Cayman Law Amended To Facilitate The Grant Of Interim Relief In Aid Of Foreign Proceedings

In modern litigation there is often a strong possibility that obtaining interim relief from the court of the jurisdiction in which you are suing your opponent will not fully protect you against the dissipation by him of assets which you either claim are yours or will in due course seek to realise to satisfy your judgment. The defendant may, for example, have sought to put assets beyond reach by moving them overseas, often into trusts or corporate structures in one of the International Financial Centres. As every good litigator will know, in the common law world service of process on the defendant is the means by which jurisdiction is established over that defendant. The service requirement presents a problem when the defendant in litigation in an onshore jurisdiction has put his assets offshore in a country in which he is not resident. The traditional rule holds that if you cannot sue the defendant in the offshore jurisdiction then you cannot get any interim relief against him there, either. In response to the increasing internationalisation of commercial fraud, and concerned that their jurisdictions would gain a reputation for being a place where fraudsters could safely hide assets, the courts of a number of jurisdictions - including Jersey, the Isle of Man, and the BVI - either ignored, departed from or circumvented the traditional rules concerning service and jurisdiction so as to be able to grant interim relief to claimants in support of the onshore litigation. As this judicial activism ran contrary to established principle in the common law world, the legislatures of many of those International Financial Centres have now put the rules on a statutory footing to avoid the judicial development being overruled. In contrast to the judicial activism seen in the Channel Islands, Isle of Man and other Caribbean jurisdictions, the courts in the Cayman Islands have adhered to the conventional approach. One reason for this was that Cayman's civil procedure rules made provision for the service of process out of the jurisdiction but expressly prohibited the Cayman courts from granting permission to serve a defendant out of the jurisdiction with proceedings where the only relief sought by the claimant was an interim injunction. The Cayman court has thus felt constrained to follow the policy that its legislature set many years previously and has refused to allow foreign claimants to obtain interim relief against overseas defendants unless it was part and parcel of substantive proceedings being litigated here. A series of recent cases had limited the practical barriers to freezing assets held by Cayman entities on behalf of wrongdoers, but adherence to the conventional view has the...