The Tribune

By David F. Allen Jr. Esq.

The casual reader may be puzzled by the amount of media coverage concerning transforming the Bahamas into an international arbitration centre. Why the pomp and ceremony concerning such a mundane legal area as arbitration? Arbitration is not a game changer, a life saver, or an economic powerhouse for the Bahamas’ financial services industry. In the purest sense, arbitration is a secret trial without judges, little more.

Arbitration is already permitted in the Bahamas, and has been for a long time under the Arbitration Act. Why, then, has arbitration become the buzz word of choice for leaders in the financial services industry? The recent zeal for arbitration is a Trojan Horse, used to muffle the outcry of local attorneys and strong arm the ‘opening up’ of the Bahamian legal system to foreign practitioners.

Via the ‘free movement of labour’ provisions contained in CARICOM’s Caribbean Single Market & Economy (CSME) to the European Union’s (EU) Economic Partnership Agreement (EPA) and World Trade Organisation (WTO) membership, foreign forces and parties have been chomping at the bit to liberalise and enter the Bahamian legal system. The Government has sought to liberalise services as a ‘quid pro quo’ offering to garner favour with, and access to, these elite international clubs. The holy grail of these offered services would be the Bahamas Bar.

The Bahamas’ legal profession, much like Bahamian realtors, is the envy of the Caribbean and even the world. Many Bahamian attorneys earn multi-million dollar salaries and pay zero income tax. Further, Bahamian attorneys have access to ultra high net worth clients right at their doorstep on Paradise Island, and at Lyford Cay, Old Fort Bay and Albany. What’s not to love about that?

Having researched arbitration in Bermuda and other offshore jurisdictions, it is clear that arbitration has not proven a large economic stimulus, other than in Singapore. Arbitration thrives in larger, industrialised nations with stromg legal systems. Why would a multi-billion dollar company choose the Bahamas over New York to air its grievances? Is the Bahamas globaly respected for its law enforcement, jurisprudence or organisational systems?

The truth is the Bahamas is in the death throes of its financial services lifespan. The effect of lifting secrecy was even more devastating to the banking industry than first imagined. The Bahamas is no longer a favoured jurisdiction for offshore assets. With its skyrocketing crime rate, slow and disorganised company registry and high labour costs, it has been outclassed by British colonies such as the Cayman Islands, Bermuda and British Virgin Islands.

Arbitration is certainly not a valid reason for ‘giving away’ our legal system, and is a Trojan Horse. As the Bar president alluded, it is highly likely that foreign interests seek to gain access to the Bahamas’ lucrative legal market.

Foreign firms would desimate the practices of Bahamian commercial attorneys. From personal injury matters and resealing of probates, to corporate trademarks and contracts, foreigners would choose overseas law firms to represent their interests rather than Bahamians.

The Bahamas has a history of exploitation by foreign interest groups. However, the mindset of its leaders has not changed, though the slogan is ‘Believe in Bahamians’. They still seek another Baha Mar project to save the day and act as national saviour. Unfortunately, without renewed secrecy, there is no saviour for the Bahamas financial services industry on the horizon. Certainly, arbitration is no quick fix.

As with tourism, the Bahamas must slowly rebuild its financial services product one wealthy client at a time. Small boutique hotels are advisable for the tourism market, and small trust companies and family offices can offset losses in the financial services industry.

Moving forward, the Bahamas must focus on pragmatic upgrades to its current financial services offerings, instead of desperately grasping at straws and easy fixes. Certainly, the legal profession should be protected and reserved for Bahamians, not sold to the highest foreign bidder.