International Litigation – Bermuda – Warren B. Bank FCIArb

Cox Hallett Wilkinson Limited (“CHW”) is one of Bermuda’s leading commercial law firms, with one of its constituent founding firms having been established on the island more than one hundred years ago. Today, CHW provides an extensive range of legal services to a diverse local and international clientele, focusing primarily on corporate and commercial, litigation and dispute resolution, insolvency and restructuring, international arbitration, private client, estate planning, real estate and intellectual property matters in a practical, cost effective and timely manner. Our business approach is to provide a high standard of professional advice, delivered by a core team of attorneys, and to develop close working and, in many cases, long-standing relationships with our clients and overseas counsel around the globe. CHW is a member of the Meritas international law firm network, a global alliance of more than 183 independent law firms spanning over 86 countries.

Our firm has maintained a steady flow of large-scale and high-value cross-border insolvency and contentious trusts litigation throughout the pandemic and beyond. We have been involved in some of the largest contentious trust cases of significant complexity and quantum before the Bermuda Courts in the past year, achieving success in respect of each matter that proceeded to judgment. This has included successfully acting for a class of beneficiaries in an application to bless a restructuring of the trust assets, as well as other matters involving multifaceted variations of trusts. We have also worked closely in conjunction with attorneys in the US in disputes in the resinsurance industry. We continue to advise and act for both companies and creditors seeking to engage Bermuda’s special “light touch” provisional liquidation regime.

In one recent case, we were instructed to represent several groups of investors in a US-based insurance-linked securities (ILS) fund business, who were opposed to the proposed buy-out transaction and scheme of arrangement before the Supreme Court of Bermuda. Our litigation team, working in conjunction with attorneys in the US and eminent leading counsel in London, successfully negotiated a highly advantageous settlement with the scheme companies and their joint provisional liquidators, thus allowing the eventual sanction and approval of the scheme by the Court.

See answer 2 above: trusts, insolvency, restructuring. We are continually requested to provide advice to law firms across the globe with respect to civil procedure in Bermuda, or the Bermuda law aspects of multinational contracts and trusts. Two of our counsel hold the FCIArb designation from the Chartered Institute of Arbitrators and are currently appointed to arbitrate disputes arising in the cruise line industry, as several of these entities and their vessels are registered in Bermuda. We believe that we are an approachable and respected firm in the Bermuda litigation market and, owing to our sterling reputation, are often referred matters by the larger local firms when they are conflicted from acting.

We would approach this question from the reverse angle: in line with international trends, one always seeks to encourage forms of ADR such as mediation or arbitration as an alternative to litigation. This may be particularly advantageous to parties that seek to maintain the strict confidentiality of their dispute or have it resolved under the auspices of one of the many international ADR bodies such as the ICC or CIArb. On the other hand, the judiciary of the Supreme Court and Appeal Court of Bermuda are of the very highest calibre, and their jurisprudence is often cited in important decisions in other Commonwealth jurisdictions, particularly in the field of offshore trusts and reinsurance.

As almost all of our cases have an international angle, we have found that the significant time differences between Bermuda and, for example, Hong Kong, China and Singapore make real-time communication somewhat difficult but not insurmountable, as we are very used to holding telephone and video-streaming conferences very late at night or over weekends when necessary. We also find ourselves having to redraft pleadings or affidavits on behalf of clients that are accustomed to very different styles of legal drafting, for example those accustomed to US-style litigation, in order to render them more appropriate for use in the courts of Bermuda.

Our firm has not yet seen any litigation that may specifically be classed as ESG-related. However, as one of the main global centres of the insurance and reinsurance industries, Bermuda has a highly developed and growing ILS sector, which appears to be committed to sustainability. It has been said that ILS is well able to provide easy access to capital to insure against environmental risk factors. In so doing, this has identifiable social and governance benefits such as in providing direct access to capital to assist with disaster relief, rebuilding and general economic recovery. As investment in this sustainable form of asset class increases, one may expect an increase in ESG-related litigation.

Because so many litigation clients in our jurisdictions are global entities with operations spanning several continents, it is inevitable that such litigation will increase for the simple reason that claims affecting overseas operations are litigated in the Bermuda courts, having jurisdiction in such claims. There can be no doubt that our clients will therefore have to consider ESG factors when managing their litigation risk.

The onset of the pandemic saw a dramatic rise in the use of technology to hold online video-streaming conferences and eventually, court hearings and arbitrations. Although it has allowed many practitioners to work remotely and effectively, it is still no substitute for the ability to communicate face-to-face where possible. The ability to properly assess the demeanour of witnesses in court hearings and arbitrations is somewhat impeded by remote hearings where they are physically absent. On the other hand, as the technology has improved, this problem has lessened. Further, we are seeing the rise and growth of secure, encrypted online document management / e-discovery service providers that have developed highly sophisticated systems for the effective and secure management of hearing bundles and pleadings over several countries. Our firm has found this particularly useful in our many multiparty trust hearings, when there are often more than 20 different parties, including representatives and trustees. Such cases involve hearing bundles of many thousands of pages. The development of sophisticated OCR-searchable databases that are simple to operate and highly responsive in real-time has greatly facilitated this type of litigation.

The writer is a signatory to and member of the Campaign for Greener Arbitration (CGA), which seeks to minimise the carbon footprint in international arbitration. It has traditionally been common for such proceedings to involve parties from several countries having to fly to an arbitration hearing in another country on long-haul flights and produce hundreds of files of documents. Now, by encouraging electronic correspondence and video conferencing, and avoiding international travel as far as possible, it is hoped that the international arbitration community will minimise its impact on the global environment.

This is extremely important. Not all developments in litigation are found in reported judgements. By subscribing to email newsletters that highlight particular areas of interest in different jurisdictions, it is now far easier to have these “pushed” to the email inbox than to actively go out and search for this information. Attending conferences and events provides invaluable opportunities to meet other practitioners, forge bonds with colleagues and share personal insights. This is particularly important in the relatively small litigation community in Bermuda, where we often find that another firm is our opponent in one particular matter while at the same time being part of the same team of lawyers in another, unrelated matter. This is only one of the many reasons why members of the Bermuda Bar Association enjoy exceptionally collegial professional relationships.

The onset of sanctions by the UK, EU and US against Russia has had a significant impact on the ability of lawyers to accept instructions from any entity or person subject to sanctions. Bermuda, as one of the UK’s Overseas Territories, had previously enacted the International Sanctions Act and Regulations, 2013, which extends to Bermuda any order made by the Privy Council as an Order in Council. For all practical purposes, as far as the implementation of financial sanctions is concerned, Bermuda is in exactly the same position as the UK. As such, the UK’s sanctions measures are governed by the Russia (Sanctions) (EU Exit) Regulations, 2019, which are promulgated under the Sanctions and Anti-Money Laundering Act, 2018.

Of specific relevance to Bermuda are the amendments to the Sanctions Regulations that have focused on the transportation sector, particularly aviation. There is a prohibition on providing insurance and reinsurance services in aviation and space goods/technology to those connected with Russia or for use in Russia. Similar restrictions affect marine vessels.

At the moment, there are no regulations that specifically target Bermuda trusts with a “Russian connection”, and there is certainly no requirement to terminate such Trusts or make distributions to Beneficiaries, as is the case with Trusts directly affected by the EU Regulations. This situation may well, however, change in the future.