1. IDENTIFYING ASSETS IN THE JURISDICTION
1.1 OPTIONS TO IDENTIFY ANOTHER PARTY’S ASSET POSITION
There are various options to consider in order to identify a judgment debtor’s asset position before determining which method of enforcement action may be the most effective. These options can be exercised either individually or cumulatively as the resources of the plaintiff and any pre-existing knowledge of the debtor’s assets allow. The options include the following.
- Searches of Public Registers (either in person or, in some cases, online).
- The Land Registry – to confirm ownership of real property and ascertain whether there are registered charges over the property.
- The Bermuda Shipping and Maritime Authority Shipping Registry – to ascertain ownership of vessels and whether there are mortgages registered over the shares of the vessel.
- The Aircraft Registration section of the Bermuda Civil Aviation Authority and the Aircraft and Aircraft Engine Mortgage Register – to ascertain ownership of aircraft and whether there are mortgages registered over the aircraft or aircraft engine.
- Directors and Officers Register – to reveal the identity and addresses of the company’s directors and officers.
- Company Register maintained by the Registrar of Companies – the Company Register includes details of mortgages or charges registered against the assets of a company. The Company Register also details whether a company is subject to winding-up proceedings.
- Supreme Court Register maintained by the Registrar of the Supreme Court – the Supreme Court Register (Cause Book) can be searched by appointment to reveal details of recorded judgments and ongoing actions or proceedings.
- Court records – subject to documents protected by privacy restrictions (such as in certain trusts cases and proceedings relating to the enforcement of arbitral awards), the public has a right to request disclosure of specified types of document from the Registrar of the Supreme Court. For example, in respect of cases pending before the court, requests may be made for copies of originating process or orders filed in the proceedings. However, copies of evidence will not be provided.
Looking to the medium-term future, the public will soon have access to the beneficial ownership data of companies, limited liability companies and partnerships contained on the register maintained by the Bermuda Monetary Authority. Currently, under Bermuda law, this information is not available to the public and can only be accessed by governmental authorities, including revenue officers and police forces. The government of Bermuda has recently announced that within 12 months of the publication of the European Union’s 5th Anti-Money Laundering Directive in January 2022, it will bring forward legislation to establish public access to the beneficial ownership of companies held on the register. The beneficial ownership register will include details of individuals and/or entities that hold 25% of the shares, voting rights or interests in a company through direct or indirect ownership.
- Examination of means – apart from the above publicly available information, a judgment creditor may apply to the court for an order that a judgment debtor (or the director of a company) attend court to set out the financial position under oath. The procedure involves filing an application summons supported by affidavit and is usually granted on the papers without the necessity of a court hearing.
Having first identified that a judgment debtor has, on “solid and cogent” evidence, at least some assets in Bermuda (or even outside the jurisdiction if a worldwide order is sought and appropriate), it is possible to obtain a Mareva or freezing injunction in aid of execution of a final judgment. A freezing order restrains a judgment debtor from disposing of or dissipating its assets. In conjunction with the order, the court may also make an ancillary asset disclosure order whereby the judgment debtor must produce an affidavit, usually forthwith, setting out the nature, value and location of its assets. This allows relevant parties such as banks and corporate service providers to be notified of the freezing order by the plaintiff.
2. DOMESTIC JUDGMENTS
2.1 TYPES OF DOMESTIC JUDGMENTS
There are a number of domestic judgments available from the Bermuda courts that usually follow the trial of a dispute and generally take the form of:
- money judgments whereby the defendant is ordered to pay a sum of money;
- judgments ordering a party to take or refrain from taking a specific action; and
- declaratory judgments that establish the rights and/or obligations between the parties and thus resolve any uncertainty as to the status of a legal state of affairs.
The first two types of judgment are executory in nature. The latter is declaratory and cannot be enforced directly, although if a defendant acts contrary to a declaration, the plaintiff may be able to commence proceedings for damages and/or apply to restrain the infringement of its legal rights.
In addition to obtaining a final judgment following trial, it is also possible to obtain the following.
- Interim remedies – pending a full trial, the Bermuda courts may grant various forms of interim relief, which include an interim freezing injunction, an order requiring a party to provide certain information, and declaratory relief (where appropriate to be ordered at an interlocutory stage).
- Summary judgment – under Order 14 of the Rules of the Supreme Court (RSC), after a defendant has entered an appearance and has been served with the statement of claim, a plaintiff may apply for summary judgment, which is a judgment without a trial. The court will enter judgment in favour of the plaintiff if it appears to the court that there is no defence to all or part of the claim. This is a relatively high threshold to meet.
- Strike-out – under Order 18, Rule 19 of the RSC, either party may, at any stage of the proceedings, apply for the strike-out of all or part of the other party’s pleadings. Pleadings may be struck out where (i) they disclose no reasonable cause of action (or defence to a cause of action), (ii) they are frivolous or vexatious, (iii) they are an abuse of the process of the court or (iv) they may prejudice, embarrass or delay the fair trial of an action. This is a relatively high threshold to meet. If a strike-out application is successful in respect of a party’s entire claim (or defence) or the substantive part of a party’s claim (or defence), the court will either require them to amend their pleadings or enter judgment against them.
- Judgment in default – a judgment in default may be obtained where a defendant has failed to enter an appearance and/or file a defence within the prescribed time. A defendant may apply to have a regularly obtained judgment in default set aside where it can demonstrate to the court that it has a defence with a real prospect of success or where there is “some other reason” for proceeding to trial. If a default judgment has been obtained irregularly (eg, entered prematurely), it must be set aside as of right.
2.2 ENFORCEMENT OF DOMESTIC JUDGMENTS
Where a judgment creditor has a final money judgment, this judgment may be enforced by using any of the methods set out below. In each case, an application must be made to the court with a supporting affidavit. Note that charging orders are not available in Bermuda. These methods include the following.
Writ of Fieri Facias
A writ of fieri facias, commonly known as fi fa, may be issued immediately upon the expiry of any time provided for compliance with a judgment or order of the court. The writ allows control to be taken of the defendant’s goods by a court official. The process is relatively straightforward and involves issuing a writ directed to the Provost Marshal General (an officer of the court) to seize the debtor’s assets and auction them to satisfy the debt. Upon the sealed writ being delivered to the Provost Marshal, the property of a judgment debtor within Bermuda is bound to the Provost Marshal for execution.
Writ of Sequestration
Where a judgment debtor fails to comply with an order or judgment of the court, the party seeking enforcement, with leave, may apply to have a sequester appointed (usually a local accountancy professional) to seize the judgment debtor’s assets until the defendant complies with the order or judgment.
It is also possible to obtain a garnishee order, whereby a third party, most commonly a bank or employer, will be directed to pay funds owed to the judgment debtor directly to the judgment creditor. This application is made ex parte supported by affidavit. The supporting affidavit must identify the judgment or order to be enforced, state the unpaid amount, and that the judgment debtor is indebted to the judgment creditor. A garnishee order cannot usually be obtained in relation to a joint debt or future debt owed to the judgment debtor, or where the court does not have jurisdiction (ie, where the debt is owed in another country).
Appointment of a Receiver
Under Order 51 of the RSC, the court has the power to appoint a receiver over the judgment debtor’s asserts to assist in collecting in the assets of a judgment debtor where it appears to the court to be “just and convenient” to do so. A court-appointed receiver is an officer of the court. It is important to note that the receiver’s fees and expenses will take priority over any recovery and the appointment will not affect any property already subject to an existing security. Often this type of order is a last resort but may be effective where the assets are shares (where a dividend may be due) or where a company has specific valuable assets.
As discussed above, the court has the power to issue a freezing order in aid of execution of a final judgment. Such an order may be appropriate where, absent restraint pending enforcement, the court is satisfied that there is a real risk that a judgment debtor will dispose of or dissipate its assets, rendering the judgment nugatory.
Order for Committal
An application for committal may be appropriate where a judgment debtor refuses or fails to comply with a judgment or order. In this regard, an applicant can seek an order to send the judgment debtor (where the debtor is an individual) to prison for non-payment. It is important to note that a court will not grant such an order where the judgment debtor proves to the satisfaction of the court that he does not have the means to satisfy the judgment (Section 2 of the Debtors Act 1973).
In the case of a breach of an injunction, it is also open to a plaintiff to commence contempt of court proceedings, including committal to prison, sequestration of assets and imposition of a fine. Where the defendant is a company, an application can be made against the company’s directors providing that the penal notice in the injunction expressly adverts to this prospect. Contempt of court proceedings are generally reserved for serious or persistent breach of court orders due to the draconian nature of the court’s remedies.
These processes will wind up the judgment debtor company or bankrupt an individual debtor based upon non-payment of the judgment debt. In broad terms, the liquidator or trustee in bankruptcy (as the case may be) is empowered by the court order to look into the assets and affairs of the debtor and collect in those assets. The debtor’s assets will be distributed to repay the debts according to the priority of unsecured creditors based upon proof of debt. Unless the creditors are secured creditors or preferred creditors within the limited statutory categories recognised in Bermuda (such as employees for certain payments and for payment of taxes), creditors will be treated on a pari passu basis (ie, pro rata to the level of the debt).
The above insolvency processes, while similar in some respects, also entail different procedural rules. A statutory demand will be required in the case of a bankruptcy but will often not be necessary to commence liquidation proceedings. They are collective processes, where not only the interests of the judgment creditor will be taken into account, but also the interests of the general body of creditors (which will be to the fore).
Insolvency practitioners also have the power to investigate and apply to the court to reverse certain transactions (for example, fraudulent preferences and transfers of property at an undervalue or for no value). This will be important where there are concerns that the judgment debtor has moved or sold assets, or made particular payments to associated entities, in order to put those assets beyond the scope of enforcement and outside the liquidation. These remedies contain bespoke time limits and should be considered at an early stage in cases where these types of concerns arise, together with consideration of complementary strategies such as injunctive relief.
2.3 COSTS AND TIME TAKEN TO ENFORCE DOMESTIC JUDGMENTS
The costs and timing for enforcement are difficult to estimate and will vary depending on the circumstances and complexity of each case. Challenges to the method of enforcement (and the basis for such a challenge and whether it has merit or not) will delay proceedings and likely increase the cost of enforcement. This is especially the case where execution of a judgment involves an order for the sale of the judgment debtor’s property, such as a family home, to satisfy the judgment. By contrast, a writ of fi fa should, at least in theory, be a relatively quick and cost-effective procedure.
Where an insolvency route is taken, it is important to note that the costs of the insolvency professional will be deducted as a priority from the assets of the insolvent estate of the judgment debtor, and will therefore diminish (sometimes very considerably) the amounts available for distribution. Unsecured creditors will often only receive a small proportion of their debt.
In relation to any of the methods listed above, it is crucial that careful prior consideration be given to which enforcement method will offer the greatest prospect of success for recovery. In a high-value or particularly complex case, it may be appropriate to pursue a number of different methods simultaneously.
2.4 POST-JUDGMENT PROCEDURES FOR DETERMINING DEFENDANTS’ ASSETS
As discussed in 1. Identifying Assets in the Jurisdiction, a judgment creditor may make an application to the court for an oral examination of a judgment debtor. This will take place under oath. This is a particularly useful tool as the court has the power to compel a person’s attendance and order a judgment debtor to produce relevant documents related to his or her financial position.
Also, as set out earlier above, in insolvency proceedings, a liquidator or trustee in bankruptcy will investigate the assets and affairs of the judgment debtor.
2.5 CHALLENGING ENFORCEMENT OF DOMESTIC JUDGMENTS
The most common way to challenge the enforceability of a judgment is to appeal it and to seek a stay pending appeal. A Bermuda court has a wide discretion to stay the execution of a judgment where circumstances make it inexpedient to enforce the judgment or order (Order 47 of the RSC). This will apply, for instance, where there are concerns about the plaintiff’s ability to repay the judgment debt in the event that the appeal is successful. The court may attach conditions to the grant of a stay as it thinks fit.
An appeal may also challenge the enforcement of a judgment on technical grounds, including:
- that the court did not have jurisdiction to hear the dispute (eg, because Bermuda was not the proper forum to deal with the proceedings);
- that the pleadings were not properly served on the judgment debtor; or
- seeking to set aside a judgment obtained in default.
2.6 Unenforceable Domestic Judgments
Judgments requiring a person to act or refrain from acting in a certain way or for the payment of money can be enforced by the courts of Bermuda (subject to any challenges to enforcement). Declaratory judgments may need to be enforced through fresh proceedings in relation to breach or by way of injunctive relief.
Domestic judgments must be enforced within 20 years of the date the judgment became enforceable under Section 26 of the Limitation Act 1984 (the “Limitation Act”).
2.7 Register of Domestic Judgments
All civil claims above BMD25,000 fall within the jurisdiction of the Bermuda Supreme Court. Matters below that level are dealt with in the Magistrates’ Court. Supreme Court judgments are recorded in the Cause Book maintained by the registrar of the Supreme Court. Presently, this information is not available online and must be searched in person for a nominal fee.
Note that prior to the Land Title Registration Act 2011 coming into force, a Supreme Court judgment automatically attached to any land owned by the judgment debtor. Since 2 June 2018, a judgment must be registered with the Land Title Registrar against a judgment creditor’s property to protect priority over property owned by the judgment debtor.
3. FOREIGN JUDGMENTS
3.1 LEGAL ISSUES CONCERNING ENFORCEMENT OF FOREIGN JUDGMENTS
Bermuda has not entered into any bilateral or multilateral treaties for the reciprocal recognition and enforcement of foreign judgments. There are instead two mutually exclusive regimes for enforcement. Which procedure should be followed in each case will be determined by the identity of the country that issued the judgment.
Both regimes only apply to final moneyjudgments made under the personal jurisdiction of a superior court in the relevant jurisdiction that are for a determinable sum of money (as defined in the judgment or order to be enforced or can be calculated from it). The judgment must be conclusive between the parties. A judgment is deemed to be “conclusive” notwithstanding that there may be an appeal pending, or that the judgment can still be subject to an appeal. All other types of judgment will be unenforceable.
The Judgment (Reciprocal Enforcement) Act 1958 (the “1958 Act”) applies to judgments issued by the countries listed in the Judgment Extension Order 1956. The Commonwealth jurisdictions to which the 1958 Act applies include England and Wales, Scotland, Northern Ireland, Barbados, British Guiana, Gibraltar, Grenada, Hong Kong, Leeward Islands, St Vincent, Jamaica, Dominica, St Lucia, the federal courts of Australia, as well as state or territory courts of New South Wales and the Northern Territory.
Common Law Regime
Enforcement of judgments not covered by the 1958 Act – notably the USA, China and the member states of the European Union – will need to be enforced at common law.
After recognition of a foreign judgment by the Bermuda courts, the same methods of enforcement as identified in 2.2 Enforcement of Domestic Judgments may be taken to enforce it.
3.2 VARIATIONS IN APPROACH TO ENFORCEMENT OF FOREIGN JUDGMENTS
The rules and procedure to apply to enforce a foreign judgment are different for each regime. Under the 1958 Act, foreign judgments must be registered (either in whole or part) before they can be enforced. Following registration, which is essentially an administrative process, a foreign judgment has the same effect and force as a judgment of the Supreme Court. Thus, for example, a Bermuda court may grant an asset freezing order in support of it or appoint a receiver.
If the common law regime applies, a judgment creditor must issue fresh proceedings in Bermuda and obtain a domestic judgment, relying on the foreign judgment debt as forming the cause of action; eg, this is not a re-litigation and the judgment debtor will be treated as having no defence on the merits, as liability has already been decided and the foreign judgment cannot be impeached for any error of law or fact. Usually, a judgment creditor will apply for default judgment if no appearance is then entered, or summary judgment under Order 14 where it has been. Such an application must be supported by affidavit evidence that in effect will cover the same matters set out below under the 1958 Act.
3.3 CATEGORIES OF FOREIGN JUDGMENTS NOT ENFORCED
A final and conclusive money judgment is the only foreign judgment capable of enforcement in Bermuda. The following judgments are not capable of enforcement:
- judgments for specific performance – such judgments may be recognised by the Bermuda courts as a defence to a claim;
- injunctions will not be enforced by the courts of Bermuda – such judgments may be recognised by the Bermuda courts as a defence to a claim; and
- money judgments in respect of taxes or other charges of a like nature, or in respect of a fine or other penalty.
3.4 PROCESS OF ENFORCING FOREIGN JUDGMENTS
A party seeking to enforce a foreign judgment under the 1958 Act must make an application to the Supreme Court by way of an originating summons supported by affidavit evidence. This affidavit must state, in so far as possible, the full name and address of the judgment debtor, that the judgment creditor is entitled to enforce the judgment, and that, to the best of their knowledge and belief, no grounds for a defence exist. A verified or certified copy of the judgment to be enforced is required.
No notice of registration need be given to a judgment debtor. Where an application is made ex parte, a judgment creditor is under a duty to give full and frank disclosure of all the material facts relevant to the application. The order registering the foreign judgment must be served personally or by serving it to the last known address of the judgment debtor before any practical enforcement measures are taken. A foreign judgment must be registered within six years from the date of the judgment or after the date of the last judgment in the proceedings if there has been an appeal.
For foreign judgments that fall under the common law regime, a judgment creditor must issue fresh proceedings as set out in 3.2 Variations in Approach to Enforcement of Foreign Judgments. The limitation periods in the Limitation Act will apply to the proceedings (for instance, six years for claims in contract and tort, to be calculated from the date of the foreign judgment).
3.5 COSTS AND TIME TAKEN TO ENFORCE FOREIGN JUDGMENTS
The length of the enforcement process and costs will vary depending on the circumstances of each case. Under both regimes, challenges, even if ultimately unsuccessful, will delay enforcement and increase costs. Enforcement of a 1958 Act judgment cannot commence until the challenge period to set aside registration has expired.
The decision of the Supreme Court on an application to set aside, or obtained under the common law regime, is subject to a right of appeal to the Court of Appeal. Although this type of appeal is (and should be) rare, it can cause delay as the Court of Appeal sits in only three sessions spread throughout the year. The Bermuda court also retains a discretion to set aside registration of a foreign judgment, even if temporarily, to allow an appeal to be concluded.
In addition to the costs of enforcement, the RSC permits a judgment debtor to apply to obtain an order for security for costs. While a judgment creditor is not automatically required to make provision for security, one of the usual grounds upon which a court can order security is that a judgment creditor resides outside of Bermuda. Whether security will be ordered is a matter of discretion.
3.6 CHALLENGING ENFORCEMENT OF FOREIGN JUDGMENTS
Grounds to challenge enforcement of a foreign judgment depend on whether the 1958 Act or common law principles apply.
Under the 1958 Act, registration of a foreign judgment is liable to be set aside if one of the five conditions listed below is established:
- the foreign judgment is not a judgment to which the 1958 Act applies (eg, a money judgment) or the judgment was registered in contravention of the 1958 Act;
- the judgment debtor did not receive sufficient notice of the proceedings;
- the judgment was obtained by fraud;
- the rights conferred by the judgment are not vested in the person seeking enforcement; or
- the matter in dispute giving rise to the registered judgment was previously determined and subject to a final and conclusive judgment by a foreign court having jurisdiction over the matter.
In addition, a judgment debtor may also challenge enforcement on the basis that the foreign court did not properly exercise jurisdiction over the judgment debtor. The jurisdictional competence test applied by the courts of Bermuda is set out in Bacardi Ltd & Others v Rente Investments Ltd  Bda LR 60. In general terms, a party is considered to have submitted to the jurisdiction of a foreign court if:
- the defendant voluntarily appeared in the proceedings and contested them on the merits;
- the defendant agreed prior to the start of proceedings to submit to the jurisdiction of the foreign court (ie, by way of a contractual clause); or
- if the person counterclaimed in the proceedings before the foreign court.
At common law, a judgment debtor may challenge enforcement on the following grounds:
- lack of jurisdiction according to Bermuda conflict of law principles;
- the judgment was obtained by fraud; and
- enforcement of the judgment would be contrary to public policy (see Muhl (Superintendent of Insurance of the State of New York as Liquidator) of Nassau Insurance Co v Ardra Insurance Co Limited  Bda LR 36); or
- the proceedings in which the judgment was obtained were contrary to the rules of natural justice (see Ellefsen v Ellefsen  Bda LR 53).
4. ARBITRAL AWARDS
4.1 LEGAL ISSUES CONCERNING ENFORCEMENT OF ARBITRAL AWARDS
In Bermuda, there are two separate statutory frameworks for arbitration. The International Conciliation and Arbitration Act 1993 (the “1993 Arbitration Act”), which incorporates the UNCITRAL Model Arbitration Law (the “Model Law”), applies to all international commercial arbitrations, unless the parties agree otherwise (Section 24 of the 1993 Arbitration Act).
The Arbitration Act 1986 (the “1986 Arbitration Act”) primarily governs domestic arbitrations but will apply to “international” arbitrations where the parties have expressly or by implication agreed that the 1993 Arbitration Act will not apply.
The 1993 Arbitration Act provides for the enforcement and recognition of New York Convention Awards (“Convention Awards”). A Convention Award, with leave of the court, may be enforced by the Bermuda courts. Where leave is granted, the court will enter judgment in the terms of the award and such award is capable of enforcement in the same manner as a judgment of the Bermuda court. Accordingly, the same measures of enforcement as identified in 2.2 Enforcement of Domestic Judgments may be taken to enforce the arbitral award.
4.2 VARIATIONS IN APPROACH TO ENFORCEMENT OF ARBITRAL AWARDS
The main variation in approach relates to differences in the scope of appeal of arbitral awards. The legislative framework in Bermuda reflects the strong public policy in the finality and enforcement of arbitral awards. Specifically, under the 1993 Arbitration Act, grounds to challenge an award are very narrow, and are limited to the grounds set out in 4.6 Challenging Enforcement of Arbitral Awards. In contrast, an award under the 1986 Arbitration Act may be appealed to the Court of Appeal as to questions of law.
4.3 CATEGORIES OF ARBITRAL AWARDS NOT ENFORCED
Bermuda is, generally speaking, a pro-arbitration jurisdiction. Both final money awards and declaratory awards can be enforced.
Most awards are capable of enforcement in Bermuda except where there are public law consequences. In terms of enforcing an arbitral award, an arbitral award must meet the requirements of that particular convention or statute. Article 31 of the Model Law provides that an award must be in writing, signed by all arbitrators, state the reasons for the award (unless otherwise agreed), and state the date and place the award was made. If an arbitral award does not meet these requirements, it cannot be enforced by the Bermuda courts. In relation to a Convention Award, the award must meet the New York Convention’s requirements, namely that the award must be in writing and signed.
Partial or Interim Awards
In addition to final awards, under Section 36 of the 1993 Arbitration Act and Section 22 of the 1986 Arbitration Act, respectively, a tribunal in an arbitration seated in Bermuda has the power to make partial or interlocutory awards. Unless otherwise agreed, an interim award shall be final and binding on the parties and capable of enforcement in the same manner as a judgment of the Supreme Court.
4.4 PROCESS OF ENFORCING ARBITRAL AWARDS
An arbitral award is enforceable by action or by leave of the court as a judgment of the Supreme Court.
The procedure for enforcement and recognition of arbitral awards in Bermuda courts is set out in RSC Order 73. This process involves an application for leave to the Supreme Court. An application for leave is made under Section 37 of the 1986 Arbitration Act (in respect of domestic awards), Section 40 of the 1993 Arbitration Act (in respect of Convention Awards) or Section 48 of the 1993 Arbitration Act (in respect of non-Convention Awards). The application for leave may be made ex parte; however, the court may direct a summons to be issued in the form of an originating summons.
The application for leave must be supported by affidavit evidence that:
- exhibits the original arbitral agreement and the original award or a certified copy of the same;
- states the name and last known address or place of business of the applicant (creditor) and person against whom it is sought to enforce the award (debtor); and
- confirms that the award has not been complied with (or sets out the extent to which the award has not been complied with).
If leave to enforce the award is granted, the order will be served on the defendant personally or by serving a copy to their last known address. If a defendant is a body corporate, the place of service is the registered address of the body corporate. Service of the order on a person resident outside of Bermuda is permissible without the leave of the court.
Once service has been effected, a defendant has a 14-day period (unless otherwise expressed in the order) to apply to set aside the order. The award is not capable of enforcement until the expiry of this period.
An action to enforce an arbitral award in Bermuda must be made within 20 years after the date on which the cause of action accrued (Section 9 of the Limitation Act).
4.5 COSTS AND TIME TAKEN TO ENFORCE ARBITRAL AWARDS
As set out above, the process for making an application for leave to the Supreme Court is relatively straightforward. The duration and costs will depend largely on whether enforcement is challenged. In addition to the costs of enforcement, under the Stamp Duty Act 1976, nominal stamp duty is payable on an arbitral award (¼% of the value up to a maximum of BMD25).
4.6 CHALLENGING ENFORCEMENT OF ARBITRAL AWARDS
Under the 1986 Arbitration Act, subject to the consent of the parties or leave of the Supreme Court, an award can be appealed to the Court of Appeal as to questions of law arising out of a domestic award (Section 37 of the 1986 Arbitration Act). In general terms, the Supreme Court will not grant leave unless the determination of a question of law would substantially affect the rights of the parties to the arbitration.
In contrast, under Section 42 of the 1993 Arbitration Act, the grounds upon which an arbitral award may be challenged are limited. There is no right to challenge an award on the merits and the appropriate remedy against the award is to set aside the award. The grounds for refusal to recognise or enforce an award are limited to the following:
- a party to the arbitration agreement was under some incapacity;
- the arbitration agreement was invalid under the law of the country where the award was made;
- proper notice of the appointment of the arbitrator or the arbitral proceedings was not given;
- the award deals with a dispute outside the scope of the arbitration agreement;
- the composition of the arbitral tribunal or the arbitral procedure was not in accord with the agreement of the parties;
- the subject matter of the dispute is not capable of settlement by arbitration under the laws of Bermuda; or
- the award is in conflict with the public policy of Bermuda.
Stay of Enforcement Proceedings Pending Set-Aside Proceedings
The Supreme Court has a discretion to stay enforcement proceedings pending the conclusion of set-aside proceedings in the supervisory jurisdiction of the arbitral seat. The Bermuda court’s power to stay enforcement of a foreign award is contained in Section 7 of the 1986 Arbitration Act and Section 36(2) the 1993 Act, respectively. A recent example of a stay being granted by a Bermuda court is the case of LAEP Investments Ltd v Emerging Markets Special Solutions 3 Ltd  Bda LR 36. In LAEP, the Bermuda Court of Appeal held that a stay order issued by the courts in the seat of arbitration meant an arbitral award was not capable of enforcement pending the conclusion of the appeal.
The recent judgment in CAT SA v Priosma Limited  Bda LR 69 makes it clear that a judgment debtor may be ordered to provide security in the full amount of the award and costs as a condition of the grant of a stay of enforcement proceedings. The Bermuda court, in the exercise of its discretion, will consider (i) the strength of the argument that the award is invalid and (ii) whether enforcement of the award will be more difficult if enforcement is delayed.