British Virgin Islands

Introduction

Enforcing an arbitration award in the British Virgin Islands (BVI) is a straightforward but precise process that demonstrates the jurisdiction’s commitment to adhering to international arbitration standards.

The BVI, renowned for its status as a leading offshore financial centre and for its robust commercial legal framework, has established a seamless regime to ensure the efficient recognition and enforcement of arbitral awards.

The BVI Arbitration Act 2013 came into force on 1 October 2014, after the BVI acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (New York Convention). The Act integrated the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (1985), with amendments. The Act contains special provisions on the BVI International Arbitration Centre (IAC) (Part XII), with the BVI IAC Rules applicable if selected by the parties in the arbitration agreement.

It is clear from the posture taken that the BVI has a pro-enforcement approach to arbitration awards. Given the volume and scale of commercial transactions within the jurisdiction, and the popularity of arbitration internationally within the business community, the stance of the BVI courts towards enforcement is unsurprising, making the BVI seat more appealing for parties.

A noteworthy feature of the Act is that it aims to maintain confidentiality of arbitration-related court proceedings. Disclosure of information relating to arbitral proceedings and awards is prohibited, subject to limited exceptions. The court is required not to make orders for publication of a judgment unless the parties agree.

Part I: what can be enforced?

Subject to the conditions referred to below, arbitral awards (whether domestic or foreign) are enforceable in the BVI.

The Act provides no express distinction between domestic and foreign awards, so the same enforcement regime is typically applied for arbitral awards made inside the BVI or outside of it (apart from some procedural differences as explained below). The Act, however, differentiates between convention awards (an arbitral award made in a state or territory which is a party to the New York Convention: Part X, Division 1) (convention awards) and arbitral awards (the Act does not define what an arbitral award is, but it is fair to say that this award would be a non-convention award, ie, an award not made in a New York Convention contracting state: Part X, Division 2) (non-convention awards).

As with many other signatories to the New York Convention, parties have found that enforcing arbitral awards in the BVI is easier than enforcing foreign judgments.

There is little to no limitation concerning the types of arbitral awards that are enforceable in the BVI, but it must be emphasised that generally only awards that are binding on the parties are enforceable.

In addition to enforcing monetary awards, a party can enforce awards containing injunctions (the parties must have agreed that the arbitral tribunal could make such an order). Partial awards are generally not subject to enforcement; however, the court is able to enforce part of the award (AB Ltd, CD Ltd and EF Ltd v GH Limited, para 49) if that part is relevant to the BVI, provided the matters are separable. Awards containing decisions on matters not considered at arbitration may also be enforced to the extent that the award contains decisions on matters submitted to arbitration that can be separated from the matters not submitted (ss83(3) and 86(4) of the Act).

Third-party funded foreign arbitral awards, though not mentioned in the Act, are generally enforceable in the BVI, provided they meet the usual legal requirements for enforcement under the Act and the New York Convention. The key considerations for enforceability focus on the legitimacy and binding nature of the arbitral award itself, rather than the source of funding for the arbitration.

Orders on interim measures: enforceability

Maintaining the status quo of assets prior to a final award being made is essential to any commercial matter where there is an asset flight risk. Obtaining a final award that cannot be enforced serves no purpose and the Act has contemplated this.

Pursuant to s43 of the Act, the court is empowered to grant an interim measure upon the application of any party in relation to any arbitral proceedings which have been or are to be commenced in or outside the BVI. The court has the power to grant interim measures; however, it may decline to do so. The court may take the view that the interim measure is currently the subject of arbitral proceedings and thus would be more appropriately dealt with by the arbitral tribunal (s43(4) of the Act).

In the case of international commercial arbitral awards, the court will decline to grant the interim measure if the measure is incapable of being enforced within the jurisdiction (s43(5) of the Act).

The court may grant a relief even if the arbitral proceedings will not give rise to the cause of action in the BVI and the relief is not ancillary to arbitral proceedings in the BVI (s43(6) of the Act). The court is empowered to also make any consequential order it determines necessary in addition to the interim measure. It is crucial to emphasise that any decision under s43 is not subject to appeal (s43(10) of the Act).

Article 27 of the BVI IAC Rules (Interim Measures) provides that the arbitral tribunal has the power to grant interim measures at the request of a party, and said measures are available to be made by the tribunal at any time prior to the issuance of the final award. The measures may be used to maintain the status quo, prevent action likely to cause prejudice to the arbitral process or current imminent harm, preserve assets, and/or preserve evidence that is material and/or relevant to the resolution of the dispute.

Emergency awards: enforceability

Under the BVI IAC Rules 2021, the position of emergency arbitrator has been introduced (Appendix 1). This allows a party to seek an urgent interim or conservatory measure prior to the formation of the arbitral tribunal without needing to make an application in court. The appointment of an emergency arbitrator is time sensitive and must be done within two days from the date of receiving the request. The emergency arbitrator is required to give a decision within 14 days from the date of receipt of the file, unless the parties agree otherwise to extend the time, or the secretariat approves any such extension at the request of the emergency arbitrator. The decision of the emergency arbitrator shall be made in the form of an order and is binding on the parties who voluntarily undertake to comply with it. The award is not a final one and can be revoked, modified, or terminated upon the request of the party, thus rendering it unenforceable. Note, however, that the cost aspect of the order is final and accordingly a party may proceed to have same enforced.

Part II: resisting enforcement

Section 79 of the Act outlines the circumstances under which a party may apply to the court to set aside an arbitral award. A party making this application must provide proof that:

• A party to the arbitration proceedings was under some incapacity.
• The arbitration agreement was invalid under the law which the agreement was subject to.
• No proper notice was given of the appointment of the arbitrator, or of the arbitral proceedings.
• The party was unable to present its case.
• The award deals with disputes not contemplated by the agreement.
• The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties.
• The award is contrary to BVI public policy, and the award is not capable of settlement by arbitration under the laws of the BVI.

The burden is on the applicant to show that the award should be set aside (s79(2)(a) of the Act). However, in relation to the final bullet above, the court can refuse enforcement of its own volition (s79(2)(b) of the Act).

An application for setting aside may not be made after three months have elapsed from the date on which the party making that application received the award (s79(3) of the Act).

In some instances, the court may order that the setting-aside proceedings be suspended for such period it deems appropriate to allow the arbitral tribunal an opportunity to resume arbitral proceedings or such other action which, in the opinion of the arbitral tribunal, will eliminate the grounds for setting aside the enforcement.

In the BVI, non-parties to arbitral proceedings generally do not have the standing to seek annulment of an arbitral award. The right to challenge or seek the annulment of an arbitral award is typically reserved for the parties directly involved in the arbitration. This is consistent with the principle of party autonomy in arbitration, where the arbitration agreement and subsequent proceedings bind only the parties who consented to it.

Part III: enforcing foreign awards

To successfully enforce any arbitral award in the BVI the applicant must comply with the requirements of ss83 and 86, which provide:

• The parties to the arbitration agreement had the requisite mental capacity and were not under some incapacity under the law applicable to the parties.
• There is a valid arbitration agreement (the agreement was made under the law agreed by the parties or where no agreement existed concerning the law governing the arbitration agreement, the agreement was subjected to the law of the country where the agreement was made).
• Proper notice was given regarding the appointment of the arbitrator and the convening of the arbitral proceedings.
• Parties were allowed the opportunity to present their respective cases.
• The award made was directly relevant to the terms of, and contemplated by, the arbitration agreement.
• Arbitral proceedings were conducted as contemplated by the arbitration agreement or the law of the country where the arbitration took place, and the composition of the arbitral tribunal was in accordance with the same.
• The award binds all the parties and has not been set aside or suspended by the tribunal.
• The award is not contrary to BVI public policy, and the award is capable of settlement by arbitration under the laws of the BVI.

Unlike convention awards, the enforcement of which may not be refused except for non-compliance with the above requirements (s86 of the Act), there is one further requirement in relation to non-convention awards:

• There is no reason whereby the court would consider it unjust to grant the order (s83(2)(c) of the Act).

The burden is on the defendant to show that the award is not enforceable. However, in relation to the penultimate bullet above, the court can refuse enforcement of its own volition (ss83 and 86 of the Act).

Required evidence for recognition and enforcement of an award

Part X of the Act governs the recognition and enforcement of foreign awards. The Act provides that a convention award can be enforced either by commencing an action in court or by applying to seek leave of the court; a non-convention award can only be enforced by seeking leave of the court. Said application is made to the Commercial Court of the Eastern Caribbean Supreme Court.

Depending on the court’s availability, the application for leave to enforce the award may take up to four months to be heard.

Once leave has been given, the award has the same character as a judgment or order of the BVI court and can be enforced using the remedies provided under the Eastern Caribbean Supreme Court Civil Procedure Rules (EC CPR) Part 4.

To recognise and enforce an arbitral award in the BVI one must comply with the requirements of EC CPR r43.12. This rule requires that a fixed date claim form and a supporting affidavit be filed, and the affidavit must contain the following information:

• The original or certified copy of the award and, if applicable, a certified English translation.
• The original or certified copy of the arbitration agreement.
• The date and place of the arbitration proceedings.
• The amount of interest, if any, which has become due under the award up to the time of the application.
• A statement to the best of the deponent’s information and belief that the claimant is entitled to enforce the award, the award has not been satisfied, and the amount of the award which remains unsatisfied.

If the court is satisfied with the evidence presented and grants leave to the applicant, the order must be served on the debtor, who can apply to appeal or set aside the decision. If the party against whom enforcement is sought is a foreign defendant, the claim must be served out of the jurisdiction pursuant to EC CPR r7.3(5).

Enforcement of arbitral awards

Subject to the leave of the court, the award is enforceable in the same way as any judgment or order issued by the BVI court (ss59(1) and 81(1) of the Act).

Once the order sought is made, the applicant can utilise all local enforcement measures against assets located within the BVI. These measures include orders for seizure and sale, garnishee orders, charging orders, appointing a receiver, etc.

Enforcing a foreign award may take several months, especially if the hearing is contested, so it is always best to apply for enforcement as soon as reasonably practicable in the circumstances.

If satisfied that there has been non-compliance in obtaining the enforcement order, the court will set it aside. The authority of AB Ltd, CD Ltd and EF Ltd v GH Limited provides guidance on setting aside orders of enforcement in the BVI.

A party wishing to set aside an enforcement order should apply to the Commercial Division of the High Court (Qu Haiping v Window of Trade International Limited and Others) as soon as is reasonably practicable (typically once an enforcement order is served) and prove to the court the basis upon which the enforcement order should be set aside.

Instead of challenging enforcement in the BVI court, the aggrieved party may instead opt to challenge the award with the “competent authority” (usually the court) under the laws of the jurisdiction which governs the seat of the award and apply for the award to be set aside. If proceedings on setting aside the award are commenced, the BVI court may adjourn enforcement proceedings (Qu Haiping v Window of Trade International Limited and Others) and may, on application, order the aggrieved party to give security. A decision to adjourn or order the provision of security cannot be appealed.

Please note that a dissatisfied party in the case of a non-convention award may appeal the decision of the court, but leave must first be obtained (s81(3) of the Act). Enforcement of convention awards is not subject to appeal.

Securing enforcement

Locating the assets within the jurisdiction is essential to enforcement proceedings. Accordingly, it is recommended that prior to enforcement a search is conducted of share registers and other repositories of information. In certain cases, it may be possible to apply to the court for a Norwich Pharmacal order against the registered agent in the BVI.

The procedure for repatriating sums awarded after obtaining an enforcement order in the BVI involves several key steps: executing the judgment by identifying and seizing assets; converting those assets to liquid funds if necessary; and, finally, transferring those funds out of the BVI. On the provision of the court order a party should have no issues remitting the funds from this jurisdiction to theirs.

Part IV: enforcing domestic awards

Save for variations as outlined below, the regime for the enforcement of domestic awards is the same as foreign awards.

Under the EC CPR r43.10, the domestic award is an award issued by an outside body, ie, any authority within a territory or member state (under EC CPR r2.4, “member states” means: Antigua and Barbuda; Commonwealth of Dominica; Grenada; Saint Christopher and Nevis; Saint Lucia; and Saint Vincent and the Grenadines. The “territories” means Anguilla, Monserrat, and the Virgin Islands).

The general rule is that an application for permission to enforce or register a domestic award may be made without notice but must be supported by evidence on affidavit (unless provided otherwise by law). Together with an affidavit, the applicant must provide the court with the following documents and information:

• an award or a copy of it
• address for service of the documents on the person against whom the award is sought to be enforced
• in the case of a monetary award, certify the amount remaining due to the applicant

Once registered, the award can be enforced in a similar vein to a BVI court judgment.

Conclusion

Overall, the BVI continues to be a leading pro-arbitration destination. The framework for enforcement of arbitral awards is solid and the approach taken by the court underscores the jurisdiction’s commitment.