This country-specific Q&A provides an overview of Litigation laws and regulations applicable in Cayman Islands.
What are the main methods of resolving disputes in your jurisdiction?
Disputes in the Cayman Islands are most commonly resolved through litigation, although the use of mediation or arbitration is not uncommon, for example via the Cayman International Mediation & Arbitration Centre. Judicial mediation has also relatively recently been introduced and the Cayman courts have shown themselves willing to make such an order where appropriate.. It is likely that the Grand Court will increasingly refer cases to judicial mediation where doing so would either further the Overriding Objective to deal with every cause or matter in a just, expeditious and economical way.
What are the main procedural rules governing litigation in your jurisdiction?
Commercial litigation is principally governed by the Grand Court Rules (“GCR”), which were modelled on the Rules of the Supreme Court that governed civil litigation in England and Wales prior to the introduction of the Civil Procedure Rules. The GCR remain in substantially the same form as the former Rules of the Supreme Court, although there are some significant departures which can create traps for the unwary. The GCR are supplemented for financial services litigation by the FSD Users Guide. There are also bespoke procedural rules for winding up proceedings – the Companies Winding Up Rules.
What is the structure and organisation of local courts dealing with claims in your jurisdiction? What is the final court of appeal?
Commercial claims will almost invariably be determined by the Grand Court at first instance (generally within its Financial Services Division), since their value typically exceeds the threshold for Summary Court proceedings (up to KYD $20,000). Appeals from orders of the Grand Court are made to the Cayman Islands Court of Appeal (CICA), and appeals from CICA are made to the Judicial Committee of the Privy Council.
How long does it typically take from commencing proceedings to get to trial in your jurisdiction?
Commercial cases tend to take between 18 months and 2 years from commencement to trial. However, that will depend very much on complexity and the way in which the litigation is conducted. Particularly complex or hard-fought cases may take well over 2 years to reach trial, especially where they involve extensive discovery and substantial interlocutory hearings along the way.
Are hearings held in public and are documents filed at court available to the public in your jurisdiction? Are there any exceptions?
Commercial trials are almost always held in public, given the fundamental principle of open justice. Interlocutory hearings are typically held in chambers, with only the parties and attorneys in attendance; and, although such hearings are not technically ‘private’, any non-party who wishes to observe will require the court’s permission.
Originating processes, judgments and orders are generally published on the judiciary’s website (judicial.ky). Documents which will not ordinarily be published include interlocutory summonses, evidence and written submissions. The court can permit a non-party to inspect a court file and take copies of documents within it, but this is not routine and the non-party may need to show a legitimate interest in the matter before such permission will be granted.
What, if any, are the relevant limitation periods in your jurisdiction?
The limitation periods which apply to the most common causes of action are:
- Breach of contract – 6 years from the date of breach.
- Tort – ordinarily 6 years from the date the damage was suffered, although it is possible for the limitation period to be extended in some cases, subject to an overriding time limit of 15 years; and actions for personal injury, libel and slander are subject to a limitation period of 3 years.
- Breach of trust – ordinarily 6 years, but there is no prescribed limitation period where a beneficiary sues for fraud or fraudulent breach of trust involving the trustee, or to recover trust property or its proceeds from the trustee (to which equitable doctrines such as laches may however apply).
- Actions to recover land – ordinarily 12 years from the date when the cause of action accrued, although a 30-year limitation period applies to claims against the Crown.
- Action on a judgment – 6 years from the date on which the judgment became enforceable.
Where an applicable limitation period has expired, the defendant will be entitled to plead its expiry by way of defence to the claim and avoid liability.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
There are no prescribed pre-action conduct requirements, apart from the pre-action protocol which applies to judicial review proceedings. However, the courts do expect parties to assist with furthering the Overriding Objective by conducting proceedings reasonably and efficiently. As a result, it is not uncommon for parties to commercial disputes to engage in pre-action correspondence before issuing proceedings.
The Overriding Objective is incorporated into the Grand Court Rules and includes requirements to identify the issues in dispute at an early stage, and to help parties to settle where possible. The court may therefore consider pre-action conduct when exercising its very wide discretion to award costs in the litigation.
How are proceedings commenced in your jurisdiction? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
Civil proceedings are generally commenced by the following methods: (i) writ of summons; (ii) originating summons; (iii) originating motion; or (iv) petition (collectively described as originating processes). The choice of originating process will principally be determined by the nature of the relief sought.
The party bringing the action is responsible for service of the originating process. Where the defendant or respondent is within the Cayman Islands, unless otherwise agreed, natural persons are generally served by personal service, and locally registered companies may be served by delivery to their registered office.
Permission to effect service by alternative means such as by email may be granted where service by ordinary means has proved to be impracticable. Where the defendant or respondent is located outside of the Cayman Islands, it will normally be necessary to apply to the court for permission to serve outside of the jurisdiction.
How does the court determine whether it has jurisdiction over a claim in your jurisdiction?
Jurisdiction in the Cayman Islands is primarily territorial, and generally founded on the valid service of proceedings within the jurisdiction. This means that a locally incorporated entity or person residing in the Islands is generally within the court’s jurisdiction as of right, provided that service can be validly effected.
How does the court determine which law governs the claims in your jurisdiction?
The court will generally respect parties’ choice of law governing their commercial relationships, although it can refuse to do so on public policy grounds. In the absence of agreement or in non-contractual claims, the court will apply settled common law principles relating to conflict of laws, including considering where the act giving rise to the claim occurred, or the law with the closest connection to the relevant obligation.
In what circumstances, if any, can claims be disposed of without a full trial in your jurisdiction?
The Grand Court can order that a claim be disposed of without full trial in a number of circumstances, including (but not limited to):
- Judgment in default of acknowledgment of service or defence – where a party fails to file a response document required by the relevant rules within the necessary timeframe, a plaintiff can apply for default judgment
- Summary judgment – when a party establishes that the defence or claim in question has no reasonable prospect of success
- Dismissal on a point of law – where the claim is suitable for determination on a legal point, without the need for a full trial
- Dismissal on the basis of non-compliance – where a party has failed to comply with procedural requirements, such as its disclosure obligations or court orders
- Strike-out – can be sought on a number of grounds including where:
- a party has no reasonable grounds to bring the claim
- the claim is scandalous, frivolous or vexatious
- the claim may prejudice the fair trial of the action
- a party fails to comply with the relevant procedure
- there has been an abuse of process of the court
- Lack of jurisdiction
What, if any, are the main types of interim remedies available in your jurisdiction?
A broad range of interim remedies are available in aid of both domestic and foreign proceedings, including:
- Mareva or Freezing Injunctions – an interim order restraining a party (or non-party which holds assets for a party) from dealing with, or removing, assets from the jurisdiction
- Notification – where freezing orders are too intrusive, notification orders can provide an alternative where, provided that the grounds for a freezing injunction are established, parties will be notified of any proposed dispositions of relevant property
- Norwich Pharmacal – a disclosure order compelling a third party somehow ‘mixed up’ in wrongdoing to disclose certain materials to help the applicant identify and/or pursue a potential defendant to future proceedings, whether those proceedings are to take place in the Cayman Islands or abroad
- Anton Piller – a search and seizure order enabling a successful applicant to enter, search and remove from the respondent’s premises documents or other evidence relevant to a dispute
- Anti-Suit Injunction – orders restraining the bringing or continuation of foreign proceedings, such as in breach of an arbitration clause
- Quia Timet or Prohibitory Injunction – an interim order restraining a party from taking some alleged wrongful action that it has threatened or is carrying on
After a claim has been commenced, what written documents must (or can) the parties submit in your jurisdiction? What is the usual timetable?
Once a claim is commenced, the parties will set out their case through written pleadings. These must contain a statement in a summary form of the material facts on which the party relies for their claim or defence. The usual timeline is for:
- a Statement of Claim to be served within 14 days of acknowledgement of service;
- a Defence to be served within 14 days of service of the Statement of Claim; and
- any Reply is to be served within 14 days of service of the Defence.
These timelines will generally be extended in complex cases, either by agreement or by application to the court.
What, if any, are the rules for disclosure of documents in your jurisdiction? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
In commercial litigation, orders for discovery are normal to ensure the fair resolution of the proceedings. Discovery is given by providing a list of documents in a prescribed form, with inspection of those documents in commercial cases generally given by uploading electronic files to an e-discovery platform. A party can also apply to the court for disclosure of specific documents.
Where an order is made, the parties must disclose any document relevant to a matter in issue in the proceedings which is in their possession, custody or power. The scope of the obligation is broad. ‘Document’ includes anything upon which information is recorded, including all forms of digital files. ‘Possession, custody or power’ covers not just documents which are physically held by the party but also those which the party has an entitlement to a copy e.g. from an agent. The legal test for relevance includes documents which not only may advance or damage a party’s case, but also which may fairly lead the other to a train of inquiry which may have either of those effects.
Documents provided in discovery will be held by the other under an implied undertaking not to use them outside the proceedings. This undertaking will only be released once the documents enter the public domain at trial or by order of the court.
Documents (or parts of them) can be withheld from inspection on the grounds of privilege (both legal advice privilege and litigation privilege), but they must be discovered by being listed on the list of documents. Documents may also be withheld on the grounds of public interest immunity or where giving disclosure may put the receiving party at risk of criminal sanction. Whilst relevant documents cannot be withheld on the basis of confidentiality, generally protocols will be agreed or ordered so as to protect such confidentiality outside of the proceedings.
How is witness evidence dealt with in your jurisdiction (and in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
For applications considered prior to trial, parties will generally give evidence by way of sworn affidavit or affirmation. There are particular rules in relation to the preparation of these documents which must be strictly observed. Witnesses will generally not be required to give oral evidence in relation to interim applications prior to trial.
For trial, witnesses will generally be required to attend to give oral evidence and be cross examined. Witnesses will sign witness statements, which will then be adopted as their evidence when called to give oral testimony. These statements will be served ahead of trial so that advance notice is given of the evidence that will be provided. The court has the power to restrict cross-examination of witnesses to ensure the efficient progress of the trial.
The court can order that a witness be deposed ahead of trial, but this is unusual and would need to be specifically applied for. The court will only make such an order where it is necessary for the purposes of justice. Depositions will only be admissible at trial by agreement or where the court is satisfied that the witness is unable to attend due to death, being outside the jurisdiction, sickness or other infirmity.
Is expert evidence permitted in your jurisdiction? If so, how is it dealt with (and in particular, are experts appointed by the court or the parties, and what duties do they owe)?
Expert evidence is permitted in the Cayman Islands and is routinely given in proceedings before the Grand Court. This type of evidence requires leave of the court or agreement between the parties. The court can appoint an expert of its own initiative, or experts can be appointed by the parties, on a single or joint basis.
Experts are subject to strict duties and, importantly, will owe a primary duty to the court to give unbiased expert testimony. Experts will give their evidence by way of expert reports and will generally be required to attend trial to be cross examined on those reports. Where the parties each have their own expert, the issues in dispute will generally be clarified and narrowed through a meeting of experts and a joint memorandum.
Due to the international nature of the jurisdiction, the courts are well used to considering expert evidence on matters of foreign law.
Can final and interim decisions be appealed in your jurisdiction? If so, to which court(s) and within what timescale?
A decision of the Grand Court is appealed to the Cayman Islands Court of Appeal (CICA). The CICA comprises a panel of eight justices, each of whom will have held high judicial office in either the Cayman Islands or another Commonwealth jurisdiction. The CICA sits in panels of three. Whether a decision is final or interim will generally determine whether leave to appeal is required (for interim decisions) or whether an appeal lies as of right (for final decisions). An appeal may be based on a point of law or, less frequently, on a question of fact or a wrongful exercise of discretion. The CICA will only interfere with an exercise of discretion if it is satisfied that the decision is clearly wrong. It is possible to apply for a stay pending appeal, but such stays will generally only be granted where the appeal would otherwise be rendered nugatory.
As the Cayman Islands is a UK Overseas Territory, the court of final appeal is the Judicial Committee of the Privy Council (JCPC). The Judges of the JCPC consist of the same Judges who sit in the English Supreme Court.
New JCPC rules came into force on 2 December 2024, together with an updated case management portal. Parties must register on the JCPC website to file and receive documents.
There are specified time limits for the bringing of appeals, both to the CICA and then to the JCPC. Once an appeal is filed, this will generally take around 9 to 18 months to be determined. The CICA sits three times a year, but a special sitting can be requested for urgent appeals. Previously, an appeal to the JCPC could take up to 2-3 years to be determined, but now that service of documents and communications are managed through the JCPC portal, it may significantly streamline the appeal process.
What are the rules governing enforcement of foreign judgments in your jurisdiction?
There is specific legislation in the Cayman Islands relating to enforcement of foreign judgments, but this is currently only relevant to certain Australian states and territories. The usual route is therefore under common law principles.
A common law action for the enforcement of a foreign judgment is brought in the Grand Court by writ of summons. Enforcement will be permitted where the relevant foreign court properly assumed jurisdiction, the foreign judgment was not obtained by fraud and there are no reasons of public policy or natural justice for denying enforcement.
The Cayman Islands is a party to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, and it has accordingly enacted specific legislation providing for the efficient recognition and enforcement of foreign arbitral awards.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side in your jurisdiction?
The general rule is that costs follow the event, and so a successful party will usually be awarded a proportion of its costs.
Awards are typically made on a ‘standard basis’, which allows recovery of reasonable costs, including legal fees and disbursements (such as court and expert fees). Recoverability of legal fees is limited to rates capped by reference to the seniority of the counsel engaged, which are typically lower than the rates which will actually have been incurred. Legal fees incurred for foreign lawyers are generally irrecoverable, unless those lawyers have been admitted to practice in the Cayman Islands on a limited basis, such as to act as leading counsel in a particular matter.
Where an unsuccessful party has conducted itself negligently, unreasonably or improperly, costs may be awarded on an ‘indemnity basis’. This allows the successful party to recover substantially all of its incurred costs, limited only by what the court considers to be reasonable in the particular circumstances of the case.
What, if any, are the collective redress (e.g. class action) mechanisms in your jurisdiction?
There is no direct equivalent of a ‘class action’ in the Cayman Islands. However, where a group of parties has a common interest or grievance, a representative action may be brought by one or more of them on behalf of all of the members of that group. Representative actions are only possible where the relief claimed is beneficial to all of the represented parties and where interests among the members of the group are aligned, and therefore relatively rare in practice.
What, if any, are the mechanisms for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings in your jurisdiction?
Third parties can be joined to ongoing proceedings in certain circumstances. Permission from the court is generally required, unless the action was begun by writ and the defendant seeks to join the third party before serving its defence.
Two or more sets of proceedings pending in the same division of the court may also be consolidated if it appears that:
- a common question of law or fact arises;
- the rights or relief claimed are in respect of or arise out of the same transaction(s); or
- for some other reason consolidation is desirable.
As an alternative to formal consolidation, the court has broad case management powers and may order related proceedings to be stayed or case managed together, such as tried at the same time or one immediately after another.
Are third parties allowed to fund litigation in your jurisdiction? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
Yes, third parties can fund litigation in the Cayman Islands in certain circumstances, typically in return for a share of the proceeds if the claim is successful.
Third party funders can be held liable for the costs incurred by the other side. Although costs orders against non-parties such as funders are exceptional, the courts have held that this means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. This is therefore a risk to be considered prior to funding arrangements being entered into.
What has been the impact of the COVID-19 pandemic on litigation in your jurisdiction?
The Cayman Islands was well placed to adapt to the challenges presented by the COVID-19 pandemic, as efforts had already been made to invest in systems allowing for the electronic filing of documents and remote participation in hearings. The online e-filing system has since become the primary method of filing in the Islands and is expected to continue to improve.
What is the main advantage and the main disadvantage of litigating international commercial disputes in your jurisdiction?
The main advantage is the expertise and experience of the members of the judiciary and the attorneys who typically handle commercial litigation in the Cayman Islands. Commercial judges and litigators are accustomed to dealing with complex commercial documents and financial issues, and the novel questions of law which arise (not infrequently) from innovative transactions and parties testing the boundaries of settled law. A significant (if not main) disadvantage of litigating such disputes in the Cayman Islands is that the natural persons involved are typically beyond the territorial reach of the court, and where certain persons (parties or prospective witnesses) are uncooperative, relevant evidence may remain unavailable by the time of trial and/or the costs, complexity and duration of the case may be increased in the quest for any such evidence.
What is the most likely growth area for commercial disputes in your jurisdiction for the next 5 years?
- Insolvency and restructuring: as an incorporation jurisdiction with an established and tested insolvency regime, reliable court system and high-quality professionals, the Cayman Islands is likely to continue to attract a growing share of these matters. This increase is also likely to be enhanced over the next few years by the current challenging global economic conditions and outlook, as well as recent changes in the local legal framework, which was augmented in 2022 to introduce a specialised restructuring regime. Insolvency proceedings are mainly governed by the bespoke Company Winding Up Rules, superseding much of the GCR. Given that 2024 was a busy year for the UK restructuring market, we expect this will also have an effect on restructuring work in the Cayman Islands in the near future.
- Fund disputes: the Cayman Islands is the leading offshore jurisdiction for private equity funds and funds incorporated as Cayman Islands exempted limited partnerships (ELPs) have been steadily rising over the last decade. We are already seeing a subsequent uptick in ELP related disputes in the jurisdiction, which tend to be complex and high value claims between investors and fund managers.
- Cryptocurrency: there is also a growing niche of cryptocurrency work, though no landmark contested cases have yet been determined in the jurisdiction on novel areas of the law relating to these assets. The rapid growth and relative novelty of this area means that the sector is a potential growth area for disputes, particularly during more challenging economic conditions.
What, if any, will be the impact of technology on commercial litigation in your jurisdiction in the next 5 years?
The Cayman Islands is a modern international jurisdiction and has readily adopted technological advancements to aid the efficient and effective management of commercial litigation.
The Grand Court’s online e-filing system allows for proceedings to be conducted entirely paperlessly and remotely. It is anticipated that investments will continue to be made to improve this online portal over the next 5 years to offer commercial litigants a bespoke court file management system, incorporating aspects such as the management of court fees and communications with the court.
The Judicial Administration’s move earlier this year to neutral citations for Cayman Islands judgments and the update to the JCPC’s case management portal also reflects an operational change, which should speed up the reporting and managing of cases.
Due to the generally international nature of commercial litigation in the Financial Services Division, the Grand Court makes ready use of video hearings for interim applications, saving parties significant expense and judicial time. Increasingly, video technology is being used during trial to enable witnesses to give evidence remotely to increase efficiency. It is anticipated that as this technology improves, it will be increasingly implemented to streamline the court process and help to ensure that matters are being dealt with proportionately, whilst maintaining a fair system where witness evidence is still appropriately tested before the court.
For further information, please contact:
Andrew Jackson, Partner, Appleby
ajackson@applebyglobal.com
