According to The Cayman Islands Law Reform Commission, “Consumer Protection: Entrenching Consumer Supremacy in Cayman Islands Legislation” paper:
_“Financial service providers should abide by such general principles of consumer protection as fair contracts, disclosure and redress, and consumers should be represented in regulation and redress procedures”. _
According to Section 15. Of the Electronic Transactions Law:
_“If a change or error occurs in the transmission of an electronic record -
_If the originator and the addressee have agreed to use an information security procedure in respect of the electronic record and one of them has conformed to the procedure, but the other has not, and the nonconforming person would have detected the change or error had he also conformed, the conforming person may avoid the effect of the changed or erroneous electronic record;
If and individual is either the originator or the addressee of an electronic record, he may avoid the effect of the electronic record if the error was made by the individual in dealing with the electronic agent of another person of another person if the electronic agent did not provide and opportunity for the prevention or correction of the error, and at the time the individual learns the error, the individual:
i) promptly notifies the other person of the error and that he did not intend to be bound by the electronic record received by the other person;
ii) takes reasonable steps, including steps that conform to the other person’s reasonable instructions, to return to the other person, or, if instructed by the other person, to destroy the consideration received, if any, as a result of the erroneous electronic record; and
iii) has not used or received any benefit or value from the consideration, if any, received from the other person; and c) if neither paragraph (a) nor paragraph (b) applies, the change or error shall have the effect provided by any other law and any contract between the originator and the addressee.”_
In cases, related to smart contracts, the Grand Court of the Cayman Islands, Financial Services Division, which usually deals with cases concerning mutual funds, exempt insurance companies, financial services regulatory matters, applications relating to trusts, corporate and personal insolvency, enforcement of foreign judgments and arbitral awards and applications for evidence pursuant to letters of request from other jurisdictions will decide the responsible side.
The court may grant the following final remedies:
Rectification of a written contract to create what the court regards as the true bargain made by the parties. An order for restitution of property where the court finds that a party has been unjustly enriched. A declaration as to the parties’ rights relating to the matter in issue. An order requiring a party to provide an account of profits improperly made from a breach of trust or fiduciary duty.
In breach of trust claims, an order allowing the claimant to follow, trace and recover from the trustees or a third party property that has been applied or transferred in breach of trust. In addition to compensatory damages, the court has the jurisdiction to award: Aggravated damages, usually if the defendant is shown to have acted deliberately or out of malice towards the claimant. Exemplary or punitive damages, in three sets of circumstances: cases of oppressive, arbitrary or unconstitutional conduct by government agents; where the defendant’s actions were calculated to make a profit; or where permitted by statute (currently no such statute exists).
The courts generally respect the choice of jurisdiction in a contract. The courts apply the common law rules and consider all the circumstances of the case when deciding whether to allow the matter to proceed in the Cayman Islands. The courts usually grant a stay of proceedings commenced in breach of an agreement to refer matters to a foreign court, unless the claimant had a strong case why the proceedings should not be stayed. This requires more than simply showing that the Cayman Islands are the most convenient jurisdiction.
*The Grand Court Rules provide for collective redress, which is usually funded by the respective parties or their affiliates. On application by the claimant, the court may exercise its powers to appoint one or more defendants or other persons to represent all of the defendants in proceedings, or alternatively order a party to be added as a defendant. *
*The Cayman Islands does not have standards for proving identity in electronic transactions. While the Electronic Transactions Law (2003 Revision) contains a certification mechanism, to be effective this would rely on a third party verifying the identity of the person or entity controlling the signature device. The government is considering updating the ETL and digital identification is likely to feature in that discussion. *
The Cayman Islands Law Reform Commission, “Consumer Protection: Entrenching Consumer Supremacy in Cayman Islands Legislation”
The Electronic Transactions Law (2000, 2003 Revision not found) Section 15
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