The Cayman Islands has developed a framework for the enforcement of foreign judgments, including arbitral awards, which has long been recognised as friendly to those wishing to enforce judgments or awards against assets, or entities, located within the jurisdiction. This is often attributed to the desire to advance the Cayman Islands' reputation as a creditor friendly financial services centre. However, as much as the available procedural mechanisms can facilitate easy enforcement in the Cayman Islands, the process is not always straightforward, particularly when the judgment debtor is unwilling (or unable) to satisfy its obligations as prescribed by the judgment or award.
After summarising the existing procedural frame work for the enforcement of foreign judgments and arbitral awards, this article, with reference to recent judgments from the Cayman Islands Grand Court (Grand Court), highlights challenges that might be faced by an applicant in enforce ment proceedings. We also consider practical strategies that might need to be deployed by the successful applicant in enforcement proceed ings to ensure that some value is recovered after an enforcement order is obtained.
Framework for Enforcement
The procedural framework for the enforcement of foreign judgments is different from the statutory mechanism available for the enforcement of foreign arbitral awards. These are therefore described separately below.
Foreign judgments
The Foreign Judgments Reciprocal Enforcement Act (1996 Revision), provides a statutory regime for the enforcement of foreign judgments. However, as at the date of this article, this legislation only applies to judgments from Australia and its external territories.
For all other jurisdictions, enforcement proceedings in relation to foreign judgments are commenced by filing a writ of summons in the Financial Services Division of the Grand Court. The writ would seek that the Grand Court make an order in terms identical to the relevant foreign judgment. The Grand Court will usually enforce a foreign judgment, thereby creating a debt or liability under Cayman Islands law, if the judgment:
- is final and conclusive on the merits;
- was made by a court of competent jurisdiction;
- is for a definite sum of money (though non money judgments can be enforced if the principles of comity require); and
- is not contrary to public policy (for example, where the judgment relates to taxes, fines, or other penalties).
Importantly, there is a six-year statutory limita tion period for the commencement of actions seeking the enforcement of foreign judgments in the Cayman Islands, starting from the date on which the judgment became enforceable.
If the enforcement action is brought against a foreign defendant, the applicant will need to seek the leave of the Grand Court to serve the writ of summons out of the jurisdiction. This is a separate ex parte application. Assuming that an order granting leave is made by the Grand Court, the defendant will have the opportunity to seek that leave to serve out of the jurisdiction be set aside.
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Originally published by Chambers and Partners Enforcement of Judgments 2024
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.