The Black Swan Flies Again: Current Status Of Interim Standalone Relief In Support Of Foreign Proceedings In The BVI

• Published date: 25 June 2021
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Insolvency/Bankruptcy/Re-structuring, Corporate and Company Law, Insolvency/Bankruptcy, Contracts and Commercial Law, Arbitration & Dispute Resolution
• Law Firm: Collas Crill
• Author: David Harby

David Harby, Partner and head of Collas Crill's Dispute Resolution team in the British Virgin Islands discusses the current status of interim standalone relief in support of foreign proceedings in the Territory following the Broad Idea case and the introduction of the Eastern Caribbean Supreme Court (Virgin Islands) Amendment Act, 2020.

Introduction

The ability to obtain standalone relief in support of litigation which has been commenced abroad is a useful weapon in an insolvency practitioner's armory to prevent the dissipation of assets that have been transferred to, or "hidden" in, a third-party company in an attempt to defeat creditors.

For the last 10 years it was assumed that the British Virgin Islands' (the BVI) Commercial Court had the power to grant such orders as a matter of common law. However, last year, in Broad Idea International Limited v Convoy Collateral Limited ¹ the Eastern Caribbean Court of Appeal (the Court of Appeal) decided otherwise. This left claimants in a difficult position. The potential impact of this judgment will be brought home to the reader when one considers that there are over 400,000 companies incorporated in the BVI, the majority of which are holding companies used to hold assets for parties outside the jurisdiction.

This article seeks to set out the background to the decision in Broad Idea and the recent introduction of legislation to place so-called Black Swan relief on a statutory footing.

Broad Idea

In Broad Idea the Court of Appeal was asked to consider (amongst other matters) whether the BVI Commercial Court had jurisdiction to grant a freezing order in support of foreign proceedings in circumstances where no cause of action lay against the defendant, Broad Idea, in the BVI and nor had any substantive proceedings been commenced against it in any other jurisdiction.

The claimant, Convoy, relied on the decision of Bannister, J., in Black Swan Investment ISA v Harvest View Limited et al ² where the Commercial Court considered the dicta of Lord Diplock in the English authority, The Siskina ³ , which is often cited as the starting point in any discussion on the Commercial Court's power to grant such injunctions. In that case, Lord Diplock considered the English Court's authority to grant an interlocutory injunction pursuant to s.45(1) of the UK Supreme Court of Judicature (Consolidation) Act 1925, and held that:

"A right to obtain an interlocutory injunction is not a cause of action. It cannot stand on its own. It is...