Rethinking Sovereignty in the Global Era: What does this mean for the Cayman Islands?

Vaughan Carter

1. Introduction

1.1 Constitutional Review in the Cayman Islands

Ever since the United Kingdom issued its White Paper¹ on the future of its relationship with its Overseas Territories, the Cayman Islands has effectively been put on notice. Notice, on the one hand, that the United Kingdom had a continuing obligation to all of these territories and would not force independence upon them, but on the other, that the territories would be expected to comply with the United Kingdom's international responsibilities in respect of good governance, financial regulation and human rights.

It was not long before the Cayman Islands accordingly embarked upon a process of constitutional review,² which resulted in the rapid production of a draft constitution by the Constitutional Modernisation Review Commissioners.³ Although this was sent to the United Kingdom with a view to adoption, further consultations with Caymanian politicians from both sides of the Legislative Assembly and various non-governmental organisations revealed that there were still qualms regarding the appropriateness of this document. However, certain aspects of the proposed constitution, notably the creation of an official Leader of Government Business and Leader of the Opposition, the reclassifying of Executive Council as Cabinet and the establishment of an Electoral Boundary Commission to prepare recommendations for single-member constituencies were nevertheless enacted as amendments to the existing constitutional provisions.⁴

These all accord with the United Kingdom's perspective on how territories ought to advance: from Committee system, to Cabinet government and then full internal self-government as the final preparatory step for independence; all the time garnishing their constitution with more and more features of the Westminster system of parliamentary government. The problem is that this leaves Overseas Territories, like the Cayman Islands, with little room for manoeuvre. Having progressed along this linear route and reached the second stage, as the Cayman Islands now has, following the 2003 Constitutional Order; the territories are then faced with an awkward conundrum. They must either, accept that this is the end of the road, or if they want to advance further, commit to independence. If full internal self-government, the position that Bermuda has managed to attain, is not now an option, unless a date for independence is set,⁵ it may be that neither option currently on the table is particularly attractive or desirable.

1.2 The Status Quo: Remaining an Overseas Territory

Since the position of the Cayman Islands is that it does not wish to pursue independence,⁶ the only alternative, within the terms offered by the United Kingdom, is to remain an Overseas Territory with no prospect of any further meaningful constitutional advancement, at least in relation to greater self-government. The draft constitution, with its chapter on fundamental rights would no doubt follow in due course, but the balance in the relationship between Cayman and the United Kingdom would remain the same: heavily tilted in the favour of the United Kingdom. This means, amongst other things, that the United Kingdom would still be able to legislate for the Cayman Islands and the United Kingdom appointed Governor would still be able to refuse to assent to legislation passed in the local Legislative Assembly.

The potential for dissatisfaction in this relationship reminds me of a quote that I have used before, but it bears repeating:

• A colonial constitution is not so concerned with meeting local demands as it is with balancing these demands with the need for metropolitan control, and therefore it is marked by caution and satisfies none of the parties involved.⁷

This is precisely the danger inherent in perpetuating the existing relationship: neither the United Kingdom nor the Cayman Islands end up truly satisfied. Indeed, this may be becoming evident already. Two recent legislative proposals, passed by the Legislative Assembly sought to give powers; in respect of the Terrorism Bill 2003, to a Grand Court judge; and with the Information and Technology Authority (Amendment) Bill 2003, to Cabinet. However, the Governor objected to both, believing that these powers ought rightfully to lie with the Governor, where the United Kingdom could monitor their control. Since the balance of the constitution favours the Governor in the resolution of these disputes, heightened tension appears inevitable.

More cynically, it could be argued that the United Kingdom has not taken opportunities to relieve this tension, when they have been presented in recent times. Although the United Kingdom has stated that it would "not seek to influence opinion in the territories about independence,"⁸ there is a fine line between encouraging independence and backing a territory into a corner, where they feel that they have no other option. Both the United Kingdom's positions on the release of information, which in part led to the collapse of the Eurobank trial,⁹ and on the European Savings Directive,¹⁰ have, if anything, exacerbated the situation, leaving many sections in Caymanian society reluctantly reconsidering their position on the independence question. With an adversarial political system now safely in place, all of the seeds have been sown for the independence option to grow in popularity. This may suit the United Kingdom, who are admittedly "ready to respond positively" when independence is the "clearly and constitutionally expressed wish of the people"¹¹ but the more pertinent question is: does this suit the Cayman Islands?

1.3 Independence

Independence has long been shunned in the Cayman Islands. There are perhaps many reasons why this has been such a strongly held view. It has something to do with the history of these islands and their relationship with the colonial power, which on the whole left Cayman to its own devices. It has something to do with the small size of the Islands and their population, and the costs that would have to be borne. It also has something to do with the difficulties experienced by its Caribbean neighbours when they opted for independence. However, it has everything to do with the fear that the economic advances made over the last thirty years could be put at risk; the fear that without the security that the link with the United Kingdom provides, Cayman's hugely successful financial industry would be destroyed and the rest of the economy undermined along with it.

With such a fear, the initial question is: can the constitutional options, both of which have their limitations for the Cayman Islands, really be limited to independence or the status quo? This primary objective of this paper therefore is to explore an alternative perspective, which may in turn give rise to possible alternatives. In doing so, it is necessary to undertake this investigation in the context of the global era that is increasingly upon us all. These forces of globalisation have taken hold in Europe; they are impacting on the Caribbean; and cannot be ignored in the Cayman Islands. In an era "beyond walls", where sovereignty is increasingly shared, perhaps the forces of globalisation and their impact on the region can provide a fresh, and at the same time more realistic, perspective on the constitutional options for the Cayman Islands? As Kirby has persuasively asserted:

• Once we saw issues and problems through the prism of a village or nation-state ... Now we see the challenges of our time through the world's eye.¹²

Maybe taking a glimpse through the "world's eye" is just the perspective needed to reinvigorate the constitutional debate in the Cayman Islands?

Times have certainly changed since Jamaica was gearing up for independence, when Norman Manley's primary concern was gaining the control of the state and severing the link with the colonial power, as the precursor for the creation of the nation. With that at the forefront of his mind, he therefore made "no apology" for not attempting "to embark upon any original or novel exercise in constitutional building."¹³ Consequently, when Jamaica became independent in 1962, the British institutions that had been nurtured as the country advanced and developed politically, simply became Jamaican. The internal constitutional system itself did not really change. However, what was right for Jamaica or Trinidad and Tobago in the 1950s as they prepared for this takeover, or any of the other Commonwealth Caribbean states that acquired independence in the subsequent decades, may not necessarily be appropriate for the Cayman Islands, at the start of the 21st Century.

In a global era, with the world's eye increasingly set upon us, with the existing options all flawed, an original and novel exercise in constitutional building would appear to be is precisely what is now needed. This then is the challenge for the Cayman Islands and other Overseas Territories.

2. Globalisation and Sovereignty

2.1 The Globalisation Phenomenon

So, what is globalisation? It is often argued that the collapse of the Berlin Wall heralded a new global era. However, whilst this was perhaps the most graphically visible encapsulation of the demise of the old world order, this process cannot be reduced to a single event. The forces of globalisation are in fact diverse and their impact is pervasive. They have brought down many more, less tangible, barriers; reuniting states on occasion, but in general, bringing all states closer together. As a result, traditional conceptions of sovereignty are now subject to challenge throughout the world. Even the nation-state, for so long the norm of modern political organisation and the foundation of world order, is under fire from the forces of globalisation.

In an attempt to encompass the diversity and pervasiveness of this seemingly ubiquitous term,¹⁴ Held et al. define globalisation as "a widening, deepening and speeding up of world-wide interconnections in all aspects of life."¹⁵ Undoubtedly; the world is a smaller place. Technological advances have brought an increasing number of the world's population closer together. One only has to sit at a computer connected to the Internet and the world is literally at your fingertips. But we are not just increasingly interconnected; we are similarly ever more interdependent on one-another as well. The threat posed by global warming is the quintessential example of how our problems are now shared and how we will all have to be dependent upon each other for a solution, although the SARS epidemic and its propensity to breakout in China on one day and emerge in Canada the next, equally illustrates the need for a common response.¹⁶

Brief reference to these technological and environmental dimensions of globalisation is sufficient to illustrate the diversity of the phenomenon. However, in a wide and varied arsenal, where there are many armaments to choose from, it is perhaps the economic artillery, the political missiles and the legal guns, in the form of free markets, liberal democracy and universal human rights, that have proved the most effective weapons in heralding a new global era. Since the end of the Cold War, these have emerged as dominant organising principles in a world notable for the absence of any viable alternatives to challenge their ascendancy. In many respects, this triumvirate are interrelated. Thus, for example, where a state seeks economic assistance from the international community, if forthcoming, this is now likely, in addition to economic undertakings, to be contingent upon democratic reform and an increased respect for the western perception of human rights.

The effect of these forces is not, however, limited to those states in need of aid. Nor has it impacted merely on what are commonly referred to as Third World states, or even small-island territories, which might be particularly vulnerable due to their size. The effect is far more pervasive; even established nation-states, who have long cherished and fought for their sovereign powers, which might be considered part of the world elite, are caught in this world-wide web. This has led some commentators to claim that:

• ... the power, authority and influence of the state are all on the decline as the process of globalisation advances.... that the state is effectively in 'retreat' as a result of the increasing internationalisation of activities erstwhile performed by the state within their domestic national jurisdiction.¹⁷

Other commentators approach this phenomenon from a different angle. They argue that:

• ... rather than resulting in the weakening or diminishing of the sovereignty of the state, [globalisation] has only brought about changes in the way states function.¹⁸

Whichever approach one prefers, it is evident that nation-states are no longer able to operate as freely as they once were. They can no longer act in isolation; they can no longer ignore global forces; and they may have no option but to enter into agreements and co-operate with one-another.

2.2 Sovereignty Shared: The European Example

In the wake of the Second World War, the European continent embarked upon two experiments in international co-operation. The European Convention on Human Rights and Fundamental Freedoms was signed;¹⁹ a European Court of Human Rights was created and latterly a right of individual application to this court enabled individuals from states who were party to the Convention to apply and obtain a remedy in international law against their state for abuses of human rights. Whilst this has perhaps come to represent an indirect and somewhat marginal assault on the sovereignty of the signatories, who were relatively rarely, but nonetheless significantly, prevented from acting in a particular way when found in breach by the European Court of Human Rights, a more direct assault has come in the form of the European Union.

This is not the forum to retrace the entire history of the European Union,²⁰ although identification of some of its major achievements will prove instructive. These include the creation of a supranational legal system for the European (Economic) Community, the integration of that system into the constitutional and legal arrangements of its member states, the supremacy of Community law over conflicting national law as a perquisite for the system to function effectively²¹ and the invention of the Union itself, which encompasses the original three economically orientated Communities and extends European co-operation into the more contentious political sphere. Following the creation of the European Union at Maastricht in 1992, there are now three broad categories of law within the umbrella of the European Union:

1. The law of the European Community, which [as noted above] is the most extensive and significant so far;
2. The law of the second pillar [Common Foreign and Security Policy], which remains in nature a form of international, intergovernmental law; and
3. The law of the third pillar [Justice and Home Affairs], which after the Amsterdam Treaty [1997] is a hybrid of the two.²²

It is significant to note that each of these has a different legal weight. In the economic area, the integration commitment is stronger and consequently, so is the European law that is generated here. Conversely, in foreign affairs and security issues, some the member states are still clinging to their sovereignty. A decision-making process that does not retain a veto for each member state is not therefore viable. All of the member states are, however, still prepared to cooperate, but not to compromise their sovereignty in this area.

This three-pillared edifice, with its flexibility and variable geometry, depending upon the subject matter, was not without its critics. Most of the concerns centred on the loss of unity for the integration process. Curtin, for example, viewed it as "one step forwards and two steps backwards at the same time" that would only end up in "constitutional chaos",²³ while others lamented that in the absence of a unitary authority, an already disinterested populace would become increasingly confused and alienated from the decision-makers.²⁴ Walker, meanwhile, provides a plausible explanation for this course of action:

• Strategically, the evolving forms and models of flexibility within the EU may be viewed as a contest between, on the one hand, those states and other political actors who favour flexibility as a way of maintaining the momentum of integration against the caution of nationalist sceptics and, on the other, those same sceptics who favour flexibility as a way of endorsing a less monolithic - and so ultimately less powerful - EU. In other words, flexibility is not an end in itself, but a ubiquitous device which can serve different - even diametrically opposed - end games.²⁵

Judging by the recent expansion of the European Union from 15 member states to 25, encompassing many of the Eastern European, former Communist states, along with the strides taken towards the adoption of a European Constitution, Walker's analysis illustrates how such a fragile balance between the widening, and at the same time, deepening, of the Union can be maintained. It cannot, however, address the democratic concerns noted above, unless one starts to think about constitutions in a different fashion.

If one applies orthodox constitutional thinking, constrained by the mind-set of the nation-state and traditional conceptions of sovereignty, then the so-called "democratic deficit" in the European Union could be fatal. Globalisation, as I have argued elsewhere,²⁶ on the other hand, requires new terms of reference, which take into account the advent of international and supranational organisations that "authorise, instruct, influence, supplement or [even in some cases] supplant"²⁷ state sovereignty. Only by realising that sovereignty and indeed democracy now operate at a variety of different levels, can one truly assess the legitimacy of the European Union.

If this methodology can be employed supranationally, there is an equally good argument that it must necessarily also be deployed at the domestic level. It then follows that domestic constitutions, especially those designed in the global era, should embrace the relationship between these domestic and non-domestic spheres of influence in their construction. Thus far, such flexible considerations have not featured in the debate in the Cayman Islands, where the United Kingdom and its Constitutional Modernisation Checklist and draft Bill of Rights have largely determined the parameters of the debate. Yet as an Overseas Territory, where powers are already divided, according to which is domestic and which is metropolitan, this division of sovereignty is not such an alien concept. The challenge then is to move out of the colonial mindset and into the global era, where shared sovereignty and multi-level governance are becoming acceptable. Having done this, the task for the Cayman Islands vis-à-vis the United Kingdom, if it wishes to retain that connection, or within the region, if that is where its future lies (or both?), is the same as the United Kingdom has with its European partners: to negotiate the best possible terms for any sacrifice of domestic sovereignty.

2.3 The Caribbean and the Caribbean Court of Justice

When the Heads of Government of the Caribbean Community met in Montego Bay in July 1997, some fifty years after they had met in the same location to discuss the prospect of decolonisation, their conclusions, contained in a Declaration, expressly recognised how the world had changed and how this is now impacting differently upon the Caribbean region. Having committed the region to a deeper integration process, the preamble continues:

• Aware that fundamental changes in the global community since the 1947 Montego Bay Conference, have made the need for unity more compelling than ever before and that, to continue to secure our survival as a free people, we must act together to take advantage of opportunities and to overcome challenges;

• Recognising that the momentum of globalisation demands even greater coordination and collaboration amongst small states, in the defence of our interests and the preservation of our independence.²⁸

The threats posed by the forces of globalisation were similarly evident in the report of the joint Organization of American States; United Nations Development Programme; University of West Indies conference on "Constitutional Reform in the Caribbean."²⁹ Chapter IV, entitled, "Regional Integration: Small States and Political Sovereignty in a Global Economy" states:

• Especially since the end of the Cold War, there has been a heightened sense that more profound integration is necessary for the nations of the region to be able to compete in the global economy.... the sovereignty of Caribbean nations was at risk not only because of global economic demands, but also as a result of the spread of global communications and the requirements of membership and participation in an increasing number of international bodies.³⁰

With particular reference to the proliferation of small states in the region and the dangers facing them, Professor Bourne has also cautioned:

• The sovereignty of small states has only juridical meaning in a world so organised. In law, small states are free to make decisions about transactions within their borders. In political and economic reality, their decisions are constrained by foreign corporations and the superpower and may even be the outcomes of the expressed interests of either of these two entities.³¹

Quoting from Premdas, he continues:

• The typical Caribbean state has been distinguished by its deep dependence in practically every sphere of its existence. Sovereignty remains an atavistic symbol, an illusory indulgence, parodied persistently by a multiplicity of transgressions.³²

Since the Caribbean region is more vulnerable and with economic survival potentially at stake, it would therefore appear that the need for regional integration in the Caribbean is even greater than that in Europe. However, whilst the Caribbean possesses three regional organisations, the Organisation of Eastern Caribbean States; the Caribbean Community and Common Market; and the Association of Caribbean States, all three are primarily economic in their focus.³³ Moreover, none of these organisations possess a supranational dimension. Unlike the European response to the new global era, post-Maastricht, there has been no similar watershed in the Caribbean. The powers that be all seem to accept the need for greater integration, as evidenced in the Montego Bay Declaration, but as yet, are not prepared to put their money where their mouth is, and compromise their individual sovereignty.

Like the fear of independence in the Cayman Islands, one of the reasons for this is undoubtedly the constitutional history of the region. Having waited for independence and sovereignty for so long, and having rejected political integration in the guise of the West Indies Federation in the immediate post-colonial period, any loss of this precious sovereignty is hard to completely come to terms with. This has also been the experience of much of the Third World, where despite being failed by the system of sovereignty, have according to Clapham:

• ... sought to retreat and regroup, erecting barricades around a more restricted, and more defensible, conception of sovereignty.³⁴

The creation of the Caribbean Court of Justice is, however, intended to provide Caribbean integration with a fresh impetus, although this development is particularly interesting in the context of the current debate because it will perform two conflicting functions. On the one hand, it will serve as a tribunal with original jurisdiction in respect of the Caribbean Single Market and Economy, whilst, on the other, it will operate as a final court of appeal, replacing the Privy Council in London, for much of the Caribbean Commonwealth. As such, it has an integrationalist agenda, which may very well spur the region towards some form of shared sovereignty, but at the same time, it is also portrayed as the final victory in the long war to attain full independence and sovereignty from the United Kingdom. With this development, the old and the new methodologies have come together and it will therefore be especially interesting to see which wins through. If the European experience is anything to go by, the forces of globalisation will ensure that integration ultimately prevails over sovereignty. In a world where sovereignty is no longer the "universal organizing principle for the management of the global system"³⁵ and in a region seemingly moving towards greater integration, it would be somewhat ironic if the Cayman Islands were to fall victim to the temptations and false promises of sovereignty in a global era.

3. Globalisation and the Cayman Islands

3.1 Financial Regulation

The Cayman Islands is not immune to the forces of globalisation either. In fact, with an economy centred on tourism and finance, it could be argued that the Cayman Islands is especially vulnerable to global events. Indeed, following the September 11th attacks, it was noticeable that both tourism and the financial industry were soon under attack. Tourism experienced a significant downturn, as potential stay-over passengers, fearing flying, stayed at home,³⁶ whilst it was only a matter of days before the confidentially rules, the legal basis for many of the successes of Cayman's financial industry, were early casualties in the opening exchanges of the global war on terrorism. For many years the United States had sought unsuccessfully to persuade the Cayman Islands to share certain financial information, but suddenly, with the possibility that funding for terrorism might be at issue, the Cayman Islands capitulated and agreed to a bilateral exchange of such information with the United States.³⁷

This, however, has not been the only salvo fired at Cayman's financial industry. Indeed, the offshore finance industry, not just in Cayman, but throughout the world, has come under systematic attack from the economic forces of globalisation.³⁸ Under the auspices of the good banking principles established by the Basle Committee on Banking Supervision,³⁹ the United Nations Convention against Illicit Traffic in Illegal Drugs and Psychotropic Substances, 1988 (the Vienna Convention) and the United Nations Convention against Transnational Organized Crime, 2000 (the Palermo Convention), numerous international organisations from the Organisation for Economic Co-operation and Development⁴⁰ to the Financial Action Task Force⁴¹ and including the Financial Stability Forum,⁴² the World Bank, the International Monetary Fund⁴³ and the European Union have sought to implement these broad supervisory standards. Collectively, their efforts to combat harmful tax competition, money laundering and drug trafficking and to facilitate financial stability and the exchange of information, have established an international financial regulatory framework, which restricts the freedom of sovereign nation-states and overseas territories alike.

Where the economy of a country relies so heavily on a financial industry, like it does in the Cayman Islands, then the impact of this regulation is magnified. However, in spite of the extent of the concerns, under threat of "blacklists" and the like, the Cayman Islands has had little choice but to comply with the demands of these global forces.⁴⁴ In 2000, partly in preparation for a Review of Financial Regulation in the Caribbean Overseas Territories and Bermuda, conducted by the Foreign and Commonwealth Office,⁴⁵ an array of legislation was enacted.⁴⁶ In 2001, a new Proceeds of Criminal Conduct Law⁴⁷ was enacted and various Orders in Council were implemented to give effect to restrictions imposed by the United Nations Security Council Resolutions⁴⁸ and the practice has continued unabated since then.

Even where the Cayman Islands sought to question these sorts of measures, they have been thwarted. This is best illustrated with reference to the European Union's Savings Directive⁴⁹ and the sortie of the Cayman Islands Government to the European Court of First Instance.⁵⁰ The Directive, amongst other things, imposes a tax on the cross-border income earned from interest on the savings of European Union citizens and requires those territories to whom it applies, or has been extended to, to share and exchange information to facilitate this objective. The Caribbean Overseas Territories collectively commissioned Professor James Mirrlees, a 1996 Nobel Laureate for Economics, to undertake a study identifying how the Directive might impact on their economies. In respect of the Cayman Islands, Mirrless concluded that the cost would be approximately US$50 million per year in lost business, with an additional US$30 to US$70 million per year incurred by financial institutions and regulatory agencies in administration.

In an effort to delay the adoption of this Directive and its potentially devastating effects, at least until a Partnership Working Party had been established to discuss the implications of this legislation for the Cayman Islands, the Cayman Islands Government applied to the European Court of First Instance for the annulment of the EC Commission's refusal to respond to its request to establish the Partnership Working Party. At the same time, the Cayman Islands Government also applied to the President of the Court of First Instance for interlocutory relief, pending judgment in the main proceedings. Rejecting the application on various technical and procedural points, the Court of First Instance concluded by finding:

• Interim relief would not have been granted in any event, since the applicant had failed to show it was urgently required to protect its interests, or that the balance of interests favoured its cause. The European Parliament having no competence to adopt legislation which extended beyond the territory of the Community to OCT's such as the Cayman Islands, the Directive would not apply to the Cayman Islands. Neither the member states' inter-governmental agreement to extend their implementing measures to associated or dependent territories, nor the fact that the United Kingdom might adopt an Order in Council to this effect were within the power of the Commission and neither flowed directly from the Directive. Consequently, any damage to the Cayman economy that might ensue from the enactment of the measures to implement the Directive there would not be attributable directly to the Council's adopting the Directive, even if it could be separated causally from the commercial decisions of individual financial institutions in response to the measures.⁵¹

It follows that the responsibility for ensuring that the Overseas Territories comply with the Directive falls squarely with the United Kingdom. The attempt to seek legal recourse had failed and all that remained now was to prevail upon the United Kingdom to reconsider its stance on extending the Directive to its Overseas Territories.⁵² However, with its international reputation and Community law obligations to consider, the economy of the Cayman Islands was not at the top of the Chancellor of the Exchequer's list of priorities. His response to the Cayman Islands especially, who out of all of the Overseas Territories had sought to stick to its guns, was one of intransigence; enact domestic legislation to give effect to the Directive, or expect an Order in Council in due course to achieve precisely the same aim. Thus, in spite of their protracted resistance, the Cayman Islands has reluctantly complied and committed to the enactment of the requisite legislation.

Not only does this saga further illustrate the difficulty in holding back the economic forces of globalisation, it also reveals some distinct inadequacies in the constitutional arrangements of the Cayman Islands. Firstly, the Cayman Islands was prevented from obtaining redress in the European forum because the legislation at issue was not addressed to the Cayman Islands, but to the United Kingdom, as the member state. The Cayman Islands was not a party to the founding treaties and instead, derived all of its responsibilities through the United Kingdom's membership. Essentially, the Cayman Islands was neither sufficiently part of the club to have a say in what it did, nor sufficiently outside of its reach as to be unaffected by its actions. It was in no man's land and directly in the line of fire. To compound this, the Cayman Islands' constitutional connection to the United Kingdom, which allows the United Kingdom to legislate for the Cayman Islands, was then utilised by the United Kingdom as a threat to secure the United Kingdom's desired outcome.

3.2 Human Rights

Another of the major forces of globalisation that has seemingly set its sights on the Cayman Islands is the human rights movement.⁵³ The Cayman Islands remains one of the few territories in the world that does not possess a Bill of Rights as part of its constitutional arrangements and whilst it is a signatory to numerous international human rights treaties,⁵⁴ these are not domestically enforceable unless they are enacted into domestic law. These principles have nevertheless found their way into judicial decisions.

In Streeter and K Coast Development v Immigration Board and Governor-in-Council, Smellie CJ analysed how, notwithstanding that it had not been incorporated, he could still employ the International Covenant on Civil and Political Rights:

• The Covenant has neither been extended by Order in Council nor ratified to make it part of domestic Cayman law and so our courts have no power to enforce it directly. However, so long as the Islands are a party to the Covenant it creates obligations which are binding as a matter of international law. It follows that Cayman statutes ought to be construed, if they are reasonably capable of bearing such a meaning, as intended to carry out the obligations specified in the Covenant and not to be inconsistent with it. In other words, there is a presumption of statutory interpretation that Parliament intends its legislation to comply with the country's treaty (here covenanted) obligations.⁵⁵

Although Smellie CJ went on to discuss whether there had to be ambiguity in the domestic provision before the international treaty could be utilised as an aid to interpretation, a view articulated in R v Home Secretary, ex parte Brind,⁵⁶ he declined to express any preference on the point, noting that this position is also subject to mounting criticism in academic and judicial circles.⁵⁷

In addition to aiding statutory interpretation, Smellie CJ has also suggested that international human rights treaties can inform the development of the common law. In Grant and Chin v Principal of John A Cumber Primary School, Chief Education Officer and Education Council,⁵⁸ the Chief Justice having made reference to the "laudable objectives" contained in the Universal Declaration of Human Rights, the European Convention for the Protection of Human Rights and Fundamental Freedoms, the United Nations International Covenant on Civil and Political Rights, the United Nations Convention Against Discrimination in Education and the United Nations Convention on the Rights of the Child, reiterated that since they were not part of domestic law, they could not be "directly enforced so as to give effect to specific rights or obligations."⁵⁹ However, he continued:

• [I]t is none the less permissible for this court to take account of them in determining the reasonableness or otherwise of the decision .... In the absence of domestic legislation which conflicts with the covenants (and which would have to be enforced none the less) the case law does suggest that there is some room for considering the covenants. I consider that if this court is to avoid regarding the country's treaty obligations as mere platitudinous exhortations, or as mere 'window-dressing'⁶⁰ ..., they must at least be deserving of consideration in such a case as this, in examining the reasonableness or otherwise of the impugned decision.⁶¹

When the Grant case reached the Court of Appeal,⁶² Collett JA concurred with the Chief Justice to the extent that the international treaties were important as a background to the decision under review. Nevertheless, Collett JA still found time in his judgement to make express reference to a passage from ex parte Brind,⁶³ where Lord Bridge observed that "'nothing less than an important competing public interest will be sufficient to justify' a restriction upon a convention right to freedom of expression",⁶⁴ and to the decision of the English Court of Appeal in R v Ministry of Defence, ex parte Smith.⁶⁵ Quoting directly from ex parte Smith, Collett JA indicated that a court:

• ... might interfere with the exercise of an administrative decision if satisfied that it was unreasonable as being 'beyond the range of responses open to a reasonable decision-maker,' and in judging whether or not this was so it could take account of the human rights context. 'The more substantial the interference with [such] rights, the more the court would require by way of justification before being satisfied that the decision was reasonable.'⁶⁶

The relevance of international human rights conventions to judicial review was verified in Nazary, Hussaini and Yusufi v R,⁶⁷ where Graham J confirmed the approach of the Cayman Islands Court of Appeal in Grant and their English counterparts in ex parte Smith. In this case, three asylum seekers from Afghanistan, who had been detained under the Immigration Law (2001 Revision),⁶⁸ argued that their continued detention offended the 1951 Geneva Convention Relating to the Status of Refugees. Although this Convention was not part of domestic law, Graham J found that it, along with the right to liberty, found in both the International Covenant on Civil and Political Rights and the European Convention for the Protection of Human Rights and Fundamental Freedoms, could influence the assessment of the continued decision to detain:

• The deprivation of liberty is the most 'substantial' interference with normal human rights which can take place in a democratic society, and the longer it takes place, the more 'substantial' it is. If one places the continuing failure to consider release in the context of the obligations imposed by the section and the human rights imperatives, then the nature of the continued detention of the plaintiffs can only be seen as illegal .... There is nothing in s.52 which offends the general scheme of the Convention. That is not the case with s.53, which contemplates unlimited administrative detention.⁶⁹

The dualist approach to international law and the constitutional divide between the powers and functions of the executive and legislative branches of government are thus no longer sufficient to hold back the international human rights movement. Embracing the human rights philosophy, judicial activism has responded where there has been legislative caution.⁷⁰

This is not to say that the Legislative Assembly of the Cayman Islands has been totally unresponsive to international legal advances outside of the financial sector. In fact, if the last few months are anything to go by, then the opposite could be said to be the case. Both the initial decision in Nazary and the subsequent judgement of the Grand Court in further proceedings⁷¹ following the re-arrest of the three Afghan refugees, revealed the inadequacies of the existing Immigration Law, which did not have any specific provisions for asylum. The new Immigration Law,⁷² enacted on the 31st December 2003, addresses this void in Part VII and in doing so exemplifies how international human rights treaties and practices are also shaping Caymanian legislation. In addition, the Terrorism Law 2003⁷³ actually enacts the United Nations Convention on the Funding of Terrorism, 1999 and it could also be argued that another new and important piece of legislation, the proposed Labour Law, is influenced by the international standards identified by the International Labour Organisation.

The forces of globalisation are therefore fighting their battles, in the name of the internationalisation of financial regulation and human rights, in both the legislative and the judicial arenas, and as far as the Cayman Islands is concerned, it appears that they are making headway on both fronts.

4. Conclusion

4.1 Beyond Walls: Building Bridges Instead

If the Cayman Islands cannot ignore the forces of globalisation; if even in its current state of constitutional development, the Cayman economy and legal system are increasingly influenced by legislative and judicial responses to these forces; then there is every need to reassess the constitutional future of the Cayman Islands in the light of this.

However, the independence option, one of two alternatives apparently open to the Cayman Islands, may not only be unpopular in Cayman, but also unrealistic in the new global era. As the European experience demonstrates and the direction of Caribbean developments indicates; sovereignty will be increasingly shared in the global world. In response to this, small island territories, especially, may have to think innovatively about their constitutional arrangements, embracing concepts such as flexibility and multi-level governance if they are to dovetail effectively with the international, the supranational, the regional and the global advances.

As an Overseas Territory of the United Kingdom, it is not surprising that the debate has been about gaining more sovereignty rather than losing it. However, this need not necessarily be in conflict with a refinement of the relationship with the United Kingdom. In spite of the United Kingdom's denials, self-determination can encompass other options. It is not just restricted to independence, but, according to the United Nations approach to decolonisation also includes integration and free association. Whilst integration is not suited to the Cayman Islands for a variety of reasons, ⁷⁴ free association could be the answer to its prayers. There is no reason why, under a free association agreement, Cayman could not obtain full internal self-government and share responsibility for foreign affairs and defence with the United Kingdom. ⁷⁵ This would be an improvement on even the privileged position that Bermuda currently enjoys, which of course, may not sit well with the United Kingdom, but self-determination ought to be about what the people of Cayman want and the balance ought to be tilted in their favour not the United Kingdom's. If the United Kingdom remains aloof to this possibility, the Cayman Islands could call upon a powerful ally; none other than the forces of globalisation to assert their human right to determine their own destiny.

Previously, independence may have been the right, indeed only option, but with the sovereignty of independent nation-states increasingly compromised, limited or even shared, it may not be as attractive to the few remaining territories in the world who have not as yet exercised their right to self determination. Whereas, in the past, the clamour for full sovereignty, symbolised by Clapham as the erecting of barricades, with the preservation of what is inside for one's sole control; in an era "beyond walls" and beyond barricades, it will be necessary to lower some of these walls, to tear some down altogether; and build bridges instead. These bridges could link the Cayman Islands with its neighbours in the region, ⁷⁶ the other remaining United Kingdom Overseas Territories who share similar needs, or even entail a reconstruction of the lengthy, rickety old bridge that joins Cayman to the United Kingdom. In the global era, with a more flexible approach to constitutions and sovereignty, which embodies a division of competencies designed to suit the needs of the Cayman Islands, all are possible; although it will take both an "original" and "novel" exercise in constitutional building to deliver this.

Endnotes

¹ Partnership for Progress and Prosperity: Britain and the Overseas Territories, Cmnd 4264.

² For further discussion of this process, see Carter V, "Designing Constitutions to Fit the Peculiar Circumstances of the Overseas Territories in the Commonwealth Caribbean: A Preliminary Appraisal of the Constitutional Review Process in the British Overseas Territories" (paper delivered at the Organisation of Commonwealth Caribbean Bar Associations Conference: Designing Constitutions to Fit Our Peculiar Circumstances, Frigate Bay, St Kitts, 6 September 2002) and Carter, V, "Constitutional Developments in the Cayman Islands: Is the Cayman Islands any Closer to Obtaining a Constitution that fits its Peculiar Needs and Circumstances?" (paper sent to Organisation of Commonwealth Caribbean Bar Associations Conference, Bridgetown, Barbados, 6 September 2003).

³ A folder of information on the Constitutional Review, including the report of the Commissioners and the draft constitution can be found on the Cayman Islands Government website: http://www.gov.ky/servlet/page?_pageid=2373&_dad=portal30&_schema=PORTAL30&_mode=3 (accessed May 2004).

⁴ Cayman Islands (Constitution) (Amendment) Order 2003 (SI 2003: 1515).

⁵ This was confirmed in respect of St Helena by Quentin-Baxter in her paper, commissioned by the Citizenship Commission in St Helena and the St Helena Branch of the Commonwealth Parliamentary Association: Quentin-Baxter, A, "St Helena and its Dependencies: Exploring Options for their Future Constitutional Development"; where she notes that: "The advice from the FCO is that progress can only be made on ways of refining the Constitution of St Helena as an Overseas Territory. ... the only other option for St Helena was to ask for independence."

⁶ "Independence Will Not Be Pursued, Says LGB" The Caymanian Compass, 30 May 2003.

⁷ Quote from Singham, A, The Hero and the Crown in Colonial Polity, taken from the collected speeches of the Anguilla Constitutional and Electoral Reform Committee, February 2002.

⁸ Partnership for Progress and Prosperity, supra n2.

⁹ R v Stewart, Cunha, Burges and Donegan 2002 CILR 652.

¹⁰ See discussion below in the context of global pressure on the Cayman Islands.

¹¹ Partnership for Progress and Prosperity, supra n2.

¹² Observation of Justice Kirby in the introduction to his book, Through the World's Eye, quoted in Pinto, D, "Through the World's Eye: Governance in a Globalised World" Murdoch University Electronic Journal of Law, Volume 9 Number 3 (September 2002), http://www.murdoch.edu.au/elaw/issues/v9n3/pinto93.html (accessed May 2004).

¹³ Quoted in Lindsey, L, "The Myth of Independence", Working Paper no 6, Kingston: ISER Publications, 1975.

¹⁴ Where a term may mean many different things to many different people and where there is such a wealth of literature, which varies according to the ideological perspectives and disciplinary groundings of the author, it is difficult to know where to start when directing the reader on this term. However, an accessible general overview of the phenomenon, which deals with some of the themes that I explore in this paper, is: Jegede, F, "Globalisation - The New Order or Disorder? Consequences for Individuals, Nation-States and Society", paper presented at the 1st International Conference of the Global Studies Association, Networks and Transformations, Manchester Metropolitan University, Manchester, UK; 2-4 July 2001, www.globalstudiesassociation.org/conference1papers/Globalisation1.doc (accessed May 2004).

¹⁵ Held, D, McGrew, A, Goldblatt, D and Perraton, J, Global Transformations, Polity Press, Cambridge, 1999, quoted in Jegede, ibid.

¹⁶ For further information exemplifying this point, it is worth accessing the World Health Organization's website, http://www.who.int/en/ (accessed May 2004), where there is a strong emphasis on the importance of Global Health Security.

¹⁷ Summarised by Jegede, supra 15.

¹⁸ ibid.

¹⁹ Incidentally, the European Convention on Human Rights and Fundamental Freedoms has proved to be a model of human rights that the United Kingdom has exported throughout the Commonwealth. Both the draft Bill of Rights that the Foreign and Commonwealth Office prepared for the last few remaining Overseas Territories who do not have constitutional protection for human rights, including the Cayman Islands, and the Chapter on fundamental rights in the draft constitution that the Constitutional Commissioners in the Cayman Islands sent back to the United Kingdom, both closely resemble the European Convention.

²⁰ For an excellent account with supporting materials, see Craig, P and G de Búrca, EU Law, Oxford University Press, 2003.

²¹ In the context of the United Kingdom, this is best illustrated by the Factortame litigation and the suspension and ultimate dissapplication of the Merchant Shipping Act 1988. See R v Secretary of State for Transport, ex parte Factortame [1990] 2 AC 85 and R v Secretary of State for Transport, ex parte Factortame (No 2) [1991] 1 AC 603.

²² Craig, P and G de Búrca, supra n21.

²³ Curtin, D, "The Constitutional Structure of the European Union: A Europe of Bits and Pieces" (1993) 30 CMLRev 17, 67.

²⁴ See de Búrca, G and J Scott, Constitutional Change in the EU: From Uniformity to Flexibility?, Hart, Oxford, 2000 and Walker, N, "Sovereignty and Differentiated Integration in the European Union" (1998) 4 ELJ 355.

²⁵ Walker, N, "Flexibility within a Metaconstitutional Frame" in de Búrca, G and J Scott, ibid.

²⁶ For a more extensive articulation of this argument as an alternative to the creation of a right to democracy in international human rights law, see Carter, V, "Democracy and Law beyond the Nation State" (2000) 1 NIGD 5.

²⁷ Walker, supra n26, at 15.

²⁸ CARICOM Heads of Government Declaration made in Montego Bay, Jamaica, 4 July 1997.

²⁹ http://www.upd.oas.org/caribbean_reform/executive_summary.html (accessed May 2004).

³⁰ http://www.upd.oas.org/caribbean_reform/chapter_four.html (accessed May 2004).

³¹ Bourne, C, "Small States in the Context of Global Change" delivered at the 4th Annual Conference of Sir Arthur Lewis Institute of Social and Economic Studies, University of the West Indies, 15 January 2003.

³² Premdas, 2002, at 47, quoted in Bourne, ibid.

³³ See Berry, D, "Nested Communities: The Implications of a Changing CARICOM for St Kitts and Nevis", delivered at a previous University of the West Indies "Beyond Walls" Conference, for further discussion of the overlap between these organisations.

³⁴ Clapham, C, "Sovereignty and the Third World State", Political Studies (1999), XLVII, 522, 535.

³⁵ ibid., 537.

³⁶ For further discussion of the vulnerability of tourism in the Cayman Islands, see the comment by W. M. Conolly, where he begins by noting that the industry "is faced with a myriad of complex barriers that have further impeded sustainable growth at almost every level. These barriers are as a result of increasing world conflicts such as the 9/11 catastrophe in the United States, the Afghanistan assault, and the Iraq war, preceded by the beginning of a global economic recession and what may be termed as a wall street 'meltdown' of wealth and later followed by the medical threat of Anthrax, SARS and Mad Cow diseases." Cayman Net News, December 1 2003, http://www.caymannetnews.com/2003/12/542/comment.shtml, (accessed May 2004).

³⁷ Agreement for the Exchange of Tax Information with the United States, November 27 2001.

³⁸ For example, when the Organisation for Economic Cooperation and Development sought to impose the principles of transparency, non-discrimination and effective exchanges of information on non-OECD jurisdictions, even senior US politicians from both parties described those initiatives as "a fundamental violation of sovereignty." Reported in the British Virgin Islands; http://www.bvibeacon.com/030101/working030101.html (accessed May 2004).

³⁹ The Basle Committee was established by the central-bank Governors of the Group of Ten countries at the end of 1974 and now has representatives from Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, United Kingdom and United States. More information can be found on the website for the Bank of International Settlements: http://www.bis.org/bcbs/aboutbcba.htm (accessed May 2004), although it is worth pointing out that, "the Committee does not possess any formal supranational supervisory authority, and its conclusions do not, and were never intended to, have legal force."

⁴⁰ For more information on the Organization for Economic Co-operation and Development and in particular the revised Principles of Corporate Governance, signed by the thirty member states on 22 April 2004, see: http://www.oecd.org/document/22/0,2340,en_2649_201185_31558102_1_1_1_1,00.html (accessed May 2004).

⁴¹ The Financial Action Task Force was established by the Heads of Government of the then G7 countries in June 1989. Its initial recommendations, drawn up in 1990, were designed to combat the misuse of financial systems by persons laundering drug money. These were revised to deal with the increasing complexity of money laundering in 1996 and again recently in June 2003. The new Forty Recommendations can be viewed at http://www1.oecd.org/fatf/pdf/40Recs-2003_en.pdf (accessed May 2004). The Financial Action Task Force has also expanded its remit to encompass the financing of terrorism since 2001 and notably has had a regional presence since the early 1990's when the Caribbean Financial Action Task Force was created to implement a further nineteen recommendation with a specific regional significance. For more information see www.cfatf.org/eng (accessed May 2004).

⁴² According to its website, http://www.fsforum.org/home/home.html (accessed May 2004), the Financial Stability Forum was "was convened in April 1999 to promote international financial stability through information exchange and international co-operation in financial supervision and surveillance" and seeks to "promote international financial stability, improve the functioning of markets, and reduce systemic risk."

⁴³ Both the World Bank, http://www.worldbank.org/ (accessed May 2004) and the International Monetary Fund, http://www.imf.org/ (accessed May 2004) undertake assessments of countries to ensure their compliance with the various initiatives identified here.

⁴⁴ For an accessible overview of these, see Byles, P, A Dunkley and K Davis, The New Regulatory Climate in the Cayman Islands, Deloitte and Touche, 2001.

⁴⁵ Cm 4855-IV.

⁴⁶ The included the the Monetary Authority (Amendment) International Co-operations) Law 2000, the Banks and Trust Companies (Amendment) (access to Information) Law 2000, The Companies Management (Amendment) Access to Information) Law 2000 and the Proceeds of Criminal Conduct (Amendment) Money Laundering Regulations Law 2000.

⁴⁷ Law 15 of 1996, revised 2001.

⁴⁸ These included the Afghanistan (United Nations Sanctions) (Overseas Territories) Order 2001 and the Terrorism (United Nations Measures) (Overseas Territories) Order 2001.

⁴⁹ Council Directive 2003/48/EC.

⁵⁰ Government of the Cayman Islands v Commission of the European Communities, Court of First Instance of the European Communities (Vesterdorf, President): March 26th 2003, 2003 CILR 91.

⁵¹ ibid., 95.

⁵² Although the United Kingdom was committed to extending the Directive to all of its Overseas Territories strictly in the Caribbean, Bermuda, which is often addressed alongside the Caribbean Overseas Territories, was exempted.

⁵³ The two are not always distinct and indeed, often work in concert with one another. This has already been alluded to above in the context of the international provision of aid. As an aside it is interesting to note that the European Union, which encompasses the European Community and the original free trade objectives of the Communities, is also now premised on the principles of democracy and respect for human rights. Of more direct concern to the Cayman Islands financial industry, is the international financial community's reluctance to give any country a clean bill of health unless certain human rights, particularly those relating to the security of property, are protected.

⁵⁴ These include the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights, the Convention on the Rights of the Child, the Convention on the Elimination of All Forms of Racial Discrimination and the European Convention for the Protection of Human Rights and Fundamental Freedoms.

⁵⁵ 1998 CILR 366, 387-8.

⁵⁶ [1991] 1 AC 696, 761.

⁵⁷ de Smith, Woolf and Jowell, Judicial Review of Administrative Action, Sweet and Maxwell, 5^th ed, para 6-051-6-052, at 324-325.

⁵⁸ 1999 CILR 307.

⁵⁹ ibid, at 334.

⁶⁰ Borrowing a phrase used by a New Zealand court to express a similar concern in Tavita v Minister of Immigration [1994] 1 LRC 421, 431.

⁶¹ Grant, supra n59, 334-5.

⁶² 2001 CILR 78.

⁶³ Brind, supra n57.

⁶⁴ Grant (CICA), supra n63, 85.

⁶⁵ [1996] 1 All ER 257.

⁶⁶ Grant (CICA), supra n63, 85.

⁶⁷ 2001 CILR 259.

⁶⁸ Law 12 of 1991, revised 2001.

⁶⁹ Nazary, supra n68, 266.

⁷⁰ For further discussion of the capacity for judicial adoption of international human rights norms and its relevance to the Cayman Islands and the Commonwealth Caribbean, see Carter, V, "Sharing in the Common Wealth of Human Rights" in the collected papers from Human Rights Today Caribbean Symposium, Cayman Islands, 11-14 September 2001. On the use of international human rights treaties in domestic courts generally, see also Opeskin, B, "Constitutional Modelling: The Domestic Effect of International Law in Commonwealth Countries - Part II" [2001] P.L. 97. Additionally, for a discussion on how judges form various different domestic jurisdictions are further facilitating this process, see McCrudden, C, "A Common Law of Human Rights?: Transnational Judicial Conversations on Constitutional Rights" [2000] OJLS 499.

⁷¹ Nazary, Hussaini and Yusufi v R, 2001 CILR 371.

⁷² Law 34 of 2003.

⁷³ Law 14 of 2003.

⁷⁴ It may, however, suit other United Kingdom Overseas Territories, such as St Helena, whose geographic isolation handicaps their economy. It is also interesting to note that following a successful campaign in the European Court of Human Rights (Matthews v United Kingdom; application no 24833/94, judgment delivered 18 February 1999), Gibraltar, another United Kingdom Overseas Territory, is incorporated into a mainland British constituency for the purposes of elections to the European Parliament.

⁷⁵ A free association agreement need not be negotiated with just the old colonial power. There is no reason why it could not be with an entirely new state. The suggestion, reported in the local press, that the Cayman Islands could become part of the United States, was an April Fools joke, although reports linking the Turks and Caicos Islands with Canada might have more credence. Certainly, as far as the United Nations is concerned, it is not impossible.

⁷⁶ The Cayman Islands is already an Associate Member of CARICOM. Other United Kingdom Overseas Territories in the Caribbean, such as Montserrat, have a longer history to their relationship with CARICOM and may wish to move ahead with the integration agenda, including the Caribbean Court of Justice. At the same time, they may not wish to sever the link with the United Kingdom, because of the economic advantages that it provides them. The proposal here, if feasible, could be equally tailored to meet their needs. The United Kingdom would, however, still have to be persuaded to loosen its hold over the Overseas Territories. As the Organization of American States' report on Constitutional Reform in the Caribbean, supra n31, notes: "[T]hree of the British Territories in the Caribbean - Montserrat, Anguilla and the British Virgin Islands - are members of the OECS [Organization of Eastern Caribbean States] and within the jurisdiction of the OECS Supreme Court, with the right of ultimate appeal to the Privy Council.... If CARICOM established the Caribbean Court of Justice, London would probably want the three territories to remain within the purview of the Privy Council, which would raise questions about the status of the three territories within the OECS."

Acknowledgements

I am extremely grateful to my colleagues at the Cayman Islands Law School, Simon Cooper and Debra Morris, who assisted me in areas of law, which I am less familiar with. However, my application of that assistance here should not be taken as a representation of their views on those subjects.

© Vaughan Carter, 2004.