Exploring Offshore Litigation

The Court of Appeal of England and Wales has dismissed an appeal in Logix Aero Ireland Limited v Siam Aero Repair Company Limited, holding that the voluntary acts of fraudsters broke the chain of causation between an assumed breach of a confidentiality clause and the claimant's loss. The decision restates the principles of legal causation in contract and clarifies the limited reach of London Joint Stock Bank v Macmillan. Although the decision is one of English law, the causation principles applied are common law principles regularly cited in the Cayman Islands and other International Financial Centres (IFCs). Background Logix agreed to purchase two aircraft engines from Siam Aero under a Letter of Understanding (LOI). The LOI was predominantly non-binding. However, certain clauses – including a confidentiality provision – were expressly stated to be legally binding. Unknown fraudsters intercepted email correspondence between the parties. They registered domain names differing from the genuine addresses by a single character and began altering emails before forwarding them on. Among the changes, they substituted their own Vietnamese bank account details for Siam Aero's Thai account in draft Purchase Agreements and invoices. Logix paid the balance of the purchase price to the fraudsters' account believing it was paying Siam Aero. Logix took no independent step to verify the bank details. The fraud came to light days later when Siam Aero informed Logix by telephone and WhatsApp that it had not received payment, by which point the funds had already left the fraudsters' account. Logix commenced proceedings in England. It initially alleged Siam Aero's complicity in the fraud but dropped that allegation after forensic investigation. The claim was narrowed to a single ground: that Siam Aero's four emails to the fraudsters breached the confidentiality clause and caused Logix's loss. The issues At first instance, Mrs Justice Williams struck out the proceedings under CPR 3.4(2)(a), holding that the claim was "bound to fail". She accepted it was arguable that Siam Aero breached the confidentiality clause by unwittingly "disclosing" documents and information to the fraudsters. She held, however, that it was not arguable that any such breach caused Logix's loss. Lord Justice Males granted permission to appeal solely on causation. On appeal, Logix argued that the Judge wrongly failed to follow Macmillan. In that case, a firm had drawn the cheque negligently, leaving gaps in the figures and words that the clerk exploited to increase the amount from £2 to £120. The House of Lords held that, notwithstanding the intervening fraud, the firm's negligence in drawing the cheque facilitated the forgery and was the effective cause of the loss. As such, the firm was precluded from recovering its loss from the bank on the basis that "forgery is not a remote but a very natural consequence of negligence of this description". Siam Aero opposed the appeal on the ground it was not arguable that its actions breached the confidentiality clause at all. The judgment Lord Justice Phillips (Lord Justice Peter Jackson and Lady Justice Cockerill agreeing) dismissed the appeal. It was common ground that the "but for" test of factual causation was satisfied. The question was whether Siam Aero could be held liable despite the intervention of the fraudsters. The Court identified three principles by which the chain of causation may be broken: 1. First, the breach may not be the "effective" or "dominant" cause of loss but merely the opportunity or occasion for it (Galoo v Bright Grahame Murray; Armstead v Royal & Sun Alliance). The same distinction has been applied in the Cayman Islands. In Omni Securities v Deloitte & Touche, the Court of Appeal considered the Galoo test in the context of auditors' negligence and held that whether a breach was the "effective cause" of loss, or merely the "occasion" for it, was to be resolved by "the application of the court's common s...

In the recent decision of The Trustees v AB and Ors (Re the D Trust) the Cayman Grand Court granted relief under section 64A of the Trusts Act (2021 Revision) (the Act) to set aside a deed of exclusion (Deed of Exclusion) executed by previous trustees in reliance on erroneous UK tax advice. The decision adds to the growing body of authority on the statutory Hastings-Bass jurisdiction in the Cayman Islands, and includes guidance on the good faith requirement, standing by successor trustees, notification to tax authorities, and whether section 64A applications should be dealt with on the papers. Background The D Trust is a Cayman Islands discretionary trust with a broad class of beneficiaries. It was originally governed by New Zealand law, but its proper law and forum were changed to the Cayman Islands in November 2019. The trust formed part of a wider estate planning structure. When the D Trust was settled in 2011, the Settlor transferred non-UK situs property into it. A connected trust (the H Trust, governed by Guernsey law) borrowed those funds to purchase a residential property in England. The arrangement was designed to ensure the loan owed by the H Trust to the D Trust remained "excluded property" for UK inheritance tax (IHT) purposes, shielding the value of the UK property from any charge on the Settlor's death. In early 2017, proposed changes to the IHT regime threatened to undermine that planning. The previous trustees instructed a specialist London firm, which recommended (among other options) executing a deed of exclusion to declare the Settlor an "Excluded Person" under the trust deed. The Deed of Exclusion was executed on 30 March 2017, shortly before the new rules took effect on 6 April 2017. In January 2025, a different London firm reviewed the arrangements and concluded that the original advice had been incomplete and in places erroneous. It had failed to consider: (i) the risk that section 102 of the UK Finance Act 1986 would treat the Settlor as having incurred the H Trust's liabilities; (ii) whether the charge over the UK property was an "incumbrance created by a disposition made by [the Settlor]" within section 103 of that Act; and (iii) how the General Anti-Abuse Rule might apply to the 2017 arrangements. The D Trust faced the very IHT exposure the Deed of Exclusion was supposed to prevent. The issues The current trustee applied by originating summons for a declaration that the Deed of Exclusion was void ab initio under section 64A of the Act. The application was dealt with on the papers. The principal issues were: (i) whether the current trustee had standing; (ii) whether the statutory conditions in section 64A(2) were satisfied; (iii) the scope of the court's residual discretion (including the good faith requirement and notification of HMRC); and (iv) whether it was appropriate to determine a section 64A application without an oral hearing. The judgment The applicable law Justice Segal adopted the analysis of Justice Kawaley in Maples Trustee Services v AB (In Re Settlements), describing it as "a clear and authoritative summary of the applicable law". Justice Kawaley had identified three strands of the statutory language: 1. the power must be a fiduciary power; 2. but for the mistake the power would not have been exercised in the same way, at the same time, or at all; and 3. the person exercising the power must have failed to take into account relevant considerations, or taken into account irrelevant ones. Justice Segal adopted Justice Kawaley's tentative view (that section 64A contains an implied good faith requirement), reasoning that such a qualification is necessary to keep the jurisdiction within proper bounds and avoid what Lord Neuberger extrajudicially described as giving trustees a "get out of jail free card". He disagreed, however, with Justice Kawaley's observation that the circumstances required for section 64A relief are "likely in many (if not most) cases to be indistinguishable (legal lab...

In the recent decision of Lim Yew Cheng v Guanghua SS Holdings Limited, the BVI Court of Appeal dismissed an appeal against a first instance refusal to stay BVI recognition and enforcement proceedings pending the outcome of litigation in Hong Kong. The judgment is a useful restatement of the demanding test that an applicant must satisfy where it asks the court to put its own proceedings on hold to await the resolution of foreign litigation. Background In April 2022, Guanghua SS Holdings Limited (Guanghua) obtained a Hong Kong High Court Judgment arising out of two US$80 million loan facilities personally guaranteed by Mr Lim and his son, Lin Minghan. In June 2024, Guanghua commenced recognition and enforcement proceedings in the BVI, which Mr Lim sought to stay, first relying on pending separate Hong Kong proceedings (the Hong Kong Proceedings) and, subsequently a further claim issued in Hong Kong and derivative proceedings brought in the BVI. Mithani J (Ag.) refused both the stay and a related adjournment application, and Mr Lim appealed. The threshold for a case management stay The central question on appeal was whether Mithani J, when considering whether it was appropriate to grant stay of the enforcement proceedings on case management grounds, had applied the wrong test by failing to follow Athena Capital Fund SICAV-FIS SCA v Secretariat of State for the Holy See. Ward JA accepted that the single test is whether, in the particular circumstances, it is in the interests of justice to grant a stay. However, drawing on the analysis of Males LJ in Athena Capital, the Court emphasised that the presence of "rare and compelling circumstances" remains a highly relevant factor where the stay sought is to await foreign proceedings. The Court held that, while the "rare and compelling circumstances" formulation is not itself the legal test, "it is only in rare and compelling circumstances that it will be in the interests of justice to grant a stay on case management grounds to await the outcome of foreign proceedings", describing this as a "high threshold" and noting that the usual function of the court is to decide cases, not decline to do so. The appeal The Court observed that while the first instance judge did not expressly articulate the test he applied, the factors he relied upon were "plainly relevant" to the interests of justice question under the applicable test. These included the facts that (a) the Hong Kong Judgment had not been appealed, (b) no application had been made to stay the Hong Kong Judgment in Hong Kong, which would have been an obvious and effective way to bring a halt to the BVI enforcement proceedings, and (c) the relief sought in the Hong Kong Proceedings did not seek to set aside the Hong Kong Judgment. In those circumstances, there was no reason to regard the Hong Kong judgment as not final and no reason why the judge could not proceed with the recognition and enforcement claim. The appellant, Mr Lim, also sought to make much of the judge's statement that he had not considered his late evidence in great detail. The Court noted, however, that the judge had been deluged at the eleventh hour with over 100 pages of evidence and more than 2,000 pages of exhibits, comprising allegations yet to be proven at trial in support of the appellant's stay application. The Court found nothing to suggest that the judge had failed to appreciate the appellant's case for a stay; to the contrary, the judge's recital of the background showed that he was well acquainted with the case. Accordingly, nothing before the judge amounted to "rare and compelling circumstances", and his decision sat comfortably within the generous ambit of his case management discretion. The decision is a clear signal that BVI courts will not lightly stay recognition and enforcement of a final foreign judgment to await collateral foreign proceedings, particularly where no stay has been sought in the originating jurisdiction and the foreign challenge doe...

In the recent decision of State House Trust v Friend Media Technology Systems the Jersey Royal Court allowed an appeal against the Master's refusal to exclude an opinion from English counsel filed in support of a summary judgment application. Commissioner Sir Michael Birt (who is also a Justice of Appeal of the Cayman Islands Court of Appeal) held that there was no requirement to obtain the leave of the court to obtain evidence from a single expert witness, but that in this instance the opinion was inadmissible, and used the occasion to call for the introduction of a rule equivalent to English CPR 35.4. His analysis of the absence of a requirement for leave raises questions that Cayman Islands attorneys will recognise, because it is not clear that the position under the Grand Court Rules is materially different. Background The proceedings arise out of a shareholder dispute in which three Defendants applied for summary judgment and filed an opinion from English counsel (the Opinion) in support. The Plaintiffs sought to exclude the Opinion – the Master refused, and the Plaintiffs appealed. The judgment Commissioner Sir Michael Birt, hearing the appeal afresh, addressed three issues: 1. whether leave was required; 2. whether summary judgment must be decided on admissible evidence; and 3. whether the Opinion was admissible. He answered yes to the second and no to the first and third issues. It is the first issue – the requirement for leave – that has the most significance for the Cayman Islands. The Plaintiffs argued that Royal Court Rule 6/20(2)(d), which allows the court to "order that not more than a specified number of expert witnesses may be called", read with Practice Direction 17/09, created a leave requirement. The Commissioner rejected that submission. The rule merely empowers the court to limit the number of experts; it does not require leave. The wording is similar to, and Commissioner Birt decided has the same meaning as, the former English Supreme Court Rules Order 38, rule 4, which the English Court of Appeal in Sullivan v West Yorkshire Passenger Transport Executive held gives jurisdiction only to limit numbers, not to exclude expert evidence entirely. The absence of language equivalent to the English CPR 35.4(1), which expressly requires leave, confirmed the position. Commissioner Birt added that he had not reached the conclusion on leave with "any great enthusiasm". He recommended the introduction of a provision equivalent to CPR 35.4, which would impose a simple requirement to obtain the court's leave to submit expert evidence, and this would allow the court to consider admissibility and case management at an early stage. The Cayman position GCR O38, r4 is the Cayman analogue, in materially similar terms to Jersey's RCR 6/20(2)(d): it empowers the court to limit expert numbers rather than imposing a leave requirement. On a strict reading of the GCR, no express leave requirement appears to exist. O38, r36(1) restricts expert evidence unless one of four conditions is satisfied: (i) leave of the court; (ii) agreement of all parties; (iii) an application for a disclosure direction under r37 or r41; or (iv) compliance with automatic directions under O25, r8(1)(b). The third and fourth routes are procedural steps concerning the form and timing of disclosure; they are not applications for permission to call an expert. The party-agreement route is, in particular, difficult to reconcile with a blanket leave requirement. FSD Guide B5.1(a) provides that "[a]ny application for leave to call an expert witness or to serve an expert's report should be made at a case management conference or on a summons for directions". The use of "any" rather than "an" is conditional: it addresses what should happen if such an application is made, not that one must be made. The Guide also uses "should" rather than "must", and as a practice guide issued under the inherent jurisdiction of the court (not a statutory instrument or rule of court...

The Grand Court of the Cayman Islands recently delivered its judgment in In the Matter of New Ruipeng Pet Group Inc, concerning the continuation of the appointment of restructuring officers (ROs) over New Ruipeng Pet Group Inc (the Company). While the outcome was relatively straightforward on the facts, the judgment provides much-needed guidance concerning the grounds that the Court will consider when determining whether to continue the appointment of ROs given it is the first judgment to consider the issue. On 5 December 2025, ROs were appointed to develop and implement a restructuring plan for the Company and its wider corporate group to avoid a potentially insolvent liquidation. Upon appointing the ROs, the Court also directed that a case management conference be scheduled to assess progress with the restructuring plan. By the hearing on 3 March 2026, the ROs had made some progress developing a restructuring plan but had not yet obtained agreement from key stakeholders. Given liquidity pressures faced by the Company, the ROs advised the Court that they intended to pursue interim financing to stabilise the Company while continuing to pursue a longer-term restructuring of its debt. In this context, Justice Asif KC considered whether it was appropriate for the ROs' appointment to continue. As noted by Justice Asif KC, the judgment addresses interesting jurisdictional questions about the nature of the enquiry the Court must undertake when reviewing the continuation of RO appointments as there was previously no authority that directly addressed the Court's supervisory jurisdiction. The Court first considered the judgment of Kawaley J in Re Holt Fund SPC which dealt with an application to discharge ROs and records that where a consensual restructuring is no longer viable, the ROs will have grounds for their removal. Conversely, the potential for a viable restructuring must exist for the appointment of ROs to continue as detailed below. The Court accepted that the dicta of Cresswell J in Re Trident Microsystems (Far East) Ltd, decided in the context of light-touch provisional liquidations, were relevant by analogy. Cresswell J stated that when the Court is asked to adjourn a winding up petition and permit the continuation of a provisional liquidation, the Court is "in effect exercising its discretion to appoint provisional liquidators afresh" and must give due consideration to all relevant factors. Justice Asif KC determined that this approach should also be applied when considering the continuation of RO appointments. In other words, on each occasion the matter comes back before the Court, the Court must be satisfied that the statutory criteria in section 91B of the Companies Act for the appointment of ROs continue to be met. If they are not, the Court is under a duty to discharge the appointment. After establishing the applicable test, the Court approved the continuation of the ROs' appointment for the following reasons: The Company was, or was likely to become, unable to pay its debts.The Company and the ROs intended to present a compromise to creditors.The restructuring remained feasible and continued to be supported by significant stakeholders.The alternative to restructuring, being a winding up of the Company, was highly likely to result in a significantly worse outcome for stakeholders.Importantly, both the ROs and the Company itself supported the continuation of the ROs' appointment. The Court also bore in mind the warning in Re Aubit that the Court must be astute to ensure that a hopelessly insolvent company is not allowed to continue trading to the detriment of creditors and stakeholders simply by seeking the appointment of ROs. However, there was no suggestion by any party that this concern applied to the Company. Justice Asif KC's judgment is significant given the RO regime in the Cayman Islands remains relatively new. The decision serves as an important pronouncement of the obligations that ROs will be required to ...

Litigants and prospective litigants are now armed with two new tools for discovery in the Cayman Islands, thanks to the newly-introduced Rule 7A of GCR Order 24. The new rule, which came into force on 30 March 2026 in the Cayman Islands, provides a structured mechanism to obtain discovery of documents before proceedings are commenced and from a non-party to existing proceedings. Rule 7(A) establishes two distinct categories of application. Under Rule 7(A)(1), a prospective litigant may apply to the Grand Court for discovery prior to proceedings being initiated. This application is made by way of originating summons, and the person against whom the order is sought is named as the defendant to the summons. Meanwhile, Rule 7(A)(2) allows a party to existing proceedings to apply for an order for discovery by a person who is not a party to the proceedings. This application is made by summons and must be served on that person personally and on every party to the proceedings. Both types of application must be supported by affidavit evidence. In the case of pre-action discovery, the supporting affidavit must state the grounds on which it is alleged that the applicant and the named person are likely to be parties to subsequent proceedings before the court. In both cases, the affidavit must specify or describe the documents sought and demonstrate, if practicable by reference to any pleading served or intended to be served, that the documents are relevant to an issue arising or likely to arise in the proceedings and that the respondent is likely to have or have had them in their possession, custody, or power. The court retains wide discretion under Rule 7(A)(5) to make the order for discovery conditional on the applicant providing security for the costs of the respondent, or on such other terms as the court thinks just. The discovery order must also require the respondent to make an affidavit stating whether any documents sought are, or have at any time been, in their possession, custody or power, and if not, when they parted with them and what has become of them. Rule 7(A)(6) contains an important limitation: no person shall be compelled by a discovery order under Rule 7(A) to produce any documents he otherwise could not be compelled to produce: in the case of pre-action discovery, if the subsequent proceedings had already begun; orin the case of non-party discovery, if he had already been served with a writ of subpoena duces tecum to produce the documents at trial. The new Rule 7(A) closely mirrors the language of Hong Kong's Order 24, Rule 7A of the Rules of the High Court, which is modelled on the former English Rules of the Supreme Court that also forms the basis of the Cayman Islands provision. There are however noteworthy differences between Rule 7(A) and the equivalent rules in England and Wales, which are set out in UK CPR 31.16 and 31.17. In the case of pre-action discovery, CPR 31.16(1)(d) additionally requires that the disclosure sought must be "desirable in order to dispose fairly of the anticipated proceedings; assist the dispute to be resulted without proceedings; or save costs." For non-party discovery, CPR 31.17(3) requires that the documents sought "are likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings; and disclosure is necessary in order to dispose fairly of the claim or to save costs." Coined as the "cards on the table" approach to litigation by the court, the new discovery measures introduced through Rule 7(A) could reduce time and costs of litigation by allowing the prospects of success of disputes to be assessed earlier. This development represents a significant step in Cayman Islands civil procedure rules and brings the Cayman Islands procedural framework into closer alignment with the position in England and Wales and Hong Kong, where pre-action and non-party disclosure rules are well established. If you are contemplating commencing proceed...

The British Virgin Islands (BVI) has long occupied a pre-eminent position among the world's offshore jurisdictions for corporate formation. Hundreds of thousands of entities are registered under the BVI Business Companies Act, Revised Edition 2020 (BCA), and the territory's appeal as a domicile for holding companies, investment vehicles, and international trading structures shows no sign of diminishing. Yet with such a vast population of registered entities comes an inevitable corollary: a great many companies fall into administrative neglect, are struck off the Register of Companies (the Register), and are dissolved—sometimes without their beneficial owners, creditors, or counterparties appreciating the gravity of what has occurred. A central feature of BVI company law, therefore, is the mechanism by which a struck-off and dissolved company may be restored to the Register and brought back to legal life. Among the various grounds upon which restoration may be sought, one of the most practically significant—and frequently litigated—is restoration at the instance of a creditor. Creditor-led restorations sit at the intersection of corporate law, insolvency practice, and asset recovery, and they raise distinctive procedural, evidential, and strategic questions that reward careful analysis. This article examines the legal framework governing creditor restorations in the BVI, the procedural requirements that must be satisfied, the practical obstacles that creditors routinely encounter, and the emerging judicial solutions that have reshaped this area of practice. The Legislative Landscape: From Strike Off to Dissolution A BVI company may be struck off the Register for a number of reasons, but the most common is the prosaic failure to pay annual government fees by the due date. Other triggering events include the absence of a registered agent, the failure to file statutory returns, or the conducting of business without a required licence. The amendments to the BCA that came into force on 1 January 2023 effected a fundamental change to the consequences of a strike off. Under the previous regime, a struck-off company continued to exist in a form of corporate purgatory—suspended but not yet dead—for up to seven years before it was automatically dissolved. That grace period has now been abolished. Under the current regime, a company that is struck off the Register is simultaneously dissolved on the same date. It ceases to exist as a legal entity from that moment. The conflation of these two previously distinct events means that companies no longer enjoy a prolonged window during which restoration is a straightforward administrative matter; instead, the consequences of administrative neglect are immediate and severe. One of the most serious consequences of dissolution is that any property of the company that was not disposed of at the time of strike off and dissolution vests in the Crown as bona vacantia pursuant to section 220(1) of the BCA. Nevertheless, and critically for the creditor, the dissolution of a company does not extinguish its liabilities. Section 215(3)(b) of the BCA expressly preserves the right of any creditor to make a claim against the dissolved company and to pursue that claim through to judgment or execution. Equally, the company and each of its shareholders, directors, officers, and agents remain responsible for any liability that existed before the strike off. Two Routes to Restoration The BCA provides two mechanisms by which a struck-off and dissolved company may be restored to the Register. Section 217 provides for administrative restoration by the Registrar of Corporate Affairs (theRegistrar), while section 218 provides for restoration by order of the court. Both routes are available to creditors, although their respective requirements and the circumstances in which each is appropriate differ materially. Administrative Restoration under Section 217 The administrative route does not require a court application a...

For a creditor to place a dissolved BVI company into insolvent liquidation, the creditor must first restore the company. Good news to all creditors – AS PNB Banka (in liquidation) v Registrar of Corporate Affairs now confirms that the appointment of a registered agent is not required as a precondition to restoration where the creditor seeks restoration solely for the purpose of placing a dissolved company immediately into insolvent liquidation. Pursuant to section 91 of the BVI Business Companies Act, Revised Edition 2020 (BCA), a company shall at all times have a registered agent, except if it is in liquidation. Section 218A(1) of the BCA provides that: quote start Subject to sub-section (2), on an application under section 218, the Court may – (a) make an order to restore the company to the Register if: (i) the Court is satisfied that a licensed person has agreed to act as registered agent of the company… As such, the practice has been to engage a registered agent for the company, for the purpose of seeking the restoration which is immediately followed by the insolvent liquidation. Unfortunately, as happened to the Claimant in AS PNB Banka (in liquidation) v Registrar of Corporate Affairs, the engagement of a registered agent is often difficult for creditors because creditors will invariably not have all the KYC documents and information that registered agents are statutorily required to obtain. No registered agents were willing to act for the Claimant , leading the Claimant to apply to the Court for restoration without the appointment of a registered agent. Upon considering the parties' arguments, Justice Mangatal accepted the Claimant's submission that a creditor's ability to exercise its rights to seek restoration cannot depend upon the "discretionary commercial risk appetite of private licensed entities". She also noted that the appointment of a registered agent would cause delay and incur unnecessary costs, especially since section 91 of the BCA clearly states that no registered agent is required for a company in liquidation, being what the dissolved company will immediately enter into upon restoration. Justice Mangatal considered what the Claimant was seeking as a "single composite judicial act": restoration of the dissolved company and the appointment of liquidators. The company therefore never exists in a state requiring a registered agent pursuant to the BCA, and hence no registered agent need be appointed for applications of this nature. Conversely, the two-stage approach creates a "circular barrier to enforcement": restoration is required to appoint liquidators, yet the appointment of a registered agent, which may itself depend upon cooperation from those whose conduct may warrant investigation, would become an indispensable threshold condition. Restoration would become impossible "precisely in those cases where corporate management has disappeared or is unwilling to cooperate – circumstances which most strongly justify investigation through insolvency proceedings". Importantly, the judge was satisfied that the Claimant's construction does not dilute the AML objectives underpinning section 218A of the BCA. In the insolvency context, regulatory and investigative oversight is provided by court-appointed liquidators operating under the supervision of the court and within the statutory framework of the Insolvency Act, rather than by a registered agent. In permitting the Claimant's composite solution, the judge interpreted the permissive language in section 218A of the BCA as providing a guide for the exercise of judicial discretion rather than an inflexible jurisdictional precondition incapable of contextual interpretation. While Justice Mangatal considered leave to appeal unnecessary, she nonetheless granted leave to the Registrar of Corporate affairs on the basis "it concerns important issues that are likely to arise again, and the point is not free from difficulty". For now, this judgment removes a very common o...

On 24 March 2026, Justice Segal handed down his long-awaited trial judgment in Laggner v Uphold, dismissing a petition to wind up a Cayman Islands digital money platform on just and equitable grounds. The Petition was filed on 14 June 2022. In the four years since, the matter has been before the Court on three interlocutory occasions, proceeded to a three-week trial, and culminated in a 349-page ruling. It is one of the most substantial contested winding-up petitions to have reached a full trial in the Cayman Islands. The trial judgment is, subject to any appeal, a conclusive determination of the dispute. Background Uphold Ltd is a Cayman Islands exempted company operating a digital money platform (formerly known as 'BitReserve'). The Company was founded in 2013 and has over 800 shareholders, including significant institutional and individual investors. The dispute at the heart of this case arose from a funding arrangement entered into in mid-2016 (the 2016 Transaction) involving Adrian Steckel, a director and (through his entities, Uphold Holdings LLC and ASP Capital Sub one Inc) a major shareholder. The Petitioners were six minority shareholders, led by William Laggner, a former director of the Company. They alleged that Mr Steckel had, through the 2016 Transaction and a series of subsequent actions, gained de facto control of the Company and caused a dilution of independent shareholders' interests without their knowledge, consent, or any opportunity to participate. The Petitioners' complaints fell into three broad categories. The first was that the 2016 Transaction itself was designed to hand control to Mr Steckel at the expense of other shareholders. The transaction took the form of a revolving credit facility accompanied by a warrant which, upon exercise, gave Mr Steckel's entity approximately 50 per cent of the Company's issued shares on a fully diluted basis. The second concerned subsequent amendments to the revolving credit agreement, in particular the Third Amendment dated May 2017, which permitted the Company to pay interest on the loan by issuing shares to Mr Steckel and Mr James Chen at a fixed (and allegedly artificially low) valuation of US$48 million. This resulted in vast numbers of shares being issued as "PIK interest" without independent shareholders being informed, consulted, or offered the opportunity to participate. The third was that a valuable corporate opportunity, namely the Company's UK banking licence application (which ultimately became TBOL plc), was improperly diverted to Mr Anthony Watson, then a director and the Company's former CEO, in September 2017. Discovery had revealed an undisclosed side agreement pursuant to which Mr Steckel, Mr Thieriot, and Mr Dennings were each to receive personal shareholdings in TBOL. This was the second winding-up petition brought against the Company. A first petition was filed in February 2021 and settled in June 2021, leading to the establishment of a Litigation Committee chaired by Mr Jim Hilton, an independent director appointed in January 2021. When the current Petition was filed on 14 June 2022, the Petitioners sought either a winding-up order under section 92(e) of the Companies Act (the Act) or, as their primary relief, a buy-out order under section 95(3) of the Act. Before the matter reached trial, Justice Segal delivered three interlocutory judgments addressing service, the Company's participation in the proceedings (discussed further in our recent post 'Defanged: Curtailing company participation in winding up proceedings'), and a strike-out application. On the strike-out, Justice Segal dismissed the Respondents' applications, holding that the Petitioners' case was not bound to fail and that the disputed factual and credibility issues required a full trial. The trial took place over three weeks in April and May 2025 and judgment was delivered on 24 March 2026. The issues By the time of closing submissions at trial, the Petitioners' case had narrowed si...

Since the launch of ChatGPT in November 2022, the use of generative AI has proliferated across every domain and litigation is no exception. Courts in various jurisdictions have grappled with the challenges posed by the revolutionary technology and provided important guidance. The decision in Guerin v O'Doherty In March 2026, the Irish Court of Appeal provided its first guidance to lawyers and litigants on the use of generative AI in litigation in Guerin v O'Doherty [2026] IECA 48. The decision concerned an appeal by the defendant, Gemma O'Doherty against the dismissal of her application to strike out a defamation claim. The Court dismissed Ms O'Doherty's appeal. In rejecting all eight grounds of appeal, the Court observed that much of Ms O'Doherty's submissions and complaints addressed matters that either did not arise on the appeal, or were irrelevant to the question whether the court below had erred in refusing to strike out the proceedings (at paragraph 27). Acting in person, Ms O'Doherty used AI to prepare her written submissions for the appeal. However, she did not notify the plaintiff's solicitors in advance that she had done so. The Court found that Ms O'Doherty's submissions contained a number of "hallucinated authorities" which did not exist, or which did not support the propositions they purported to establish. This caused the plaintiff's solicitors to spend time and costs attempting to locate non-existent authorities. The Court emphasised that all parties, whether represented or not, have an obligation not to mislead the court. This includes the obligation not to rely on or advance submissions based on authorities that have no basis in law. The Court also noted that lawyers are subject to professional and ethical obligations which do not apply to litigants in person, but did not address those obligations as they did not arise in the case. The Court's guidance on AI use To assist parties, the Irish Court of Appeal set out the following general guidance for parties, whether acting through counsel or in person: 1. Parties are entitled to use AI to assist in carrying out research in respect of their case provided they do so responsibly and do not, even inadvertently, mislead the court by advancing propositions or relying upon supposed authorities which have no foundation. 2. In all cases where they do so, they should expressly inform both the other parties and the court of their use of AI. 3. A self-represented party is as equally responsible for the ultimate written or oral work as lawyers. 4. It is important, therefore, that any party who uses AI as part of their research independently verifies the accuracy of their submissions and the authorities cited as supposedly establishing the propositions advanced. 5. No authority should be cited by a party who has not verified that it is a genuine judgment of the court and that it is, or at least arguably is, authority for the proposition contended for. Consequences of improper AI use The Court had strong words of caution against the improper use of AI, noting that it could lead to wasted time and costs, cast an unfair burden on the opposing party, potentially bring the administration of justice into disrepute, and mislead the court. The Court emphasised that it had a variety of sanctions at its disposal in cases where parties use AI in breach of these guidelines and where such improper use has the potential to mislead the court. Fortunately for Ms O'Doherty, the Court declined to draw any adverse conclusions against her on that occasion, reasoning that at the time submissions were filed, no guidance was available to litigants in relation to their obligations to the other parties and to the court as regards the use of AI-generated material in proceedings. What it does mean is that going forward, all litigants and lawyers appearing before the Irish courts will have to ensure that they abide by the guidance set out above, or risk adverse inferences and sanctions. Lawyers be ...

Koa Capital LP and 507 Summit LLC (together, the Petitioners) presented a winding up petition on 16 January 2024 in respect of Fang Holdings Limited (the Company), a Cayman-incorporated entity. The petition was directed principally at the conduct of Tianquan Mo (Mr Mo), listed as the First Respondent, who the Petitioners alleged had engaged in wrongdoing that benefited him personally at the expense of the Company. The Company itself was named as the Second Respondent. Progress was slow. The Petitioners had difficulty effecting service on Mister Mo, and the matter did not come on for a directions hearing until 25 November 2025. By that stage, the Company had engaged separate counsel and wished to participate in the proceedings beyond simply providing discovery. The hearing concerned three questions: 1. Should the proceedings be treated as inter partes between the Petitioners and Mr Mo in his capacity as a member of the Company? 2. To what extent should the Company be permitted to participate? 3. What procedural directions should be given for the future conduct of the petition, including timetabling for defences, reply, discovery, and evidence? The Petitioners argued that the dispute was properly between them and Mr Mo, and that the Company's role should therefore be confined to giving discovery. The Company, on the other hand, contended that the serious allegations against its board necessitated its separate and independent representation, and that its wider shareholder base would be prejudiced if it could not defend the proceedings. The Company invited the Court to permit it to participate and indicated (without supporting evidence) that it would establish a litigation committee for that purpose, to be comprised of independent directors. Mr Mo did not appear. The Court applied Order 3, rule 12(1) of the Companies Winding Up Rules and the established authorities, including the decisions of Justice Foster in Freerider Ltd, Justice Segal in China Shanshui, Justice Richards in Madera Technology Fund CI Ltd, and Justice Segal in Uphold Ltd. Those authorities recognise a "rebuttable distaste" for company participation in shareholder petitions brought on just and equitable grounds, the underlying rationale being that such disputes are typically between shareholders, and the company's involvement risks one faction using corporate funds to fight what is essentially a private battle. The Court characterised the real dispute as one between the Petitioners and Mr Mo. The allegations were that Mr Mo had acted in his own interests at the Company's expense. The Company had not demonstrated that it held a separate and independent position requiring protection. The Company's offer to establish a litigation committee was found to be insufficient. In Uphold, Justice Segal had set out in some detail what the Court expects where a company seeks to participate through a litigation committee: the committee must be able to act independently and without improper interference from the respondent shareholders; the committee members must confirm that they are not conflicted; and the committee must not overstep its remit, leaving the accused shareholders to take the lead in (and bear the cost of) defending the allegations against them. Even in Uphold, where the company had already established a litigation committee and put evidence before the Court going "a long way towards providing the court with the assurances that it needs", Justice Segal still required further evidence of independence. In the present case, by contrast, the Company had provided no evidence at all: no evidence of proposed committee members, no safeguards, and no articulated defence strategy. The Company had also failed to provide a draft order setting out the directions it actually sought, which the Court noted was unhelpful. On the question of Mr Mo's membership, the Court considered section 48 of the Companies Act (2025 Revision), which provides that the register of members consti...

A long-standing question in offshore trust practice concerns the role of the protector and the nature of their power. When a trust instrument requires a protector's consent before trustees can act, does the protector simply check that the trustees' decision is lawful and rational, or can the protector form its own independent view on whether the proposed course of action serves the beneficiaries' interests? These two competing positions have become known as the "Narrow Role" and the "Wider Role." Under the Narrow Role, the protector satisfies itself only that a reasonable and properly informed body of trustees could lawfully take the decision in question and, if so, must consent. Under the Wider Role, the protector may decide for itself whether to consent by reference to its own assessment of the beneficiaries' interests and the merits of the proposal, even where the trustees' decision is perfectly rational. This debate, which has divided courts and commentators across trust jurisdictions, has now been squarely addressed by the Privy Council in A and 6 Others v C and 13 Others (Bermuda) [2026] UKPC 11. Facts and judicial history The case arose from a group of family settlements, many of which had been amended in the early to mid-1990s. Those amendments introduced common-form protector provisions requiring the protector's prior written consent for two categories of high-impact decision: capital appointments and dealings with (including the voting of) what were called "Specified Securities" (primarily a large, coordinated shareholding in a family operating company). The trustees proposed a substantial reorganisation that would allocate the trusts' aggregate assets between two family branches in a broadly two-thirds to one-third split. The protectors, having been consulted, indicated they were minded not to approve the proposal. Their objection was not that the trustees' proposal was unlawful or irrational, but rather that, in their own independent assessment, the proposal did not best serve the beneficiaries' interests. This distinction went to the heart of the dispute: under the narrow view, if the protectors could only withhold consent on the basis of the legality and rationality of the trustee's proposed action, and there were no legality or rationality concerns in this proposed split, then the protector's objection had no proper basis; whereas, under the wider view, if the Protector's could bring their own judgment to bear on the merits, it did have proper basis. The trustees responded by seeking the Bermuda court's blessing under Public Trustee v Cooper jurisdiction and, subsequently, a declaration on the proper scope of the protector's role. At first instance, Justice Kawaley held that the protector possessed only the Narrow Role. The reasoning emphasised the trustees' paramount substantive powers, the ancillary character of the consent requirement, the unanimity requirement among joint protectors, and concerns that a Wider Role would create duplication and deadlock. The Court of Appeal for Bermuda affirmed, describing the protector as a "watchdog" whose function was to supervise trustee legality and rationality rather than to substitute its own independent judgment. The appeal to the Privy Council squarely presented the same binary choice. One branch of the family contended for the Wider Role; the other urged the Narrow Role. The trustees and protectors remained neutral. The Privy Council's decision The Board's reasoning proceeded in two stages. First, it addressed the correct analytical framework. Second, it applied that framework to the particular trust instruments before it. The Board's starting point was to reject the premise that courts must choose a single, universal "default role" for protectors in the abstract. Instead, the proper question is always one of construction: what constraints, if any, does the particular trust instrument impose on the protector when exercising a power of consent, bearing in mind any ...

In THG Plc v Zedra Trust Company, the UK Supreme Court, by 4-1, overturned the Court of Appeal and held that no statutory limitation period applies to unfair prejudice petitions under section 994 of the Companies Act 2006 (the CA). Relevant legal provisions Section 994 of the CA allows a shareholder in a company to petition to the court for a remedy on grounds that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or some of its members, or that an actual or proposed act or omission of the company is or would be unfairly prejudicial. If unfairly prejudicial conduct is established, the court may grant a variety of relief that it thinks fit pursuant to section 996 of the CA, including the payment of compensation. Meanwhile, the Limitation Act of 1980 (the 1980 Act) governs time limits for bringing proceedings in a court of law. Section 8 of the 1980 Act provides that unless an action for which a shorter period of limitation is prescribed elsewhere in the Act, "[a]n action upon a speciality shall not be brought after the expiration of twelve years from the date on which the cause of action accrued." Under Section 9 of the 1980 Act, "An action to recover any sum recoverable by virtue of any enactment shall not be brought after the expiration of six years from the date on which the cause of action accrued." Finally, Section 36 of the 1980 Act disapplies the limitation periods in sections 8 and 9 for "any claim for specific performance of a contract or for an injunction or for other equitable relief", except where the court applies such time limit by analogy in limited circumstances. Background Zedra acquired a 13.2% stake in THG plc in 2011 when it was a private company under the name of The Hut Group Ltd. In 2019, Zadra filed a petition to the court under section 994 of the CA, alleging that the conduct of THG's affairs was unfairly prejudicial to it in a number of respects. In 2022, Zadra sought to amend its petition to include an allegation that it was unfairly prejudiced by being excluded from a bonus issue of shares made more than six years earlier to some shareholders, seeking equitable compensation for its alleged loss. THG opposed the amendment, arguing that it was "an action to recover any sum recoverable by virtue of any enactment" and therefore time-barred by section 9 of the 1980 Act. The High Court held that the 1980 Act does not impose any limitation period to petitions under section 994 of the CA and as such, the amendment was not time-barred and should be allowed. On appeal, the Court of Appeal ruled that all petitions under section 994 of the CA are subject to a 12-year limitation period under section 8 of the 1980 Act and that claims for monetary relief under section 994 are subject to a six-year limitation period under section 9. As the only remedy Zedra sought was compensation, its claim fell within section 9 and was therefore time-barred. Zedra appealed to the Supreme Court, arguing that neither section 8 nor 9 of the 1980 Act applied to an unfair prejudice petition. Judgment In a 4-1 majority decision, the Supreme Court allowed Zedra's appeal, holding that a claim under section 994 is neither an "action upon a speciality" under section 8 of the Limitation Act, nor an "action to recover any sum recoverable by virtue of any enactment" under section 9 of the Act. The central issue in this case on appeal is whether any limitation period applies to unfair prejudice petitions under section 994 of the CA. The Supreme Court decided that: Under section 8 of the 1980 Act, "an action upon a speciality" is, in essence, an action to enforce an obligation which is created by a deed or a statute. Section 994 of the CA, however, does not create any obligations but merely provides for remedies and rights of petition if there is or has been unfair prejudice in the conduct of a company's affairs. Hence, a claim under section 994 is not an acti...

In Conyers Trust Company (Bermuda) Limited (as trustee of the First Trust) v The Protector of the Second Trust, the Supreme Court of Bermuda exercised its power to set aside a trustee's mistaken exercise of its fiduciary powers to unwind a transaction which would have resulted in unintended tax implications. The trustee was the trustee of two related trusts, the A Trust and the B Trust. As part of a restructuring, the trustee, acting in its capacity as trustee of the B Trust, entered into a phased transaction which entailed the distribution of all the assets of the B Trust to a beneficiary. Thereafter, the beneficiary made a gift of those assets to the trustee in its capacity as trustee of the A Trust. The final step of the transaction was the amendment of the A Trust to reflect the terms of the restructuring. However, the trustee had not taken appropriate UK tax advice before exercising its power to make the distribution to the beneficiary. Had the trustee done so, it would have realised that the distribution would attract unnecessary additional tax liabilities, and it would not have exercised its power in the way that it did. As a result, the trustee applied to the court under section 47A of the Trustee Act 1975 for an order to set aside its exercise of its power and consequential declaratory relief that the distribution from the B Trust to the beneficiary be treated as never having occurred. In order to engage the court's jurisdiction under section 47A, the trustee was required to satisfy the court that (i) when exercising the fiduciary power it did not take into account a consideration of fact or law that was relevant to the exercise of the power and (ii) but for the failure to take that consideration into account the trustee would not have exercised the power at all or would have done so on a different occasion or would have exercised the power in a different manner. Where those conditions are met, the court has a broad and unfettered jurisdiction to set aside the exercise of the fiduciary power either wholly or in part without there being any need to demonstrate that the power was exercised in breach of trust. The effect of making such an order is that the exercise of the relevant power is treated as never having occurred. The evidence demonstrated that the trustee did not take into account a relevant consideration, namely the effect of an aspect of UK tax law, before exercising its power to make the distribution. Had the trustee taken such tax advice, the trustee would not have exercised its power in the way that it did. Consequently, the court found that the conditions for relief under section 47A were met and set aside the exercise of the trustee's power and granted a declaration that the distribution from the B Trust to the beneficiary be treated as if it had never occurred. This decision is a useful reminder to trustees of the care that must be taken when exercising their powers. However, where transactions are entered into under a mistaken understanding of their effect, Bermuda's statutory regime (along with similar ones which exist in the British Virgin Islands and the Cayman Islands) is helpful in enabling trustees to seek the court's assistance to unwind those transactions to avoid unintended consequences.

In a previous blog post, we discussed the first instance judgment in the Phoenix BVI litigation, where Justice Mangatal considered the formalities for becoming a shareholder under s49 of the BVI Business Companies Act, Revised Edition 2020 (BCA). That judgment has now been appealed, with an accompanying application for a stay of execution. On 27 February 2026, in ICM SPC v Jarvis, the Court of Appeal refused the stay. The judgment restates the C-Mobile Services Ltd v Huawei Technologies Co Ltd criteria for stay relief and offers guidance on credibility-based appeals, the limits of using stays as leverage in foreign proceedings and impecuniosity arguments. Phoenix Commodities PVT Ltd (Phoenix BVI) was placed into voluntary liquidation in April 2020. The joint liquidators (JLs) settled a list of members which included Ancile Special Opportunity and Recovery Fund Segregated Portfolio (ASOR), a segregated portfolio of ICM SPC (ICM), a Cayman Islands company. ASOR disputed its shareholder status, arguing that neither it nor any authorised agent had agreed in writing to become a shareholder. The judge at first instance dismissed this application, finding that ASOR had so agreed through its representative. The JLs subsequently issued a call to ASOR for over US$40 million (Call). ICM appealed and sought a stay of the first instance judgment, Order and the Call, though it later narrowed its stay application to the judgment and Order only. Meanwhile, the JLs served a statutory demand on ICM in the Cayman Islands and filed a winding-up petition. The Court of Appeal dismissed the stay application with costs. It applied the five settled principles from C-Mobile Services Ltd in determining ICM's application: consider all circumstances;treat stays as exceptional;require cogent evidence of stifling;apply a balance of harm test; andassess prospects only where strong grounds exist. On its appeal prospects, ICM failed to demonstrate a realistic chance of success. While the appeal raised questions about the interpretation and application of s49 of the BCA, the trial judge's findings were heavily influenced by credibility assessments – in particular, her observations that ICM's main witness was "inconsistent, incredible and convoluted" – and appellate courts are traditionally reluctant to disturb such findings absent exceptional circumstances. On stifling, even if ICM were wound up, then the liquidators could pursue the appeal if they considered it meritorious. ICM's evidence regarding its concerns that a winding up order would result in reputational harm and irreparable damage to itself and a second segregated portfolio, fell short of demonstrating that those fears would actually be realised. On balance of harm, Phoenix BVI's creditors had waited nearly six years for the liquidation to complete. Their prejudice from further delay outweighed ICM's. While a winding-up would mean ICM's "death", liquidators could pursue the appeal alongside their other duties. The Court was also critical of ICM's true objective: using the stay to influence the Cayman winding-up proceedings. This had "unflattering optics" and amounted to seeking a "coercive measure in extra-territorial proceedings". In any event, the BVI judgment has no binding force on the Cayman Islands Court; it is merely persuasive, to be treated as a matter of judicial comity. Finally, impecuniosity was not relied upon, but the Court observed that any such argument requires cogent evidence of means, failing which the application would be "irremediably undermined". This case affirms the five C-Mobile Services criteria for stay applications. Three key takeaways: First, appeals challenging credibility-based findings face a steep uphill battle. Absent exceptional circumstances, appellate courts will not disturb them.Second, courts will scrutinise the true purpose behind a stay application. Using stay relief to gain leverage in foreign proceedings will not be tolerated.Third, impecuniosity argument...

In Lakhany v Hasan, the English High Court* discharged a worldwide freezing order (WFO) for an applicant's failure to adequately discharge their "full and frank" disclosure duty. This case is a welcome reminder of the consequences for artificially elevating a general suspicion of dissipation to a "real risk" before the court. The facts concerned a contractual dispute over an alleged debt of approximately GBP1 million. The remaining background is of only tangential interest: the key takeaway for litigators is how the "real risk of dissipation" was presented to the court. Despite the respondent having relocated from the UK to Pakistan in December 2024 (and contemporaneously informing the applicant's solicitors of this), the applicant gave misleading evidence that the relocation took place months later in March 2025. The applicant invited the court to infer that the respondent had fled the UK to avoid the consequences of any adverse judgment; In respect of a London-based property which the applicant wanted to injunct for the purposes of potential future enforcement, the applicant took four weeks to act on a property alert (being a search to protect a pending purchase) but nonetheless described the alleged risk of dissipation as "compelling". No explanation was given for the delay between the search and the filing of the injunction application (or indeed the hearing of said application, which took place a further four weeks later); and The applicant alleged that the respondent (a) had control over the property; and (b) was seeking to "liquidate his only asset within the jurisdiction" in circumstances where a reasonable public search would have revealed this to be inaccurate: the London-based property was neither the respondent's asset, nor under his control (following the appointment of an LPA receiver on 11 August 2020). To compound the misleading presentation of the case, the applicant's skeleton argument stated that no response to the application for injunctive relief had been received when, in fact, the application had not even been served on the respondent. The Judge hearing the application, unconvinced that the facts supported a conclusion that a risk of dissipation existed, adjourned the hearing to hear from the respondent, but the respondent – by then living abroad – only received two days' clear notice of the adjourned hearing. The hearing proceeded in his absence (despite some informal written representations being made) and the WFO was granted. Remarkably, the applicant's procedural inadequacies persisted post-hearing: neither (a) the transcript of the freezing injunction hearing; nor (b) the subsequent judgment itself were provided to the respondent for over 18 weeks. That transcript recorded the fact that the claimant was only seeking a freezing order in respect of the London property, and not a WFO (as had been granted). When the respondent was provided with a copy of the freezing order on 2 July 2025, he was therefore unaware of the basis upon which the WFO was sought and obtained. In these circumstances, the WFO (granted before the inconsistencies became apparent) could not survive the applicant's complete failure to provide "full and frank" disclosure. As an aside, the applicant attracted further criticism by drafting a freezing order which (a) not only failed to set a return date, but (b) also failed to provide any exception for either (i) living; or (ii) legal expenses. Inadequate notice was given for the injunction hearing; The applicant made misleading representations about the respondent's move to Pakistan and failed to disclose that the property in question was under LPA receivers' control since August 2020; and There was no solid evidence establishing a risk of dissipation. In the circumstances, it's difficult to see how the court could have arrived at another conclusion. The test, of course, for a "real risk of dissipation" is whether "unless restrained by injunction, the defendant will dissipate or dis...

In the recent decision of Unicorn Biotech Ventures One Ltd v Unicorn Biotech Ventures Two Ltd the Grand Court has for the first time considered the issue of whether it has jurisdiction to compel parties to participate in alternative dispute resolution (ADR) against their wishes, and if so, what factors should be taken into account. The Grand Court held that it does have the power to do so and the ultimate test will be whether compelling participation in ADR has a real prospect of furthering the overriding objective by bringing about a fair, speedy and cost-effective solution to the dispute. The application arose in the context of two actions commenced by limited partners of an exempted limited partnership in which they sought declarations regarding the conduct of the fund by the general partner, and the winding up of the fund. There had been a complete breakdown in the personal relationships between those behind the corporate entities which are the LPs and GPs. Notwithstanding proximity to trial, the GP sought orders compelling the parties to attend a mediation at the same time that the parties were due to be exchanging witness statement and preparing for trial. The application raised two issues which had not previously been considered by the Grand Court. Does the Grand Court have the power to compel parties to attend mediation or other means of ADR against their wishes? The Grand Court, following the guidance set out by the English Court of Appeal in Churchill v Merthyr Tydfil, held that it does have inherent jurisdiction to compel parties to participate in ADR in a suitable case. The English Court had observed that courts regularly adjourn hearings and trials to allow the parties to discuss settlement and it would be absurd if they could not to do simply because one of the parties resisted the adjournment. In addition, the court has a long-established right to control its own process including by staying or delaying existing proceedings whilst a settlement process is underway. Justice Asif noted that by virtue of section 11 of the Grand Court Act, the Grand Court has the same jurisdiction as the High Court of Justice in England. His Lordship held that the decision in Churchill was of very persuasive value and should be applied in the Cayman Islands, and it is consistent with the overriding objective to assist the parties to a resolution of their dispute which may be quicker and cheaper than a court-based determination. What are the factors that the Court should consider in determining how to exercise its discretion? Examples of potentially relevant criteria (as raised in Churchill) include the form of ADR proposed, whether parties are represented, the urgency of the case and reasonableness of the delay caused by ADR, whether any delay would vitiate the claim or give rise to limitation issues, the costs of ADR in real terms, relative to the claim and parties' resources, whether there is any realistic prospect of resolution through ADR, any imbalance in bargaining power, and the reasons given by a party not wishing to mediate. However, Justice Asif held that the decision whether to order ADR is multifaceted and declined to lay down any particular criteria to be applied. Ultimately, the test is whether compelling participation in ADR has a real prospect of furthering the overriding objective by bringing about a fair, speedy and cost-effective solution to the dispute and the proceedings. It is not a balance of probabilities test but whether ADR would have a "real prospect of a useful outcome". Outcome The Grand Court declined to compel the parties to attend mediation. The Court considered that the positions taken by the parties to date, and the nature of the dispute and relief sought, meant there was no prospect that mediation would be successful. The GP's application was also late in the day and imposing a mediation at the same time that parties were preparing for trial would be a time-consuming distraction. Overall, the Cou...

In Jardine Strategic Limited v Oasis Investment II Master Fund Ltd & Ors the Privy Council (on appeal from Bermuda) held on July 24 that the so-called "Shareholder Rule" should be abrogated. This rule provided that a company could not, in the course of litigation between a company and shareholders, withhold documents from inspection on the basis of legal advice privilege. The Board held that the original proprietary justification for the Shareholder Rule no longer exists and the company shareholder relationship is not one that falls into the joint privilege relationship family. The Board also held, pursuant to its Willers v Joyce jurisdiction (where the Privy Council, not being a court of the United Kingdom but comprising the same Justices those who sit in the House of Lords and the UK Supreme Court, may direct that its decision also represents the law of England and Wales), that the domestic courts of England and Wales should treat this decision as binding and part of the law of England and Wales. This decision is significant for common law jurisdictions – it is binding in Bermuda and England and Wales, and likely to be highly persuasive in other common law jurisdictions such as the Cayman Islands. It provides certainty to company directors seeking legal advice and, in the context of shareholder appraisal proceedings under section 106 of the Bermuda Companies Act (and likely also in the Cayman Islands in shareholder appraisal proceedings under section 238 of the Cayman Islands Companies Act), clarifies that companies are not required to produce legal advice obtained when setting fair value offered to dissenting shareholders. This is the second decision of the Privy Council arising out of the amalgamation of two companies within the Jardine Matheson group and section 106 proceedings issued by the dissenting shareholders seeking a fair value appraisal by the Court. In the present matter on appeal, the dissenting shareholders had sought discovery of legal advice that was given to the Jardine Matheson group when it was setting the $33 value which was offered as fair value to dissenting shareholders who had their shares cancelled. The Company asserted that the advice was covered by legal advice privilege. The dissenters asserted that where a party seeking to access the documents is a shareholder, that will override the usual rules on privilege. They submitted that the Shareholder Rule was in reality a sub-set of joint interest privilege, such that it remains justified notwithstanding the fading away of the original proprietary basis for its creation. The primary issue for the Board was whether the Shareholder Rule exists as a matter of Bermudian law. At first instance, Chief Justice Narinder Hargun of the Court of Appeal of Bermuda rejected the Company's claim to privilege on the basis that the Shareholder Rule was a long established and complete answer to any assertion of legal professional privilege by a company against its shareholders. The Company appealed the decision. The Court of Appeal of Bermuda dismissed the appeal. Justice of Appeal Geoffrey Bell who gave the main judgment, recognised that the Shareholder Rule had not been applied in any decision in Bermuda but that the Court of Appeal had clearly operated on the basis that the rule did exist in at least one previous case. Justice of Appeal Bell regarded the rule, if it existed, as based on joint interest privilege and not 19th century case law (from which the rule originated). Justice of Appeal Ian Kawaley reached a more nuanced conclusion. He rejected the traditional view that the company shareholder relationship was enough to establish an exception to privilege. Rather, it would depend upon all the circumstances and was a flexible and context-based rule rather than status-based rule. President Sir Christopher Clarke agreed with both judgments and added that the joint interest principle, applicable to defeat what would otherwise be a successful claim to legal advic...

In a recent Privy Council decision IGCF SPV 21 Limited v Al Jomiah Power Limited and another, the Board ruled on when a party is held to have submitted to the jurisdiction of a foreign Court as a matter of Cayman law. The parties' positions It was common ground between the parties that an applicant will forfeit its right to an injunction if it submits to the Court of a foreign jurisdiction. The Appellant was pursuing proceedings against the Respondent in Pakistan. The Respondent had sought to appear in Pakistan in order to contest jurisdiction. The Respondents applied for an anti-suit injunction in the Cayman Courts, seeking to restrain the Appellant from pursuing the proceedings in Pakistan. The Appellant's argument was that the Respondent had submitted to the jurisdiction of Pakistan. The Rule in Geoprosco The Appellant relied on what they called the "Rule in Geoprosco" - a 1975 English Court of Appeal case that held that appearing before a foreign Court (Pakistan) simply to contest jurisdiction counted as submission. Since Geoprosco was decided, it had in fact been reversed in England and Wales by a 1982 statute. Without an equivalent Cayman statute, the question arose: what was the Cayman position? The Board concluded at [52] that Geoprosco "should form no part of Cayman law". Put simply, appearing in a foreign Court to contest jurisdiction did not count as submission. What counts as submission? In deciding what counts as submission, the Board held that Cayman law should reflect the current law in England and Wales, namely the seminal case of Rubin v Eurofinance. Key takeaways The Board's approach to a legislative lacuna in Cayman is noteworthy. The Board analysed academic texts and English Hansard Debates, and compared the solutions of other common law jurisdictions. It was also emphasised that the "Cayman courts may decline to follow English court decisions where there is good reason to do so" [47]. Interestingly, the Board noted that some common law jurisdictions had adopted legislation similar to the English statute, and that others without a legislative equivalent had declined to follow Geoprosco. The Board highlighted a first instance case from Bannister J in the BVI to that effect. The Appellants had not been able to point to a single common law jurisdiction which followed the Rule in Geoprosco. Although a Cayman judgment, the case may well have extra territorial influence in years to come in those jurisdictions where common law solutions have so far been found, but only at the first instance level. Finally, and as a mark of the jurisprudential significance of the BVI, this judgment is one of a number of important decisions in which the Board was assisted by the BVI's the Honourable Dame Janice Pereira, who heard the appeal together with four permanent members.

Harneys successfully secured the appointment of a receiver by way of equitable execution over a Cyprus private company, in order to assist in the execution of a judgment against a villa in Limassol Marina. Facts Our client obtained a Singapore judgment for over USD 124 million plus interest against the defendants. After filing a common law action in Cyprus based on that judgment, the District Court of Larnaca issued a summary judgment, effectively recognising and localising the Singapore judgment in Cyprus against the judgment debtors. Subsequent enforcement measures were pursued in Cyprus to target assets of the judgment debtors located within the jurisdiction. One such asset was a villa at the Limassol Marina, for which no separate title deed had been issued. This, in turn, necessitated the filing of an application for the appointment of a receiver over the judgment debtor owning the villa and/or the villa itself. Legal background The Cyprus courts may appoint a receiver by way of equitable execution, where there exists a practical or legal hindrance or difficulty, which prevents enforcement through ordinary statutory means. The courts must be satisfied that the receiver is likely to meaningfully assist in executing the judgment. The appointment is discretionary and grounded in equity principles. This type of order is particularly appropriate, as in this case, when the debtor's interest in immovable property cannot be enforced under existing statutory provisions. The case Harneys argued that there was a legal impediment to execution against the property, as no separate title deed had been issued in the name of the judgment debtor. The property, one of the villas at the Limassol Marina, is held by the judgment debtor under a long-term lease agreement with the Ministry of Energy, Commerce and Industry, as well as a sublease agreement with another Cyprus company. Following the issuance of the summary judgment, the judgment creditor attempted to register a memorandum of judgment over the property, with the intention of initiating its sale under the provisions of the Cyprus Civil Procedure Law, Cap. 6. However, this was not possible. The District Lands Office of Limassol confirmed in writing that such registration could not be effected "since [the judgment debtor] is not the registered owner [of the property] as provided by the relevant legislation." Relying on this confirmation, Harneys argued that the absence of registered title deed meant that no other legal mechanism was available to execute the judgment against the property. This constituted a clear impediment to execution against the property, thereby justifying the appointment of a receiver by way of equitable execution. Ruling The District Court of Larnaca held that, indeed, the absence of a separate title deed created a legal difficulty that prevented the property from being sold through the ordinary execution process. Accordingly, the Court found it necessary to appoint a receiver with powers to take control of the property, assess its condition and proceed with a private sale by one of several possible means: assignment of rights; cancellation of the existing lease and sublease agreements and execution of new agreements with a buyer; or even the transfer of rights from the lease and sublease agreements to a company, with the sale ultimately effected through the sale of that company's shares. The Court concluded that this was an appropriate case for the appointment of a receiver, finding that there was a reasonable prospect that the receiver's involvement and the ancillary powers granted would substantially assist in the execution of the judgment. Consequently, the Court appointed the proposed receiver, an experienced lawyer and insolvency practitioner, and issued ancillary orders to facilitate the execution process. Comment This decision is particularly significant in the context of cross-border litigation and judgment enforcement, as it demonstrates the Cyprus cour...

There has been a significant increase in the number of lenders enforcing against secured assets in the BVI, which has entailed an uptick in the appointment of out-of-court receivers. This guide highlights the types of disputes arising out of such appointments. As many offshore companies operate as holding vehicles, security is often granted by way of share mortgage. The BVI Business Companies Act 2004 (BCA), provides a mortgagee with security over shares in a BVI company a statutory right to appoint receivers over those shares. That right is typically mirrored in the underlying security instrument. The process for appointing receivers in the BVI is set out in the Insolvency Act 2003 (Insolvency Act). Once appointed, out-of-court receivers act as agent for the mortgagor unless the instrument pursuant to which they are appointed provides otherwise. While receivers are generally personally liable for their actions, this agency affords them a degree of protection as they act in the name of and on behalf of the mortgagor. BVI legislation is relatively light-touch on the powers granted to a receiver, generally deferring to what has been agreed and set out within the instrument pursuant to which the receiver is appointed. In the case of security over shares, the receiver will generally have the power to (1) sell the shares, (2) vote the shares, and (3) take such other steps as they consider necessary or desirable to protect, improve or realise the shares. According to the Insolvency Act, receivers are subject to a primary duty to exercise their powers (1) in good faith and for a proper purpose and (2) in a way they believe (on reasonable grounds) to be in the best interests of the person on whose behalf they are appointed. To the extent consistent with these primary duties, a receiver has a secondary duty to have reasonable regard to the interests of certain interested parties, such as creditors and those with an interest in any equity of redemption. As the number of receiverships increase, so does the range of issues being disputed by mortgagors, often seeking to prevent appointed receivers from exercising their powers. The following trends are beginning to emerge: 1. Challenges to appointment A mortgagor seeking to resist having their security enforced will often start by challenging the validity of the receiver's appointment by reference to the security documents. The relevant documents must have been properly executed and valid, the right to appoint receivers must have accrued (usually contingent upon an event of default) and the necessary processes carried out to notify the mortgagor of the default and give effect to the receiver's appointment. 2. Extent to which the Insolvency Act applies to receiverships over shares in BVI companies owned by an individual or entity located elsewhere The Insolvency Act has an entire part governing the appointment of receivers. However, there is ambiguity as to whether several key provisions, such as those setting out the duties of a receiver, apply to all receivers appointed in relation to assets in the BVI. Various provisions apply specifically to a receiver of a 'company', a company being defined as a company in respect of whose assets a receiver is appointed, unless the context requires otherwise. The overarching definition of a 'company' in the Insolvency Act is restricted to BVI registered companies. Arguably, therefore, where a receiver is appointed over shares in a BVI company, but not the assets of a BVI company, these provisions do not apply. This ambiguity can lead to disagreements over what steps should or should not be taken by receivers and provides fertile grounds for legal disputes. 3. Balancing duties The tripartite nature of receiverships (between mortgagee, mortgagor and receiver) has given rise to extensive authority on how receivers ought to balance the various duties that arise. But there is no one-size-fits all solution: a receiver must evaluate the competing interests ...

In the recent judgment of TAX v FDQ, the BVI Court of Appeal provided guidance on the granting of anti-suit arbitration injunctions and the Court's supervisory jurisdiction over arbitrations commenced in the BVI. Background The applicant/appellant, TAX, and the respondent, FDQ, entered into a license agreement in 2018 and further agreed that any disputes arising out of the agreement would be arbitrated in accordance with the BVI Arbitration Act 2013. Their relationship subsequently broke down and on 21 January 2021, TAX initiated arbitration proceedings in the BVI (the 1st Arbitration). The Final Award of the 1st Arbitration was handed down on 21 February 2023. On 23 March 2023, FDQ filed a Fixed Date Claim Form in the BVI High Court, seeking to challenge the Final Award by way of appeal. On the same date FDQ also filed a notice of application in the High Court for leave to appeal several points of law. The leave has been granted but the appeal is yet to be heard. FDQ's Fixed Date Claim Form was heard in December 2023. On 25 June 2024, Mr Justice Wallbank ordered that the Final Award be set aside (the Setting Aside Order). In his judgment, Mr Justice Wallbank indicated that by setting aside the Final Award, this will give the parties opportunity to refer their disputes to a differently constituted tribunal if they so wish. TAX has since obtained leave to appeal the Setting Aside Order. The appeal also remains to be heard. On 21 July 2025, FDQ started a new arbitration in the BVI (the 2nd Arbitration) with identical subject matter, factual background and issues as the 1st Arbitration. On 29 July 2025, TAX applied to the BVI Court of Appeal for an interim injunction to restrain FDQ from pursuing the 2nd Arbitration. Key legal issues At the heart of this appeal is whether it is just and convenient to grant interim injunctive relief to restrain FDQ from pursuing the 2nd Arbitration while two appeals are pending. The Court's starting point is that it may, in the exercise of its equitable jurisdiction and discretion, grant interim injunctive relief where satisfied that it is just and convenient to do so. While acknowledging the policy imperatives in the Act against judicial interference in arbitration proceedings, the Court reiterated well-established case law, that the Court retains the power to prevent abuse of process in the conduct of Court or arbitral proceedings. It would exercise those powers of control only if necessary, and would do so judicially, not to interfere with an arbitration, but rather to restrain a party from abusing the process of a Court or arbitral tribunal or using either forum in an oppressive or unconscionable manner. This principle applies whether the arbitration is domestic or foreign. Applying the above principles, the Court was be satisfied that it was just and proper to grant an interim injunction, subject to an undertaking in damages based on the following findings: 1. There are two pending appeals before the Court in relation to the 1st 2. Parties agree that the issues to be determined on appeal are similar to some of the issues that will arise in the 2nd Arbitration, including construction and meaning of the license agreement and liability. 3. If the 2nd Arbitration advances at the same time as the appeals, those issues would be considered in parallel. 4. By executing the arbitration agreement, the parties have agreed that the BVI is the seat of arbitration and that the Act is applicable, thereby submitting them to all stages of the arbitration process including any appeals that may be pursued under the Act. The 1st Arbitration will only conclude after the determination of the two appeals. 5. By attempting to pursue the 2nd Arbitration while the 1st Arbitration is in train, FDQ will cause duplication of efforts, expenditure and resources, which would run contrary to the overriding objective of the BVI Civil Procedure Rules (Revised Edition) 2023. 6. More fundamentally, such a course is manifestly...

It's a familiar dilemma: a debt remains unpaid under a contract and the creditor wishes to pursue payment of the debt. The contract contains an arbitration agreement requiring disputes to be resolved in arbitration. The debtor disputes liability to pay the debt. The creditor is left to weigh its options - should it seek to wind up the company on the basis of the unpaid debt, or refer the dispute to arbitration? Courts of several leading common law jurisdictions have long grappled with the inherent tension between insolvency proceedings and arbitration. In the past decade, this debate intensified following the decision of the English Court of Appeal in Salford Estates (No.2) Ltd vs Altomart Ltd (No.2)) ('Salford Estates'). Following Salford Estates, certain leading common law jurisdictions have diverged in their approach to the interaction between insolvency and arbitration proceedings. In particular, there has been a marked divergence in the approaches taken by the courts of Hong Kong when compared with the approach taken in England (and the leading offshore jurisdictions closely associated with it). Since 2023, this divergence has crystallised in the landmark decisions of the Hong Kong Court of Final Appeal in Re Guy Kwok-Hung Lam ('Re Guy Lam') and the decision of the Judicial Committee of the Privy Council4 in Sian Participation Corp v Halimeda International Ltd ('Sian Participation'). Now, Hong Kong law, as established in Re Guy Lam and subsequently Re Simplicity & Vogue Retailing (HK) Co Ltd [2024] 2 HKLRD 1064 ('Simplicity'), generally gives primacy to upholding arbitration agreements. The Hong Kong courts will stay winding up proceedings in favour of arbitration, unless there is a strong reason not to do so, such as the dispute being deemed frivolous or an abuse of process. In contrast, English law, following Sian Participation, requires a debtor to demonstrate a bona fide dispute on substantial grounds before a creditor's winding up petition will be dismissed or stayed. Against this backdrop of divergent approaches, the recent decision by the Court of First Instance of the High Court of Hong Kong (the 'Hong Kong Court') in Hyalroute Communication Group Limited v Industrial and Commercial Bank of China (Asia) Limited [2025] HKCFI 2417 represents a significant and welcome development. The case marks the first time the Hong Kong Court had to consider whether an anti-suit injunction should be granted to restrain a creditor from presenting a winding up petition in the Cayman Islands (or another similar common law jurisdiction which applies the Sian Participation approach) despite the existence of an arbitration agreement requiring the dispute to be 'finally resolved' through Hong Kong arbitration. It raises an important question as to the relevant law when the Hong Kong courts determine whether to restrain foreign winding up proceedings in jurisdictions that are now bound, or likely, to apply the approach in Sian Participation in favour of a Hong Kong arbitration. Download the PDF to read the full article. This article first appeared in Volume 22, Issue 6 of International Corporate Rescue and is reprinted with the permission of Chase Cambria Publishing - www.chasecambria.com

In a landmark decision of the Supreme Court of Bermuda ('Court'), Harneys and the joint provisional liquidators ('JPLs') of a Bermuda company (the 'Company') successfully argued that the Court's power to summon officers of a company in liquidation or provisional liquidation before it for a private examination and delivery up of books and records under the Companies Act, 1981 ('Companies Act') has extra-territorial effect. The Company is a Class C long-term insurer registered under the Bermuda Insurance Act 1978 ('IA'), and is a segregated accounts company under section 6 of the Segregated Accounts Companies Act 2000 ('SAC Act'). It has been licenced by the Bermuda Monetary Authority ('BMA') since 2013. Download the PDF to read the full article. This article first appeared in Volume 22, Issue 6 of International Corporate Rescue and is reprinted with the permission of Chase Cambria Publishing - www.chasecambria.com

In Cyprus, companies that are struck off the official companies register maintained by the Department of Intellectual Property and Registrar of Companies in Cyprus (the Registerand the Registrar) can be restored, mainly, through two routes: (1) administrative restoration by the Registrar; or (2) Court-ordered restoration. The appropriate route depends primarily on the reason for the strike-off and the time that has passed since the company was removed from the Register. This article outlines both processes and explains the key legal considerations involved. Strike-off process Under section 327(1) and (2A) of the Companies Law, Cap. 113 (the Law), a company that is not under a liquidation process may be struck off by the Registrar in the following scenarios where: 1. The Registrar believes the company is not carrying on business or is not .; or 2. The directors apply for strike-off to the Registrar, provided the company has fulfilled all legal obligations; or 3. Failure to pay the annual levy (which applied from 2011-2023, as now abolished) within one year from the due date; or 4. Failure by a variable capital investment company to file the required special resolution within the timeframe set by the Companies (Amendment) (No. 3) Law of 2021. If the Registrar has reasonable cause to believe a company is inactive, as per scenario (1) above, then: 1. A first letter is sent requesting confirmation of the company's operational status. 2. If no response is received within one month, a second letter is issued within 14 days, warning that a strike-off notice will be published if the company does not reply within another month. 3. If there is still no response, a three-month notice is published in the Official Gazette. 4. During this period, the company, its members, or its creditors may file an objection showing that the company is active or compliant. 5. If no objection is made, the company is struck off the Register. Administrative restoration A company struck off by the Registrar may be restored administratively within 24 months of the strike-off date, following an application for restoration submitted to the Registrar Who may apply? The application for restoration may be filed by a director or a member of the company. What must accompany the application? For the purposes of the company meeting any outstanding requirements from before its strike-off date, the application must be accompanied by: 1. all outstanding filings including forms, reports, financial statements and documents due prior to the strike-off date; 2. any unpaid fees, charges, and/or fines for omissions that occurred and/or were imposed before the strike-off date; 3. a written consent from a competent representative of the Republic for the company's restoration, in the event that its assets and/or rights have been managed by the Republic; and 4. payment of a €20 fee, plus €20 if the procedure needs to be expedited. If satisfied that at the time of the strike-off, the company was offering services or was in operation, and all legal requirements relevant to the circumstances have been met, the Registrar will restore the company by re-registering it on Register and issue the restoration certificate. Following the restoration through the administrative route, the company is deemed to continue to exist as if it had not been struck off. This option is undoubtedly faster, more cost-effective, and simpler than going through the Courts. However, it is only available within 24 months from the date that the company was struck off the Register. Restoration by Court order At any point between 2 - 20 years after the strike off, a company may be restored by Court order. Who may apply to the Court? The application for restoration may be filed before the Court of competent jurisdiction by: 1. the company itself; and 2. any member or a creditor of the company that feels dissatisfied with the strike-off, or has suffered damage as a result of the company's actions prior to the strike...

The enforcement toolkit available in the BVI is similar to many other common law jurisdictions. However, the BVI Courts have tailored their approach to meet the challenges a creditor may face when looking to enforce over a complex structure. While it has its own legal system, the BVI is a British Overseas Territory. It is therefore heavily influenced by judicial decisions made in England and Wales - widely recognised as one of the fairest jurisdictions in the world. Parties also have the added benefit of being able to appeal to the Privy Council, where Supreme Court judges regularly hear appeals from the BVI. This guide sets out a high-level overview of the areas in which we regularly assist our clients. Subject to certain criteria being met, BVI Courts can recognise many foreign Judgments and have strong legal frameworks in place in this regard. Drawing from both common law and statute, the Courts offer well tested and flexible procedures that are adaptable to global developments. Norwich Pharmacal Orders (NPOs) In the BVI it is not compulsory to make publicly available all company records, such as minutes of meetings and the decisions behind the minutes. However, they are kept by a "registered agent" located on the island. Sometimes companies do make these records available and for a small fee we can check the record. Alternatively, if there has been wrongdoing, the BVI Courts have a powerful weapon in being able to compel the registered agents (and other entities such as banks and internet service providers) to release information to your client identifying wrongdoers, proving wrongdoing or identifying assets for enforcement. NPOs can be accompanied by "seal and gag" orders meaning that if successful, the registered agent cannot tell its client that such an order has been made. Freezing injunctions Where there is a risk that assets or proceeds may be dissipated, BVI Courts are frequently used to grant freezing injunctions. These are a powerful tool to prevent any steps being taken to dissipate assets pending the outcome of the wider proceedings (even if those proceedings are in other jurisdictions). The requirements to obtain a freezing injunction are similar to other common law jurisdictions but are flexible so as to recognise the way assets are held in offshore jurisdictions. The BVI Courts have a statutory power to grant freezing injunctions in support of foreign proceedings which ensure that assets located in the BVI, including shares, are kept safe during the pendency of dispositive foreign litigation. This development is particularly helpful in the case of the BVI companies, as such companies typically conduct most or all of their business activities outside the BVI (such that the BVI may not be the most appropriate forum for asset recovery litigation). Charging orders BVI Courts have powers to grant charging orders over shares, property or other assets belonging to a debtor (to include beneficially ownership). If successful a charge will be imposed on a judgment debtor's assets. If the debt remains unsatisfied, further steps can be taken to enforce a sale of the charged asset to satisfy a judgment or other award. Garnishee orders Creditors can make an application to the BVI Courts for monies to be paid directly to them which are held by a third party. This method of enforcement is commonly used to take possession of funds held in a debtor's bank account. Appointment of a receiver One of the most powerful weapons in the BVI enforcement toolkit is the appointment of a receiver. Given offshore companies are often used as holding vehicles, receivership allows a receiver to take control of a corporate structure and move "downstream" to recover assets. In simple terms, a receiver can stand in the judgment debtor's shoes to gather in and realise property. This has the added advantage of immediately preventing a judgment debtor from dealing with that property.

Harneys successfully opposed a claimant's application seeking the Court's leave to testify via videoconference during civil proceedings, before the District Court of Limassol, due to alleged health issues that prevented the claimant from travelling to Cyprus to testify. The claimant's request was based on section 36A of Evidence Law, Cap 9, which provides that, in criminal or civil proceedings, a Court in Cyprus may permit a witness located outside the country to testify via videoconference if it deems it to be in the interests of justice. According to the same provision, videoconferencing refers to real-time audio and visual communication that enables the witness and courtroom participants (including the Court, the defendant, lawyers, interpreter, or assistants) to see and hear each other. Where such request is approved, the Court may impose any conditions it considers necessary, provided that these do not conflict with Cyprus's obligations under any applicable bilateral or international conventions. Therefore, for the Court to grant such leave, the following must be satisfied: The witness shall be situated outside of Cyprus; andit is in the best interests of justice. What constitutes the "interests of justice" is at the discretion of the Court, taking into account all the surrounding circumstances. The Court held that the evidence submitted was insufficient to establish that granting leave to testify via videoconference would serve the interests of justice. Although it was alleged that the claimant suffered from a "serious health problem," the medical certificate submitted failed to provide the Court with adequate detail or evidence regarding the claimant's actual state of health, that would justify a departure from the fundamental principle that trials should be conducted with witnesses physically present before the Court. Accordingly, the Court dismissed the application. This judgment is particularly noteworthy, as recent case law reflects a generally more permissive approach to such applications under the new Civil Procedure Rules, the overarching aim of which is to empower the Courts to resolve cases fairly, efficiently, and at a lower cost. Nevertheless, fairness demands solid evidence; without it, even modern conveniences such as videoconferencing cannot override fundamental trial principles.

Fraudsters sometimes choose offshore vehicles in their illegal schemes under the mistaken belief that the misappropriated assets will not be found or that the victims of fraud will not be able to identify the fraudsters. This is completely wrong. The BVI Courts apply a well-known legal maxim originally developed by the English Courts in Lazarus Estates v Beasley [1956] 1 QB 702: "No Court in this land will allow a person to keep an advantage which has been obtained by fraud ... fraud unravels everything." When can fraud cases be brought in the BVI? To secure assistance from the BVI Courts in tackling fraud, there must be a nexus to the BVI that engages the Court's jurisdiction. This will invariably involve one or more BVI companies participating in the fraud. The role of the entities located in the BVI, and the circumstances of the individual case, will dictate the extent to which the BVI Courts can assist. Claims arising out of fraud might be pursued in the BVI in the following circumstances: 1. Where entities that participated in the fraud are located in the BVI For example, where BVI entities paid or received bribes, where BVI entities are used as conduits through which proceeds of wrongdoing are passed, or where BVI entities enter into sham contractual agreements to conceal the diversion of assets to third parties. 2. Where property situated in the BVI has been transferred for the purpose of defrauding creditors For example, where the shares of a valuable BVI company are transferred to a third party to put those shares out of the reach of the transferor's creditors. 3. Where the proceeds of fraud are held by an entity located in the BVI, regardless of whether that entity is directly involved in the wrongdoing For example, where a BVI company used as the vehicle of a fraud holds a bank account in a different jurisdiction, through which it routes the proceeds of its scam. 4. Where fraudulent acts took place in the BVI Such as the issuing of fake invoices by a BVI company or the issuing of deliberately misleading or untruthful statements by a BVI company to attract investment into a fund. What are the claims that can be brought to tackle fraud in the BVI? The term "fraud" can encompass a wide variety of actions that share the common theme of dishonesty, there are various causes of action that can be pursued in the BVI depending on the circumstances of the case. The most obvious ones are as follows: 1. Where fraudulent statements have persuaded people to part with their money or other assets then a tortious claim for deceit may accrue, which would allow the victim to seek compensatory damages. Where a statement has led to the victim entering into a contract then a claim in fraudulent misrepresentation may accrue which will allow the contract to be set aside and/or a claim in damages. 2. A claim in bribery will arise in circumstances where a person or entity pays secret commissions to the agent of a person or entity with whom they are dealing and where the principal has no knowledge of the payment. Such payments will often be made to induce the agent to act other than in the best interests of their principal and to favour the bribe payer in some way, although there is no requirement to prove such inducement (it will be presumed). 3. If the director(s) of a BVI company have misapplied company assets or otherwise acted for an improper purpose, not in the best interests of the company and/or dishonestly then they will be in breach of their fiduciary duties, which gives the company a cause of action against the director(s). In addition, the breach of fiduciary duties by the director(s) may give rise to ancillary claims against third parties that had knowledge of the breach of fiduciary duties (see below). 4. Where there has been a payment of money or transfer of assets in breach of trust or breach of fiduciary duties, then a person or entity receiving the money or assets with knowledge of the breach of duties can be liable in "k...

There continues to be an upward trend in the use of schemes of arrangement, with or without the relevant company being in provisional liquidations, as a restructuring tool, particularly in relation to China-related debt. The Chinese property market continues to suffer significant challenges and points to further use of schemes of arrangement in the jurisdictions of incorporation. There continue to be coordinated approaches across offshore jurisdictions. Discussion points include: Recent schemes of arrangement that have been approvedThe increased willingness of the judiciary to assist struggling companies that have a realistic prospect of trading their way out of difficulty Download the PDF to read more. This article is an extract from GRR's Americas Restructuring Review 2022. The whole publication is available at https://globalrestructuringreview.com/review/restructuring-review-of-the-americas/2024.

In the British Virgin Islands, arbitration is principally regulated by the Arbitration Act 2013 (the Act), which came into force in 2014. The Act is modelled upon the UNCITRAL Model Law on International Commercial Arbitration (the Model Law), subject to a number of local modifications. The Act is supplemented by the BVI IAC Arbitration Rules (the BVI Rules), which were brought into force in 2016. BVI International Arbitration Centre The BVI International Arbitration Centre (the IAC) also opened in 2016. The IAC was the first centre of its kind in the Caribbean to provide a forum for dispute resolution by way of arbitration. The IAC's Board of Directors is chaired by Mr John Beechey CBE, the former President of the International Court of Arbitration of the International Chamber of Commerce. The BVI's central location between North and South America means that parties with business and other interests in those locations are able to choose a neutral territory in which to resolve their disputes. The IAC also provides a perfect venue for arbitrations involving BVI incorporated companies. The centre itself provides a modern hi-tech facility in which parties from around the globe can expect international high-class standards in a politically neutral environment. Amongst the facilities provided at the centre are simultaneous language interpretation services, audio and video conferencing facilities and a concierge service. BVI Arbitration Act 2013 The Act has three main features which are of interest: 1. It incorporates the UNCITRAL Model Law on International Commercial Arbitration (the Model Law) as adopted by the UN Commission which is recognised internationally. 2. The BVI is signatory to the UN Convention on Recognition and Enforcement of Foreign Arbitral Awards, commonly referred to as the New York Convention. 3. The option to opt-in to a right of appeal to Court on a question of law arising from the arbitral award. In addition, other useful matters to note about the Act are the arbitral tribunal's power to consolidate two or more arbitrations in certain circumstances and a party's ability to apply to Court challenging the arbitral award on the ground of serious irregularity. UNCITRAL Model Law The incorporation of the Model Law into the Act enshrines well-established international principles. The same may be said of the BVI Rules as they are based on 2010 the UNCITRAL Arbitration Rules (the UNCITRAL Rules). The Act and UNCITRAL Rules recognise firstly, that the parties are free to choose the terms of the arbitration clause subject to the usual common law rules on validity; and secondly, the parties are able to appoint their preferred number of arbitrators. The effect of the incorporation of the Model Law is that a number of matters codified in the Model Law apply to the Act. These are: (1) the arbitral tribunal's ability to rule on jurisdiction further to section 32; (2) the doctrine of severance or separability under section 32; (3) the ability to challenge the appointment of or to remove an arbitrator further to section 23; and (4) the power of the tribunal to grant interim measures under section 33. These provisions closely follow the Model Law. Jurisdiction Jurisdiction challenges are common in arbitration so it is important that the arbitral tribunal retains the power to rule on its own jurisdiction in order to avoid unnecessary delay. The tribunal can hear any objections with respect to its jurisdiction including in relation to the existence or validity of the arbitration agreement without needing to take the dispute to Court. The jurisdictional power of the arbitral tribunal includes the power to decide whether the tribunal is properly constituted and to decide what matters have been submitted for resolution in accordance with the arbitration agreement. Severance The doctrine of severance or separability further to section 32 of the Act gives the arbitral tribunal the power to sever the arbitration clause as a contract ...

The enforcement toolkit available in the BVI is similar to many other common law jurisdictions. However, the BVI Courts have tailored their approach to meet the challenges a creditor may face when looking to enforce over a complex structure. While it has its own legal system, the BVI is a British Overseas Territory. It is therefore heavily influenced by judicial decisions made in England and Wales - widely recognised as one of the fairest jurisdictions in the world. Parties also have the added benefit of being able to appeal to the Privy Council, where Supreme Court judges regularly hear appeals from the BVI. This guide sets out a high-level overview of the areas in which we regularly assist our clients. Enforcement of foreign judgments Subject to certain criteria being met, BVI Courts can recognise many foreign Judgments and have strong legal frameworks in place in this regard. Drawing from both common law and statute, the Courts offer well tested and flexible procedures that are adaptable to global developments. Disclosure orders Norwich Pharmacal Orders (NPOs) In the BVI it is not compulsory to make publicly available all company records, such as minutes of meetings and the decisions behind the minutes. However, they are kept by a "registered agent" located on the island. Sometimes companies do make these records available and for a small fee we can check the record. Alternatively, if there has been wrongdoing, the BVI Courts have a powerful weapon in being able to compel the registered agents (and other entities such as banks and internet service providers) to release information to your client identifying wrongdoers, proving wrongdoing or identifying assets for enforcement. NPOs can be accompanied by "seal and gag" orders meaning that if successful, the registered agent cannot tell its client that such an order has been made. Interim remedies Freezing injunctions Where there is a risk that assets or proceeds may be dissipated, BVI Courts are frequently used to grant freezing injunctions. These are a powerful tool to prevent any steps being taken to dissipate assets pending the outcome of the wider proceedings (even if those proceedings are in other jurisdictions). The requirements to obtain a freezing injunction are similar to other common law jurisdictions but are flexible so as to recognise the way assets are held in offshore jurisdictions. The BVI Courts have a statutory power to grant freezing injunctions in support of foreign proceedings which ensure that assets located in the BVI, including shares, are kept safe during the pendency of dispositive foreign litigation. This development is particularly helpful in the case of the BVI companies, as such companies typically conduct most or all of their business activities outside the BVI (such that the BVI may not be the most appropriate forum for asset recovery litigation). Methods of enforcement Charging orders BVI Courts have powers to grant charging orders over shares, property or other assets belonging to a debtor (to include beneficially ownership). If successful a charge will be imposed on a judgment debtor's assets. If the debt remains unsatisfied, further steps can be taken to enforce a sale of the charged asset to satisfy a judgment or other award. Garnishee orders Creditors can make an application to the BVI Courts for monies to be paid directly to them which are held by a third party. This method of enforcement is commonly used to take possession of funds held in a debtor's bank account. Appointment of a receiver One of the most powerful weapons in the BVI enforcement toolkit is the appointment of a receiver. Given offshore companies are often used as holding vehicles, receivership allows a receiver to take control of a corporate structure and move "downstream" to recover assets. In simple terms, a receiver can stand in the judgment debtor's shoes to gather in and realise property. This has the added advantage of immediately preventing a judgment debtor from...

In the British Virgin Islands, arbitration is principally regulated by the Arbitration Act 2013 (the Act), which came into force in 2014. The Act is modelled upon the UNCITRAL Model Law on International Commercial Arbitration (the Model Law), subject to a number of local modifications. The Act is supplemented by the BVI IAC Arbitration Rules (the BVI Rules), which were brought into force in 2016. BVI International Arbitration Centre The BVI International Arbitration Centre (the IAC) also opened in 2016. The IAC was the first centre of its kind in the Caribbean to provide a forum for dispute resolution by way of arbitration. The IAC's Board of Directors is chaired by Mr John Beechey CBE, the former President of the International Court of Arbitration of the International Chamber of Commerce. The BVI's central location between North and South America means that parties with business and other interests in those locations are able to choose a neutral territory in which to resolve their disputes. The IAC also provides a perfect venue for arbitrations involving BVI incorporated companies. The centre itself provides a modern hi-tech facility in which parties from around the globe can expect international high-class standards in a politically neutral environment. Amongst the facilities provided at the centre are simultaneous language interpretation services, audio and video conferencing facilities and a concierge service. BVI Arbitration Act 2013 The Act has three main features which are of interest: 1. It incorporates the UNCITRAL Model Law on International Commercial Arbitration (the Model Law) as adopted by the UN Commission which is recognised internationally. 2. The BVI is signatory to the UN Convention on Recognition and Enforcement of Foreign Arbitral Awards, commonly referred to as the New York Convention. 3. The option to opt-in to a right of appeal to Court on a question of law arising from the arbitral award. In addition, other useful matters to note about the Act are the arbitral tribunal's power to consolidate two or more arbitrations in certain circumstances and a party's ability to apply to Court challenging the arbitral award on the ground of serious irregularity. UNCITRAL Model Law The incorporation of the Model Law into the Act enshrines well-established international principles. The same may be said of the BVI Rules as they are based on 2010 the UNCITRAL Arbitration Rules (the UNCITRAL Rules). The Act and UNCITRAL Rules recognise firstly, that the parties are free to choose the terms of the arbitration clause subject to the usual common law rules on validity; and secondly, the parties are able to appoint their preferred number of arbitrators. The effect of the incorporation of the Model Law is that a number of matters codified in the Model Law apply to the Act. These are: (1) the arbitral tribunal's ability to rule on jurisdiction further to section 32; (2) the doctrine of severance or separability under section 32; (3) the ability to challenge the appointment of or to remove an arbitrator further to section 23; and (4) the power of the tribunal to grant interim measures under section 33. These provisions closely follow the Model Law. Jurisdiction Jurisdiction challenges are common in arbitration so it is important that the arbitral tribunal retains the power to rule on its own jurisdiction in order to avoid unnecessary delay. The tribunal can hear any objections with respect to its jurisdiction including in relation to the existence or validity of the arbitration agreement without needing to take the dispute to Court. The jurisdictional power of the arbitral tribunal includes the power to decide whether the tribunal is properly constituted and to decide what matters have been submitted for resolution in accordance with the arbitration agreement. Severance The doctrine of severance or separability further to section 32 of the Act gives the arbitral tribunal the power to sever the arbitration clause as a contract ...

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...

The Cayman Islands Court of Appeal has refused a renewed application for leave to appeal in Frye-Chaikin v Bradley, affirming a Grand Court summary judgment grounded in foreign issue estoppel arising from prior Michigan proceedings. The decision underscores the high threshold for leave to appeal, the potency of foreign issue estoppel, and the litigation risk of attempting to revisit merits arguments already determined abroad. The dispute stemmed from a 2014 agreement to sell a Cayman property. The plaintiffs originally issued Cayman proceedings, but at the defendant's urging, the action was stayed on forum grounds so the matter could be determined in Michigan (where the parties lived). After a contested hearing, the Michigan Circuit Court granted summary judgment upholding the property sale agreement and ordered specific performance. The defendant's subsequent appeal to the Michigan Court of Appeal was dismissed and the Michigan Supreme Court refused leave. When the defendant still did not comply, the Circuit Court signed the sale agreement on her behalf. Relying on those outcomes, the plaintiffs obtained Cayman summary judgment in September 2024. The defendant's subsequent leave to appeal this summary judgment was refused in the Grand Court and by a single judge of the Court of Appeal. The defendant then renewed her application before the full Court of Appeal. The Court of Appeal held that any appeal had no real, as opposed to fanciful, prospect of success and agreed with the single appeal judge that the requirements for foreign issue estoppel were satisfied (relying on Dicey, Morris and Collins on The Conflict of Laws): The Michigan courts were competent; Their judgments were final, conclusive and on the merits; The parties were the same; and The issues now raised in Cayman were the same as those determined in Michigan. It was therefore too late to revisit the merits in this jurisdiction. In reaching their conclusion, the Court of Appeal also considered and agreed with the single judge's analysis regarding the test for summary judgment under Cayman law, being whether the defendant has a realistic, as opposed to a fanciful, defence and one that is more than merely arguable (derived from the English case of Easyair v Opal Telecom). The defendant, acting in person, repeated and expanded on her complaints about the agreement's validity, alleged duress, unconscionability, evidential falsity, and impropriety in the Michigan proceedings, and contended the Grand Court should have engaged those points under Cayman law. The Court of Appeal held that such submissions did not confront the basis of the Grand Court's decision, being issue estoppel. Having successfully contended at the outset that Michigan was the appropriate forum, the defendant was bound by the Michigan outcomes and could not re-argue the dispute in Cayman. To the extent any points were not advanced in Michigan but could and should have been, it was now too late. Final, merits-based decisions of competent foreign courts between the same parties on the same issues will be given issue-estoppel effect in Cayman. Parties who secure an overseas forum should expect to be held to the result; Cayman will not readily offer a second bite at the cherry. Summary judgment remains a robust filter. Defences foreclosed by estoppel, or that are merely fanciful, will be disposed of summarily, saving cost and time.

There is increasing demand in the PRC for obtaining grants from the BVI Probate Court. A grant of probate is typically required in order to validly deal with BVI assets held by a deceased person. In this update, we share some key points from our significant experience in handling probate applications originating from the PRC. The most common probate applications we deal with at Harneys in Shanghai involve shares in BVI companies. Pursuant to the BVI Business Companies Act, shares in BVI companies are deemed to be situated in the BVI. Accordingly, it is necessary for the appropriate grant to be obtained from the BVI Probate Court before the deceased's interest in a BVI company can be validly transferred to the intended legatee or heir (often resident in the PRC). When it comes to the application itself, the applicant needs to submit various documents. The two key documents are: As the deceased was typically domiciled in the PRC, an affirmation by a PRC lawyer is required confirming the validity of the will and explaining why the personal representative is entitled under the laws of the PRC to administer the estate. Not all PRC lawyers are willing to comment on the validity of the will, because as a matter of practice this may involve assuming liability should there be any issue subsequently arising as to the validity of the will. Competing heirs may make a claim against the PRC lawyer for any perceived loss of his or her share in the deceased estate. The issue of will marking will not arise if no will is available; the intestacy rules governing the shares in BVI companies as movable assets are those of the deceased's jurisdiction of domicile, hence normally the PRC.However, if there is a will that is to form the basis of an application for a grant of probate or letters of administration under the Eastern Caribbean Supreme Court (Non-Contentious Probate and Administration of Estates) Rules 2017, then the will must be 'marked' by the applicant with the standard oath and signature. In the PRC, the marking is to be done before a notary public. Afterwards, the notarised documents will be further apostilled under the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents before it may be recognised in the BVI. An issue we frequently encounter is that because the Convention only came into effect in the PRC on 7 November 2023, local Foreign Affairs Offices have relatively little experience dealing with cases that require will marking. With the added complication that under PRC law a will may be invalid if it is marked, local Foreign Affairs Offices are typically cautious to apostille such documents which can result in the initial rejection of an application. We have encountered delays in multiple provinces including Fujian, but have had considerably more success in our cases in Beijing and Shanghai. We expect that efficiencies will improve as local Foreign Affairs Offices become more familiar with the Convention and their obligations arising therefrom. The long-established practice of PRC nationals using BVI companies as holding vehicles means there is an inevitable demand for BVI probate grants and letters of administration. Harneys has considerable experience in this field, and works closely with local counsel to ensure the process of notarisation and apostilling of the will 'marking' goes smoothly - bridging the differences between the two legal systems. If you would like to learn more about the process, or require assistance with BVI probate, please contact the author or your usual Harneys contact.

In the follow up to their article on recent guidance from the Cayman Islands' courts on fraudulent trading claims, Harneys partner James Eggleton and counsel Anya Allen unpack the UK Supreme Court's decision and its relevance for the Cayman Islands. This is the second article in a two-part series on recent decisions concerning fraudulent trading claims under Section 147 of the Cayman Islands Companies Act and Section 213 of the UK Insolvency Act, being Conway & Ors v Air Arabia [2025] CIGC (FSD) 41 (20 May 2025) and Bilta & Ors v Tradition Finance Services [2025] UKSC 18 (7 May 2025). Bilta & Ors v Tradition Finance Services Bilta was one of several companies which were vehicles in a missing trader intra-community fraud involving spot trading in carbon credits under the EU Emissions Trading Scheme. Spot trading in EU allowances within EU Member States at that time attracted VAT. The rules were changed when the authorities realised that the EU Allowances were being used in relation to such fraud. In this case, the fraud involved five companies which were left with enormous VAT liabilities owing to HMRC. The companies issued a claim against Tradition Financial Services alleging that it had dishonestly assisted their directors in the breach of their fiduciary duties to the claimant companies. The liquidators also brought a claim under Section 213 of the Insolvency Act alleging that Tradition had knowingly participated in the fraudulent trading of the businesses of the claimant companies. The parties reached a partial settlement, leaving two substantive issues for the Court to decide. The UK Supreme Court addressed two key issues. Firstly, whether the persons who may be required to make contributions to a company's assets under Section 213 of the UK Insolvency Act are confined to those involved in the management or control of the business, or extend also to third party "outsiders". Those "outsiders" include, for example, those who have transacted with the company in the knowledge that by those transactions, the company was carrying on business for a fraudulent purpose. Secondly, the court looked at the operation of Section 32(1) of the UK Limitation Act, which defers the commencement of limitation periods in fraud cases to the point at which the claimant has discovered or could with reasonable diligence have discovered, the fraud. It considered the effect of the legislation within the context of a related claim brought by the company in dishonest assistance, during the period in which the company had (prior to its restoration) ceased to exist. Issue 1: Whether Tradition fell within the scope of Section 213 The UK Supreme Court considered the scope of the words in Section 213(2): "any persons who were knowingly parties to the carrying on of the business in the manner above-mentioned." Tradition argued that the words were restricted to persons exercising management or control over the company in question, such that it should not, and could not, be treated as a party to the carrying on of the fraudulent business. Applying principles of statutory interpretation and by reference to previous authorities, the court noted that certain features of the statutory language contained in Section 213 limit the circumstances in which liability may be incurred under Section 213, as follows: The person must be a party to the carrying on by the company of a fraudulent business and not merely involved in a one-off fraudulent transaction, unless that fraud is sufficient evidence on its own of the carrying on of a fraudulent business; Being a party to the carrying on by the company of a fraudulent business does not extend to a mere failure to advise; and The person liable must have had an active involvement in the carrying on of the fraudulent business by the company. However, the Supreme Court held that subject to those limitations, there is nothing in the language of Section 213(2) which restricts the scope of the provision to directors and "insid...

Recent guidance on Section 147 fraudulent trading claims in Conway v Air Arabia Harneys partner James Eggleton and counsel Anya Allen in the Cayman Islands examine two recent authorities on fraudulent trading claims in complex cases, from the Grand Court of Cayman Islands in the first instalment of a two-part series and from the UK Supreme Court in the second instalment. There is, perhaps surprisingly given the breadth of its potential application, very little authority in the Cayman Islands concerning fraudulent trading claims under Section 147 of the Cayman Islands Companies Act. This two-part series considers two recent decisions from the Cayman Islands Grand Court concerning Section 147 and the UK Supreme Court concerning the corresponding English provision (Section 213 of the UK Insolvency Act 1986), being Conway & Ors v Air Arabia [2025] CIGC (FSD) 41 (20 May 2025) and Bilta & Ors v Tradition Finance Services [2025] UKSC 18 (7 May 2025). Conway & Ors v Air Arabia The proceedings arose out of the collapse of the Abraaj group of companies in early 2018. The defendant company, UAE airline Air Arabia, had submitted two proofs of debt in the liquidation of Abraaj Holdings (AH) in connection with loans it had made to AH. The airline had also been appointed to AH's liquidation committee. The liquidators commenced proceedings against Air Arabia for a declaration pursuant to Section 147 that the airline had knowingly been a party to AH's business being carried out with intent to defraud creditors and/or for a fraudulent purpose, and was accordingly liable to contribute to AH's assets. The Cayman court addressed several novel points relating to Section 147 claims against persons outside of the jurisdiction. Issue 1: Does submitting a proof of debt in a foreign liquidation amount to submitting to jurisdiction? The court first considered whether Air Arabia lodging a proof of debt in AH's Cayman Islands' liquidation amounted to submission to the offshore jurisdiction. It was not in dispute that submitting to the jurisdiction is separate from establishing the jurisdiction of the court over a person by service of process. Where the court's jurisdiction over a defendant is based on voluntary submission, the rules relating to service out are irrelevant because the court's jurisdiction is not founded on service. Air Arabia and AH also agreed that lodging a proof of debt in a winding up process amounted to a submission to the jurisdiction of the court with conduct of the winding up, even if the proof of debt has not been adjudicated or is ultimately rejected. However, the parties disagreed as to the scope of the submission to the jurisdiction which results from lodging a proof of debt. The liquidators argued that lodging a proof of debt amounts to a submission to the jurisdiction of the court for all purposes connected with the winding up of the company. Air Arabia argued that the submission was narrow and did not extend to submission for the purposes of claims that liquidators might bring under Section 147 of the Companies Act. The presiding judge, Justice Asif KC, held that submission to the jurisdiction by lodging a proof of debt is effective for all purposes connected with the winding up of the company (including any claims brought under Section 147 of the Companies Act). The principles expressed in English and BVI authorities favoured this approach. The judge held they are general common law principles that apply with equal force in the Cayman Islands. Those common law principles include the UK Supreme Court's decision in Rubin v Eurofinance SA [2012] UKSC 46. There, the court held that there is no doubt that orders may be made against a foreign creditor who proves in an English liquidation or bankruptcy, on the basis that by proving, the foreign creditor submits to the jurisdiction of the English court. A creditor should not be allowed to benefit from the insolvency proceeding without the burden of complying with the orders made i...

In 2017, Singapore incorporated the UNCITRAL Model Law on Cross-Border Insolvency (the 'Model Law') into its domestic legislation,1 providing a comprehensive and structured framework for the recognition and assistance of foreign corporate insolvency proceedings. By contrast, the offshore jurisdictions of the British Virgin Islands, the Cayman Islands, and Bermuda have not adopted the Model Law. Each relies on its own domestic statutory mechanisms and common law principles. The Singapore Model Law regime thus provides a useful reference point against which to examine the more varied approaches taken in the BVI, Cayman and Bermuda. This article offers a comparative analysis of the recognition regimes with a view to identifying the practical tools available to insolvency practitioners seeking recognition and assistance in these jurisdictions. This article addresses certain aspects of Singapore law for general informational purposes only. Harney Westwood & Riegels do not practise Singapore law and its contents should not be construed or relied upon as legal advice on Singapore law. Download the PDF to read the full article. This article first appeared in Volume 22, Issue 5 of International Corporate Rescue and is reprinted with the permission of Chase Cambria Publishing - www.chasecambria.com

Section 36(13) of the Exempted Limited Partnership Act (2021 Revision) ('ELPA') gives the Grand Court of the Cayman Islands the power to override a limited partnership agreement and replace the general partner ('GP') of an exempted limited partnership ('ELP') during its winding up, if necessary for a proper dissolution. Recent cases, notably In the matter of One Thousand & One Voices Africa Fund I, LP (In Voluntary Liquidation) FSD 22 of 2024 (IKJ) ('1K1V') and In the matter of Sensegain Vorak Investment L.P. (in voluntary liquidation) FSD 62 of 2025 (DDJ) ('Sensegain') confirm the primacy of the commercial will of the limited partners ('LPs'), while highlighting the readiness of the Court to intervene where trust and cooperation with the GP have broken down. The ongoing case of Kuwait Ports Authority v Port Link GP Ltd FSD 236 of 2020 (RPJ) ('Port Fund') litigation illustrates how the Court handles deadlock and conflicts, sometimes promoting hybrid governance solutions such as receivership and ongoing case management to protect investor value. Each case points to a general rule: robust consensus by LPs, fully documented processes and prompt engagement with statutory remedies are all essential to overcome obstructive GPs and bring Cayman funds to an orderly close. Drafting best practice now includes explicit recognition of statutory rights, including section 36(13) of the ELPA, in all Limited Partnership Agreements ('LPAs'); effective winding down depends more on commercial alignment and process discipline rather than the words of the partnership agreement. Download the PDF to read the full article. This article first appeared in Volume 22, Issue 5 of International Corporate Rescue and is reprinted with the permission of Chase Cambria Publishing - www.chasecambria.com

In a recent decision of the Cayman Islands Grand Court, Justice Asif KC granted leave to serve foreign defendants out of the jurisdiction and extended the validity of a writ to accommodate service under the Hague Convention: Linksure Global Ltd v Infinite Solution Ltd. The plaintiff alleges that three defendants conspired to derail its planned IPO. According to the claim, the defendants sought to prevent the listing in order to trigger a put option, from which they expected to derive greater financial benefit than would be the case with the proposed IPO. The three defendants were: (i) an investment company, which was invested in the plaintiff; (ii) a director of the plaintiff; and (iii) a director of the investment company. Service out of the jurisdiction The Cayman Islands Grand Court Rules (the GCR) contain a list of the principal cases in which service out of the jurisdiction is permissible. In cases in which the Court's leave is required, applicants must bring themselves within one of the "gateways" in GCR O11, r1(1) and also show a serious issue to be tried and that the Cayman Islands is the appropriate forum. In this case, the plaintiff relied on two gateways: Gateway (c): permits service on a foreign defendant where there is already (or will be) a properly served anchor defendant in the proceedings, and it is appropriate for the foreign defendant to be joined as a "necessary or proper party". Gateway (ff): which permits service on a person who is, or was, a director or officer of a Cayman company in respect of claims concerning the performance of their duties in that role. The plaintiff sought leave to serve the two director defendants in Singapore and in Hong Kong under GCR O11, r1(1)(c) as "necessary and proper parties" and under (ff) as "directors of Cayman companies". Justice Asif KC held that there was a serious issue to be tried and that both gateways were satisfied. Notably, the Court held that, although unusual, it was at least reasonably arguable that the language of gateway (ff) was drafted sufficiently widely to cover a situation whereby the director defendant was not a director of the plaintiff (and so would not owe any duties directly to the plaintiff), but to another defendant. Forum On the issue of forum, the Court concluded that the Cayman Islands was clearly the most appropriate jurisdiction, notwithstanding the likelihood that there would be few if any witnesses located physically within the Cayman Islands and the current uncertainty about the whereabouts, globally, of relevant documents. "Considerable weight" was to be given to the fact that the plaintiff and first defendant were both Cayman companies, the issues turn on Cayman law, and no alternative forum was preferable. Hague service and writ extensions The judgment highlights the practical realities of international service. The plaintiff pre-emptively sought an extension of the writ's validity, anticipating significant delays in serving under the Hague Convention. Justice Asif extended the writ by six months (longer than the four months initially requested) and granted liberty to apply for further extensions if necessary. This pragmatic approach recognises the complexity of Hague Convention service. In practice, Hague requests involve processing through numerous government bodies: filing through the Clerk of Court (the Cayman "designated authority"), processing through the local Governor's Office and transmission through the UK Foreign, Commonwealth and Development Office to the foreign state's central authority (in this case Singapore and Hong Kong). Once received, the request is often scrutinised for technical compliance before being passed down to local courts for execution of service. Service through the Hague Convention is unpredictable and can take many months. Against that backdrop, the Court's willingness to extend writ validity ahead of time reflects a realistic understanding of the obstacles to timely service abroad. Indeed, in this ...

In the recent decision of RCF VII Sponsor LLC v Blue Gold Ltd, the Cayman Islands Grand Court granted an interim injunction restraining the Defendant company from holding an extraordinary general meeting, demonstrating the Court's flexible approach to injunctions and cross-undertakings where the balance of convenience favours early judicial intervention. The Plaintiffs sold some of their shares in a special purpose acquisition company (SPAC) to a buyer. The transaction documents explicitly provided that the Plaintiffs' remaining shares in the SPAC would be freely tradeable. After the sale was completed, the buyer announced a business combination with the Defendant. Correspondence from the related negotiations appeared to confirm the contention that the Plaintiffs' new shares in the Defendant would be freely tradable. On that basis, the Plaintiffs agreed to the transaction which was then completed. Subsequently, the Defendant took the position that the Plaintiffs' shares were subject to trading restrictions and the Plaintiffs commenced proceedings in the Cayman Islands to determine the issue. The Defendant's board of directors then called an EGM to resolve that the Plaintiffs' shares are to be treated as restricted. On this basis, the Plaintiffs made an ex parte interim injunction application to restrain the Defendant from holding the EGM, on the grounds that: the proposed resolution would alter class rights without the requisite consent in breach of the Defendant's Articles of Association; the Defendant's directors called the EGM for an improper purpose - to benefit the majority shareholders and disadvantage the Plaintiffs - in breach of their duty to act for benefit of the company as a whole; the directors' actions constitute a breach of contract or there is an estoppel by convention; and the calling of the EGM is abusive of the Plaintiffs' pending proceedings as it would predetermine the precise issue to be determined by the Court. The Court granted the injunction and held that: There were serious issues to be tried. The Court confirmed that: the question as to whether a shareholder can be described as having the benefit of a class right is really a question of substance rather than labelling, in that a shareholder would be considered to have class rights if it enjoys certain rights which are different or separate from rights to which other shareholders in the company are entitled; andclass rights attaching to a class of shares cannot be varied merely by a resolution of shareholders without the express agreement of the shareholders of that class. The adequacy of damages as a remedy was not clear given there would likely be real difficulties in quantifying the Plaintiffs' loss if no injunction was granted. The balance of convenience favoured granting an injunction to 'hold the ring' until determination of the proceedings: there was no time pressure for the EGM to occur on the scheduled date or any particular future date; and the unlikelihood of the Defendant suffering any significant damage from the grant of the injunction. The Court expressed concern that only the First Plaintiff was willing to offer a cross-undertaking, but not the Second Plaintiff, based on a mere assertion that the Second Plaintiff is a small company with limited assets. That said, the Court was prepared to excuse the Second Plaintiff from providing a cross-undertaking for the time being based on the unusual circumstances before it, namely that: the First Plaintiff was willing to give a cross-undertaking for the entirety of any loss to Defendant; and it was very difficult to see what loss, if any, the injunction would cause to the Defendant. However, the Court will revisit the question of the Second Plaintiff providing a cross-undertaking at the return date. The Court will consider any submissions that may be made by the Defendant and the Second Plaintiff is expected to provide substantive detailed evidence as to its financial position and submissions ...

Harneys secured a significant recovery of approximately €9 million for our client through garnishee (attachment of debt) proceedings against two major banks in Cyprus. Under Cyprus law, a payment order in garnishee proceedings can be issued when: the claimant is a judgment creditor and can demonstrate that the judgment debt remains unsatisfied; there is a creditor-debtor relationship between the judgment debtor and the garnishee; and the Court exercises its discretion in favour of the claimant. A complicating factor in this case was that, out of the €9 million, substantial sums were held in bank accounts in the names of third parties, as a means to alienate or conceal funds. In Cyprus, funds held in the name of third parties can be subject to garnishee proceedings, if it can be proven that the judgment debtor has a beneficial interest in those funds. The third parties must be properly served with the proceedings, in order to be given the opportunity to appear before the Court and be heard. The Court concluded that the third parties were indeed holding the funds for the benefit of the judgment debtors and ordered the banks to transfer the funds to our client. This result not only marks a major success in our ongoing efforts to enforce the judgment in question, but also highlights the critical role of strategic legal action in recovering debts, particularly when the assets are concealed through third parties.

The Cayman Islands Court of Appeal has issued a strong warning on the risks of using generative artificial intelligence in court proceedings in the recent decision in Samuel Johnson v Cayman Islands Health Services Authority [2025] CICA (Civ) 15 (Johnson v HSA). The judgment is the first in the jurisdiction to directly address the use of AI in legal submissions and highlights the duty of candour owed by litigants, whether they are represented by counsel or appearing on their own. Background The Appellant, a self-represented litigant, brought an appeal against the Cayman Islands Health Services Authority. Johnson filed a skeleton argument that included references to two legal cases but was unable to produce copies of those cases when requested by the Court. The Appellant admitted that the cases had been generated using a generative AI tool and confirmed that at least one of them did not exist. At first, the Appellant did not disclose that he had relied on AI at all, only acknowledging it when questioned by the Court. This raised a serious and unprecedented issue for the Court with regard to the reliability of AI-generated legal research and the potential for misleading submissions undermining the administration of justice. The Court's response The Court of Appeal, led by Justice Clare Montgomery KC, was unequivocal in its criticism. It emphasised the following: litigants-in-person are subject to the same duty as lawyers not to mislead the court, intentionally or otherwise; the Appellant's actions as a breach of this duty, particularly because he initially failed to disclose the use of AI and only admitted it when pressed; while it chose not to impose sanctions in this instance, it issued a stern warning about the future consequences of such conduct. These could include contempt of court proceedings, referral for criminal investigation, costs orders, and/or the case being stayed or struck out; and the Court made clear that any future use of AI in preparing court documents must be disclosed, and the party submitting those documents remains personally responsible for ensuring their accuracy. The risks of Generative AI Citing the English case of R (Ayinde) v London Borough of Haringey [2025] EWHC 1383, which similarly explored the pitfalls of relying on generative AI tools such as ChatGPT for legal research, the Court highlighted that, while AI can be a helpful tool, it cannot replace human judgment or legal expertise. The English court likened the use of AI to relying on the work of a trainee solicitor or pupil barrister: just as a lawyer remains fully responsible for checking the accuracy of their junior's work before it goes before the court, so too must anyone using AI take personal responsibility for verifying the results. A regional perspective: Turks & Caicos The Cayman decision in Johnson v HSA comes at a time when other Caribbean jurisdictions are beginning to grapple with how generative AI should fit within court processes. Just weeks before this judgment, the Turks & Caicos Islands Judiciary issued Practice Direction 1 of 2025, a landmark step in setting clear boundaries for AI use in litigation. This practice direction applies to all courts in Turks & Caicos and introduces a structured framework for managing the risks of AI-generated content. It requires parties to explicitly disclose when AI has been used in preparing submissions, skeleton arguments, or other documents, and to independently verify all legal authorities and factual content before filing. It also prohibits the use of AI for creating evidentiary material, such as affidavits and witness statements, recognising that these must reflect first-hand human knowledge and accountability. Perhaps most importantly, the Practice Direction empowers judges to sanction non-compliance, including striking out improperly prepared documents, imposing adverse costs orders, and, in serious cases, referring matters for further investigation. This signals a strong judicial c...

In Sandoz AG v Bayer Intellectual Property GMBH, the English High Court provided important clarification that a claimant in an inquiry for damages is not entitled to an account of profits under the standard cross-undertaking as to damages. Background The Inquiry Defendants had obtained certain interim injunctions against the Inquiry Plaintiffs which were subsequently discharged. Following the discharge, the Court ordered an inquiry as to damages caused to the Inquiry Plaintiffs as a consequence of the interim injunctions, pursuant to cross-undertakings given by the Inquiry Defendants. The Inquiry Plaintiffs' principal claim was for an account of the profits that the Inquiry Defendants had made as a result of the injunctions being in place. They also made an alternative claim for loss of profits, though they pleaded that such a remedy would not provide adequate compensation in the circumstances. Terms of the cross-undertaking The cross-undertaking contained the key provision that if the Court found that the injunction "has caused loss" to the Inquiry Plaintiffs and decided that they "should be compensated for that loss", then the Inquiry Defendants would comply with any order the Court may make and would be "jointly and severally liable for any monetary award relating to such loss". The Court's analysis and decision Citing various authorities, the Court considered that the purpose of cross-undertakings is to compensate for loss caused by the injunction which was wrongly granted. In construing the terms of the cross-undertakings with regard to their underlying purpose, the Court found that the Inquiry Defendants had undertaken to comply with any order requiring them to compensate the Inquiry Plaintiffs for losses suffered as a result of the injunctions, and to be jointly and severally liable for any monetary award made to that end. However, crucially, they had not undertaken to disgorge profits they made as a result of the injunctions. The Court specifically rejected the Inquiry Plaintiffs' construction that, so long as the court decided they had suffered loss for which they should be compensated, the Inquiry Defendants had undertaken to comply with any order the court might make, even if that order was not an award of compensation for that loss. The Court found this interpretation would be inconsistent with the purpose of a cross-undertaking, which is to ensure that a party which has suffered loss as a result of an injunction that should not have been granted is compensated for that loss. The Court also rejected the argument that, under a cross-undertaking, monetary relief should be assessed as if there had been a contract in which the applicant agreed not to prevent the respondent from doing that which the injunction prevented them from doing. Significance of the decision While Harneys does not practice the law of England and Wales, this decision provides important guidance on the interpretation and scope of standard cross-undertakings given in interim injunction proceedings, which are also typically given in the offshore jurisdictions in which we practice. A standard cross-undertaking is compensatory in nature and does not extend to restitutionary remedies.

In Maso Capital Investments Ltd v Trina Solar Ltd the Privy Council reinstated the first instance decision of the Grand Court, confirming that the task for the trial judge in an assessment of fair value pursuant to section 238 of the Companies Act (as revised) is highly fact specific and will depend on the relative reliability of the valuation methodologies contended for. The Privy Council also reiterated that the principles to be applied by an appellate court to findings of fact or evaluative assessments of a lower court are restrictive and designed to be so. The petition of the Appellant, Trina Solar, was heard by the Grand Court in May and June 2019. The Judge's carefully and thoroughly reasoned judgment comprised 353 paragraphs over 249 pages. The Judge heard extensive expert evidence over sixteen days and determined the values per ADS reached by applying three valuation measures, after a minority discount, to be Merger Price US$11.37; Market Price US$7.26; and Discounted Cash Flow (DCF) Value US$17.81. The Judge then applied a weighting of 45 per cent to the Merger Price, 30 per cent to the Market Price and 25 per cent to the DCF Value in reaching his decision that a fair value was US$11.75 per ADS. In an equally thorough judgment, the Cayman Islands Court of Appeal (CICA) correctly identified the appropriate legal principles which would allow an appellate court to interfere with findings of fact or evaluative assessments. In short, it would need to satisfy itself that the Judge's conclusions were plainly wrong; conclusions which no reasonable judge could have reached on the evidence. The CICA concluded that: "On the facts of this case … I do not see that any reliance can safely be placed on the Merger Price. The whole point of the protections and processes which have been developed in the Delaware jurisprudence and adopted in this jurisdiction is to give the court comfort that the merger price can be probative of fair value." The CICA concluded that the Judge's assessment of Merger Price was indeed plainly wrong and decided it should interfere by giving it no weight. It was not persuaded that the Judge's assessment of Market Price was ultimately in error and, in effect, redistributed the relative weighting of the three methodologies so that fair value would be comprised 30 per cent Market Price and 70 per cent DCF (almost three times that attributed by the Judge). The JCPC restored the Judge's original decision. It concluded that the reasoning adopted by the CICA for interfering with the Judge's assessment of the weight to be accorded to the Merger Price was flawed. Instead, the JCPC held the Judge's nuanced assessment based on a sea of evidence, which acknowledged deficiencies in the sales process, was within the reasonable bounds of evaluation and that while the CICA had "correctly identified the limits on its entitlement to interfere … it seems to the Board that it impermissibly strayed into the realm of substituting its own evaluation for that of the Judge". The JCPC criticised the CICA's approach to reliability in this context, explaining that it is a comparative concept which allows the court to attribute weight even where it concludes that there are weaknesses or uncertainties. The JCPC also concluded that the CICA was not justified in treating the Judge's conclusions on Management Projections as plainly wrong. It disapproved of the CICA approach characterising it as a "calculation exercise" as opposed to an exercise in estimation which could produce a range of reasonable results. The CICA's alternative figures were arbitrary and unsupported by evidence - the figures were "plucked out of the air" and had "no greater claim to validity" than Trina Solar's projections. The Judge was ultimately better placed to make an assessment of the relevant inputs and the reliability of the Management Projections. In the highly valued and complex area of appraisal litigation in the Cayman Islands, the JCPC's decision to restor...

The Privy Council has just handed down judgment in Fang Ankong & Anor v Green Elite (in liquidation) which clearly restates how the Duomatic principle is to be applied and, in particular, the need for certainty, knowledge and an actual assent that can be objectively established. At first instance the BVI Commercial Court found that a historical understanding between joint venture partners (and eventual shareholders in Green Elite) did not objectively evince an intention to create a binding shareholder agreement. In this case, the proceeds of a sale of shares were paid directly to one of the directors of Green Elite who paid them on to the intended beneficiaries of a share incentive scheme for key employees. The appellants argued that the payments were properly made to implement Green Elite's agreed purpose to provide an employee share incentive scheme. If the payments would otherwise have constituted breaches of duty, the appellants' case was that the payments were made with the unanimous approval of the shareholders and therefore duly authorised. They argued that such approval was given when the shareholders agreed that Green Elite would act as the vehicle for the employee share incentive scheme for the intended beneficiaries. The first instance judge determined that "there was never any meeting of minds on the terms which Mr Fang believed gave him the absolute power to deal with the proceeds of sale of the… shares held by Green Elite" such that the Duomatic principle could not apply. The Court of Appeal upheld this decision, which has now been followed by the Privy Council. The Duomatic principle operates so as to allow the shareholders of a company to approve matters informally which would otherwise require a formal shareholder resolution. In this case, the shareholders could have authorised or ratified the director's actions by unanimous informal consent. However, on the facts, those actions and the breaches of duty involved were not approved. Whilst it was agreed that Green Elite would be used to provide an employee share incentive scheme, all other matters relating to the scheme were to be agreed at a later date and in fact were never agreed. It was impossible to see how the shareholders of Green Elite would have agreed by way of formal resolution to something which lacked critical details; given that there could not have been a formal resolution, the Duomatic principle could not regard equivalent approval to have been given informally. The first instance judge had previously couched his finding in the language of contract; but the Privy Council found that assent given in accordance with the Duomatic principle need not have the particular features of a binding contract. It is not a question of creating legal relations, as understood in the law of contract, nor whether the assent is "legally enforceable" or has "legal effect", but whether the shareholders intended to bind themselves legally "as if they had passed a formal resolution." While the judgments of the lower courts had also considered the scope of section 175 of the BVI Business Companies Act, Revised Edition 2020, which applies where there is a disposal of more than 50 per cent of the assets of a company outside the company's "usual or regular course of business", the Privy Council found that since a valid Duomatic assent did not arise, it was unnecessary to consider the issues in relation to section 175. The Privy Council decision upholds the lower courts' clarification on the application of the Duomatic principle in the BVI, building on the landmark decision of the Privy Council in Ciban Management Corp v Citco (BVI) Ltd, and in particular the need for objective certainty and knowledge by the shareholders. Harneys has represented Green Elite (acting through its liquidators) throughout the proceedings.

The decision of Justice Mangatal in Ming v JF Ming Inc is the latest judgment from the long-running family dispute and unfair prejudice proceedings over JF Ming Inc (JFM), a BVI holding company with subsidiaries holding substantial real estate in Hong Kong. The judgment is notable as it is the first detailed BVI decision that deals with the valuation of real estate-holding companies in Hong Kong in unfair prejudice proceedings and the question of whether a minority discount should be applied in a non-quasi partnership case. In 2014, the Claimants, three of seven siblings, jointly commenced unfair prejudice proceedings against their brother (Lawrence) and JFM. The proceedings were bifurcated and structured in phases: In 2016, the BVI Court found in favour of the Claimants on all aspects of their claim and granted them the relief sought, including a buyout. On appeal by Lawrence, in 2017 the Eastern Caribbean Court of Appeal set aside the buyout order but otherwise upheld all findings of Lawrence's unfairly prejudicial conduct and the other discrete remedies granted to the Claimants. In 2021, the Claimants appealed successfully to the Privy Council, which reinstated the buyout order, concluding the liability phase of proceedings (see our blog on the judgment here). In 2022, at the first stage of the valuation phase, the BVI Court (i) fixed the valuation date, (ii) determined the share entitlement of each Claimant, and (iii) decided that certain contested claims should be excluded as assets of JFM for the purpose of valuing JFM's shares. The matter then proceeded to trial before Justice Mangatal, where the principal issue for determination was the fair value of the Claimants' shares as at the valuation date. The Court was concerned with two main issues: first, which expert's valuation was to be preferred, and second, whether a minority discount should be applied in valuing the Claimants' shareholdings. Property valuation methodology On the first issue, both share valuation and property valuation experts were instructed, but by the time of trial the only dispute concerned the property valuations of Kyoto Plaza, the most valuable real estate in JFM's portfolio: The experts adopted different methodologies, leading to differing valuations. The Claimants' expert relied primarily on an income approach, with a market approach used as a cross-check, producing valuations of HK$1.44 billion (income approach) and HK$1.40 billion (market approach). Lawrence's expert, by contrast, relied exclusively on the market approach and arrived at a lower valuation of HK$1.27 billion. The Claimants argued that Lawrence's expert erred in failing to apply the income approach or, at the very least, an alternative method as a cross-check. They contended that best practice, informed by the International Valuation Standards (IVS), required the income approach where the property's critical attribute was its income-generating ability from a market participant perspective. Lawrence disagreed, arguing that in Hong Kong commercial real estate is valued both for capital appreciation and income-generation, such that the income-producing ability of Kyoto Plaza was not a critical element, and therefore did not mandate the application of the income approach. Lawrence also argued that there were insufficient reliable rental comparables to support a meaningful income approach adopted by the Claimants. The difference between the experts' market approach valuations turned largely on their treatment of ground-floor units (in particular a unit with an unusual layout) and their selection of comparables and adjustments for factors such as location and age. Ultimately, the Court preferred the evidence of the Claimants' expert, finding that it better complied with the IVS, particularly IVS 105, which emphasises the income approach for income-generating properties. In doing so, the Court implicitly accepted, without elaboration, that Kyoto Plaza's income-producing potential wa...

In Hyalroute Communication Group Limited v Industrial and Commercial Bank of China (Asia) (Hyalroute), the Hong Kong Court dismissed an application by a Cayman Islands-incorporated company for anti-suit relief to restrain a creditor from filing a winding-up petition in the Grand Court of the Cayman Islands. This is the first time the Hong Kong Court has had to consider the circumstances in which it should restrain winding-up proceedings in a similar common law jurisdiction (here, the Cayman Islands) in circumstances where the two jurisdictions have conflicting approaches as to how they deal with winding-up proceedings in favour of arbitration. Background The underlying dispute arose from a Term Facility Agreement (TFA) containing an arbitration clause mandating resolution of disputes in Hong Kong: the creditor had served a statutory demand in the Cayman Islands for a debt allegedly owed under the TFA and other arrangements. The company disputed the debt was due. The company applied to the Hong Kong Court to injunct presentation of a winding-up petition in Cayman arguing that it would be in breach of the TFA's arbitration clause. The Hong Kong Court had to ascertain whether the Cayman Islands winding-up proceedings would have the effect of finally resolving the dispute regarding the Plaintiff's indebtedness under the TFA. The judgment In order to reach a determination, Mr Recorder William Wong SC considered (at [31]) that the starting point for the Court was to "[evaluate] the foreign proceedings on broader grounds, such as whether they are vexatious, oppressive, or inconsistent with principles of forum non conveniens. In such cases, the Court is mindful of international comity and adopts a more cautious and restrained approach". [emphasis added]. The Court's reasoning in determining whether to grant anti-suit injunctive relief then continued as follows (at [38]): "[The] Court's focus here is on enforcing the arbitration agreement, not to prejudge or evaluate the merits of the underlying dispute. This approach ensures respect for the parties' contractual choice to arbitrate and avoids undermining the arbitral process by prematurely addressing issues that are properly reserved for the arbitral tribunal." [emphasis added] By considering the tension between the approach taken by the Hong Kong Court and that of the Cayman Islands, the Court held that the intended Cayman Islands winding-up proceedings did not breach the TFA, and even if it had, there were strong reasons not to grant the injunction. Analysis: the approach in Hong Kong In Re Lam Kwok Hung Guy (Re Guy Lam), the Hong Kong Court (G Lam JA) specifically considered and rejected the principle that winding-up proceedings based on a disputed debt do not, in themselves, determine the dispute and therefore do not contravene a relevant arbitration clause. Drawing an analogy between a winding-up proceeding and a summary judgment, G Lam JA explained that both processes can determine a dispute because both of them can give rise to an estoppel over the precise issues decided (subject to the usual conditions being satisfied). A proceeding which determines a dispute is a proceeding which is capable of giving rise to an estoppel. Put simply, the Court held (at [64]) that: "[t]he starting point is that a pursuit of foreign proceedings in breach of an arbitration agreement would be liable to be restrained by an anti-suit injunction" and since "the Plaintiff seeks a contractual anti-suit injunction by invoking the arbitration agreement … it has to establish a breach … by the Defendant. The burden is on the Plaintiff to show a "high probability of success" that the Defendant's pursuit of the anticipated Cayman winding-up proceedings breaches [the arbitration clause of the TFA]". Analysis: the approach in the Cayman Islands The Court then turned to the Judicial Committee of the Privy Council decision of Sian Participation Corp v Halimeda International (which is binding in the Cayman Isla...

Fraudsters sometimes choose offshore vehicles in their illegal schemes under the mistaken belief that the misappropriated assets will not be found or that the victims of fraud will not be able to identify the fraudsters. This is completely wrong. The BVI Courts apply a well-known legal maxim originally developed by the English Courts in Lazarus Estates v Beasley [1956] 1 QB 702: "No Court in this land will allow a person to keep an advantage which has been obtained by fraud ... fraud unravels everything." When can fraud cases be brought in the BVI? To secure assistance from the BVI Courts in tackling fraud, there must be a nexus to the BVI that engages the Court's jurisdiction. This will invariably involve one or more BVI companies participating in the fraud. The role of the entities located in the BVI, and the circumstances of the individual case, will dictate the extent to which the BVI Courts can assist. Claims arising out of fraud might be pursued in the BVI in the following circumstances: 1. Where entities that participated in the fraud are located in the BVI For example, where BVI entities paid or received bribes, where BVI entities are used as conduits through which proceeds of wrongdoing are passed, or where BVI entities enter into sham contractual agreements to conceal the diversion of assets to third parties. 2. Where property situated in the BVI has been transferred for the purpose of defrauding creditors For example, where the shares of a valuable BVI company are transferred to a third party to put those shares out of the reach of the transferor's creditors. 3. Where the proceeds of fraud are held by an entity located in the BVI, regardless of whether that entity is directly involved in the wrongdoing For example, where a BVI company used as the vehicle of a fraud holds a bank account in a different jurisdiction, through which it routes the proceeds of its scam. 4. Where fraudulent acts took place in the BVI Such as the issuing of fake invoices by a BVI company or the issuing of deliberately misleading or untruthful statements by a BVI company to attract investment into a fund. What are the claims that can be brought to tackle fraud in the BVI? The term "fraud" can encompass a wide variety of actions that share the common theme of dishonesty, there are various causes of action that can be pursued in the BVI depending on the circumstances of the case. The most obvious ones are as follows: 1. Where fraudulent statements have persuaded people to part with their money or other assets then a tortious claim for deceit may accrue, which would allow the victim to seek compensatory damages. Where a statement has led to the victim entering into a contract then a claim in fraudulent misrepresentation may accrue which will allow the contract to be set aside and/or a claim in damages. 2. A claim in bribery will arise in circumstances where a person or entity pays secret commissions to the agent of a person or entity with whom they are dealing and where the principal has no knowledge of the payment. Such payments will often be made to induce the agent to act other than in the best interests of their principal and to favour the bribe payer in some way, although there is no requirement to prove such inducement (it will be presumed). 3. If the director(s) of a BVI company have misapplied company assets or otherwise acted for an improper purpose, not in the best interests of the company and/or dishonestly then they will be in breach of their fiduciary duties, which gives the company a cause of action against the director(s). In addition, the breach of fiduciary duties by the director(s) may give rise to ancillary claims against third parties that had knowledge of the breach of fiduciary duties (see below). 4. Where there has been a payment of money or transfer of assets in breach of trust or breach of fiduciary duties, then a person or entity receiving the money or assets with knowledge of the breach of duties can be liable in "k...

In the recent decision of Suning International Group Co Ltd v Carrefour Nederland BV the Cayman Islands Court of Appeal provided guidance on the procedure to be followed under Order 73, rule 31(6) of the Grand Court Rules for service of proceedings to enforce a foreign arbitral award. In doing so, the Court of Appeal emphasised the policy of Cayman Islands law in favour of swift enforcement of arbitral awards. It also cautioned that failure to follow the guidance in this judgment will likely result in a service order being set aside. Background The respondent obtained an arbitral award in Hong Kong requiring the appellants to pay RMB1 billion (plus interest and costs) arising out of the failure by appellants to make payment pursuant to a put option for shares exercised by the respondent. Pursuant to section 5 of the Foreign Arbitral Awards Enforcement Act (1997 Revision) and with leave of the Court a Convention award may be enforced in the same manner as a judgment or order of the Grand Court. GCR Order 73, rule 31 deals with the procedure to be followed. Rule 31(6) provides that an order giving leave may be served personally, by sending to the respondent's usual or last known place of residence or business, or in such other manner as the Court may direct, including electronically. Grand Court's decision The Grand Court made an order ex parte granting leave to enforce the arbitral award in the Cayman Islands and directed that the order and associated documents be served on the appellants by delivery to their Hong Kong counsel in the arbitration proceedings. The respondent arranged service pursuant to the terms of the order, and also effected service by hand and registered post on each appellant respectively. The appellants then applied to set aside the order on various grounds including that the method of service ordered by the Judge was allegedly not in accordance with the relevant law. The appellants submitted that service of an ex parte order pursuant to rule 31(6) should be by way of service on a body corporate at its principal office or registered address and that the option of serving in some other manner should only be utilised on exceptional grounds. They submitted there was no evidence before the Court to show that service in according with the Hague Convention would cause any particular difficulty or delay, and there was no justification for in effect ordering substituted service. Justice Kawaley rejected these submissions and held that the wording of rule 31(6) gave the Court a suite of equal options rather than a suite of options sequentially ranked. He drew a distinction with the wording of GCR Order 65, rule 4 permitting substituted service where personal service is "impractical". He also noted there was no suggestion that serving the documents on the appellants' arbitration attorneys was contrary to Hong Kong law. The Grand Court dismissed the application to set aside the order but granted leave to appeal on the basis that the manner in which service of an ex parte order giving leave to enforce a foreign arbitral award is a matter of public interest which would benefit from a decision from the Court of Appeal. The appeal The Court of Appeal dismissed the appeal. Policy of "speedy finality" The Court of Appeal endorsed Mr Justice Foxton's comments in the English decision of M v N. In particular, the policy of speedy finality reflected in the approach to arbitration cases is even more compelling in connection with applications for enforcement of awards. Mr Justice Foxton set out factors that he held justified an order for alternative service notwithstanding that the Hague Service Convention applied. These included that the application was brought to assist with the enforcement of an arbitral award which engages the policy of speedy finality, the respondent had fully engaged (through counsel) with the proceedings that culminated in the award, the award had been outstanding for a considerable period of time (two ...