reichhold need to be read in light of the more modern litigation culture in 2022 that requires more active judicial case management than was in its infancy in 1999.
In reaching this view, Justice Doyle described how the law and practice of case management stays has developed over time, recognizing that increased cross-border litigation in particular has meant that the circumstances that justify the granting of a stay are now less rare.
Importantly, there must still be a compelling reason to grant the stay.
In the even more recent Grand Court decision of The Port Fund LP and another, on June 27, [5] before Justice Raj Parker, the statement by Justice Doyle on the manner in which the court’s approach to case management stays has developed since Reichhold was quoted and expressly endorsed by Justice Parker.
In Port Fund, two materially overlapping professional negligence claims had been brought before the Grand Court, involving a number of the same parties, partly on the basis of the ability of individual limited partners to bring derivative actions on behalf of investment funds structured as Cayman Islands exempted limited partnerships, under a local statute.
It was an unusual situation for the court to deal with. Two limited partners had brought the first action on behalf of the fund. Then, six months later, two different limited partners brought almost the same action against one of the same defendants, again on behalf of the fund, in the same Cayman court. In reaching his decision to stay the second action as a whole pending the outcome of the first, Justice Parker expressly asked himself the question “whether in all the circumstances of this case there are strong reasons for granting a stay to further the ends of justice, carefully weighing the benefits and any prejudice which are likely to result.”
In answering that question, Justice Parker sought to balance the private interests of the parties against the wider public interest.
In terms of the public interest, it was relevant that substantially more court time and resources would be used by two sets of proceedings, to the detriment of other court users.
Justice Parker went on to adopt Justice Doyle’s comments in New Silk Route Advisers, while recognizing that they were made in the different context of parallel cases in different jurisdictions, concluding as follows:
I agree that the approach to case management stays needs to be adapted to current times where there is a greater emphasis on the importance of active judicial case management, which leads to efficiency in disposing of litigation. The principle seems to me to apply even more so to the Court controlling procedure in its own jurisdiction in the present circumstances.
CONCLUSION
While it is correct to say that the high-level principles in relation to case management stays remain the same as they have for decades, the recent decisions of the Grand Court in this area certainly suggest a shift in the application of these principles toward a more flexible and progressive approach.
While Reichhold is still good law, the Reichhold principles appear to be applied in a way that, practically, result in case management stays becoming more common.
This may be as a result of the necessary compelling circumstances threshold being more easily met in the modern context, particularly given the significant shift, both in England and in the Cayman Islands, toward a focus on efficiency and proportionality since the decision in Reichold some 22 years ago.
This subtle yet noticeable shift in approach is to be welcomed in an ever-globalizing world where we will inevitably see an increasing need for the court to flex its case management muscles to ensure an efficient, cost-effective and just coordination of related litigation across multiple jurisdictions.
It may be that when the Cayman Islands Court of Appeal is given an opportunity to
consider the law in this area, the rare element of this statement of principle falls away.
The court is well used to considering complex cross-border matters and has shown itself to be moving with the times in terms of judicial case management, being prepared to deploy robust case management solutions in order to deal with cases justly in the modern context.
Importantly, in the broader context, this only goes to highlight the Cayman Islands as a modern and sophisticated jurisdiction in which to do business and to litigate.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients. It is for general information purposes and is not intended to be and should not be taken as legal advice.
This article is for general information purposes and is not intended to be and should not be taken as legal advice.
For further information, please contact:
Tony Heaver-Wren, Partner, Appleby
theaverwren@applebyglobal.com
[1] AHAB v. Al-Sanea, 2 CILR 289.
[2] Re Nanfong International Investments Ltd., 2 CILR 321.
[3] Reichhold Norway ASA v. Goldman Sachs, 1 WLR 173 (CA).
[4] New Silk Route Advisers LP, unreported, FSD 278 of 2021. [5] The Port Fund LP and another, unreported, FSD 383 of 2021.
