The Cayman Islands Court of Appeal has provided important guidance on the approach to service in the context of applications to enforce foreign arbitral awards in its recent judgment in Suning Group Co Limited & Suning.com Co Ltd v Carrefour Nederland BV (CICA (Civil) 15 of 2024).
Background and Summary of the Case
In Suning v Carrefour, the Court of Appeal was called upon to consider the proper approach to service of orders granting leave to enforce a foreign arbitral award. The case arose from a dispute over the sale of shares, which was referred to arbitration in Hong Kong, resulting in an award in favour of Carrefour for RMB 1 billion (approximately US$140 million) plus interest and costs. Suning did not apply to set aside the arbitral award in Hong Kong, and Carrefour sought to enforce it in the Cayman Islands.
The Service Issue
Carrefour applied ex parte in the Grand Court for leave to enforce the Hong Kong arbitral award in the same way as a judgment obtained in the Cayman Islands. The Grand Court granted the order and directed that service be effected on Suning by delivering the court documents (including the ex parte order) to their Hong Kong arbitration counsel, which was done (in addition to the documents being delivered, out of an abundance of caution to the defendants in Hong Kong (by hand) and China (by courier)).
Suning challenged the validity of service, arguing that the method ordered by the Grand Court was irregular and not in accordance with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matter (“Hague Convention”).
The Hague Convention establishes a framework for the service of judicial documents abroad, generally requiring transmission through a designated Central Authority in the recipient’s jurisdiction. This process is designed to ensure due process and respect for sovereignty, but in practice, it can be slow, cumbersome, and, in some jurisdictions (notably China, which has objected to certain alternative methods under Article 10 of the Hague Convention), highly restrictive.
Court of Appeal’s Approach to Service
Order 73, rule 31(6) of the Grand Court Rules governs service of ex parte orders granting leave to enforce foreign arbitral awards. The rule provides that such orders must be served on the respondent either personally, by ordinary service, or in such other manner as the Court may direct, including electronically. The Court of Appeal emphasised that this gives the Grand Court a broad discretion to order service “in such other manner as the court may direct.” Unlike the English rules, which require ‘good reason’ and treat alternative service as exceptional, the Cayman rules allow the court to consider alternative methods as a matter of routine, provided there is justification.
The Court of Appeal made clear that whilst the Hague Convention cannot be ignored, it is not an absolute barrier to alternative service. Where the respondent is in a jurisdiction that is a party to the Hague Convention (such as Hong Kong and China), the Court must consider whether there is ‘good reason’ to depart from the Hague Convention’s prescribed method of service (i.e. through the Central Authority). If the relevant state has made an Article 10 objection (as China has), the Grand Court would then need to consider whether ‘exceptional’ or ‘special’ circumstances exist so as to justify some other form of service.
The Court of Appeal has provided clear guidance that applicants seeking an order for alternative service of arbitral awards must provide evidence regarding:
- The practicalities and expected timeframe of service via the Central Authority;
- The reliability of such service;
- Any urgency or need for expedition;
- Whether the relevant jurisdiction has made an Article 10 objection; and
- The reasons why alternative service is appropriate in the circumstances.
The Court of Appeal recognised that, especially in a jurisdiction like the Cayman Islands, which is a global financial centre with a strong pro-enforcement policy, the ability to enforce arbitral awards efficiently is of paramount importance. Accordingly, it confirmed that if an application contains all the necessary information, there is no reason why the Grand Court should not ‘usually’ or ‘routinely’ decide that good reason or exceptional circumstances are made out so as to justify an order for service other than through the relevant Central Authority. This could include service directly on the relevant party electronically, or, as in this case, service on the lawyers who have acted in the arbitration (which is often the most reliable and expeditious way of bringing proceedings to the attention of the respondent, especially where the respondent has already participated fully in the arbitration process).
The Court of Appeal’s reasoning reflects a pragmatic balance between international obligations and the local policy of facilitating swift enforcement. The Court of Appeal also observed that, in the absence of any prejudice to the respondent and where no defence to enforcement is raised (as was the case here), technical objections to service should not be allowed to frustrate the enforcement of arbitral awards.
Implications for Future Cases
The Court’s guidance establishes a clear procedural standard for service in enforcement proceedings. Going forward, any failure to comply with the requirements set out by the Court of Appeal – particularly the need to address the Hague Convention and to provide evidence justifying alternative service – may result in any service being treated as ineffective and/or the order being set aside as invalid. The Court of Appeal has given these clear warnings at paragraphs 61 and 65 of the judgment.
Conclusion
The Suning v Carrefour decision confirms that the Cayman courts will adopt a flexible, pragmatic and policy-driven approach to service in arbitration enforcement proceedings. While the requirements of the Hague Convention are respected, they will not be allowed to impede the effective and timely enforcement of arbitral awards. Provided there is good reason and the necessary information is before the court (such as evidence of delay or impracticality of using the Hague Convention), the Cayman courts will usually or routinely permit alternative service where justified – particularly in the context of enforcing foreign arbitral awards, where speedy finality is a policy objective, ensuring that the Cayman Islands remains an attractive and effective jurisdiction for the enforcement of international arbitration awards.
Campbells acted for Carrefour in both the Grand Court and Court of Appeal proceedings. Please do not hesitate to contact the authors should you have any questions.
