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Bermuda is a colony of the United Kingdom, but it enjoys a level of soveriegnty.  In makes its own laws, governs itself.  Relations with the UK are maintained through the Foriegn and Commonwealth Office, not through parliamentarian representation in Westminster.  The following, quoted from Bermuda-Online, best sums it up:

Bermuda is externally a self-governing overseas territory of the United Kingdom. It makes all its own laws. UK and European Community laws do not apply in Bermuda. Newcomers from other countries can come here to work despite the island’s small size and exceptionally high population per square mile but, unlike in Britain, are not allowed to gain citizenship or vote or acquire lower-priced real estate unless they they qualify for citizenship in ways no other Western country require. In the UK, USA, Canada and elsewhere, citizenship comes after 3 (if married to a national) or 5 years, tops. But not in Bermuda, not even if you stay longer than 5 years. In Bermuda, only with marriage to a Bermudian and living with a spouse for over 10 years can someone not Bermudian apply for citizenship. Even children born in Bermuda are not Bermudian under Bermuda law unless one parent is.  

Other UK colonies, like the Falkland Islands, are under the similar arrangements.

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