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A Highlight of Differences Between Bermuda & US Arbitrations

by ~ Rod S. Attride-Stirling (Email) (Web Site)

Arbitration in the U.S. and in Bermuda is dangerously similar. The attributes of each are sufficiently alike so that the practice of one is immediately recognizable as closely related to the other. The challenge, therefore, occurs in discerning where the differences lie. Although the differences may appear small or subtle, their effects can be substantial.

Bermuda has two pieces of arbitration legislation. For purposes here, we discuss the Bermuda International Conciliation and Arbitration Act 1993 (the “Arbitration Act), which generally applies to ‘international commercial arbitrations. The Arbitration Act enacts the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law). Many states have adopted parts of this U.N.-created model as part of their domestic arbitration regime. Bermuda has adopted it in whole.

Some of the Model Law’s fundamental elements include the right to challenge the jurisdiction of the Tribunal and the right to challenge individual arbitrators in limited circumstances, principally where the arbitrator lacks contractually required qualifications, or justifiable doubts exist concerning his or her impartiality. These types of challenges are made first to the Tribunal and then to the Supreme Court of Bermuda (the first-instance trial court). There can be no appeals from this court.

In terms of key differentiators, the leading ones are the make-up and approach of the Tribunal itself. In a Bermuda arbitration, all of the Tribunal members, including the party-appointed members, must be neutral, independent and impartial.

Whilst in the U.S. there is a debate as to whether party-appointed arbitrators should be neutral, outside of the U.S., the norm is that all arbitrators must be neutral. Evidence of partiality is a ground for the removal of an arbitrator under the Model Law.

Further, there can be no ex parte communications with a party-appointed arbitrator. (There is no debate as to when ex parte communications should end. They should never take place!) When appointing an arbitrator, one is permitted to discuss issues as to his retainer and payment and to ensure that there are no client-conflicts of interest. These communications, however, cannot include discussion about the merits of the case, or the arbitrator’s view on a particular factual scenario or point of law.

Bermuda law permits the parties to adopt any procedural rules they wish, subject to not being able to contract out of certain fundamental aspects of the Arbitration Act, in particular certain procedural matters. It is very common to see arbitrations in Bermuda governed by the substantive law of another jurisdiction, but the procedural law of Bermuda. Issues as to arbitrator neutrality and admissibility of evidence are procedural, so will always be governed by Bermuda law. If the contract is silent as to choice of law, then Bermuda conflict of law rules will normally be applied to determine what law governs the contract.

Bermuda follows U.K. and international practice in arbitration. This means that documentary discovery will be limited and focused on specific issues. There is no oral discovery (i.e. no depositions). It is common to use written witness statements which stand as evidence-in-chief (i.e. no direct examination). However there is cross-examination of witnesses at the main hearing.

Bermudian pleadings follow the English practice. Detailed pleadings are required from the outset (bearing in mind that discovery is limited).

Awards must always be written, reasoned awards. The Tribunal has discretion in relation to the issue of allocating costs. The general rule, however, is that costs will be awarded to the winner - i.e. the loser pays the legal costs (including legal fees and arbitration costs) of the winner.

The grounds for challenging an award are very limited: incapacity of a party, failure to give notice of the arbitration, dispute not covered by an arbitration agreement, composition of the Tribunal, or public policy. There can be no appeals of the Award, however, based on mistake of fact or mistake of law. This remains one of the key differences between arbitration in Bermuda and the U.K. In the U.K., one can still, in particular cases, appeal the ruling on a point of law.

One can say, in conclusion, that arbitration is supposed to be a simpler method of resolving disputes - and question whether lawyers simply make this process more complicated than it should be. Further, one can also say that it should not matter at all whether one is arbitrating in Bermuda or the U.S. (or any other place). What matters is getting the “right result. The difficulty with this is that the “right result will vary according to who is defining it. The best that we, as lawyers, can do is to work within an agreed framework, and apply agreed rules and agreed law to the interpretation of the contract under dispute. And so, understanding the framework is crucial. The similarities between U.S. and Bermuda arbitration are much greater than the differences. The key is recognizing the differences. The devil, as often, is in the detail.Choose right replica handbags,replica omega,replica watches and swiss replica watches also can make you shiny.

Rod S. Attride-Stirling is the senior partner at Attride-Stirling & Woloniecki in Hamilton, Bermuda. He may be reached at rod.attride-stirling@aswlaw.com.

 2012 Attride-Stirling & Woloniecki. All rights reserved.

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