I INTRODUCTION TO THE DISPUTE RESOLUTION FRAMEWORK
The British Virgin Islands (BVI) is a British overseas territory, and the British government is responsible for foreign affairs and defence. Executive authority is vested in Queen Elizabeth II and is exercised on her behalf by the Governor, currently His Excellency Mr John Duncan OBE. There is, however, a large degree of internal self-government. A new Constitution was adopted in 2007, and the country is now led by the Premier, who is elected in a general election and who nominates a Cabinet, which is appointed by the Governor. The legislature consists of the Queen (represented by the Governor) and a House of Assembly. The official currency is the US dollar. There are no exchange controls and no restrictions on the free movement of currency.
Since the 1960s, the BVI has steadily moved from an agriculture-based economy towards tourism (mainly boat chartering, although it is also a cruise ship destination and popular beach resort) and financial services. It is now a leading offshore financial centre. Over 1 million companies have been incorporated in the BVI and it is the second-largest domicile for the formation of offshore investment funds.
The Eastern Caribbean Supreme Court (ECSC) is the superior court of record for the BVI, as well as for Anguilla, Montserrat, Antigua and Barbuda, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Grenada and Dominica. The ECSC is headquartered in Saint Lucia, although each Member State has its own High Court Registry and its own High Court Judiciary. Since 2009, the ECSC has had a dedicated Commercial Division, located in the BVI, with its own judge (currently Mr Justice Barry Leon) and its own modern premises. Saint Lucia also has a Commercial Division court, which opened in January 2016. Appeals from the High Court are to the ECSC Court of Appeal, which sits in the BVI approximately three times a year, and appeals from the Court of Appeal are to the Judicial Committee of the Privy Council in London. The BVI also has a Magistrate’s Court, which has both a criminal and a civil jurisdiction, and from which appeals lie directly to the Court of Appeal.
II THE YEAR IN REVIEW
i Major actions
The issue of the recoverability of the costs of overseas lawyers assisting in BVI litigation has been the focus of much attention following the Court of Appeal decision in Dimitry Vladimirovich Garkusha v. Ashot Yegiazaryan.2
In this case, the applicant, Mr Yegiazaryan, had made an application for security for costs with respect to Mr Garkusha’s appeal against the dismissal of his claim. Maples and Calder acted for Mr Garkusha. Mr Yegiazaryan’s application was dismissed and Mr Garkusha sought to recover his costs incurred resisting the application. Both parties filed written submissions and the matter was heard on paper.
In its judgment, the Court set out, in some detail, the position in the BVI prior to the introduction of the Legal Profession Act 2015 (LPA) and confirmed that the fees of overseas lawyers had been generally recoverable under the common law in the BVI prior to the LPA, in contrast with the position in other common law jurisdictions such as the Cayman Islands.
However, the Court then went on to conclude that overseas lawyers’ costs incurred in BVI legal proceedings after the LPA came into force (on 19 November 2015) were no longer generally recoverable.
The Court primarily based its analysis on its interpretation of Sections 18, 2(1) and 2(2) of the LPA. The Court considered that the LPA now meant that overseas lawyers assisting in a BVI matter were to be deemed as practising BVI law. The Court referred to Section 2(2), which concerned the practice of BVI law outside the BVI and which the Court considered had the implication that the practice of BVI law by overseas lawyers without being on the Roll was unlawful. Consequently, it was held that the fees of lawyers performing such unlawful services could not be recoverable.
It should be noted that this matter was heard on paper and there was no opportunity for the parties to make detailed submissions on the effect of the LPA on the recoverability of overseas lawyers’ costs, and indeed neither party addressed these issues in their submissions.
As a result, we are of the opinion that the Court’s decision was mistaken in a number of ways, principally in its failure to take into account the fact that Section 2(2) of the LPA was never brought into force and was subsequently repealed. We also consider that the decision was in contradiction to established English authority that a person only acts as a solicitor when they perform acts that can only be performed by a solicitor, which may affect whether the assistance of an overseas lawyer should be considered to be practising BVI law.
A recent decision of the BVI Commercial Court in Gudavadze v. Carlina Overseas Corporation addressed costs that were incurred before the LPA came into force, and does not assist with costs subsequently incurred.
Although the BVI Commercial Court is presently treating Garkusha as binding authority upon it, this issue is currently before the Court of Appeal in another matter and that judgment is pending.
ii Other cases of note
The issue of whether anti-arbitration injunctions are available in the BVI was addressed by the Court of Appeal in Sonera Holding BV v. Cukurova Holding AS.3
These proceedings concern the attempts by Sonera Holding BV (Sonera) to enforce an ICC arbitration award made in Geneva in 2011. There have been hearings in this matter up to Privy Council level and, consequently, the facts are complex. However, this particular hearing was concerned with Sonera’s appeal against the decision of the BVI court at first instance to dismiss its application for an anti-arbitration injunction in connection with Cukurova Holding AS’s (CH) claim in a second arbitration relating to the same dispute.
At issue was Section 3(2)(b) of the BVI Arbitration Act 2013 (the Act), which states that ‘the Court shall not interfere in the arbitration of a dispute, save as expressly provided in this Act’. The judge at first instance held that as a result of the Act the court had no discretion to interfere with the ongoing arbitral proceedings.
Sonera appealed on the grounds that despite the wording of the Act the court had jurisdiction to grant injunctions under Section 24(1) of the West Indies Associated States Supreme Court (Virgin Islands) Act (the Supreme Court Act) and that it ought to have exercised that jurisdiction in this case.
The Court of Appeal agreed with Sonera that the court retained a general power and jurisdiction to grant an anti-arbitral injunction. The Court held that the Act expressed a principle of non-intervention that did not remove the court’s independent jurisdiction under the Supreme Court Act, stating:
Any provision of a statute which seeks to oust the court’s jurisdiction must be expressed in clear terms. The statement of policy contained in Section 3(2)(b) of the Act does not meet this standard.4
The Court then held that this jurisdiction to grant injunctions to restrain foreign proceedings should be exercised with caution and only granted in exceptional circumstances, being an infringement of a legal or equitable right of a party, or if the proceedings were vexatious, oppressive or unconscionable.
Despite this apparently high bar, the Court held that Sonera’s appeal should be allowed and the injunction granted.
It appears from the judgment that the Court’s decision was influenced by its perception that the second arbitration application made by CH was designed to avoid the results of the first arbitration award and nullify the BVI court’s judgment. The Court held that CH’s actions in bringing the second arbitration were:
specifically aimed [. . .] at interfering with the court’s judgment and ought not to be permitted. The court is duty bound to step in to protect its processes and judgments.
The authors disagree with the Court of Appeal’s decision and consider that the analysis of the court of first instance was the correct one. However, CH’s appeal to the Privy Council against the decision was withdrawn as a result of the final award coming out before it could be heard.
This case does give valuable guidance as to the circumstances in which the BVI courts will grant an injunction to restrain foreign proceedings.
Post-judgment third-party disclosure
Until the English case of NML Capital Ltd v. Chapman Freeborn Holdings Ltd et al 5 was decided in 2013, it was well established that Norwich Pharmacal relief was available to a party seeking to enforce a foreign judgment in the BVI. However, this case was considered to have cast some doubt as to the availability of this remedy after a judgment has been rendered. The Commercial Court provided welcome clarification that the previous position remains good law in the BVI in the case of UVW v. XYZ (A Registered Agent).6
The claimant, a judgment creditor, applied for third-party disclosure orders against a BVI-registered agent to obtain information that could lead to the identification of assets available for enforcement, having identified a BVI company as belonging to the judgment debtor. The judgment creditor also identified a pattern of conduct on the part of the judgment debtor that, according to the court, carried ‘the unmistakable hallmark of efforts to make himself judgment-proof by way of deliberate concealment of assets’.7
It was held that the BVI court has jurisdiction to grant Norwich Pharmacal orders in aid of the enforcement of judgments where there is reasonable suspicion that the third party has been mixed up in a wrongdoing. Further, as a registered agent has previously been held by the BVI court to facilitate the functioning of a company by its very role8 and consequently must be involved in the ‘wrongdoing’ of the judgment debtor, this meant that such orders could be made against a registered agent.
It was held that the company at issue would be liable regardless of the purpose for which it was created and that the applicant need only show a general pattern of wilfully evasive conduct rather than that the assets had been transferred to the company for no reason other than to avoid enforcement.
The Court also held that Norwich Pharmacal relief was available to assist in securing compliance with freezing orders, including those made in foreign courts, on the basis of comity and to ensure the freezing order jurisdiction was exercised effectively.
A final interesting point made by the Court was that applications for such orders should not be dismissed on the grounds that the applicant was merely ‘fishing’ for information, seemingly accepting that this should be regarded as a ‘discarded test’. Such an order may be made in the BVI if there are respectable grounds for thinking that there may be a claim and the claimant simply wants additional documents to plead the claim, or documents that will enable him or her to ascertain whether an action would have a reasonable prospect of success.
Submission to the jurisdiction
Whether a defendant who is not present in the BVI can be said to have submitted to the jurisdiction in responding to a claim can be a question of great importance, but is often the subject of considerable dispute. The Court of Appeal case of Alexander Katunin v. JSC VTB Bank9 is helpful in providing further guidance to defendants in this area.
Mr Katunin, a Russian national resident in Moscow who owns BVI companies, was served at the registered agent of these companies by JSC VTB Bank (the Bank) with proceedings relating to the enforcement of a Russian order, and a freezing order further to an order of the BVI court. The Bank also obtained an order to serve proceedings on Mr Katunin by an alternative method in Russian. Mr Katunin acknowledged service and expressly reserved his right to challenge service and jurisdiction. The Bank then filed an application for summary judgment.
Mr Katunin subsequently applied for an extension of time to file his defence after determination of the summary judgment application, and one month later he also filed an application affidavit opposing summary judgment. He then applied to set aside the alternative service order and challenged the jurisdiction of the court to hear the claim.
The court of first instance dismissed the application to set aside the alternative service order on the grounds that it considered Mr Katunin to have submitted to the jurisdiction. Mr Katunin appealed on a number of grounds.
Mr Katunin argued that the Bank had waived its right to make the point that he had submitted to the jurisdiction as it had not done so earlier. The Court of Appeal disagreed, stating that the conduct of the Bank did not give rise to waiver in this case as the test applied by the judge at first instance, that the steps taken by Mr Katunin must be inconsistent with his contention that the courts did not have jurisdiction, was incorrect.
The Court of Appeal held that the test the court should apply was whether the conduct that was said to amount to submission to the jurisdiction was wholly unequivocal; in other words, the conduct must not simply be consistent with submission to the jurisdiction, but there must be no other explanation for it. Whether the conduct is unequivocal is to be determined by reference to the circumstances of the case.
Upon the application of this test, the Court (of Appeal) found that Mr Katunin had not submitted to the jurisdiction and consequently was successful in his appeal.
This finding was made on the basis that Mr Katunin’s application for an extension of time was not made solely to extend the time in which he could file his defence, but also to allow him to file his challenge to jurisdiction, as was clearly stated in the application, and that he also reserved his right to challenge jurisdiction then. Indeed, he did challenge the jurisdiction within the prescribed time for him to do so.
The Court also held that it was relevant that the affidavit filed by Mr Katunin had been in response to the Bank’s application for summary judgment, made before the time for filing a challenge to the jurisdiction had expired, and was not made in support of any application or step taken by him.
As will be obvious from the preceding, any action taken by a defendant who is contesting the jurisdiction of the BVI court must be carefully considered in light of all the facts of the case to ensure they are not taken to submit to the jurisdiction. The guidance given in this case is valuable in evaluating possible responses to proceedings being brought against foreign defendants in the BVI.
III COURT PROCEDURE
i Overview of court procedure
The Eastern Caribbean Supreme Court Civil Procedure Rules 2000 (CPR) govern practice and procedure in the BVI courts, as supplemented by practice directions. The CPR were significantly amended in 2011, in particular, in respect of the practice and procedure relating to service out of the jurisdiction (Part 7) and appeals to the Court of Appeal (Part 62). English case law continues to be persuasive in the jurisdiction; however, where the CPR provides for a different approach to that of England and Wales, the English Civil Procedure Rules will not be of assistance. Where no special provision exists under BVI law in respect of the exercise of jurisdiction vested in the High Court in civil proceedings, pursuant to Section 11 of the West Indies Associated States Supreme Court (Virgin Islands) Act, the BVI court will exercise its jurisdiction as nearly as may be in conformity with the law and practice for the time being in force in the High Court of Justice in England.
Parts 69A and 69B of the CPR are of note. These provide for a sui generis approach to Commercial Court cases, heard in the BVI Commercial Court. A case is suitable for determination in the Commercial Court when it falls into certain categories of cases arising out of the transaction of trade or commerce, and generally has a monetary value of over US$500,000.
In addition, practice and procedure in respect of certain Insolvency Act proceedings are governed by the Insolvency Rules 2005. The CPR may still apply if there is a lacuna, provided that the Insolvency Act or the Rules are not contradicted.10
ii Procedures and time frames
A fixed-date claim form, akin to a Part 8 claim form under the English CPR, must be used in claims arising out of hire-purchase or credit sale agreements, in proceedings for possession of land, whenever its use is required by a rule or practice direction and where, by any enactment, proceedings are required to be commenced by originating summons or motion. The procedure used for a fixed-date claim form is designed to speed up the process for determination of the matter and generally such claims take a few months to be determined.
All other cases (save for certain insolvency proceedings as described below) are commenced by claim form, in the form prescribed at Form 1 of the CPR. The claim form must be issued with a statement of claim, unless the claimant has included in the claim form all the information required by the CPR or the court gives permission for there to be no statements of claim. In cases of emergency, a claimant may issue and serve the claim form without a statement of claim (or an affidavit or other document required by the rules) but must apply to the court for permission thereafter. Claims commenced under this form generally take a couple of years to reach trial, allowing for interlocutory applications and time extensions.
In proceedings for the appointment of a liquidator under the Insolvency Act 2003, it is necessary to bring the application by way of originating application. The Commercial Court sets liquidation hearing dates on a regular basis, so determination of an application will generally take place quite quickly. Thereafter all further applications in the liquidation must be brought by ordinary application.
iii Class actions
There is no provision in the BVI for class action lawsuits, but pursuant to Part 21 of the CPR, it is possible to bring a representative action where five or more people have the same or a similar interest in a claim. Special provision is also made in the CPR for representation of persons who cannot be ascertained (or readily ascertained) in proceedings that concern the construction of a written instrument, the estate of someone who is deceased or property subject to a trust.
iv Representation in proceedings
All parties to a claim may be represented by a BVI-admitted legal practitioner. Barristers or solicitors, who are called to the BVI Bar, have rights of audience to conduct cases in both chambers and open court.
Any natural person may appear in court as a litigant-in-person. There is no express provision in the CPR for a McKenzie friend but it has been permitted both at first instance and appellate levels.11
A firm or partnership may be represented in court by a duly authorised employee provided that the court grants permission. A body corporate may be represented by a duly authorised officer, who will require permission to represent the body corporate in open court, save for in the Commercial Court, where all bodies corporate must be represented throughout by a BVI-admitted legal practitioner.
v Service out of jurisdiction
Part 7 of the CPR governs service out of the jurisdiction of BVI proceedings. Permission must be sought from the court, unless service is on the agent of a principle who is out of the jurisdiction and certain criteria are met. The court may only grant permission where one or more gateways are engaged. These include cases where there is between the claimant and a person on whom the claim form has been or will be served a real issue that it is reasonable for the court to try, and the claimant now wishes to serve the claim form on another person who is outside the jurisdiction and who is a necessary or proper party to that claim. The enforcement gateway has recently been extended to common law enforcement proceedings, rather than being limited to enforcement under statute.
The court may also grant permission where the claim is for an injunction ordering the defendant to do or refrain from doing some act within the jurisdiction, or for a remedy against a person domiciled or ordinarily resident within the jurisdiction.
Rule 7.3 of the CPR also sets out a number of other gateways. Examples include claims where the contract contains a term to the effect that the BVI court has jurisdiction to determine any claim in respect of that contract, claims in tort where the act causing the damage was committed within or the damage was sustained within the BVI, and claims that relate to the constitution, administration, management or conduct of the affairs or the ownership or control of a company incorporated within the jurisdiction. English common law principles of forum non conveniens and the relevant case law, as locally developed, will be and are regularly applied to the question of service out of the jurisdiction.
The application for permission to serve out may be made without notice. Once service is effected on a foreign defendant, the foreign defendant is required procedurally to file an acknowledgement of service. Thereafter he or she may apply to the court to set aside any order for service out or apply for declaratory relief and a stay of proceedings on forum grounds.
vi Enforcement of foreign judgments
Enforcement under statute
The statutory basis for enforcement of foreign judgments is provided for by the Reciprocal Enforcement of Judgments Act (Chapter 65) 1922 and the Foreign Judgments (Reciprocal Enforcement) Ordinance (Chapter 27) 1964. There is a view among some practitioners (with which the authors disagree) that the latter statute is not in fact effective, but the arguments for and against this approach are beyond the scope of this work.
These statutes deal with the registration of judgments from the High Court in England, Northern Ireland or in the Court of Session in Scotland, as well as from the Bahamas, Barbados, Belize, Bermuda, Grenada, Guyana, Jamaica, Saint Lucia, Saint Vincent, Trinidad, Australia and its states and territories, and Nigeria.
The judgment must be made for a definite sum of money and must be enforceable in the place in which it was made. The judgment cannot be registered if:
- a the original court acted without jurisdiction;
- b the judgment debtor:
• was not ordinarily resident nor carrying on business within the jurisdiction;
• had not submitted or agreed to submit to the original court’s jurisdiction;
• had not been duly served and did not appear; or
• satisfies the BVI court that an appeal is pending or that he or she is entitled to and intends to appeal the judgment;
- c the judgment was obtained by fraud; or
- d the judgment was in respect of a cause of action that for public policy or similar reasons could not have been entertained by the BVI court.
The application for registration is made under Part 72 of the CPR, without notice, supported by affidavit evidence exhibiting an authenticated copy of the foreign judgment, verifying the amount due, and setting out other details required by the CPR. It should be made within 12 months after the date of the judgment or a specified longer period with the permission of the court if, in the circumstances of the case, the court considers it just and convenient that the judgment should be enforced in the BVI. The order for registration will provide that the debtor may apply to set the order aside within a specified time limit. If no application is made or the application to set aside is unsuccessful, the creditor can proceed to execution.
Enforcement at common law
A foreign judgment may be enforced by action at common law provided that it meets certain criteria:
- a it must be made by a court of competent jurisdiction;
- b it must be for a debt or definite sum of money;
- c it must not be a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty; and
- d it must be final and conclusive.
The judgment creditor may apply for summary judgment if the above criteria are met, as the BVI court will not entertain a retrial of the action. There is very limited scope to defend an action for enforcement at common law. The defences are if:
- a the above criteria were not met;
- b the judgment was obtained by fraud;
- c recognition or enforcement of the judgment in the BVI would be contrary to public policy; or
- d the foreign proceedings contravened the rules of natural justice.
vii Assistance to foreign courts
The Evidence (Proceedings in Foreign Jurisdictions) Act 1988 in essence gives effect to the provisions of the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters 1970. Under the Act the court may issue an order for the obtaining of evidence for a foreign court, including for the examination of witnesses, the production of documents, and the inspection, custody or detention of property. The court must be able to take the steps requested as a matter of BVI law were the matter to proceed in the BVI, and witnesses can only be compelled if they are compellable as a matter of BVI law.
In addition, under the Financial Services Commission Act 2001, the Financial Services Commission (FSC) may receive and grant assistance on request from a foreign regulatory authority so that the foreign authority may discharge its regulatory functions. The FSC may apply for the examination of witnesses either by the appointment of an examiner or before a magistrate and may disclose information to overseas regulatory bodies and law enforcement agencies. Furthermore, the Financial Investigation Agency plays a similar role in respect of requests for information from foreign fiscal authorities – it can, among other powers available to it, order the production of documents.
The Insolvency Act Part XIX allows for judicial assistance in insolvency proceedings. The BVI courts may make an order assisting a foreign insolvency or restructuring process. The Act allows certain foreign office holders to apply to the BVI courts for assistance. The court may exercise its discretion, if it considers it just, and grant relief provided (among other matters) that the rights of a secured or preferential creditor are protected, as are those resident in the BVI with claims (so that they are not prejudiced or inconvenienced by the foreign process) and that treatment of all persons claiming in the foreign proceedings is just. However, this will be on an order-by-order basis, and will not involve recognition of the representative per se. The provisions of Part XIX, and the residual common law rights of recognition in the BVI, are only available to foreign representatives of insolvency proceedings in Australia, Canada, Finland, Hong Kong, Japan, Jersey, the United Kingdom and the United States.
Last, there are a number of bilateral treaties between the BVI and the United States in respect of drug enforcement and anti-terrorism with the United States, that provide for mutual assistance in those fields. In addition, the Terrorism (United Nations Measures) (Overseas Territories) Order 2001 provides that the Governor may grant disclosure to the United Nations and to any foreign government to detect the evasion of United Nations measures that are related to terrorism.
viii Access to court files
Members of the public are able to access originating court process (e.g., a claim form or notice of appeal), judgments and orders, unless the court file is sealed. Any other document can be obtained with the leave of the court, which may be granted on an application made without notice. Parties to the litigation are entitled to see all documents filed, unless the court file is sealed, in which case they too would require permission from the court to view them.
ix Litigation funding
There is no statutory provision for legal aid within the BVI for civil matters. Most litigation fees are structured on a time-spent basis and conditional and contingency fee arrangements are infrequent. Third-party funding of litigation is permitted provided that it does not offend common law principles against champerty and maintenance. Insurance can cover the cost of litigation.
IV LEGAL PRACTICE
i Conflicts of interest and Chinese walls
The Legal Profession Act 2015 came into force on 11 November 2015. It contains a Code of Ethics that deals with the issue of conflicts. This provides that a legal practitioner may represent multiple clients, but only if each client’s interests can adequately be represented with their consent to such representation after full disclosure of the possible effects of multiple representation. Where a legal practitioner is unable to adequately represent the interests of multiple clients because of a conflict of interests, the legal practitioner shall desist from engaging in multiple representation in relation to the clients affected thereby.
The BVI currently adopts the English common law position with respect to Chinese walls.
ii Money laundering, proceeds of crime and funds related to terrorism
Only the activities of ‘regulated persons’ are caught by the Anti-Money Laundering Regulations 2008, made under the Proceeds of Criminal Conduct Act 1997. Lawyers only fall within that category when they conduct transactions that are considered ‘relevant business’. Relevant business for lawyers is the provision of legal, notarial or accounting services for the buying and selling of real estate; management of client money, securities or other assets; management of bank, savings or securities accounts; the organisation of contributions for the creation, operation or management of companies and the creation, operation and management of legal persons or arrangements; or the buying and selling of business entities.
When conducting relevant business, lawyers are required to maintain client identification procedures and records, maintain suspicious-transaction records and ensure that internal controls and communication procedures are at a level appropriate for the purposes of forestalling and preventing money laundering. This includes training any employees on the money laundering regulations in the BVI, so that they are able to identify and have the requisite knowledge to deal with clients who may be high risk. Failure to adhere to the requirements of the legislation or to report suspicious transactions may result in criminal prosecution with maximum fines ranging between US$150,000 and US$500,000. The maximum term of imprisonment for certain money laundering offences is 14 years.
iii Data protection
The Computer Misuse and Cybercrime Act 2014, creates a number of offences, including unauthorised access to computer data, facilitating unauthorised access and unauthorised publication of computer data. The sanctions range up to fines of US$100,000 and 10 years in prison. After some controversy, a public interest exception clause was added to the unauthorised publication offence before the Act was passed.
V DOCUMENTS AND THE PROTECTION OF PRIVILEGE
Legal professional privilege attaches to legal advice and to any document produced in contemplation of or arising from or in connection with legal proceedings for the primary purpose of providing or receiving legal advice. The English common law position applies and privilege can also be claimed in respect of the Crown and public interest privilege. ‘Without prejudice’ communications may not be used in proceedings pre-judgment.
There are no pre-action protocols applicable in the BVI and therefore there is unlikely to be any basis for pre-action disclosure. Given that the CPR covers other aspects of disclosure, and in view of case law,12 it is unlikely that Section 11 of the West Indies Associated States Supreme Court (Virgin Islands) Act can be used to import the law and practice administered for the time being in the High Court of Justice in England and thereby provide for pre-action disclosure.
Disclosure and inspection of documents is governed by Part 28 of the CPR. ‘Document’ is defined as anything on or in which information of any description is recorded. Disclosure is ordinarily by mutual exchange of lists, and a party’s legal practitioner is required to certify on the face of the list that he or she has explained to the maker of the list of the need to make full disclosure and the possible consequences of a failure to do so.
Parties are required to disclose documents that are directly relevant to the matters in question in the proceedings and that are in that party’s control. For a document to be directly relevant, the party with control of it either intends to rely on it, or it tends to adversely affect that party’s case or support another party’s case, but the rule of law known as the rule
in Peruvian Guano13 does not apply. Control of a document means that it is or was in the physical possession of the party, the party has or has had a right to inspect or take copies of it or the party has or has had a right to possession of it. It is also possible for the court to order specific disclosure, in addition to standard disclosure.
Disclosure from third parties: Norwich Pharmacal relief
The BVI court follows English common law in that it has the jurisdiction to order disclosure from third parties following the case of Norwich Pharmacal Co v. Commissioners of Customs & Excise.14 For an applicant to succeed they must show that a wrong has (at least arguably) been carried out by the wrongdoer, that the claimant intends to assert his or her legal rights against the wrongdoer and that the order is necessary and proportionate to enable the action to be brought. The third-party respondent must have been mixed up in, or have facilitated, the wrongdoing, albeit innocently. In the case of JSC BTA Bank v. Fidelity Corporate Services Limited et al 15 the Court of Appeal confirmed that knowledge of the wrongdoing was not required and thus innocent registered agents (who provided corporate services to BVI companies) could be made subject to such an order, as they were not ‘mere onlookers’.
VI ALTERNATIVES TO LITIGATION
The BVI International Arbitration Centre was opened in the jurisdiction in November 2016,
with a roster of nearly 200 international arbitration and dispute resolution experts, who are able to conduct arbitrations in Spanish, Russian and Chinese, as well as English.
The Arbitration Act 2013 (the Act) came into force on 1 October 2014, and imports the UNCITRAL Model Law (subject to some variation) and therefore contains comprehensive legal provisions that take into account modern principles and practices of arbitration. Together with the BVI’s accession to the New York Convention on 25 May 2014 (making an arbitral award from a BVI tribunal enforceable in other contracting states and vice versa), the Act is designed to make the BVI as popular a seat for international arbitration as London, Paris and New York.
The Act applies to arbitration under an arbitration agreement if the place of arbitration is in the BVI. The common law will govern whether a dispute is capable of being resolved by arbitration.
The approach of the BVI courts is to uphold arbitration agreements if at all possible, so as to give effect to the intentions of the parties that their differences should be resolved by the arbitral process and not the courts. The liberal interpretation of arbitration clauses, thereby avoiding semantic arguments about whether the dispute ‘arose out of’ or was ‘in connection with’ or ‘arose under’ a contract, was forcefully espoused in England in Fiona Trust Corp v. Privalov & Ors,16 an approach that has been endorsed in the BVI in Victor International Corporation and Victor (BVI) Limited v. Spanish Town Development Company Limited & Ors.17 In summary, in the absence of express words to the contrary, parties are to be taken to have intended that all their disputes should be arbitrated.
A question that frequently arises is whether applications to appoint liquidators, or claims by minority shareholders in relation to unfairly prejudicial conduct, fall within the exclusive jurisdiction of the BVI courts or are arbitrable. In Zanotti v. Interlog Finance Corp,18 the BVI court held that an arbitrator could grant relief in unfair prejudice proceedings. As to winding-up applications, in the writers’ view an order appointing liquidators over a BVI company may only be made by a BVI court. In Artemis Trustees Limited & Ors v. KBC Partners LP & Ors,19 the BVI court held that the position is different in relation to limited partnerships because: (1) a limited partnership, unlike a limited company, has no identity separate from the identities of its constituent members; and (2) winding up or dissolution of the partnership would have no effect on the rights and interests of third parties.
The Court of Appeal recently departed from the English approach to the stay of winding-up applications in favour of ongoing arbitration in the case of Jinpeng Group Limited v. Peak Hotels and Resorts Limited20 (Jinpeng), instead holding that where a dispute over a debt was not made on genuine or substantial grounds a creditor should not have to prove exceptional circumstances to obtain a winding-up order. However, it appears that the BVI Commercial Court has subsequently granted a stay for arbitration proceedings in a case21 where the debt was disputed on genuine and substantial grounds. It may be that the unusual facts of Jinpeng persuaded the Court of Appeal to appoint a liquidator where ordinarily such an order would not be made.
If a party commences court proceedings concerning a matter that is the subject of the arbitration agreement, then any party to that agreement can ask the court to refer the matter to arbitration. The court must make that referral (and stay the court action) unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed.
The Act imports Articles 10 to 24 of the UNCITRAL Model Law and therefore contains detailed provisions on the procedure of the tribunal.
Under the Act, Articles 17 and 17A to 17G of the Model Law are brought into effect. The parties are able to agree that the tribunal should not have power to grant interim measures, but in the absence of this agreement the tribunal is given broad powers to preserve the status quo, prevent harm or prejudice to the arbitral process itself, preserve assets and evidence, and to make preliminary orders.
The court itself is empowered to grant interim measures in support of any arbitral proceedings that have been or are to be commenced in or outside the BVI. In relation to arbitral proceedings outside the BVI, interim relief can only be granted where the proceedings are capable of giving rise to an award that may be enforced in the BVI and the interim measure sought is of a nature that a BVI court is able to grant in relation to arbitration proceedings. There is no appeal from the court’s grant or refusal of an interim measure.
Enforcement of foreign awards
The Act explicitly provides that the grounds for refusal of enforcement that apply to a New York Convention award also apply to the enforcement of a non-Convention award, and in both cases those grounds are fully incorporated into the Act itself. However, the Court has a general discretion not to enforce an award from a non-Convention state if it considers it just to do so, whereas it does not possess that discretion in relation to awards from Convention states.22
The Act contains a number of provisions intended (save in limited specified circumstances) to maintain the confidence of arbitral proceedings, including that any court proceedings should be heard in chambers, imposing reporting restrictions and prohibiting parties from disclosing, publishing or communicating any information relating to the arbitration proceedings or the award.
The Act expressly empowers the tribunal to award any remedy or relief that could have been ordered by the court if the dispute had been the subject of civil proceedings. Unless otherwise agreed by the parties, the tribunal also has the same power of the court to order specific performance or any contract, other than one relating to land or an interest in land. The position in relation to an award of punitive damages is unchanged, and it remains unenforceable.
The situation with regard to mediation is at present perhaps a little opaque. Under the CPR,23 the BVI courts have no power to order mediation. However, further to Practice Direction No. 1 of 2003, the court has powers to refer a case to mediation and the parties will not be allowed to opt out except by order of a master or judge and upon adducing good and substantial reasons. Refusal to take part in such a mediation by a party is likely to have costs implications. There is some debate among practitioners as to whether a practice direction is capable of granting the court powers not given to it by delegated legislation; however, the authors consider it prudent to assume the court does possess these powers until such time as this is tested.
The Arbitration Act also allows for mediation24 where an arbitration agreement provides for the appointment of a mediator who will act as arbitrator in the event that no settlement is reached in the mediation.
The BVI has a roster of mediators, although their services are most frequently invoked in family disputes rather than commercial cases.
VII OUTLOOK AND CONCLUSIONS
The commercial division of the High Court continues to hear some of the most important commercial and insolvency disputes. Shareholder disputes (and related applications for freezing relief) continue to provide regular work for practitioners and the Court. Trusts litigation is still on the increase. The aim of the BVI Commercial Court is to deliver justice quickly, efficiently and at a reasonable cost.
1 Arabella di Iorio is a partner and John MacDonald is an associate at Maples and Calder.
4 At paragraph 30.
5  EWCA Civ 589.
6 BVIHC(COM) 108 of 2016.
7 At paragraph 2.
8 JSC BTA Bank Fidelity Corporate Services Limited et al. BVIHCVAP 2010/0035.
10 Insolvency Rules, 2005 Section 4.
11 And the McKenzie friend (who in essence assists a litigant in person) was permitted to address the court.
12 Veda Doyle v. Agnes Deane HCVAP2011/20.
13 Under the rule in Peruvian Guano, documents that may fairly lead to a train of enquiry that has the result of advancing a party’s own case or damaging that of his or her adversary are also disclosable. In other words, disclosure obligations are not limited to documents that are directly relevant, but extend also to documents that may indirectly advance a party’s case or injure that of his or her opponent.
14  AC 133.
15 HCVAP 2010/035.
16  UKHL40.
17 BVI HCV 2007/0293.
18 BVI HCV 2009/0394.
19 BVI HC (COM) 2012/0137.
20 BVIHCMAP 2014/0025, BVIHCMAP 2015/0003
21 Retribution Limited v. L Capital KDT Limited (BVIHCMAP 2015/78 and 2015/89).
22 A UK arbitral award now counts as a New York Convention award in the BVI and can be enforced as such.
23 CPR 25.1(h).
24 Arbitration Act, 2013 Section 30.