In the recent decision of Suning International Group Co Ltd v Carrefour Nederland BV the Cayman Islands Court of Appeal provided guidance on the procedure to be followed under Order 73, rule 31(6) of the Grand Court Rules for service of proceedings to enforce a foreign arbitral award.

In doing so, the Court of Appeal emphasised the policy of Cayman Islands law in favour of swift enforcement of arbitral awards. It also cautioned that failure to follow the guidance in this judgment will likely result in a service order being set aside.

Background

The respondent obtained an arbitral award in Hong Kong requiring the appellants to pay RMB1 billion (plus interest and costs) arising out of the failure by appellants to make payment pursuant to a put option for shares exercised by the respondent.

Pursuant to section 5 of the Foreign Arbitral Awards Enforcement Act (1997 Revision) and with leave of the Court a Convention award may be enforced in the same manner as a judgment or order of the Grand Court. GCR Order 73, rule 31 deals with the procedure to be followed.

Rule 31(6) provides that an order giving leave may be served personally, by sending to the respondent's usual or last known place of residence or business, or in such other manner as the Court may direct, including electronically.

Grand Court's decision

The Grand Court made an order ex parte granting leave to enforce the arbitral award in the Cayman Islands and directed that the order and associated documents be served on the appellants by delivery to their Hong Kong counsel in the arbitration proceedings. The respondent arranged service pursuant to the terms of the order, and also effected service by hand and registered post on each appellant respectively.

The appellants then applied to set aside the order on various grounds including that the method of service ordered by the Judge was allegedly not in accordance with the relevant law.

The appellants submitted that service of an ex parte order pursuant to rule 31(6) should be by way of service on a body corporate at its principal office or registered address and that the option of serving in some other manner should only be utilised on exceptional grounds.

They submitted there was no evidence before the Court to show that service in according with the Hague Convention would cause any particular difficulty or delay, and there was no justification for in effect ordering substituted service.

Justice Kawaley rejected these submissions and held that the wording of rule 31(6) gave the Court a suite of equal options rather than a suite of options sequentially ranked. He drew a distinction with the wording of GCR Order 65, rule 4 permitting substituted service where personal service is "impractical". He also noted there was no suggestion that serving the documents on the appellants' arbitration attorneys was contrary to Hong Kong law.

The Grand Court dismissed the application to set aside the order but granted leave to appeal on the basis that the manner in which service of an ex parte order giving leave to enforce a foreign arbitral award is a matter of public interest which would benefit from a decision from the Court of Appeal.

The appeal

The Court of Appeal dismissed the appeal.

Policy of "speedy finality"

The Court of Appeal endorsed Mr Justice Foxton's comments in the English decision of M v N. In particular, the policy of speedy finality reflected in the approach to arbitration cases is even more compelling in connection with applications for enforcement of awards.

Mr Justice Foxton set out factors that he held justified an order for alternative service notwithstanding that the Hague Service Convention applied.

These included that the application was brought to assist with the enforcement of an arbitral award which engages the policy of speedy finality, the respondent had fully engaged (through counsel) with the proceedings that culminated in the award, the award had been outstanding for a considerable period of time (two ...