The Supreme Court of The Bahamas has recently ruled in Gabriele Volpi v Delanson Services Ltd & ors, providing a clear statement on when a court will refuse to halt an arbitration because of a pending challenge to the tribunal.
Background
The dispute concerned three Bahamian family trusts - the Winter, Spring and Summer Trusts (the Trusts) - which were settled for the benefit of the Volpi family by Gabriele Volpi, an Italian-Nigerian businessman with substantial interests in logistics, ports and energy. Mr Volpi's children, Matteo, Simone and Isabella, were discretionary beneficiaries.
In 2016 the corporate trustee, Delanson Services Ltd (Delanson), distributed the entire assets of the Trusts to Garbriele Volpi. Matteo Volpi challenged those distributions, claiming they were made in breach of trust and contrary to Delanson's duties to the wider family. Matteo alleged that his father had directed or authorised the payments and that Delanson had simply followed his wishes. The trust instruments contained exclusive arbitration clauses, therefore the dispute was referred to arbitration seated in The Bahamas.
A three-member arbitration tribunal was appointed, comprising Lord Neuberger of Abbotsbury, Dr Georg von Segesser and Professor Alberto Malatesta (the Tribunal). The proceedings were divided into two phases, dealing with liability and quantum.
In June 2020 the Tribunal issued a Phase I partial award finding that the distributions were in breach of trust and that Gabriele had known this when he received them. Court challenges to that award by Gabriele and Delanson were dismissed, and Phase II (quantum and valuation) was listed for a hearing in October 2025.
Days before that hearing, Gabriele began fresh court proceedings seeking to remove the Tribunal under section 35 of the Bahamian Arbitration Act 2009 (the Removal Claim) based on allegations that several procedural decisions showed bias or unfairness. He also asked the Supreme Court to stay the arbitration until that removal claim could be determined.
Matteo opposed the stay, arguing that the removal claim was weak and that any further delay would cause serious prejudice, as the arbitration had already been running for seven years. Delanson, Simone and Isabella supported the stay.
The issues
The question for Chief Justice Winder was whether to exercise the Court's discretion to stay the arbitration while the Removal Claim was pending. The question was therefore whether the Removal Claim had sufficient merit to justify a stay and where the balance of prejudice lay between the parties.
The judgment
Following a review of the Court's powers under section 16(3) of the Supreme Court Act and rule 26.1(2)(q) of the Civil Procedure Rules, alongside section 45(1) of the Arbitration Act, which confirms that procedural and evidential matters are for the Tribunal, Winder CJ refused the stay. In doing so, Winder CJ also noted that Article 17(1) of the UNCITRAL Rules requires the Tribunal to treat the parties equally and to avoid unnecessary delay or expense.
Winder CJ accepted that stays of this kind are exceptional. Drawing on guidance from Justice Klein in an earlier judgment between the same parties, Delanson Services Ltd v Volpi & ors, he held that a stay depends on the balance of harm, the prospects of the underlying challenge and the broader policy of arbitration proceeding without interruption.
After reviewing the alleged procedural missteps, including the Tribunal's refusal to recuse itself after viewing a document said to be privileged, the Court found that the Tribunal's reasoning was detailed and fair. The recusal decision (Procedural Order No 26) showed that the contested document was irrelevant to quantum, and that exposure to such material did not indicate bias.
In arriving at his decision, Winder CJ noted that the arbitration had already "been delayed some four years as a result of stays pending challenges and appeals by Gabriele and Delanson" and commented that while "b...
