INTERNATIONAL ARBITRATION 1/3LY
MARKET COMMENTARY 35
BR I T I SH V I RG IN I SL ANDS : A V I A BL E A RB I T R AT I ON CEN T RE?
FACTORS INFLUENCING GROWTH OF CENTRES In recent years, Singapore and Dubai have emerged as growing arbitration centres. They appear to be capitalising on their ‘regional hub’ status, and have been able to exploit the fact that they are legally and financially secure ‘harbours’ with neighbours that, for a variety of reasons, are less suitable for hosting arbitration. More recently still, Mauritius has launched the LCIA-MIAC Arbitration Centre, seeking to exploit the growth of Mauritius as a financial and commercial centre supporting investment, particularly in southern Africa. Of the arbitration centresmentioned, Mauritius has the greatest similaritywith the BVI andmight provide a blueprint for developing arbitration in the Caribbean. However, one significant difference is that Mauritius has partneredwith the London Court of International Arbitration (LCIA) to develop its centre, whereas the BVI (to date) has not tied upwith awell-established international arbitral institution. Unless it does so, the BVI may struggle to attract notice in the increasingly competitive arbitration forummarket. WHAT DOES THE BVI OFFER? The BVI is the world’s largest corporate domicile, with nearly onemillion companies incorporated in the territory since 1984. It offers a stable political and economic environment that attracts international companies to set up joint venture entities, hedge funds, holding companies and trusts to conduct commercial transactions and sign deals. With such a prevalence of commercial activity, there are bound to be disputes that need to be resolvedwithin the territory. Its legal system is based on English common law. However, prior to its newarbitration act, BVI’s legal framework was not suitable for modern cross-border arbitration. The BVI’s newarbitration law is based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law. The territory recently acceded to the New York Convention, meaning that arbitral awards from the BVI will be recognised and enforced by the courts of contracting states with effect from25May 2014. Most countries in the world are now signatories to the Convention. The BVI’s accession to the Conventionwas handled by the UK Foreign& Commonwealth Office, whichmanages the BVI’s external relations. WHAT WILL THE BVI OFFER? During the debate on the newarbitration law, the BVI government recognised that it was coming froma position behind the other established arbitration centres around the world, and that establishing proper facilities to host arbitration proceedings would be fundamental to success. The government seems to be committed to addressing this. It will be interesting to see whether businesses will use the new centre once it is set up. The BVI has the potential to develop into an arbitration centre. However, in addition to establishing the legal framework, considerable legal expertise and infrastructure will need to be developed to help international arbitration take off. Will the LCIA or ICC step forward to work with the new centre and help give it somemomentum? A version of this article was published in Global Arbitration Review, January 2014
BY BEN KNOWLES AND KHALED MOYEED, PARTNER AND A SSOCIATE AT CLYDE & CO LLP
The British Virgin Islands (BVI) passed a new arbitration law in December, including provisions for setting up a new international arbitration centre. We consider some of the factors that may affect the success of arbitration in the territory. THE GLOBAL CONTEX T The longer established arbitration centres, such as London, Paris and New York, have a framework that supports arbitration. They all have domestic legislation that provides for the practice of arbitration and are signatories to relevant treaties, most importantly the New York Convention, which ensures that their awards have a good chance of enforcement internationally. Significantly, key ‘infrastructure’ has also been established, including: the availability of capable local lawyers and, especially, arbitrators; easy accessibility by international travel; and good facilities for hosting arbitrations.
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