Cayman Calling: Freezing Injunction's Longer Reach

In Batista1, the Grand Court has clarified that the scope of the statutory jurisdiction to grant a freezing order in support of foreign proceedings may extend to a person outside the jurisdiction, whether or not that person has assets within the Cayman Islands (although on the facts there were assets in the Islands). This potentially far-reaching ancillary relief is justified by the international nature of some frauds. In this regard, the statutory powers of the Cayman Court are now broadly similar to those of the English Court.

Background

Eike Batista Da Silva is a Brazilian national who was once one of the ten richest people on the planet. He now faces criminal, civil and regulatory action in Brazil as a result of alleged impropriety concerning OGX, an oil exploration company he controlled. Mr Batista is said to have artificially inflated the value of OGX, in part through alleged fraudulent representations about the company's exploration successes. The commodities crash, and Brazil's ensuing economic troubles, led to the uncovering of these alleged improprieties - but not before Mr Batista had apparently started to dissipate assets, including the proceeds of the alleged fraud, to offshore and other jurisdictions including the Cayman Islands, Bermuda and Switzerland, in an attempt to evade creditors.

The Applicants were bondholders of apparently worthless bonds issued within the OGX structure.

The Respondents were Mr Batista and certain Cayman Islands companies he allegedly controls ("Cayman Companies"), as well as a service provider to the companies.

The Applicants intended to bring substantive claims against Mr Batista and the Cayman Companies in Florida, alleging, amongst other things, fraud and conspiracy to commit fraud. No substantive claims were to be brought in the Cayman Islands.

By their Application in the Grand Court, the Applicants sought a worldwide freezing order ("WFO") against Mr Batista and the Cayman Companies, as well as discovery from the service provider aimed at identifying what had become of Mr Batista's dissipated assets.

Statutory Power

The power to order a WFO in support of foreign proceedings arises in the Cayman Islands under section 11A of the Grand Court Law (2015 Rev). The power is similar to the English power under section 25 of the Civil Jurisdiction and Judgments Act 1982.

WFO - Jurisdiction

When can the Court consider its discretion to grant a WFO?

In order for the Court to be able to consider its discretion to order a WFO...