Bermuda is a hub of international business activity. Incorporated companies and individuals resident in Bermuda enter into agreements every day with parties located outside Bermuda for the delivery of goods and services.

On occasion, disagreements arise between parties to these agreements, which lead to litigation before the courts. The key questions, for the Bermuda resident on one side of the agreement and the foreign party on the other, are where the dispute will be heard — and which jurisdiction’s law the court will apply.

The ultimate determination of the place in which the dispute is heard can be of critical importance from a legal perspective, as the relevant law applicable to the dispute may vary considerably between different countries. In addition, it may be extremely expensive in a complex case to make arrangements for witnesses to travel and be accommodated abroad. These expenses may be so high that, considering the amount in dispute, it is not cost-effective to proceed.

When entering into a contractual arrangement with a foreign party, the prudent way to maximise the likelihood that a future dispute will be heard in Bermuda is to provide for it in the agreement. Firstly, you will want the terms of the agreement to state that the agreement itself is to be governed by Bermuda law. Secondly, you will want a provision in the agreement confirming that the parties submit to the exclusive jurisdiction of the Bermuda courts, and that any disputes are to be heard in Bermuda. These provisions will indicate, not only to the Bermuda court, but to foreign courts as well, that the parties intended any dispute to be heard in Bermuda.

In many instances, however, agreements do not address the issue of jurisdiction. Often, there is no written agreement between the parties at all. In these situations, the court will consider a number of factors in determining whether the proceeding should be heard in Bermuda or in another court. While none of these factors is necessarily determinative, the court will assess them together and make a decision as to the best location for the matter to proceed in all of the circumstances.

[bul] The court will always consider the law that applies to the dispute between the parties. If the law to be applied is that of Bermuda then that suggests that the matter should be heard in Bermuda. It is generally preferable to have a Bermuda judge consider and rule on issues of Bermuda law as opposed to having a foreign court do so.

[bul] The court will also look at the location of the key witnesses that will be called to testify at trial. If most are located in the foreign jurisdiction, the State of New York for example, the court will consider that to be a factor in favour of the party seeking to have the matter heard in New York. It is more convenient for the witnesses involved, and also is more efficient in terms of travel time and cost.

[bul] The court will be mindful of the location of the documents that will be required for trial. In complex commercial cases, there may be hundreds of documents relevant to matters in issue. In such circumstances, the court will view the location of those documents as an important factor in deciding where the trial should be held.

After reviewing these factors and any other relevant considerations, the court will decide whether there is some place other than Bermuda that is the appropriate forum for the trial of the action. If so, the court will order that the action commenced in Bermuda be stayed in favour of an action in the other more suitable jurisdiction. The burden of proving that another jurisdiction is more suitable than Bermuda lies with the defendant, who will be the party seeking to have the matter heard in another jurisdiction.

Issues of jurisdiction are very important. If one is considering commencing legal proceedings against a foreign defendant in Bermuda, these issues must be carefully considered to ensure that time and costs are not thrown away on a proceeding commenced in the wrong forum.Attorney Kevin Taylor is an Associate in the Litigation and Insolvency Practice Group at Appleby Hunter Bailhache. A copy of Mr. Taylor’s column can be obtained on the Appleby Hunter Bailhache website at www.applebyglobal.com. This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.