This article was first published on LexisNexis on 13 May 2022.
The ‘Pushing envelopes across borders: offshore interim relief in international fraud and asset chases’ session brought together lawyers from England and a variety of offshore jurisdictions to discuss recent developments in offshore jurisdictions and how they work in parallel with developments in English courts. The speakers gave listeners a run down of key cases and legislation in the area, while providing useful practical guidance for practitioners, as well as querying how the law in this area will change in the next few years.
The significance of Broad Idea
Andrew McLeod, barrister at One Essex Court, posed the question whether the case of Broad Idea International Ltd v Convoy Collateral Ltd (British Virgin Islands)  UKPC 24 leaves us at a cross roads in interim relief. The case concerned an application for a freezing injunction against an innocent third party in support of foreign proceedings. One of the questions raised by the case was whether the BVI court had power to grant an injunction where no substantive cause of action was asserted against the third party. The Privy Council found that the BVI court did have power to grant injunctive relief in those circumstances, with Lord Leggatt stating that:
‘the relevance of a cause of action, where there is one, is evidential’ and that ‘there is no reason why the good arguable case need be that the applicant is entitled to substantive relief from the court which is asked to grant a freezing injunction.’
He continued: ‘a freezing injunction is not, on a true analysis, ancillary to a cause of action, in the sense of a claim for substantive relief, at all’.
Andrew McLeod briefly went through three earlier decisions which anticipated the shift in the court’s way of thinking:
Tameka Davis, of Conyers Dill & Pearman then discussed the current position of the BVI, highlighting how legislation has followed the Broad Idea judgment. The Eastern Caribbean Supreme Court (Virgin Islands) (Amendment) Act 2020 now generally mirrors the UK’s own CJJA 1982, s 25.
The first application brought under the new law was Claimant X v A TVI Company BVIHC (COM) 2021/0037, which provided a great deal of guidance on interpretation of the new s 24A, with the court finding that the section had been construed deliberately broadly.
There is therefore a clear statutory jurisdiction to grant interim injunctive relief where proceedings have been or are about to be commenced in a foreign jurisdiction, with ‘interim relief’ including ‘any relief which the High Court or a judge thereof has power to grant in proceedings relating to matters within its jurisdiction, as well as, an order against a non-cause of action defendant’.
However, Tameka commented that it remains unclear whether relief is available against a foreign respondent in light of the absence of an applicable jurisdictional gateway.
For more information see News Analysis: Black Swan jurisdiction revived in the BVI (Convoy Collateral Ltd v Broad Idea International Ltd and Cho)
The enforcement and sanctions associated with the compliance of interim relief
David Butler of Fox Williams discussed his experience from practice to highlight some of the principles of the duty of full and frank disclosure. Key questions practitioners must ask themselves to comply with their obligations and indeed, avoid the risk of orders being discharged, are:
He concluded by commenting that, although there are no cases from his experience in practice offshore, judges offshore are very concerned to ensure duties of full and frank disclosure are complied with because in practical terms they have a more limited range of sanctions available which they can impose to address a breach of the duty compared with English courts.
Andrew Bartlett of Osborne Clarke spoke of sanctions and remedies for non-compliance with interim orders/injunctions. He considered the range of direct sanctions including fines, sequestration and committal as well as the potential to prevent appeals and bring tortious actions relying on the breaches of orders constituting the unlawful means. He also discussed the potential for both registered and de-facto directors to be sanctioned for the contempt of companies. He took care to highlight how an order not complied with may still serve a useful purpose. Indeed, the seriousness of the sanctions the court can impose mean that in some circumstances an order not complied with may be just as effective as an order that has been complied with.
Norwich Pharmacal orders
William Jones of Ogier discussed the availability of Norwich Pharmacal orders in the Cayman Islands. The Cayman Court has described Norwich Pharmacal orders’ jurisdiction as ‘broad, flexible and developing’ and one which would adopt a ‘common sense non-technical approach’. He discussed the decision in Essar Global Fund Ltd et al v Arcelormittal USA LLC, (Civil) Appeal No 15 of 2019, in the Court of Appeal of the Cayman Islands, which marks a departure from the English courts, wherein judges have concluded that common law remedies, such as Norwich Pharmacal relief, are precluded where other relief has been obtained. However, this approach is now consistent with decisions in other offshore jurisdictions, such as the BVI, which has also addressed this issue in statute.
You can register online or follow us on Twitter or LinkedIn to receive our latest news, events and publications.