In a groundbreaking decision, the Grand Court has confirmed in Unicorn Biotech Ventures One Ltd (in its capacity as general partner of Rigmora Biotech Investor One LP) & Anor. V ATP III GP, Ltd [2026] CIGC (FSD) 1 that it has inherent jurisdiction to compel parties to participate in alternative dispute resolution (“ADR”).
Background
The proceedings arose from disputes between two limited partners (the “LPs”) and the general partner (the “GP”) of a Cayman Islands exempted limited partnership (the “Fund”), with the LPs holding approximately 98% of the economic interest in the Fund. Following a breakdown of the relationship between the parties in early June 2025: (i) the LPs commenced writ proceedings against the GP in the Cayman Islands seeking declarations regarding the validity of certain capital calls issued by the GP (including because those capital calls had been issued by the GP for an improper purpose); and (ii) the LPs filed a petition seeking to wind up the Fund on the basis of a loss of trust and confidence in the GP (including due to alleged misappropriation of Fund assets by the GP and its sole director and shareholder Dr Seth Harrison). A heavily expedited timetable was put in place pursuant to which both sets of proceedings were set down for a one week trial commencing in mid-January 2026.
In late October 2025 the GP applied for orders compelling the LPs to attend a two-day mediation with the GP in December 2025 (i.e. roughly one month before the trial of the Cayman proceedings was due to commence). The LPs opposed the application on two grounds: first, that the Court did not have the power to compel the parties to attend a mediation; and secondly, even if the Court did have the power to order the parties to mediate, it should not make such an order in this case.
Jurisdiction of the Grand Court to Compel ADR
Unlike typical cases where a litigant seeks an order compelling another the litigant to engage in ADR, the LPs were not bound by any contractual obligation to participate in mediation. Regardless, the GP argued that the Court has the inherent jurisdiction to compel litigants to participate in ADR. The Honourable Justice Asif KC accepted this argument.
The basis for Asif J’s decision was that pursuant to section 11 of the Grand Court Act (2015 Revision) the Grand Court has the same jurisdiction as the High Court in England & Wales. In turn, in the case of Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416 the English Court of Appeal had ruled that the High Court’s inherent jurisdiction to control its own process includes the power to order litigants to engage in ADR; and that the High Court’s obligations to make the civil justice system accessible, fair and efficient require it to facilitate the usage of ADR (including by compelling parties to engage in ADR where appropriate). In light of section 1 of the Grand Court Act, Asif J held that the reasoning in Churchill v Merthyr Tydfil applied with equal force to the Grand Court’s powers.
In reaching this conclusion Asif J rejected an argument by the LPs that the existence of Practice Direction 3 of 2022 — which empowers the Grand Court to order litigants to participate in judicial mediation before a Grand Court judge — means that the Grand Court does not have the inherent jurisdiction to order different forms of ADR. Asif J further commented that in practice the judicial mediation scheme established by Practice Direction 3 of 2022 has not been successful (a point returned to below).
Exercise of Discretion
As for the approach to be taken by the Grand Court when deciding whether to order litigants to engage in an ADR process, Asif J held that it is as follows:
- The “ultimate test” to be applied is “whether compelling participation in ADR has a real prospect in furthering the overriding objective by bringing about a fair, speedy and cost-effective solution to the dispute”. This test of whether there is a “real prospect” that ADR will lead to a useful outcome is a lower standard than a balance of probabilities test.
- When applying this test, the Court should bear in mind that even if an ADR process fails to resolve a dispute entirely, it will nonetheless have utility if it manages to narrow the issues between the parties.
- At the same time, however, the Court must also take into account the likelihood that ordering the parties to participate in ADR will interfere with a litigant’s right to a fair trial (for example, by unduly interfering with a party’s preparations for trial).
- Asif J declined to set out a “checklist” of criteria that should be considered by the Court in every case when determining whether to order ADR. Ultimately the Court’s assessment of whether to order litigants to engage in ADR is “multifaceted and multifactorial”, and will depend heavily on the specific facts before the Court.
Decision
Despite having concluded that the Grand Court has the power to order litigants to participate in ADR, and despite having found that the threshold for the Court to make such an order is fairly low, Asif J declined the GP’s application. The two key reasons for this were:
- The prospects of a mediation leading to a successful outcome were low. The LPs had made serious allegations of wrongdoing against the GP and Dr Harrison and had taken the position that it was non-negotiable that any settlement agreement must terminate the parties’ relationship. Despite this evident breakdown in the parties’ relationship, the GP and Dr Harrison had refused to confirm that they would entertain a settlement arrangement under which they would no longer feature in the management of the Fund.
- The GP’s proposed timing for the mediation would be highly disruptive to the parties’ preparations for trial. The GP had proposed that the mediation should take place in-person in mid-December 2025. This was only one month before the trial was due to commence and at the exact same time that the parties would be in the process of settling the trial witness statements. The proposed mediation would therefore be a “time consuming distraction from the necessary work that needs to be done to be ready for trial”.
Key Takeaways
This is a groundbreaking decision that will significantly change the dynamics of Cayman litigation and gives litigants and the Court an additional tool for resolving disputes efficiently and effectively. We anticipate that there will be an increased prevalence of ADR in Cayman Islands litigation in the future as a consequence.
Going forward there exist various uncertainties to be resolved in this area of the law, including:
- How low precisely has the bar been set for parties to obtain compulsory ADR orders? Our view is that the test adopted by Asif J sets the bar sufficiently low that most litigants who are prepared to put forward a sensible ADR proposal will be able to secure a compulsory ADR order if they wish. In other words, the fact that the GP failed to secure a compelled ADR order says more about the weakness of its application than anything else. Going forward, and save for in extreme cases, a litigant who is determined to participate in ADR and takes care to prepare an intelligent ADR proposal should be able to achieve it.
- What is the future of the judicial mediation scheme under Practice Direction 3 of 2022? Asif J commented that this scheme has been unsuccessful to date, primarily because the Cayman Islands judiciary has insufficient judges available for the scheme to be workable. Absent a significant and prompt increase in the number of Grand Court judges, Practice Direction 3 of 2022 may be destined for the dustbin.
- Will the Grand Court Rules be amended to supplement the Grand Court’s newly confirmed jurisdiction? Following the Churchill decision, the English Civil Procedure Rules were amended in order to include specific provisions regarding compulsory ADR orders. Whether a similar approach is warranted in the Cayman Islands will largely depend on what teething issues (if any) arise as Cayman litigants bring further compulsory ADR applications. In particular, we note that although Asif J declined to provide a “checklist” of factors to be addressed by the Court when adjudicating an ADR application, a checklist of sorts was included in Practice Direction 3 of 2022 in regards to applications for judicial mediation. We would not be surprised if in due course amendments to the Grand Court Rules and/or a new practice direction are enacted in order to further facilitate ADR applications.
