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Litigation - Cayman Islands

Where, in the course of international litigation, a party seeks to depose a future witness of fact using powers available to it under the laws of another jurisdiction or under powers of the domestic court, the question arises as to what approach the courts should take to such steps. Four recent Cayman Islands cases have considered these issues from the perspective of Cayman law. The judgments confirmed that, in appropriate circumstances, domestic and foreign depositions will be permitted to assist trial preparation, but confirmed that depositions will be permitted only in exceptional circumstances.

Most common law jurisdictions have been hostile to permitting depositions of future witnesses, even in circumstances in which the law of the jurisdiction in which the witness was resident permits such depositions. An established body of case law has consistently indicated that anti-suit proceedings would be readily granted to restrain Section 1782 depositions of intended witnesses. This has largely been on the basis that such depositions would constitute unwarranted double cross-examination. Courts in the United Kingdom,(1) Australia(2) and Jersey(3) have all reached this conclusion.

However, in Phoenix Meridian Equity Limited v Lyxor Asset Management SA
(4), after an expedited hearing and a special sitting of the court, the Cayman Islands Court of Appeal confirmed the Grand Court's refusal of an anti-suit sought by the defendant to restrain Section 1782 depositions of future witnesses. This decision was reached in part by applying the principles in the leading existing cases to the facts of the case and in part by taking into account specific issues of Cayman civil procedure.

The Phoenix litigation has provided valuable guidance on the availability of depositions in aid of Cayman litigation. The practical effect is that it may be easier to obtain depositions of witnesses resident in foreign jurisdictions using the procedures of those jurisdictions than under Cayman law provided that it can be shown that the taking of such foreign depositions will not constitute oppressive or abusive conduct in the context of the trial of the Cayman action. While this result may seem odd as a matter of initial impression, it is an indirect effect of the role of comity in international litigation. As the decision of the House of Lords in the South Carolina case acknowledged, foreign legal systems may offer litigants opportunities to obtain evidence by means which are not available in the domestic legal system, but in the absence of oppression, the domestic court will not step in to prevent the foreign process.

The judgments also indicate the importance of considering specific principles of Cayman law, particularly Cayman civil procedure, when applying principles derived from judgments in other common law jurisdictions.

A party seeking assistance under Section 1782 to seek depositions of future witnesses in aid of Cayman litigation will still have to be ready to face the challenge of an anti-suit injunction in the Cayman Islands. The judgments in Phoenix indicated that the court considered carefully the reasons given for the depositions in the specific context of the procedural history of the litigation. In other circumstances, the Grand Court may be persuaded to intervene in order to protect the integrity of the domestic trial process.