Given the ever-increasing use of arbitration in a myriad of commercial disputes, the all-important question arises as to the ease with which an arbitration award may be enforced. This may be of particular concern if the target assets are located (or believed to be located) offshore.
The British Virgin Islands (BVI) are known as a leading incorporation jurisdiction with something in the region of 400,000 active registered companies. Given the symbiotic relationship between arbitral tribunals around the world and jurisdictions where assets are held, it is useful to consider how easy it may be to enforce an award in BVI. For present purposes, we can assume that the target BVI assets are either a BVI incorporated company, or shares in a BVI incorporated company.
Overview to Enforcement in the BVI
The good news is that by reason of the Arbitration Act 2013 (which has been in force since 1 October 2014) BVI, as a signatory to the New York Convention, has adopted the UNCITRAL Model Law on International Commercial Arbitration. Although the detail of the Arbitration Act lies outside the scope of this article, it is accurate to summarise the position by stating that BVI sensibly chose to adopt a classic form of the Model Law with very little derogation. Arbitration practitioners will therefore be very familiar with the broad concepts of enforcement.
Accordingly, the beneficiary of a Convention award may readily enforce it in the BVI, applying the well-established passport principles of enforcement. Similarly, a respondent may avail themselves of standard convention defences to enforcement. To date (both before and since the coming into force of the Arbitration Act), the BVI Commercial Court has adopted a pragmatic and pro-enforcement stance, while also fairly applying established principles under the Convention.
Under the Arbitration Act, non-Convention awards may also be enforced in the BVI. Defences/ grounds for refusing enforcement are the same as those for Convention awards, but additionally, the court may refuse enforcement on the broader ground that it considers it just.
This article was first published in Legal Business.