Cayman Court Of Appeal Confirms Broader Jurisdiction To Grant Injunctions In Support Of HKIAC And CIETAC Arbitrations

Background

Section 54 of the Act provides:

1. A court shall have the same power of issuing an interim measure in relation to arbitration proceedings, irrespective of whether their seat of arbitration is in the Islands, as it has in relation to proceedings in court.
2. The court shall exercise those powers in accordance with its own procedures and in consideration of the specific principles of international arbitration.

Minsheng appealed an injunction granted pursuant to section 54 of the Act which restrained it from taking any steps to enforce a series of share charges over share capital in a Cayman Islands company, pending the outcome of arbitration proceedings before the Hong Kong International Arbitration Centre (HKIAC) and the China International Economic and Trade Arbitration Commission (CIETAC). Minsheng argued that the Respondents should have sought relief from either the HKIAC or CIETAC arbitrations, or from respective supervisory courts in Hong Kong or Beijing. The appeal focused on whether the Grand Court should have exercised its discretion under section 54 when alternative relief (in those other forums) was available.

Court of Appeal's decision

The Court of Appeal upheld the injunction, concluding that the jurisdiction of the Court to grant injunctive relief in support of foreign arbitrations is broader than in respect of Cayman arbitrations. While the Act is primarily directed towards arbitrations within the Cayman Islands, certain provisions expressly allow the Court to act in aid of foreign proceedings. Importantly, while section 43 of the Act limits the Court's power to grant interim relief to situations where the tribunal lacks power or is otherwise unable to act effectively, the power under section 54 (which is expressly applicable to foreign arbitrations) is not so limited.

In its decision, the Court of Appeal helpfully summarised the nature of the jurisdiction vested by section 54 and the applicable "principles of international arbitration" which are to be considered in an application under that provision. The Court of Appeal observed (at paragraph 79):

The jurisdiction is "open textured and uncategorised in nature", based as it is on Article 17J of the UNCITRAL Model Law on International Arbitration.

• The powers under section 54 are ancillary and must be exercised with caution. Limited curial intervention is both a policy of the Act and a principle of international arbitration.
• Subject to the above, there is no absolute requirement to seek relief from the tribunal or courts at the arbitration seat before making an application for interim relief under section 54.
• If access to the arbitral tribunal or the seat's supervisory court is available, section 54 powers may nonetheless be exercised in appropriate circumstances (such as in urgent cases or where the arbitral tribunal or foreign court would not have power to grant the interim relief), but the burden will be on the party applying for such relief to explain why it was not taken.
• There must be a sufficient connection between the interim measures sought and the foreign arbitration they purport to assist.

Other jurisdictions

The Minsheng decision is broadly consistent with jurisprudence in other offshore jurisdictions – for example, in the BVI, where the Court's power to intervene is also put on a statutory footing by the Arbitration Act, 2013. In January 2019, the Eastern Caribbean Supreme Court (ECSC), handed down an important decision in Koshigi v. Donna Union Foundation BVIHCMAPP 50/2018 which confirmed the BVI Court's similar powers to act in aid of foreign arbitral proceedings, noting that the only restriction upon the Court's ability to assist is statutory: that the Court may decline to act where it considers that relief would be more appropriately granted by the Tribunal. The Appleby BVI team appeared for the successful Respondent in the ECSC – see the previous legal update on the decision here.

Summary

The decision of the Court of Appeal in Minsheng affirms the Grand Court's broad and flexible jurisdiction to support foreign arbitrations through interim relief, recognising that situation will arise where seeking a directly enforceable injunction from offshore courts is advantageous. We would suggest that the decision is a welcome one, and should be reassuring for individuals and companies involved in current or prospective onshore arbitrations (and their onshore attorneys). This decision once again highlights the Cayman courts' continuing modern pro-arbitration stance and its readiness to act when necessary to preserve assets.