BVI Court of Appeal Makes Law on the New York Convention Defences

In a brave and decisive judgment handed down on 20th September 2010, the Eastern Caribbean Supreme Court (on appeal from the BVI Commercial Court) has decided two issues demanding clear and unequivocal guidance, one of which ahead of the Supreme Court of England and Wales.

In Pacific China Holdings Ltd v Grand Pacific Holdings Limited [HCVAP 2010/007], the Court of Appeal ruled on the scope of discretion in deciding whether to enforce an arbitration award under the New York convention; and on the basis of appointing liquidators where there is a real question of enforceability and thus a bona fide dispute on the debt.

The Respondent sought to wind up the Appellant claiming it was owed $55M based on a Convention award made by an arbitration tribunal in Hong Kong. The Appellant raised Convention defences based on the BVI Arbitration Ordinance (which in turn repeated and applied the relevant provisions of the Convention word for word) of inability to present its case; the arbitration process was not in accordance with the parties' agreement, and accordingly that it would be contrary to public policy to enforce the award. The result of such a finding would, if it was...