BAHAMAS: An Introduction to General Business Law: Dispute Resolution

Introduction

Following the implementation of the Supreme Court Civil Procedure Rules, 2022 (CPR; the “Rules”), which came into force on 1 March 2023, both judges and legal practitioners alike have successfully adjusted to the use of the modernised Rules. This is in part due to the extensive Practice Guide, which is essentially the Bahamian version of the UK’s “White Book”, which was issued to promote familiarisation with the Rules.

The Rules are intended (among other things) to ensure that cases are dealt with expeditiously and fairly, and to allot to each of them an appropriate share of the court’s resources. In an effort to improve the efficiency of the judicial system, the CPR reforms also contemplate the use of alternative dispute resolution (ADR), particularly the use of court-connected mediation as part of case management in addition to arbitration. This CPR reform also complements the recent amendments to the legislative framework to support ADR, including proposed draft legislation to support domestic and international mediation, the enactment of the UNCITRAL Model Law (through the International Commercial Arbitration Act, 2023) and amendments to the Arbitration Act of 2009 (by the Arbitration (Amendment) Act, 2023).

Many agree that the implementation of ADR, particularly court-connected mediation, will undoubtedly relieve the stress on the civil justice system, and await its utilisation with eager anticipation. It is expected that the related practice direction will be issued, and the mediation centre launched, in 2025.

In 2024, court management was significantly improved by the Supreme Court (Electronic Filing) Rules, 2023 (the “Filing Rules”) being brought into force. For the first time, the Supreme Court of The Bahamas commenced electronic filing, allowing legal practitioners to utilise an electronic platform to file court documents, thus providing 24-hour access to e-filing, reducing paper waste and improving the overall accessibility of court files. During the 2025 opening of the legal year speech, the Chief Justice, Sir Ian R Winder, Kt, indicated that the e-filing platform would also soon be available to the Court of Appeal of The Bahamas (the “Court of Appeal”), by the end of March 2025. The introduction of e-filing has been a “gamechanger” for legal practitioners, allowing court documents to be filed quickly and filed court documents to be accessed efficiently.

The implementation of the CPR, coupled with the Filing Rules and the enactment of the Court Services Act, 2023 (which allows for the courts to be administered by an autonomous body), has modernised and greatly improved the efficiency of the administration of justice in The Bahamas.

Case Law Following the Implementation of the Rules 

In a recent judgment delivered by Chief Justice Winder, the implementation and use of the Rules was comprehensively considered. In Andrew Smith & Sophia Smith v First Caribbean International Bank (Bahamas) Limited and Insurance Management (Bahamas) Limited (“Smith v FCIB”), Chief Justice Winder considered an application for relief from sanctions under CPR Rule 26.8 and made the following observations.

• Rule 26.8 confers upon the court a wider discretion to grant relief from sanctions than existed under its predecessor. The discretion is general and “is to be exercised having regard to all the circumstances of the particular case so as to enable the Court to deal justly with the application”.
• The court and parties to litigation must be cautious when relying on pre-CPR authorities for the interpretation and application of the former Rules of the Supreme Court, as the Rules were intended to represent a major shift in this jurisdiction’s approach to resolving disputes.
• In transitional cases where the parties were previously operating under the Rules of the Supreme Court, the court must take this into consideration when assessing their conduct in the context of procedural decisions, particularly those that may lead to the imposition of a sanction.
• Rule 26.8 is modelled after Rule 3.9 of the English Civil Procedure Rules and, accordingly, English cases in relation thereto are highly persuasive while the courts transition and settle the practice and procedure in relation to applications for relief from sanctions.
• The court employed a three-stage framework to determine whether the applicants in Smith v FCIB ought to be granted relief from sanctions in the event of their failure to comply with an “unless order”.
• The court identified and assessed the seriousness and significance of the “failure to comply with any rule, practice direction or court order”, which engages Rule 26.8(1).
•  The court considered why the default occurred, that is, the reason for the breach.
• The court considered all the circumstances of the case to enable it to deal justly with the application. The court found that the applicants did attempt to comply with the unless order, despite attempts on the part of their counsel being inadequate. If the proceedings were dismissed, the applicants would be “driven from the seat of judgment and will have only a claim against their legal advisers”. However, if the court granted relief from sanctions, the parties would only have to prepare for trial in the usual way. The judge then weighed the circumstances and found it appropriate to exercise the court’s discretion in granting the applicants relief from sanctions.

The Court’s Approach to the Arbitration of Trust Disputes

The December 2023 decision of the Bahamian Supreme Court in Gabriele Volpi v Delanson Services Limited, Matteo Volpi and Simone Volpi 2020/CLE/gen/00632 (The Honourable Mr Justice Loren Klein) (the “Volpi Decision") is a landmark case as it considers The Bahamas’ leading legislative provisions on the arbitration of trust disputes and affirms the Bahamian courts’ pro-arbitration stance.

The Volpi Decision is based on a dispute between Gabriele Volpi and his son, Matteo Volpi, in relation to the distribution of assets and wealth valued at several billion dollars and held by several family trusts. The trustee, Delanson Services Limited, distributed all of the trust assets to Gabriele Volpi, who was also the settlor of the family trusts, on the ground that it was necessary to protect the assets of the trusts. Matteo Volpi, one of the beneficiaries of the trusts, challenged the distribution and took the position that such distribution by the trustee amounted to a breach of the trusts for an improper purpose. The dispute triggered an arbitral clause in the trust instruments, leading to arbitral proceedings and then to litigation related to the challenge of the arbitral awards.

The Volpi Decision interpreted the legislative provisions (initially in the Trustee (Amendment) Act, 2011 and now transposed into the Arbitration Act by the Arbitration (Amendment) Act, 2023) that provide for the arbitration of trust disputes. The court upheld the arbitral awards, which set aside the disbursement of the entire corpus of the trusts to Gabriele Volpi and concluded that such action by the trustee amounted to a breach of trust.

The Volpi Decision confirmed the arbitrability of trust disputes and the scope of recourse available when an award is issued by an arbitral tribunal with seat in The Bahamas and where the governing law of the arbitration was Bahamian law. Moreover, the Volpi Decision affirmed that a Bahamian court would support arbitration instead of litigation where there is a valid arbitral clause. While the court acknowledged that the law relating to trust arbitration is “thin and underdeveloped”, it concluded that the overarching principles pertaining to the role of the supervisory court in arbitral proceedings remained relevant and applicable. This is important not only for the use of arbitration in The Bahamas but also for the development of trust arbitration, locally and internationally.

Developments in the Law of Tort and Contract

In a recent decision from the Judicial Committee of the Privy Council (the “Privy Council”) emanating on appeal from The Bahamas in the case of Great Lakes Reinsurance (UK) plc v RAV Bahamas Limited [2024] UKPC 11 (“Great Lakes v RAV Bahamas”), the Privy Council considered the correct approach to establishing a duty of care in the tort of negligence (or in contract) to prevent theft.

In Great Lakes v RAV Bahamas, the appellant (Great Lakes) was the insurer of a yacht owned by a company. The respondent (RAV Bahamas) was the owner and operator of a marina where the yacht would dock (on the basis of a boat slip lease agreement between the owner company and the respondent). The boat slip lease agreement contained a clause whereby the owner company would be responsible for taking all the necessary precautions to prevent theft. In July 2009, the yacht was stolen from the marina and was not found. Great Lakes, as the insurer, investigated the theft and found that the yacht owner was not responsible for the theft and paid indemnification to the yacht owner while subrogating claims against the respondent.

Thereafter, on its right of subrogation, Great Lakes sued RAV Bahamas, claiming damages for breach of contract and for negligence. At first instance, the Supreme Court of The Bahamas determined that RAV Bahamas owed a duty of care and had breached such duty to the owner company of the stolen yacht. Subsequently, RAV Bahamas appealed to the Court of Appeal, which quashed the decision of the Supreme Court.

On appeal from the Court of Appeal, the Privy Council considered two issues:

• whether the Court of Appeal erred in setting aside the judge’s finding that the respondent, as the owner of a marina, owed the owner of the yacht a duty of care to take reasonable measures to keep the yacht safe from theft; and
• if there was such a duty of care, whether the judge’s finding that the duty had been breached should be upheld.

The Privy Council determined that the Court of Appeal was correct in its decision and that RAV Bahamas did not owe a duty of care to the owner company to prevent the theft of the yacht, whether in tort or in contract. The appeal was dismissed.

It is expected that landmark jurisprudence will continue to emanate from The Bahamas, setting new trends and developing the law, particularly now with the increased efficiency of the administration of justice.