Cash Or Security: The Cost Of An Interim Injunction In BVI Proceedings

• Law Firm: Maples Group
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Author: Mr Matthew Freeman, Andrea Walters and Stuart Rau
• Published date: 28 March 2023

In the recent judgment of Von der Heydt Invest S.A. v Multibank FX International Corporation (BVIHCMAP2022/0008), the Eastern Caribbean Court of Appeal affirmed the criterion to be satisfied on an application by an applicant for fortification of the cross undertaking in damages contained in a freezing order.

Background

On 26 April 2021, the Appellant, Von der Heydt Invest S.A. ("VDHI") obtained a Worldwide Freezing Order ("WFO") in the British Virgin Islands ("BVI") Commercial Court ("BVI Court") against the Defendants, Mex Clearing Limited ("Mex Clearing"), Mex Securities S.A.R.L and Multibank FX International Corporation ("Multibank").

The cross undertaking in damages contained in the WFO was not fortified. VDHI later applied to continue the WFO and Multibank and Mex Clearing cross-applied to discharge the WFO. Justice Jack continued the WFO until trial or further order.

On 24 June 2021, Multibank applied for fortification of VDHI's cross undertaking in damages and security for costs. Justice Wallbank ordered VDHI to pay US$20 million into court within 14 days as fortification for the WFO, failing which the WFO will be lifted (the "Fortification Order").

VDHI appealed the decision of Justice Jack and applied for a stay of the Fortification Order.

Decision

Giving the lead judgment on behalf of the Court of Appeal ("CoA"), Webster JA allowed VDHI's appeal and set aside the Fortification Order. In doing so, Webster JA identified among other things, the three step criteria, as set out in Energy Venture Partners Ltd v Malabu Oil and Gas Ltd [2014] EWCA Civ 1295 ("Malabu Gas") and followed in PJSC National Bank Trust and another v Boris Mints and others [2021] EWHC 1089 (Comm) ("Malabu / Mints test"), that must be satisfied before the court can order fortification:

1. The applicant must show a good arguable case that there is a real risk that it will suffer loss which goes beyond a 'mere assertion of a risk'.
2. The applicant must show a good arguable case that loss will be...