Rupert Bell
Partner
Cayman Islands
What are the three key takeaways from the decision?
- Compulsion where proportionate: The Grand Court has expressly confirmed that it possesses an inherent jurisdiction to compel parties to participate in ADR where the order does not impair the essence of the right to a fair trial, it pursues a legitimate aim and is proportionate.
- Discretionary power grounded in utility: The Grand Court's power to compel ADR is discretionary and, when deciding whether to exercise its discretion, the Court will ask if ADR has a real prospect of furthering the overriding objective.
- Plan ADR early to manage risk: Parties to litigation should seek to plan ADR early and pragmatically as refusal to engage in ADR may carry costs exposure depending on context and reasonableness.
What test will the Grand Court apply when deciding whether to order compulsory ADR?
The Grand Court held that it may, under section 11 of the Grand Court Act and its inherent jurisdiction to manage proceedings, make case management orders requiring parties to attempt alternative dispute resolution where three conditions are met:
- The order does not impair the essence of the right to a fair trial;
- It pursues a legitimate aim such as saving cost, promoting efficient resolution, and narrowing issues; and
- It is proportionate to that aim.
In so doing, the Grand Court expressly adopted the Churchill tripartite test. In applying that standard, the Court emphasised that any ADR order must not impair the essence of the right to a fair trial and must be proportionate, preserving parties’ ability to proceed to trial if ADR does not resolve the dispute. Treating Article 7(1) of the Cayman Bill of Rights as equivalent to Article 6(1) ECHR (per R v Anderson [2014] 2 CILR 60), the Grand Court considered Churchill’s Article 6 analysis directly persuasive in the Cayman Islands. The Grand Court also rejected the argument that the Judicial Mediation Scheme displaces inherent powers and, given limited judicial capacity and recusal risks in a small judiciary, cannot be a complete answer. Instead, the Grand Court held that its inherent power co exists with the Grand Court Rules and the judicial mediation scheme and is exercised consistently with the overriding objective and GCR O.25 r.3(i), which encourage directions facilitating ADR.
Why did the Court refuse to order mediation in this case?
In this case, the Grand Court declined to compel mediation on the facts. The Grand Court held that the dispute, between Limited Partners with c.98% economic interest and the General Partner of a
multi billion dollar Cayman exempted limited partnership, was already set for a January 2026 trial amid parallel Delaware litigation, with entrenched positions about control. In his judgment, Justice Asif KC concluded there was no realistic prospect that a mediation a month before the trial would succeed and rather that it would distract from trial preparation on a highly compressed timetable, outweighing any likely benefit under the overriding objective.
The Grand Court, therefore, dismissed the General Partner's summonses seeking compulsory mediation.
What are the practical implications of the judgment and what factors are likely to influence whether ADR will be compelled?
As a result of the judgment, Cayman litigants can expect more active judicial encouragement and, in suitable cases, compulsion of ADR under the Grand Court’s inherent jurisdiction, subject to proportionality and fair trial safeguards. This sits alongside, not beneath, the Grand Court Rules’ emphasis on facilitating ADR and the standard direction that parties actively consider settlement.
It is also important to note that the Grand Court's power of compulsion remains discretionary and fact sensitive. In analysing whether to make an order compelling the parties to engage in ADR, the Grand Court noted that the list of potential considerations raised in Churchill, including timing pressures, case complexity, parallel proceedings, cost, parties’ resources and representation, and realistic prospects of success provide some examples of relevant criteria. However, the Grand Court declined to lay down a fixed checklist and instead held that the ultimate test must be whether compelling participation in ADR has a real prospect of furthering the overriding objective by bringing about a fair, speedy and cost-effective solution to the dispute and the proceedings. In that regard, the Grand Court gave particular credence to the judgment of Sir Geoffrey Vos in Churchill whereby it was indicated that it is not the balance of probabilities test which should be applied, but the lower standard of a real prospect of a useful outcome.
In this matter, the Grand Court reserved costs, however, the standard direction and English authorities indicate that unreasonable refusal to engage in ADR may attract costs consequences in an appropriate case.
What is the position with respect to compulsory ADR in the British Virgin Islands?
The British Virgin Islands High Court (Commercial Division) sits within the Eastern Caribbean Supreme Court and is governed by the ECSC Civil Procedure Rules (2023). Similarly to the Cayman Islands, whilst the Rules strongly encourage settlement and empower judges to manage cases proactively to further the overriding objective, there is no requirement for parties to engage in ADR either before commencing proceedings or during their course nor is there an express provision that permits the Court to compel unwilling parties to participate in mediation or any other form of ADR.
What does the BVI ADR framework look like?
The ECSC CPR emphasise early settlement, narrowing of issues, and proportionate cost. Consistent with CPR Part 26 (case management powers) and Part 27 (case management conferences and pre-trial review), judges routinely explore ADR at CMCs, may give directions that facilitate ADR, and will accede to party-agreed stays to enable mediation or other processes where this furthers the overriding objective. The Court will also enforce contractual escalation clauses where parties have promised to attempt negotiation or mediation prior to litigation, and it will grant stays in favour of arbitration under the BVI Arbitration Act 2013 and the New York Convention framework.
Whilst there is no requirement for parties to take part in ADR before issuing proceedings, the most recent amendments to the CPR in 2023 may be indicative of a greater emphasis on encouraging ADR where appropriate. More specifically, CPR rule 8.16 contemplates that the Chief Justice may, by practice direction, prescribe any pre-action protocols. Although, to date, no ECSC wide practice direction has been issued for the BVI.
In a similar manner to the Grand Court's Judicial Mediation Scheme, CPR Part 38A provides a framework for court-annexed judicial mediation and referrals to mediation, but it is facilitative rather than coercive. Notably, CPR rule 38A.5 expressly provides that a referral to mediation or other ADR process under Part 38A may only be made with the consent of all parties. On its face, this rule would appear to suggest that the consent of all parties is a prerequisite to any court-ordered ADR referral, thereby enshrining consent as the default gateway. With respect to the Judicial Mediation Scheme more generally, given the small size of the BVI judiciary, the practical use of Part 38A may be constrained in some cases, particularly where referral could present recusal risks for the trial judge. Accordingly, the general understanding in practice is that ADR in the BVI remains consensual.
Could the BVI Commercial Court compel parties to engage in ADR?
Notwithstanding the apparent requirement for consent in rule 38A.5, there is nevertheless an argument that this provision is not an absolute bar to compulsory ADR in the BVI. In particular, CPR Part 26 confers broad case management powers on the court, including the general power under rule 26.1(2)(k) to 'take any other step or make any other order for the purpose of managing the case and furthering the overriding objective' and rule 26.2 permits the court to dispense with compliance with any rule where the interests of justice so require. Read together, these provisions furnish the BVI Commercial Court with a broad discretionary jurisdiction to depart from or supplement the procedural framework laid down in individual Parts of the CPR, including the consent requirement in rule 38A.5, where doing so is necessary to further the overriding objective.
Applied by analogy, the Unicorn Biotech reasoning suggests that rule 38A.5 should be understood as governing the specific Part 38A mediation framework, but it does not circumscribe the BVI Commercial Court's wider case management powers or its inherent jurisdiction to stay or direct proceedings so as to facilitate ADR outside that framework. In other words, consent under rule 38A.5 is the gateway to court-annexed mediation under Part 38A, but the court's residual and inherent powers under Part 26 and general law are not necessarily confined by that gateway.
First, statutorily, the closest BVI analogue to Cayman’s section 11 Grand Court Act is section 24 of the Eastern Caribbean Supreme Court Act (Virgin Islands), which confers broad powers to grant injunctions and appoint receivers where it is just or convenient. Whilst section 24 is not itself an ADR provision, it evidences the BVI Commercial Court’s wide statutory toolkit for making coercive or facilitative orders to do justice, sitting alongside the Court’s inherent jurisdiction and the ECSC CPR case-management code.
Second, notwithstanding the similar legislative landscape, drawing on Unicorn Biotech and Churchill, the main basis for any order requiring engagement with ADR is the Court’s inherent control of its own process coupled with its case management powers and the overriding objective, including the ability to stay or delay proceedings to facilitate settlement. In Unicorn Biotech, the Grand Court reasoned, by reference to Churchill, that courts (including the BVI Commercial Court) have a long-established right to regulate their own procedure, may stay or delay proceedings to allow settlement efforts, and can lawfully require engagement in non-court dispute resolution, provided fair-trial rights are not impaired and the measure pursues a legitimate aim proportionately.
Finally, and against that backdrop, the Virgin Islands Constitution enshrines a right to a fair hearing before an independent and impartial court, which is substantively aligned with the guarantees reflected in Article 6 of the ECHR. On that footing, Churchill’s analysis of compatibility, legitimate aim and proportionality is arguably directly persuasive in the BVI both as a matter of constitutional principle and as persuasive common-law authority. Accordingly, where the Churchill tripartite test is satisfied, namely, that the order does not impair the essence of the right to a fair hearing, pursues a legitimate aim, and is proportionate the BVI Commercial Court could, in principle, direct ADR or impose a stay for that purpose by exercising its case management powers under Part 26, thereby dispensing with the need for party consent that would otherwise be required under Part 38A.5.
On that basis, the BVI Commercial Court does, arguably in theory, have the power to direct ADR or impose a brief stay to enable it, either (i) as case-management to regulate the process; or, (ii) based on the reasoning in Unicorn Biotech, as a mandatory order ancillary to the fair and efficient conduct of the litigation, provided the Churchill safeguards are met.
That said, until there is first-instance or appellate authority on this point in the ECSC, the cautious view is that BVI practice remains encouragement rather than compulsion, save where parties have agreed ADR or a statutory stay applies. It is also important to note that Unicorn Biotech illustrates that, even where the power exists, the court may decline to compel ADR on discretionary grounds such as low prospects of success, timing and disruption to a fixed and imminent trial, and overall proportionality
What about costs?
Although on current authority an order compelling parties to submit to mediation or ADR is unlikely, ADR conduct can be relevant to costs. Under CPR Part 65, the BVI Commercial Court exercises a broad discretion and may take account of parties’ conduct, including reasonableness in engaging with settlement opportunities, when making costs orders at interlocutory or final stages. In practice, parties should be prepared to explain their stance on ADR, address timing, confidentiality and privilege, and consider targeted, issue specific mediation where it may shorten or streamline proceedings.
What is the position with respect to compulsory ADR in Bermuda?
The inherent jurisdiction of the Supreme Court of Bermuda corresponds broadly to that of the English High Court and derives from section 12 of the Supreme Court Act 1905, which establishes the Supreme Court as a superior first instance court of record. The Commercial Court was created as a subdivision in 2006. While Bermuda is known as an 'arbitration friendly' jurisdiction, with extensive domestic and international arbitration legislation, a pro enforcement stance on enforcing arbitral awards, an active local branch of the Chartered Institute of Arbitrators, and imminent plans for the opening in 2026 of the Bermuda International Mediation and Arbitration Centre, the jurisdiction lacks formal pre action protocols which would encourage settlement before the commencement of proceedings, and, as in Cayman and BVI, there is no express power for the court to stay proceedings or compel the use of ADR where one or more parties is objecting.
What does the Bermuda ADR framework look like?
Order 1A of the Rules of the Supreme Court 1985 (RSC) introduced an overriding objective for the courts to deal with cases justly and efficiently. RSC Order 1A, rule 4(e) in particular requires the court to actively manage cases by encouraging the parties to use alternative dispute resolution procedures where the court considers that to be appropriate. In terms of the exercise of its wide case management powers, the Court of Appeal for Bermuda has recognised that the Supreme Court may take innovative and ancillary steps to further the overriding objective, even where the rules do not prescribe a specific procedural mechanism, provided that no express rule is contradicted.1
Although, unlike in Cayman, case management directions obliging the parties to consider ADR are currently rare, the court is willing to grant consensual stays at the parties' request to allow time for negotiation and mediation. In certain areas such as divorce disputes, the Bermuda judiciary has actively championed mediation and arbitration as an alternative to court litigation.
Mediation in Bermuda is, however, generally voluntary and cannot be compelled in ordinary civil and commercial proceedings, save that it is mandatory in certain family and employment law and some discrimination claim contexts. Arbitration on the other hand is entirely voluntary and usually contractual in nature (and well used in Bermuda, especially in the insurance industry - 'Bermuda Form' - arbitrations).
Can the Bermuda Commercial Court compel parties to engage in ADR?
While the Churchill and Unicorn Biotech judgments are not binding in Bermuda, they are persuasive signposts. If and when the question arises before the Bermuda courts, a similar analytical framework will very likely inform the debate. The overriding objective in the RSC is broadly similar to that in the English and Cayman rules. The court's inherent jurisdiction to manage the cases before it is wide, and the right to a fair hearing enshrined in the Bermuda Constitution closely aligns with Article 6 of the ECHR.
Given these factors, the prominence of the encouragement towards ADR in the overriding objective, and the growth of mediation in the jurisdiction over recent years, it is conceivable in theory, although not conclusive, that the Commercial Court would find that it possessed the discretionary power to stay proceedings for or compel mediation or some other form of ADR (falling short of arbitration) despite party objections and would adopt the tripartite test in Churchill as to the power's exercise. If that is the case, any such application would be entirely contextual and fact sensitive. As in BVI, until there is first-instance or appellate authority in Bermuda, the cautious working position should remain one of encouragement and facilitation rather than compulsion.
What about costs?
Refusal to engage with ADR may be relevant to conduct issues on a costs application in Bermuda, thereby indirectly encouraging parties to engage in mediation, but it is not automatically determinative as the court retains a broad discretion. Adverse costs orders might include an order withholding costs from an otherwise successful party where it has unreasonably refused mediation or awarding indemnity costs against a party who has unreasonably declined an offer to mediate. The Court of Appeal for Bermuda has cautioned that refusal to mediate does not, on its own, justify depriving a party of interest otherwise due, as distinguished from costs.2
Walkers acted for the General Partner, ATP III GP Ltd. The team advising on the matter was led by partners Shelley White and Rupert Bell with support from associates Laure-Astrid Wigglesworth and Rebecca Moseley. Walkers appeared with Andrew Ayres KC and were instructed by Quinn Emanuel Urquhart & Sullivan, LLP.
- Credit Suisse Life (Bermuda) Ltd v Ivanishvili
- Knight v Warren
