An increasing number of contracts involving Cayman Islands entities are now drafted to contain arbitration agreements which provide for disputes to be resolved through private arbitration to be conducted in the Cayman Islands (or held elsewhere in the world, or by remote video-link), subject to the supervision of the Grand Court of the Cayman Islands.

Cayman Islands law is sufficiently flexible that the parties to a contract can choose Cayman Islands law to apply to the procedural and supervisory aspects of an arbitration, while separately deciding the governing law to apply to the substance of the contract and the dispute between the parties.

For example, the substantive governing law can be selected to be Cayman Islands law, New York law, modified New York law (of the sort used in ‘Bermuda Form’ insurance policies), or English law.

In the insurance context, choosing Cayman Islands law as the substantive governing law is particularly beneficial to all parties to an insurance transaction, especially in the context of liability insurance policies that are designed to provide insurance against punitive damages liabilities arising in the United States (which are uninsurable under New York, California, or certain other US state laws).

Similarly, in the corporate, funds, partnership, employment, and financial services context, there is a well-developed body of Cayman Islands law (supported by decisions of the Privy Council and the common law) that offers certainty and predictability to contracting parties in any given situation.

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