Globeop Fin Servs v Titan

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 25 April 2014
• Court: Grand Court (Cayman Islands)
• Date: 25 April 2014

Grand Court, Financial Services Division

(Smellie, C.J.)

GLOBEOP FINANCIAL SERVICES LLC and GLOBEOP FINANCIAL SERVICES (CAYMAN) LIMITED

and

TITAN CAPITAL GROUP III LP and NINE OTHERS

N.P. Dunne for the plaintiffs.

Case cited:

(1) Masri v. Consolidated Contractors Intl. Co. SAL, 2011 (1) CILR 79, applied.

Legislation construed:

Arbitration Law 2012, s.72(5): The relevant terms of this sub-section are set out at para. 9.

Foreign Arbitral Awards Enforcement Law (1997 Revision), s.6: The relevant terms of this section are set out at para. 9.

s.7: The relevant terms of this section are set out at para. 9.

Grand Court Rules (1995 Revision), O.11, r.1(1):

‘Provided that the writ does not contain any claim mentioned in Order 75, rule 1(3) service of a writ out of the jurisdiction is permissible with the leave of the Court if in the action begun by the writ-

. . .

(m) the claim is brought to enforce any judgment or arbitral award.’

O.73, r.31: The relevant terms of this rule are set out at paras. 16 and 24.

Arbitration-foreign arbitral award-leave to enforce-no reliance on ground for refusal to recognize foreign arbitration award under s.7(2) disclosed in ex parte proceedings on basis of defendant”s unproved objections to enforcement proceedings in awarding country-court may grant leave to enforce award but delay enforcement until defendants served with order under GCR, O.73, r.31(6) and given opportunity to apply for enforcement to be set aside

Arbitration-foreign arbitral award-leave to enforce-service out of jurisdiction-under GCR, O.73, r.31(1)–(2), court may grant ex parte application to serve proceedings out of jurisdiction-leave to be granted unless reason to think award impeachable under Foreign Arbitral Awards Enforcement Law (1997 Revision)

The plaintiffs made an ex parte application for the enforcement of a US arbitration award.

The plaintiffs provided administrative services for the defendants, who disputed the fees which they had been charged. This was referred to an arbitrator in New York, who made an award in the plaintiffs” favour. The plaintiff made the present application and, as some of the defendant funds were based in the United States, applied for leave to serve the enforcement proceedings out of the jurisdiction.

The plaintiff submitted that, under the Arbitration Law 2012, s.72(5), the court was required to recognize all foreign arbitral awards whether or not the awarding country was a party to the Convention on Recognition and Enforcement of Foreign Arbitral Awards 1958 (although the United States was in fact a party). Further, the arbitration had been validly conducted and no procedural or jurisdictional challenges had been raised with the arbitrator. The defendants had briefly opposed the award in US enforcement proceedings on the grounds that the plaintiffs had behaved fraudulently, their legal representatives had been subject to a conflict of interest, and certain criticisms which they had made against the arbitrator. The US court, however, dismissed these allegations and confirmed the award. There was therefore no reason under the Foreign Arbitral Awards

Enforcement Law (1997 Revision), s.7(2) to refuse to grant leave to enforce the award. It also submitted that leave to serve enforcement proceedings out of the jurisdiction should always be granted unless there was reason to think that the award was impeachable under the provisions of the Foreign Arbitral Awards Enforcement Law.

Held, granting the application:

(1) The court would order the enforcement of the award. The United States was a party to the Convention on Recognition and Enforcement of Foreign Arbitral Awards 1958 and the award would be recognized as enforceable in Cayman, subject to the Foreign Arbitral Awards Enforcement Law (1997 Revision), ss. 6–7 (although the Arbitration Law 2012, s.72(5) had the effect that this applied to any arbitral award whether or not it was a Convention award). The court was therefore required to consider whether there was any reason under s.7(2)–(3) which would entitle it to refuse enforcement, including whether the defendants could prove that any of the grounds in s.7(2) existed. It was arguable that the defendants” objections fell under s.7(2), but these grounds could not be found in the ex parte proceedings simply because the defendants had objected to enforcement proceedings in New York. Mere allegations that such grounds existed were not sufficient to justify refusal of the enforcement and, further, the New York court had rejected the defendants” objections. The court must therefore grant leave to enforce the award. The award could not be enforced, however, until the defendants had been served with the order (under GCR, O.73, r.31(6)) and had had the opportunity to apply...