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Double-taxation treaties are the main attraction for the international investments flowing through Barbados. The island's own version of a special investment vehicle (SIV), the international business company (IBC), has made it a private investment platform for onshore treaty partners like Canada, China, the US and the UK....

Double-taxation treaties are the main attraction for the international investments flowing through Barbados. The island's own version of a special investment vehicle (SIV), the international business company (IBC), has made it a private investment platform for onshore treaty partners like Canada, China, the US and the UK. Investment to and from China, in particular, has seen significant increase since the tax agreement between Barbados and that country was signed in 2000.

Recent growth in legal services for onshore clients has furthered aspirations for Barbados and its legal community to compete with traditional offshore transaction centres like the Caymans or British Virgin Islands. Despite inroads into the financial sector, lawyers here reiterate the notion that Barbados is not attempting to be a premiere destination for hedge funds work.

However, the development of Barbados as an offshore transactional centre is forcing the island's law firms to adapt. A divide is forming between firms focused on wholly domestic matters and those that feel increasingly forced into handling international transactions. According to lawyers on the island, the influx of international clientele has created a shortage of firms capable of handling a demanding workflow from onshore agencies and investment banks. "International clients expect you to be a slave to their wishes," says one partner. "I have been flat-out the whole time. International business is booming."

The economic downturn has only hastened the process of change, with what Barbados lawyers describe as a drastic reduction in purely domestic work. Also, the new prime minister elected in 2008 has affirmed that international business development is a focus for the island's economic growth. "The government very early recognised that it was important to propose a new strategic plan for the liquidity crisis and the recession that followed," says one partner.

Despite the scarcity of local firms equipped, or even willing, to handle the growing international workflow, lawyers here don't predict any immediate influx of outside firms. The main reason for this is the strict qualifying standards for lawyers in Barbados. Any practitioner entering from foreign practice would be forced into the undesirable process of repeating his or her legal education and qualifying exams. This leaves Barbados's internationally-focused firms having to establish strategic partnerships with those onshore, struggling for the foreseeable future to keep up with the pace.