AL Thompson Bldg v Beazley
| Jurisdiction | Cayman Islands |
| Judge | (Foster, J.) |
| Judgment Date | 07 July 2011 |
| Court | Grand Court (Cayman Islands) |
| Date | 07 July 2011 |
(Foster, J.)
(1) Agassi v. Robinson (Inspector of Taxes) (No. 2), [2006] 1 W.L.R. 2126; [2006] 1 All E.R. 900; [2006] S.T.C. 580; [2006] 2 Costs L.R. 283; [2005] EWCA Civ 1507, considered.
(2) Everglade Maritime Inc. v. Schiffahrtsgesellschaft Detlef Von Appen m.b.H., The Maria, [1993] Q.B. 780; [1993] 3 W.L.R. 176; [1993] 3 All E.R. 748; [1993] 2 Lloyd”s Rep. 168, considered.
(3) Heaven & Kesterton Ltd. v. Sven Widaeus A/B, [1958] 1 W.L.R. 248; [1958] 1 All E.R. 420; [1958] 1 Lloyd”s Rep. 101, considered.
(4) Lloyd del Pacifico v. Board of TradeUNK(1930), T.L.R. 476, considered.
(5) Merak, The (Owners of Cargo) v. The Merak (Owners), The MerakELRWLR, [1965] P. 223; [1965] 2 W.L.R. 250; [1964] 2 Ll. R. 527, sub nom.T. B. & S. Batchelor & Co. Ltd. (Cargo Owners) v. Owners of SS. Merak, [1965] 1 All E.R. 230, distinguished.
(6) Piper Double Glazing Ltd. v. D.C. Contracts, [1994] 1 W.L.R. 777; [1994] 1 All E.R. 177; (1992), 64 B.L.R. 32; 31 Con. L.R. 149; [1997] Costs L.R. (Core Vol.) 256, considered.
(7) Sagicor Gen. Ins. (Cayman) Ltd. v. Crawford Adjusters (Cayman) Ltd., 2008 CILR 482, referred to.
(8) SPhinX Group, In re, Grand Ct., Cause No. FSD 16/2009, September 30th, 2010, considered.
Grand Court Rules 1995 (Revised), O.62, r.18: The relevant terms of this rule are set out at para. 12.
Legal Practitioners Law (2010 Revision), s.4: The relevant terms of this section are set out at para. 20.
Practice Direction No. 1/2001, Guidelines Relating to the Taxation of Costs.
Arbitration-costs-assessment-GCR, O.62 and Practice Direction No. 1/2001 not applicable-acting ‘judicially’ not to require compliance with detailed provisions of rules and practices of Grand Court
Arbitration-costs-foreign lawyers-no rule or public policy requiring that foreign lawyers in Cayman arbitration, or international arbitration in Cayman Islands, be temporarily admitted and their fees and expenses not otherwise recoverable-‘suit or matter’ in Legal Practitioners Law (2010 Revision), s.4 means court proceedings
Arbitration-costs-taxation in court-when costs of arbitration taxed in court, arbitrator ‘outsourcing’ own function and taxing officer to give effect to his intentions-GCR, O.62 expressly subject to such modifications as necessary and not applicable insofar as inconsistent-notwithstanding r.18, if arbitrator awards successful party costs of foreign lawyers, taxing officer to make assessment on that basis
The applicant company applied for order that an arbitral costs assessment be set aside.
The applicant claimed under insurance policies underwritten by the respondents on the London insurance market. The policies were governed by Cayman law, contained a Cayman jurisdiction clause and provided for arbitration in the event of any dispute. After the respondents declined cover, the applicant commenced arbitration proceedings in the Cayman Islands. The applicant and the respondents each instructed expert solicitors and counsel from London, none of whom was admitted as an attorney in the Cayman Islands, either generally or on a limited basis for the arbitration. The parties” English solicitors and counsel were not instructed by Cayman attorneys and no Cayman attorneys were involved in the arbitration until after the arbitrators” final award.
A preliminary issue was determined in favour of the respondents and the arbitrators awarded them their costs, to be assessed, if not agreed, by the arbitrators. The parties reached agreement on the amount-which
comprised exclusively the fees and expenses of the respondents” English solicitors and counsel-which the applicant duly paid; it did not, at any time, object to such costs on the ground that the respondents” English solicitors and counsel had not been admitted in the Cayman Islands. Following the main hearing, the arbitrators issued their final award, rejecting all of the applicant”s claims and directing the applicant to pay the respondents” reasonable costs of the arbitration proceedings, to be assessed, if not agreed, by the arbitrators. The parties were unable to agree the amount and, in particular, the applicant disputed the respondents” entitlement to recover the fees and disbursements of their English solicitors and counsel on the ground that they had not been admitted in the Cayman Islands; the respondents therefore requested the arbitrators to assess their costs.
On the arbitrators” assessment, the applicant contended that because the arbitration had its seat in the Cayman Islands and was governed by Cayman law, Cayman procedural law and principles relating to the recovery and assessment of costs, as set out in the Grand Court Rules 1995 (Revised), O.62 and Practice Direction No. 1/2001, should be applied by the arbitrators. The applicant relied, in particular, on (i) GCR, O.62, r.18(1), which precluded recovery of a foreign lawyers” fees on taxation on the standard basis unless they had been admitted as an attorney; and (ii) para. 9.4 of the Practice Direction, which precluded the recovery of travel, accommodation and related costs of foreign lawyers. The arbitrators issued a declaratory costs assessment rejecting the applicant”s submissions and declaring that the Rules and Practice Direction of the Grand Court were not applicable.
The applicant made the present application to set aside the arbitrators” declaratory costs assessment on the ground that it was erroneous in law, and remit the assessment of costs to the arbitrators for reconsideration on the correct basis. It submitted that (i) in exercising a discretion, such as in relation to costs, an arbitrator must act judicially which meant that an arbitrator acting in an arbitration which had its seat in and was governed by the laws of the Cayman Islands must apply the principles and practices to be applied by a Grand Court judge; (ii) the arbitrators were therefore bound by GCR, O.62, r.18(1) and para. 9.4 of the Practice Direction; and (iii) moreover, these provisions were based on a public policy that lawyers from other jurisdictions should not be entitled to practise in the Cayman Islands without being admitted, which a judge, and therefore an arbitrator, must observe-this policy was enacted in s.4 of the Legal Practitioners Law (2010 Revision) which provided that a suitably qualified person may be admitted to practise for the purpose of the suit or matter in respect of which that person had been instructed by a local attorney, but not otherwise, the words ‘suit or matter’ being interpreted broadly as including an arbitration.
The respondents submitted that (i) acting ‘judicially’ in respect of costs did not require an arbitrator to apply the detailed provisions of GCR, O.62, but only to observe the broad principles generally applicable to the
exercise of such a jurisdiction, i.e. the generally accepted principles of natural justice (e.g. duty to act fairly, impartially and not perversely) and law (e.g. costs should follow the event); (ii) s.4 of the Legal Practitioners Law did not require a foreign lawyer to be admitted in order to appear in a Cayman arbitration, still less an international arbitration, ‘suit or matter’ being construed as meaning proceedings before this court; and (iii) if any public policy was to be inferred from the Law it was not as broad or extensive as the applicant contended.
Held, dismissing the application:
(1) The GCR, O.62 and Practice Direction were not applicable to the arbitrators” assessment of costs; acting ‘judicially’ in this context did not require them to act in accordance with the detailed provisions of the rules of the court. Alternatively, O.62, r.18 expressly only related to taxation on the standard basis and had no application to a taxation on the indemnity basis-it could therefore have been argued that in awarding the respondents all their English solicitors” and counsel”s fees and expenses, the arbitrators were effectively awarding costs on an indemnity basis (para. 32; para. 36).
(2) There was no public policy that foreign lawyers acting in a Cayman arbitration, or an international arbitration in the Cayman Islands, had to be temporarily admitted and that their fees and expenses could not be recovered if they were not so admitted. ‘Suit or matter’ in s.4 of the Legal Practitioners Law was confined to court proceedings: (i) the section required the person to be admitted to be instructed by a local attorney-though, in an arbitration this would not necessarily be the case-indeed, in the present arbitration, no local attorneys were involved until after the final award; and (ii) it would be illogical to require a suitably qualified lawyer in terms of the Law to be admitted in order to act in relation to an arbitration but not to require others, who might equally have acted in relation to an arbitration, possibly even in the same arbitration, to be admitted (paras. 29–31; para. 36).
(3) Even if the costs of the arbitration were taxed in court, GCR, O.62, r.18 would not have been applicable-O.62 was expressly subject to such modifications as may be necessary. When the costs of an arbitration were to be taxed in court, the arbitrator would simply be ‘outsourcing’ his own function and it was necessary and appropriate for the taxing officer to give effect to the intentions of the arbitrator. Therefore, if an arbitrator in a Cayman arbitration awarded the successful party the reasonable costs of his foreign lawyers, the taxing officer should make his assessment on that basis (paras. 32–34).
1 FOSTER, J.: This application arises out of arbitration proceedings conducted pursuant to the Arbitration Law (2001 Revision) instigated by the applicant, A.L. Thompson Building Supplies...
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