Below is a summary of recent cases out of the British Virgin Islands (BVI) Commercial Court, compiled by Harneys' Litigation team.
Ruling on the use and status of ancillary relief proceedings and forum non conveniens issues.
VTB Capital plc v Nutritek International Corp and ors BVIHC (Com) 103 of 2011, 18 September 2013
Following the dismissal of the English proceedings in the VTB v Nutritek litigation by the Supreme Court earlier this year on forum non conveniens grounds, the BVI Commercial Court has refused to lift a stay of the related BVI proceedings and has held that the BVI is not, in any event, the appropriate forum for the claim.
The BVI proceedings had initially been issued predominantly for the purpose of obtaining injunctive relief in support of the English proceedings, following the procedure commonly used prior to the Black Swan decision Following that procedure, the BVI proceedings were issued in the form of a substantive claim but were immediately stayed in favour of the English proceedings. Bannister J described such ancillary relief proceedings as a device which "should not be used in future in cases where orders are sought in aid of foreign proceedings. It has no secure legal foundation and is calculated only to cause confusion". It was therefore not appropriate for such proceedings to be converted into substantive proceedings after the foreign proceedings had been dismissed.
Bannister J then ruled on a hypothetical jurisdictional challenge brought by the non-BVI defendants on forum non conveniens grounds. After considering the circumstances of the case, the Judge found that Russia, and not the BVI, was clearly the most appropriate forum for the claim. A major issue that followed from that was whether Russia was an "available" forum - Bannister J held that it was, despite some evidence that the Claimant may not be able to bring fraud claims there on technical grounds due to the interplay between the Russian Civil and Criminal Codes. However, most significantly for the purposes of BVI jurisprudence, Bannister J held that the mere fact that two out of the five parties were incorporated in the BVI was not sufficient to make the BVI the most appropriate forum, ruling that the existence of BVI companies as defendants to an action should only lead to a presumption that the BVI was the most appropriate forum where the proceedings related to the ownership or control, constitution or administration of those companies. An allegation that a BVI entity was involved in an alleged fraud was "neutral for forum purposes". This was particularly the case where the "real target" of the claim was a non-BVI resident.
"Wishful thinking: intention versus construction": BVI Court rules on the Construction of Trusts
The BVI court recently considered the construction of the Trust Deed of a BVI administered trust (the Trust). The Trust Deed listed a number of beneficiaries under the Trust defined as Specified Beneficiaries. Each Specified Beneficiary was listed with a percentage figure that purported to indicate their entitlement under the trust fund of the Trust (Percentage Entitlements). Harneys acted for the trustee (the Trustee) and brought an action for the court's assistance with interpretation of the Trust Deed and a declaration from the court that the Trustee is within its powers to amend the list of Specified Beneficiaries and the related Percentage Entitlements. The Trustee is in possession of a Letter of Wishes from the now deceased settlor, indicating his wish to amend the list of Specified Beneficiaries by deleting one name and adding two more, the Additional Beneficiaries, and to vary the Percentage Entitlements accordingly.
Mr Justice Bannister found that the Percentage Entitlements did not create a fixed interest in the trust fund of the Trust for the Specified Beneficiaries and that the trustees had a legitimate power to vary, amend and delete persons from the list of Specified Beneficiaries and the related Percentage Entitlements under the Trust Deed. Mr Justice Bannister made further comment on the construction of the Trust Deed considering the status of superadded terms and definitions in relation to those that exist in a typed precedent document. The Judge found that although the Specified Beneficiaries and Percentage Entitlements were "undoubtedly" unique to the Trust Deed, it did not follow that "those words of entitlement are to be accorded any special status of priority over the other provisions of the trust deed". The Judge found that it was not possible to infer the settlor's intention from this addition to the Trust Deed and that, because this Trust Deed is not a standard form commercial document in common use between merchants requiring completion or adaptation to conform it to the particular transaction in question, the typed/printed distinction therefore did not arise.
Exercising caution in the pleading of oral agreements – summary judgment:
Clearlie Todman-Brown v The National Bank of the Virgin Islands Limited, BVI HCV 64 of 2013, Byer J.
This case follows the recent line of BVI authority clarifying the scope of the Court's discretion in deciding whether to grant summary judgment under CPR 15. The Applicant was the defendant bank which sought to argue that the cause of action, as pleaded against it, was based on a bald assertion of an obligation owed by the bank and disclosed no viable claim.
The Court held that in making the requisite assessment for summary judgment, all of the evidence and pleadings as filed had to be taken into account. Having examined these in depth, the Court concluded that the lack of specificity in the pleadings surrounding the nature of the relevant agreement was a fatal flaw. In particular, any oral agreement must have pleaded specifics so the party against whom it is alleged can know the case against it. There would need to be an indication somewhere in the pleadings of when, where, in what manner, and the subject matter of nature of the agreement.
Approving the wording of the Saunders CJ(Ag) in Bank of Bermuda Ltd v Pentium, Civ App no 14 of 2003 BVI, at paragraph [18], the Court recognised that in exercising its discretion a judge should not allow a matter to proceed to trial where a party has produced nothing to persuade the court that there is a realistic prospect of success. Speculative claims should not be fostered or encouraged by the Court.
The application for summary judgment was therefore granted.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Ruling on the use and status of ancillary relief proceedings and forum non conveniens issues.
VTB Capital plc v Nutritek International Corp and ors BVIHC (Com) 103 of 2011, 18 September 2013
Following the dismissal of the English proceedings in the VTB v Nutritek litigation by the Supreme Court earlier this year on forum non conveniens grounds, the BVI Commercial Court has refused to lift a stay of the related BVI proceedings and has held that the BVI is not, in any event, the appropriate forum for the claim.
The BVI proceedings had initially been issued predominantly for the purpose of obtaining injunctive relief in support of the English proceedings, following the procedure commonly used prior to the Black Swan decision Following that procedure, the BVI proceedings were issued in the form of a substantive claim but were immediately stayed in favour of the English proceedings. Bannister J described such ancillary relief proceedings as a device which "should not be used in future in cases where orders are sought in aid of foreign proceedings. It has no secure legal foundation and is calculated only to cause confusion". It was therefore not appropriate for such proceedings to be converted into substantive proceedings after the foreign proceedings had been dismissed.
Bannister J then ruled on a hypothetical jurisdictional challenge brought by the non-BVI defendants on forum non conveniens grounds. After considering the circumstances of the case, the Judge found that Russia, and not the BVI, was clearly the most appropriate forum for the claim. A major issue that followed from that was whether Russia was an "available" forum - Bannister J held that it was, despite some evidence that the Claimant may not be able to bring fraud claims there on technical grounds due to the interplay between the Russian Civil and Criminal Codes. However, most significantly for the purposes of BVI jurisprudence, Bannister J held that the mere fact that two out of the five parties were incorporated in the BVI was not sufficient to make the BVI the most appropriate forum, ruling that the existence of BVI companies as defendants to an action should only lead to a presumption that the BVI was the most appropriate forum where the proceedings related to the ownership or control, constitution or administration of those companies. An allegation that a BVI entity was involved in an alleged fraud was "neutral for forum purposes". This was particularly the case where the "real target" of the claim was a non-BVI resident.
"Wishful thinking: intention versus construction": BVI Court rules on the Construction of Trusts
The BVI court recently considered the construction of the Trust Deed of a BVI administered trust (the Trust). The Trust Deed listed a number of beneficiaries under the Trust defined as Specified Beneficiaries. Each Specified Beneficiary was listed with a percentage figure that purported to indicate their entitlement under the trust fund of the Trust (Percentage Entitlements). Harneys acted for the trustee (the Trustee) and brought an action for the court's assistance with interpretation of the Trust Deed and a declaration from the court that the Trustee is within its powers to amend the list of Specified Beneficiaries and the related Percentage Entitlements. The Trustee is in possession of a Letter of Wishes from the now deceased settlor, indicating his wish to amend the list of Specified Beneficiaries by deleting one name and adding two more, the Additional Beneficiaries, and to vary the Percentage Entitlements accordingly.
Mr Justice Bannister found that the Percentage Entitlements did not create a fixed interest in the trust fund of the Trust for the Specified Beneficiaries and that the trustees had a legitimate power to vary, amend and delete persons from the list of Specified Beneficiaries and the related Percentage Entitlements under the Trust Deed. Mr Justice Bannister made further comment on the construction of the Trust Deed considering the status of superadded terms and definitions in relation to those that exist in a typed precedent document. The Judge found that although the Specified Beneficiaries and Percentage Entitlements were "undoubtedly" unique to the Trust Deed, it did not follow that "those words of entitlement are to be accorded any special status of priority over the other provisions of the trust deed". The Judge found that it was not possible to infer the settlor's intention from this addition to the Trust Deed and that, because this Trust Deed is not a standard form commercial document in common use between merchants requiring completion or adaptation to conform it to the particular transaction in question, the typed/printed distinction therefore did not arise.
Exercising caution in the pleading of oral agreements – summary judgment:
Clearlie Todman-Brown v The National Bank of the Virgin Islands Limited, BVI HCV 64 of 2013, Byer J.
This case follows the recent line of BVI authority clarifying the scope of the Court's discretion in deciding whether to grant summary judgment under CPR 15. The Applicant was the defendant bank which sought to argue that the cause of action, as pleaded against it, was based on a bald assertion of an obligation owed by the bank and disclosed no viable claim.
The Court held that in making the requisite assessment for summary judgment, all of the evidence and pleadings as filed had to be taken into account. Having examined these in depth, the Court concluded that the lack of specificity in the pleadings surrounding the nature of the relevant agreement was a fatal flaw. In particular, any oral agreement must have pleaded specifics so the party against whom it is alleged can know the case against it. There would need to be an indication somewhere in the pleadings of when, where, in what manner, and the subject matter of nature of the agreement.
Approving the wording of the Saunders CJ(Ag) in Bank of Bermuda Ltd v Pentium, Civ App no 14 of 2003 BVI, at paragraph [18], the Court recognised that in exercising its discretion a judge should not allow a matter to proceed to trial where a party has produced nothing to persuade the court that there is a realistic prospect of success. Speculative claims should not be fostered or encouraged by the Court.
The application for summary judgment was therefore granted.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
