Walkers acts for successful Respondents in important Cayman Court of Appeal judgment on injunctions in support of foreign arbitrations

Walkers acted for the successful Respondents in the appeal. The injunction was obtained in support of a Mainland China seated arbitration administered by the China International Economic and Trade Arbitration Commission ("CIETAC") in Beijing (there is also a related HKIAC arbitration).

This is the first appellate decision examining the Grand Court's jurisdiction to grant injunctive relief in support of a foreign arbitration under section 54 of the Cayman Arbitration Act 2012. The Court of Appeal has confirmed the scope and utility of the Grand Court's powers to support foreign arbitrations through interim relief where necessary to ensure an effective arbitral process, notwithstanding the availability of emergency arbitration as an alternative avenue for relief. 

Whilst parties are incentivised to comply with emergency arbitral awards so as to set the right tone in an arbitration, the judgment recognises that there are circumstances where it is clearly advantageous to seek a directly enforceable injunction from offshore courts rather than using the emergency arbitration procedure.

John Crook, a partner in Walkers' Insolvency and Dispute Resolution practice in Hong Kong, commented: "The Cayman courts have long been at pains to emphasise their pro-arbitration policy. This decision recognises the important reality that effective support sometimes requires the court to act rather than deferring to emergency arbitration. Given the frequency with which arbitrations concern Cayman Islands domiciled vehicles or assets, confirmation of the ability and willingness of the Cayman courts to grant interim relief in appropriate cases is an important reassurance for parties and arbitration practitioners seeking to preserve assets." 

Although untested, emergency arbitral awards are likely to be capable of being enforced in the Cayman Islands (and indeed other offshore jurisdictions). However, even though an emergency arbitral award may be obtained in a matter of days or weeks, where assets are located offshore it is often more efficient to go straight to the jurisdiction where they are located, particularly where those assets may be under immediate threat, thereby avoiding the additional time and parallel proceedings that would be required to obtain recognition of the emergency arbitral award.

There are other circumstances which may make the pursuit of injunctions appropriate; for example injunctions can be obtained:

on an ex parte basis (whereas practically all emergency arbitration mechanisms exclude ex parte relief);
against third parties (i.e. entities and individuals that are not parties to the relevant arbitration agreement, e.g. where there has already been some form of dissipation or assets are held on trust for a party to an arbitration); and
to preserve assets offshore against which a party may wish to enforce after a favourable arbitral award has been handed down.
Nick Dunne, John Crook, Victoria Raymond, Christina Lo and Rebecca Moseley of Walkers acted for the successful Respondents in the appeal and instructed Stephen Moverley-Smith KC of XXIV Old Buildings. Weiheng Chen and Draco Ng of Wilson Sonsini Goodrich & Rosati act as Hong Kong counsel to the Respondents (the Claimants in the underlying ongoing HKIAC arbitration).

For further details of the Court of Appeal’s decision, please read our client advisory here. Click to view a copy of the judgment