The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government appears prepared to allow international arbitration specialists to operate from the Bahamas without a work permit, as a Cabinet Minister yesterday reiterated that legal ‘liberalisation’ was “essential” for this nation to become a dispute resolution hub.

Hope Strachan, minister of financial services, used separate speeches (see article on Page 3) to reinforce her view that the Bahamian legal profession must ‘open up’ if this nation is to both maintain its international financial services standing and diversify business opportunities.

Addressing a luncheon given by the Chartered Institute of Arbitrators (CIArb) Bahamas branch, Mrs Strachan sought to reassure the Bahamas Bar Association and its members that they would not be squeezed out of business by foreign competition.

She added that certain practice areas, such as real estate and family and criminal law, would be “strictly reserved” for Bahamian attorneys and their law firms.

And Mrs Strachan, acknowledging that her position had caused controversy in certain quarters, pledged to work with the Bahamas Bar Association to reach a common position on ‘liberalisation’ that all sides can live with.

Confirming that the Ministry of Financial Services had been charged with developing the Bahamas into an international arbitration hub, Mrs Strachan told the CIArb and its members that it had identified “four key areas” that were “essential” to this objective.

These were identifying the key markets that the Bahamas could serve, and working with them to determine the best centre location; “legislative flexibility and keeping up with global trends; legal profession ‘liberalisation’; and the continued education and training of Bahamian professionals.

The legal ‘liberalisation’ goal is the one likely to cause the most controversy, as the Minister ‘stuck to her guns’ on suggesting this nation’s current approach was out of step with global trends and the Bahamas’ own ambitions.

Having attacked the perceived legal ‘closed shop’ last week, she said yesterday: “In light of the evolving environment, we can no longer isolate ourselves from the global sector while presenting ourselves as the leading international financial centre in the Caribbean.”

Mrs Strachan argued that the sector had to ‘liberalise’ so that the Bahamas could develop “new practice areas” and expand into international legal and arbitration services, areas which were increasingly in demand.

“The liberalisation of the legal profession is an essential element that cannot be ignored when implementing a development plan for international arbitration,” she added.

Although Mrs Strachan did not mention this in her speech, a copy of her prepared text that was later sent to journalists suggested the Government is prepared to waive work permit requirements to foster the development of a Bahamian international arbitration hub.

“Additionally, the liberalisation and free movement of international arbitrators, without the need for short or long-term work permits, are essential ingredients that cannot be ignored,” her written text stated.

Still, Mrs Strachan moved to reassure Bahamian attorneys and the Bar, whose president, Elsworth Johnson, was present at the luncheon, that the Government’s plans did not call for an ‘open Sesame’ that would see local practitioners overwhelmed by a foreign influx.

“Protections will be put in place in order not to infringe upon the growth of certain practice areas that will be strictly reserved for Bahamian law firms - real estate, family law, criminal law,” she emphasised.

“The liberalisation of the legal profession will only serve to allow foreign firms to service their clients in the region from the Bahamas.”

Mr Johnson last week said “nothing could be further from the truth” in response to Mrs Strachan’s comments about a ‘legal closed shop’ that was costing the Bahamas significant financial services business. He added that this nation, and its attorneys, would now have to “disabuse” an international audience of this notion.

Mrs Strachan yesterday, though, reached out to the Bar president by requesting to meet and see if they can reach a consensus position on the issue.

“I know we have some differences with the president of the Bahamas Bar Association, which I intend to sit and speak with him about,” the Minister added, so we can reach an agreed position on these issues.” Mr Johnson responded by confirming he was available to meet.

Still, suggesting that international arbitration needed an open legal profession “to thrive” in the Bahamas, Mrs Strachan added: “Bahamian law firms are poised to gain access to potentially more lucrative cross-border work, whilst also giving them the opportunity to align with international law firms and benefit from cutting-edge intellectual legal capital in the process.

“Over the next few weeks, my Ministry will collaborate with the Attorney General’s Office and key stakeholders to establish a Law Review Committee that will examine the reform of the Legal Profession Act, with the primary aim of enhancing the efficiency of the financial services industry of the Bahamas.”

International arbitration, and Alternative Dispute Resolution (ADR), have become increasingly popular as methods for resolving commercial disputes. They are perceived as avoiding the lengthy delays and costs associated with court litigation, and ADR/arbitration clauses are often being inserted into contracts - especially by companies conducting multinational or cross-border business.

The Bahamas, with its financial services and international business sectors, and strong legal profession, possesses some of the ‘building blocks’ necessary for an arbitration hub.

However, Mrs Strachan yesterday conceded that little progress towards achieving this goal had been made in the five-six years since the Bahamas passed the Arbitration Act 2009 and Foreign Arbitral Awards Act 2010 (recognising the New York convention.

“We are conscious of the fact,” she said, “very little private and institutional arbitration movement has transpired over the past five years. We intend to change that.”

“Before investing large amounts in a state of the art arbitration centre, it is essential that we identify our key markets, and know their preferences when choosing an arbitral seat or venue.”

Arguing that the Bahamas’ geographical location made it a natural arbitration hub, Mrs Strachan said her ministry planned over the next four months to survey international arbitrators and commercial attorneys who already conduct business with this nation.

Located in the US, Europe, Asia, Africa and the Middle East, they will be asked their preference for a Bahamian arbitral seat - Nassau or Freeport.

Once concluded, Professor Jan Paulsson, the arbitration expert acting as the Ministry’s consultant, will use the study results to produce a National Development Plan.

Mrs Strachan added that the Bahamas also had to provide supporting arbitration legislation that was both recognised and accepted by other countries and economic systems.

“For this reason, adopting the United Nations Commission on International Trade Law’s (UNCITRAL) Model Law on International Commercial Arbitration, recognised as the international legislative standard in many jurisdictions, will allow flexibility that will facilitate the interpretation of cases in line with internationally accepted principles,” the Minister said.

Mrs Strachan said this would boost confidence among foreign parties eyeing the Bahamas as a potential arbitration seat, while UNCITRAL’s principle legal advisor will hold a workshop on the ‘law model’s’ benefits for this nation on November 13-14.

The Ministry of Financial Services, too, is planning to hold a workshop in March 2016 by the World Bank’s International Centre for the Settlement of Dispute Resolution (ISCID). CARICOM countries will be invited to attend.

It will also work with Justice Hartman Longley to organise a ‘Judicial Dialogue’ on the New York convention at the same time.

Mrs Strachan, meanwhile, said it was important that Government officials involved in drafting international investment treaties and Heads of Agreement with developers become versed in arbitration and ADR.

“Our government often enters into contracts for various commercial transactions,” she said. Also, Caribbean nations are embracing more and more region state investment treaties and free trade agreements that contain dispute resolution provisions.

“It is therefore important that Government officers who play an intricate role in the drafting of investment treaties or foreign direct investment agreements be equipped with the necessary expertise in dispute resolution.”