Firewalls And Foreign Courts - A New Judgment From The Grand Court Of The Cayman Islands

In a judgment published on 7 November 20191, the Grand Court of the Cayman Islands (the Court) has provided helpful new guidance as to the way in which the Cayman Islands "firewall" legislation will operate to protect Cayman Islands trusts from orders which may be made by foreign courts without reference to the operation of Cayman Islands law.

In summary, the Court found that:

The Court will readily provide Beddoe relief where foreign proceedings may lead to orders being made in respect of a Cayman Islands trust. Where a foreign court will not give up jurisdiction in a matter concerning a Cayman Islands trust, the Court will be prepared to act as an auxiliary for the purpose of determining questions of Cayman Islands law relevant to the trust2. Due to the firewall legislation contained in the Trusts Law3, any order made by a foreign court in respect of a Cayman Islands proper law trust will not be recognized if Cayman Islands law has not been applied. Whether issues in respect of Cayman Islands trusts can be determined by foreign courts (applying Cayman Islands law) or whether it is only the Cayman Courts that can do so remains an open question; and In addition to the statutory protections for Cayman Islands trusts found in the Trusts Law, there is a separate and freestanding common law principle that a foreign judgment will not be enforced to the extent it conflicts with public policy in the Cayman Islands. The Facts

The need for Beddoe relief in this case arose because of proceedings issued in Singapore by the Third Defendant, one of the adult beneficiaries of the Tan Kim Choo Family Scholarship Trust (the Trust), seeking an order that the Trust be terminated (the Singapore Proceedings). The proper law of the Trust is the law of the Cayman Islands, and the trust deed and contains a provision stating that the Cayman Islands shall be the initial forum for the administration of the Trust. The trustee of trust (the Trustee) was therefore concerned to enforce and give effect to these jurisdiction provisions and initially applied for a stay of the Singapore Proceedings. However that application (which also sought time for the Trustee to seek Beddoe relief) was refused by the courts of Singapore, and a very short timetable was set down for evidence to be filed and an oral hearing to take place in that jurisdiction.

In these circumstances, the Trustee filed an originating summons with the Court seeking, among other things, Beddoe relief on an...