Arbitration plans overambitious, says leading disputes lawyer
A disputes specialist believes that a planned international arbitration centre is overambitious and that Bermuda could instead become a hub for the hearings using modest office space.
Mark Chudleigh, a partner at the law firm Kennedys, added that it was important to make a start on an idea that has been the subject of discussions for decades.
His comments came after an international arbitration centre opened in the Cayman Islands. A similar facility was launched in the British Virgin Islands in 2016.
Mr Chudleigh said: “Bermuda probably has more international arbitrations than Cayman and BVI put together.
“It also has an international insurance industry that incorporates arbitration clauses into the many thousands of high-limit insurance policies that it issues annually — although most provide for London arbitration — and Bermuda has a geographical location that is more convenient to parties in the United States, Europe and beyond.
“So it is perhaps surprising that BVI and Cayman are making progress towards establishing themselves as arbitration centres when Bermuda’s plans have not progressed beyond the drawing board.”
He added: “There has been discussion around establishing Bermuda as a location for international arbitrations since I was a law student over 30 years ago, but we are not much further forward. I think there are a number of reasons for this.
“First, I believe there is a limited understanding about what international arbitration entails and what is needed to promote Bermuda in this space.
“The main difficulty with the international arbitration centre project, as I see it, is that it is overambitious. Yes, it is important to have a dedicated organisation devoted to promoting and facilitating arbitrations, but the physical infrastructure that is needed — and therefore the start-up cost — should be fairly minimal, at least in the early years.
“The important thing is to make a start, and that can be done through renting modest, non-prime office space, employing an experienced administrator or two and setting up a committee of practitioners who will be willing to contribute their expertise without charge.
“Second, it is important to recognise that this is a long-term project. It could take ten or more years to get anything close to critical mass.
“This period is much longer than an elected government’s field of vision when they are looking for short-term returns to demonstrate their successes when the next election comes around.
“Third, there has been a reluctance to partner with an established international arbitration organisation in, say, London or New York, who will have the necessary expertise and contacts to move the project forward.
“To my mind the international arbitration centre focuses too much on the building — and at a time when, due to the pandemic, remote hearings are increasingly common — rather than on the organisational aspects.”
Mr Chudleigh pointed out: “That said, the closure of the [Fairmont] Southampton Princess and Elbow Beach hotels, and the expectation that space at the Hamilton Princess will be devoted to a casino, is problematic as these are the locations where most arbitration hearings have taken place.”
Mark Chudleigh is a partner at Kennedys who specialises in commercial and corporate litigation and arbitration involving insurance, financial services and private client sectors.
He said: “The underfunding of Bermuda courts — and I focus here on the commercial court as that is the closest equivalent — is a bigger issue.
“Again, Cayman and BVI devote more resources to their commercial courts and as a result position themselves as superior locations for resolving high-value and complex commercial cases.
“One idea that has been mooted was that the arbitration centre could be a dual-purpose building hosting both arbitrations and commercial court cases.
“I really like that idea but, personally, I think the priorities should be to provide adequate compensation to our judiciary, to provide better facilities for the Supreme Court Registry and to develop technology to convert the courts over to electronic filing and modern document management systems.”
Ground was broken at the site of the planned Ottiwell A. Simmons International Arbitration Centre on the corner of Reid Street and Parliament Street in July 2020.
Lieutenant-Colonel David Burch, the Minister of Public Works, announced then that Chicago-based Milhouse Engineering and Construction proposed the facility “as a public-private partnership with no upfront costs to the Government”.
Plans included a five-storey building with meeting rooms, office and retail space, a cafeteria, underground parking and an entertainment area.
Colonel Burch said at the time that it was hoped construction would start in December 2020 with completion of the building in March 2022.
Photographs of the site last month showed it was unkempt and covered in growth.
The public works minister said in August that he expected “modifications” to what was originally announced.
He added: “Our challenge is the size of the lot, and being able to occupy the building and provide funding to pay back the development.
“We are likely to put some other people in there — other government departments.”
A government spokesman said last week: “This has not progressed as swiftly as we would have liked. However, the developer is still interested in proceeding and options for government departments that would be a good fit with the arbitration centre are still being considered.”
He added: “The small footprint of the site requires a sustainable model to ensure the building’s uses repay the developer.
“That analysis must be satisfactorily completed before any construction is commenced.”