Court Ruling Enhances Bahamas' Trusts, Arbitration Standing – Taylor Wessing

Editorial Staff 23 January 2024

Court Ruling Enhances Bahamas' Trusts, Arbitration Standing – Taylor Wessing

A father-and-son court battle over billions of dollars of assets held in trusts led to a ruling that boosts the reputation of the Caribbean jurisdiction, a law firm argues.

The result of a court case pitting Italian billionaire Gabriele Volpi against his son Matteo Volpi over a trust has protected and enhanced the Bahamas’ status as a jurisdiction, law firm Taylor Wessing says.

The firm recently acted for Matteo Volpi in a case which stemmed from a breakdown of family relations in 2016. Gabriele Volpi directed Delanson, a trust company, to transfer assets worth billions of dollars, including Italian football clubs, to Gabriele Volpi personally, Taylor Wessing said in its account of the case. Matteo brought proceedings against his father on behalf of the beneficial class, of which he is one beneficiary, to recover the assets and reconstitute the trusts. Matteo won in 2018 but his father and Delanson appealed that decision before the Bahamian Supreme Court.

After 28 months of proceedings, the judge handed down the judgment and dismissed Gabriele and Delanson's argument in its entirety.

"This appeal has huge ramifications in future trust arbitrations that extend beyond the Bahamas. The judgement decides how the Bahamas Arbitration Act is interpreted and clarifies the position on the types of challenges that can be made to arbitration awards before the court,” Taylor Wessing told WealthBriefing. “It also protected and strengthened the Bahamas' position as a forum for trust arbitration, and sent a message to those who wish to have their trust disputes determined by arbitration that the ability for parties to challenge an arbitration decision is limited and the courts will not easily intervene in the tribunal's findings."

This news service asked the law firm what sort of challenges to arbitration awards can now be made, and what sort of challenges are out of bounds.

“The Bahamas is one of the very few offshore centres to include trust arbitrations as part of its Arbitration Act. No offshore centre has previously dealt with an appeal in relation to a trust arbitration so it was unclear how limited the challenge will be. As this is the first ever case to deal with the principles of challenge, it has set the categories of challenge for subsequent cases,” the international law firm said. 

“It is now clear that parties are able to challenge arbitration awards on a limited basis. Those are: If the arbitration didn't have the jurisdiction to make the award or decision in question or if there was some form of serious irregularity,” it continued. 

“An example to the second basis [mentioned above] would be Gabriele argued that the tribunal’s findings that Gabriele knowingly received trust assets was a serious irregularity giving rise to substantial injustice. They argued this on the basis that the point was not put to Gabriele when he was cross-examined as a witness and so the tribunal were wrong to make that finding.

“The judge found that this was not a serious irregularity and there was no basis for the challenge. The tribunal's treatment of evidence was not a cause for challenge and even if it were there would have been no substantial injustice because there was nothing to suggest that the tribunal would have reached any different conclusion with respect to the issue.

“Importantly, the court determined that under the terms of the Bahamas Arbitration Act, parties could only make a challenge on a wrongly decided point of law only if the parties to the arbitration all consent to this challenge being made.

“Any other challenges to trust arbitration awards made outside of these bases, subject to individual cases, are likely to be treated as out of bounds,” the firm said.

WealthBriefing asked Taylor Wessing how many such cases are heard in the Bahamas.

“Gabriele Volpi attempted a `root and branch’ attack on the Tribunal's partial award. Because this was the first judgement of its kind, the Bahamas Court has set very strict limits on the scope of the appeal against an arbitration award in trusts,” Taylor Wessing said. “Those limited appeals are very similar to any other commercial arbitration. As such, it is a judgement which will assist in the ongoing ability of parties to apply arbitration in a trust deed (depending upon the jurisdiction) and will likely encourage Bahamian trusts to have such a dispute resolution clause within it,” it concluded.

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