Commercial mediation in Cayman Islands

Mediation of commercial disputes in the Cayman Islands may be carried out (i) privately by agreement of the parties, or (ii) by referral by the Court to judicial mediation. A party who refuses a reasonable proposal of mediation may suffer adverse costs consequences and, in the case of a judicial mediation, litigants may be obliged to mediate. There are no statutory requirements that regulate the procedure in respect of mediations, with private mediations being conducted in accordance with the parties' agreement and judicial mediations being subject to certain (flexible) guidelines. Mediations are confidential and usually conducted on a without prejudice basis. Any settlement that is reached will be formalised in a contract and/or an order of the Court which is enforceable as such.

What is the status of mediation in this jurisdiction?

Mediation is a recognised method of alternative dispute resolution in the Cayman Islands albeit that its use in commercial and Financial Services Division litigation is still relatively limited, with parties preferring to make use of the formal court system and specially trained judiciary in the Financial Services Division. Nonetheless, Mediation is well established in the Family Division of the Grand Court and it is further anticipated that the use of mediation in high-value and/or complex litigation issued in the Financial Services Division of the Grand Court will become more frequent following the introduction of Practice Direction No. 3 of 2022, entitled “Judicial Mediation Guidelines” on 15 August 2022 (the "Guidelines").

How is a mediation conducted?

Mediation may be conducted privately by the agreement of the parties ("Private Mediation") or by referral by the court to judicial mediation pursuant to the Guidelines ("Judicial Mediation") at any stage in the proceeding.

A Private Mediation is conducted in accordance with the parties’ agreement. In the case of Judicial Mediation, directions regarding preparation for the mediation will be made at a "mediation information and assessment meeting" or preliminary case conference. The parties will be told when and where the mediation will take place and who is to attend. The parties will usually be provided with a statement of the proposed course of the mediation, and will be informed prior to the commencement of a mediation of any pre-conditions, expectations or particular requirements. These may include a requirement to provide specific documents and other information, position papers or confidential offers.

There are no statutory requirements that regulate the procedure in respect of a Private Mediation or Judicial Mediation, and the Guidelines allow for flexibility in the case of a Judicial Mediation. However, a mediation generally involves the following phases: (i) a preparatory phase in which practical factors such as the costs, timetable, documents to be exchanged, location of the mediation and the identity of the mediator are decided upon; (ii) a plenary session during which the parties present their respective positions; (iii) private sessions between the mediator and each party; (iv) a negotiation phase; and (v) a final phase in which a settlement agreement may be concluded.

In respect of a Judicial Mediation, a mediator will not conduct a private session with each party without the express approval of all parties to the mediation. Furthermore, information provided by a party to a mediator in a separate session will not be disclosed to any other party unless the mediator has been expressly authorised to do so.

Mediations are usually conducted on a without prejudice basis, although may be conducted on a without prejudice save as to costs basis by agreement between the parties or, in the case of a Judicial Mediation, if so ordered by the court. Mediations may take place in the Cayman Islands, in any other jurisdiction or remotely. Mediating parties will usually be represented at the mediation by their legal counsel.

Is there any obligation on litigants to mediate?

There is no obligation on litigants to engage in Private Mediation. In respect of Judicial Mediation, the Guidelines provide that the court may order such mediation without the consent of the parties. It is anticipated that this will happen rarely, but perhaps upon the application of one party to seek to compel an opposing party to engage in settlement discussions.

The Guidelines provide that a matter will be considered particularly suitable for Judicial Mediation where: (i) there has been an earlier unsuccessful private mediation, (ii) one or more of the parties has limited resources, (iii) there is a substantial risk that the costs and time of a trial would be disproportionate to the value or nature of the case, (iv) an estimated trial length would occupy substantial judicial resources, or (v) there are other factors such that the interests of justice require a referral to judicial mediation.

Does the court have powers to support a mediation?

Pursuant to the Overriding Objective set out in the preamble to the Grand Court Rules, the court's duty is to manage cases so as to help the parties to settle the whole or part of the proceedings. Several members of the judiciary have been trained and certified as mediators.

Under the Guidelines, no Judge will hear and determine an issue in any proceeding in which that Judge has acted as a mediator or where they have become acquainted with any confidential information relating to the mediation of the dispute. However, the Guidelines provide that if the proceedings fail to settle at mediation, the judicial mediator may give directions for the further conduct of the proceedings in their judicial capacity.

As a practical matter, informal indications have been given that the Grand Court may offer the use of its facilities for the conduct of some Judicial Mediations.

Are mediations confidential?

The parties and other participants are required to maintain the confidentiality of Judicial Mediation proceedings, and it will be the usual practice of the mediator to destroy all materials provided to or prepared by the mediator, following completion of the mediation (whether successful or not). As above, the court will give directions on the privilege that applies to a Judicial Mediation, which will most commonly be without prejudice.

A Private Mediation will commonly be subject to a mediation agreement. The mediation agreement will usually require the parties to treat all discussions and documents as confidential and without prejudice.

Does failure to mediate attract adverse cost awards?

At the time of writing there are no reported judgments in the courts of the Cayman Islands by which a party has been penalised in costs for a refusal to mediate. It is considered, however, that by the issuance of the Guidelines, the Grand Court has re-emphasised the importance of litigants seeking to settle proceedings. Moreover, jurisprudence from elsewhere in the Commonwealth, and particularly from England and Wales, is considered persuasive (albeit not binding) in the Cayman Islands. There are many examples in such case law providing for adverse costs consequences to follow an unreasonable refusal to mediate. The Cayman Islands courts have a wide discretion to make whatever costs award they consider appropriate and it is likely that a party who refuses a reasonable proposal of mediation may suffer adverse costs consequences, unless there is a good reason for the refusal.

Absent circumstances giving rise to a particular alternative costs award, the general rule is that costs are in the cause. This would ordinarily apply to the costs of any failed mediation (subject to any other agreement between the parties to a Private Mediation, or direction of the court in a Judicial Mediation).

How are settlement agreements enforced?

As a matter of Cayman Islands law, settlement agreements are contracts like any other and are enforced accordingly.

In respect of a Judicial Mediation, the Guidelines provide that the settled terms of agreement may, with the consent of the parties, be embodied in an order of the court to be executed by the mediator in his or her judicial capacity and in which event, will become binding as such.

The parties to any Private Mediation may also agree to embody the terms of settlement in a consent order. Such a consent order will, like all consent orders, be subject to the approval of the court, be thereafter can be enforced in the same way as any other order of the court. The usual approach, as with a conventional Tomlin Order, is to append the settlement agreement to the order on a confidential basis so that it does not appear on the public register of judgments and orders kept by the court.

Is there a system of accreditation and/or regulatory body for mediators?

There is no system of accreditation specific to mediators who are engaged in the Cayman Islands. There is no regulatory body for mediators in the Cayman Islands.

In 2020, the Chartered Institute of Arbitrators established a Cayman Chapter. The Cayman Chapter offers training in mediation to practitioners within the Cayman Islands. In addition, the Cayman International Mediation and Arbitration Centre is due to open a new alternative dispute resolution centre in Grand Cayman, in partnership with Toronto’s Arbitration Place. The centre will offer alternative dispute resolution case management support, and both virtual and physical hearings at new state-of-the-art facilities.