The updated Civil Procedure Rules (the “Revised CPR”) come into force on 31 July 2023, and with them a substantially increased focus on settlement and Alternative Dispute Resolution (“ADR”). In this article, Senior Associate Dr Jane Fedotova and Associate Charles Goldblatt highlight and consider three significant amendments which are relevant to arbitration, enforcement and ADR.

The first relates to a significant change in the rules about service of foreign defendants. Under the Revised CPR, upon compliance with certain conditions specific types of proceedings may be served out of jurisdiction on a foreign defendant without the permission of the Court. This will cover enforcement of an arbitral award against BVI assets of a foreign defendant and BVI proceedings commenced against inter alia a foreign defendant in aid of arbitration for Norwich Pharmacal Order, disclosure orders, freezing orders, and other interim measures. While such orders would often be sought in respect of a BVI company – in which case service out of the jurisdiction is not an issue – the order or ancillary orders of disclosure may extend to a foreign defendant. The amendment clearly has the potential to be controversial and it is yet to be seen how it is going to work in practice.

The second amendment relates to inclusion in the CPR of the procedure tailored to recognition and enforcement of arbitral awards. Previously, in the absence of specific provisions, enforcement of arbitral awards was governed by CPR 43.10, previously entitled “Enforcement of awards, etc. made by outside bodies”. The Revised CPR clarifies that the definition of “outside body” means “any authority within a Member State or Territory other than the court”. The new CPR 43.11 entitled “Recognition and enforcement of awards made by a foreign body” defines a “foreign body” as “an individual or tribunal outside of the jurisdiction of the court”. Although one could debate the meaning of the terminology, the practical consequences are such that under CPR 43.11 an application for recognition and enforcement of an arbitral award should be commenced by a fixed date claim form supported by an affidavit submitted in a prescribed form.

Another significant amendment focusing on settlement and the use of ADR comes with the introduction of new rule 8.16 and Part 38A.

By rule 8.16, we see the introduction of the possibility of mandatory pre-action protocols, which will require parties to (at least) consider settlement of their disputes and forms of ADR before claims are commenced.

Although it remains only a possibility for now (time will tell whether, when and how such protocols are prescribed), the new rule represents a clear signpost of further alignment with the English Civil Procedure Rules, which have for many years sought to encourage parties and practitioners (by way of stick, rather than carrot) to try to settle their disputes before troubling the Court with the “last resort” of litigation. No such encouragement has been found in the ECSC CPR, until now.  All of that said, we do not anticipate any immediate (or even medium term) move to compel parties in the BVI Commercial Court to adopt mandatory ADR mechanisms.

In a significant expansion of the Court’s current duty and powers to encourage and facilitate the use of ADR and mediation, (new) Part 38A introduces the concept of Judicial Settlement Conferences as an ADR mechanism for promoting the early disposition of cases.

The new provisions set out a process by which judges can, of their own motion and at any stage during the CMC process and in the stages leading up to trial, give directions for the referral of proceedings to a confidential and without prejudice settlement conference. If before trial, the referring judge has the power to actively assist in those negotiations. However, by default, a judge who is involved in a settlement conference prior to trial may not (without the parties’ consent) take any further part in the proceedings. If a referral is made during trial, by default (and unless the parties agree otherwise) the judge must refer the parties to another judge or master, assigned at random from a pool of sitting judges and masters throughout the Member States.

Parties who accept a referral to a judicial settlement conference can expect to obtain a judicial evaluation of the merits of a dispute or any part of a dispute and even a judicial opinion on the likely outcome of the proceedings. The fact that the new provisions require parties to attend or be represented by a person with authority to negotiate, enter into and execute a settlement agreement, suggest that the judiciary may go further by assisting parties to reach negotiated settlements of their disputes.

Notably, (new) rule 38A.5 expressly provides that “a judge … may at any time, with the consent of the parties, make an order directing the parties to attempt to settle their dispute by mediation or other alternative dispute resolution mechanism (to be specified in the order) agreed to by the parties”.

Although it remains to be seen whether this amendment will translate into more disputes settled by way of arbitration, express reference in the CPR to the Court’s power to refer a matter to ADR signals an encouragement from the policymakers to use ADR (and arbitration in particular) more often, including in domestic civil and commercial disputes, and reinforces the approach taken by the BVI to encourage the settlement of disputes by alternative means, including by way of arbitration.

This is a welcome development, in particular given the BVI benefits from a modern International Arbitration Centre and the recently updated BVI IAC Arbitration Rules, which are equipped to deal with disputes of every scale and calibre and enable the fast-tracking of disputes under USD4 million to hearing within six months.

The introduction of new and amended rules with a particular focus on enforcement of arbitral awards, settlement and ADR are positive and welcome steps, although practitioners may have mixed feelings about the potential for pre-action protocols, the absence of which allows proceedings to be commenced almost immediately, if necessary.

The reality remains that whilst the judiciary cannot compel parties to settle their differences outside of court, it can certainly take into account parties’ conduct at the costs assessment stage. Parties who refuse to attend or participate in the process can expect costs-related consequences at the conclusion of the proceedings. The judge or master conducting the settlement conference may refer the conduct of a party during a conference to the judge assigned to the proceedings.

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