Bahamas: A General Business Law: Dispute Resolution Overview

The dispute resolution landscape in The Bahamas continues to evolve in response to emerging global trends, particularly as it relates to the growth of arbitration and ADR. This evolution has been enhanced and supplemented by the increasing use of AI in the practice of law, the importance of which is demonstrated by the recent issuance of Practice Direction No 3 of 2025 regulating the use of generative AI (GenAI) in court proceedings.

Importantly, the Supreme Court Civil Procedure Rules 2022 (CPR) incorporate the use of ADR as part of the case management framework. This inclusion complements the existing legislative regime intended to support arbitration and ADR in The Bahamas, which continues to evolve to ensure compliance with the UNCITRAL Model Law. This evolution is evidenced through the progressive amendments to the arbitration legislative framework, commencing with the Arbitration Act 2009 (the “Act”) and followed by the 2023 and 2025 amendments.

The Arbitration (Amendment) Act 2025

The interpretation section has been expanded to include new and revised defined terms for “party”, “administration question”, “arbitration agreement”, “dispute”, “person under a disability”, “protector”, “minor”, “parties in relation to a trust”, “patient” and “trust arbitration”.

Most of the amendments are directly related to the arbitration of trust disputes, with provisions now expressly confirming, inter alia, that an arbitral clause in a trust instrument amounts to an arbitration agreement, the power of the arbitral tribunal to appoint a person to represent the interests of any person in a trust arbitration and that the trustee can recover its costs of the arbitration.

In addition to the amendments to support trust arbitration, the Act has reinstated the provisions relating to the challenge to an arbitral award and the right to an appeal on a point of law, while repealing and replacing Section 22 of the Act (that directly related to the open justice principle) to facilitate court-connected hearings in private. This further enhances the confidentiality of arbitral proceedings in The Bahamas as the Act already sanctioned the improper disclosure of confidential information.

It is hoped that the 2025 amendments to the Act will strengthen The Bahamas’ position as a leading offshore jurisdiction while supporting its progress as a preferred arbitral seat in the Americas.

The Developing Jurisprudence

Alongside the legislative developments in arbitration, the Bahamian Court has issued another decision in the ongoing legal battle between Gabriele Volpi and his son, Matteo Volpi in Gabriele Volpi v Delanson Services Limited, Matteo Volpi, Simone Volpi and Isabella Volpi – Supreme Court Action No 2025/CLE/gem/00668 (the “Removal Application”).

By way of background, this case stems from a trust dispute (first arising in 2016) in relation to the distribution of trust assets valued at several billion dollars and held by several Bahamian trusts. The dispute proceeded to phased arbitral proceedings – (i) the liability phase and (ii) the quantum and valuation of assets phase. A partial award was issued in relation to the liability phase in June 2020.

Under Section 35 of the Act, Gabriele applied to the Court for the removal of the Arbitral Tribunal (consisting of the Rt Hon The Lord Neuberger of Abbotsbury, Dr Georg von Segesser and Professor Avv Alberto Malatesta). In so doing, he sought a stay of the second phase of the arbitral proceedings pending the determination of the Removal Application, citing wasted costs and prejudice to him.

In support of the Removal Application, Gabriele argued that the Arbitral Tribunal had made several decisions which, in his view, gave rise to serious, justifiable doubts as to their impartiality. He also argued that the Tribunal conducted the arbitration in such a way that had caused, or would cause, substantial injustice to him if the Arbitral Tribunal were not removed.

The other defendants – Delanson, Simone and Isabella – supported Gabriele’s application for a stay of the second phase of the arbitral proceedings.

Matteo opposed the stay of the second phase of the arbitral proceedings and the removal of the Arbitral Tribunal. John F Wilson KC, who has represented Matteo throughout this ongoing litigation, argued that Matteo would suffer greater prejudice than Gabriele if the arbitration were stayed and further delayed, given Matteo’s resounding success in the first phase of the arbitral proceedings. He further argued that the Removal Application was hopeless and fanciful, with no prospects of success, and therefore a stay ought to be granted.

In determining the Removal Application, Winder CJ referred to the December 2023 Decision by Klein J, which discussed the principles governing the stay of arbitration proceedings pending appeal (the conventional common law principles) in the context of the specific features of international arbitration. On that basis, the Court declined to grant an order for the stay of the second phase of the arbitral proceedings, finding it unnecessary pending the determination of the Removal Application.

Further, in its assessment of the Removal Application, the Court determined that it was weak in that there was no prima facie evidence for actual or apparent bias on the part of the Arbitral Tribunal to support Gabriele’s claim of lack of impartiality. The Court further determined that while there was the potential for wasted costs, it was not impossible for Gabriele recover them if he were successful in removing the Arbitral Tribunal. Accordingly, the Court dismissed the Removal Application.

This case highlights the reasoned approach of the Court when determining matters under the Act that run parallel to the arbitration of trust disputes. Moreover, the development of jurisprudence in this area of the law helps to increase The Bahamas’ value proposition as a preferred jurisdiction across several industries.

Practice Direction No 3 of 2025

This Practice Direction, issued in November 2025, provides guidance to attorneys, judicial and legal researchers, court clerks, legal officers/advisors and pro se litigants on the use of AI in court proceedings to ensure that the integrity of the administration of justice is protected.

The Practice Direction applies to all Bahamian courts and to all GenAI models. While it does not expressly prohibit the use of AI for either judicial officers or attorneys, the Practice Direction does require accountability for its use and the maintenance of ethical and legal obligations.

The court can require the disclosure of the use of AI and the Practice Direction sets out when leave is required to use AI. Specifically, it can be used for the drafting of summaries, procedural documents, legal research and skeleton arguments, either with disclosure or with verification. However, the use of AI for annexures to affidavits/witness statements and expert reports requires the leave of the court.

The Practice Direction also cautions against the use of AI, emphasising the responsibility of users to ensure the accuracy of outputs in addition to the quality and neutrality of the data. Importantly, the Practice Direction mandates that users should not input privileged or sensitive information into unsecured AI platforms.

If an attorney uses AI to produce a document for judicial proceedings without acknowledging that use or fails to verify the sources of law, the attorney will be subject to court sanctions.

In Gruesser et al v Herman – Supreme Court Action No 2023/PRO/cpr/00006, a Bahamian Court decision predating the Practice Direction, it was discovered that an attorney had not only used AI in the preparation of their submissions, but also had failed to verify the sources of law generated by that AI, which case law was found to be non-existent.

Lewis Johnson J admonished that failing to verify sources of law and the advancement of fictitious cases before the court could amount to contempt of court and would constitute a breach of the attorney’s duty to the court to act with honesty and integrity.

The attorney in question was referred by the court to the Ethics Committee of The Bahamas Bar Association. Undoubtedly, this experience clearly accelerated the issuance of the Practice Direction on the use of AI in court proceedings.

It is expected that, as disputes and the creative way in which they are pursued continues to evolve, The Bahamas will remain responsive in adjusting to new trends and developments in the law, particularly with regard to increasing efficiency and protection of the administration of justice.