The Recoverability Of Foreign Lawyers' Fees

• Published date: 07 July 2022
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Insolvency/Bankruptcy/Re-structuring, Corporate and Company Law, Insolvency/Bankruptcy, Contracts and Commercial Law, Trials & Appeals & Compensation
• Law Firm: Forbes Hare
• Author: Mr Richard Baird

When the Legal Practitioners Act, 2015 (the 'LPA') came into force in the British Virgin Islands (the 'BVI'), it rewrote the rules governing the legal costs that parties to BVI court proceedings can recover from their opponents. Some of the LPA's implications for costs recovery have only become apparent from a series of judgments delivered over the past year. These will be of particular relevance to lawyers practising BVI law overseas and, equally importantly, to their clients.

The legislative scheme

The 'loser pays' principle, also known as the 'English rule', has always applied in BVI litigation. This is the policy that the losing party in court proceedings should reimburse the winning party for its legal costs. This is a general rule only and, of course, there are qualifications and exceptions.

This general rule is enshrined in the Civil Procedure Rules which apply in (relevantly) proceedings in the Commercial Division of the BVI High Court, and in appeals brought from decisions of the Commercial Division to the Court of Appeal of the Eastern Caribbean Supreme Court (of which the BVI High Court is a member).¹ The 'loser pays' principle applies to interlocutory applications as well as to substantive proceedings, such as claims and appeals. In practice, the tasks of ruling on which costs are allowed and of assessing the amount to be awarded pursuant to a costs order made in either Court fall almost invariably to the Judges sitting in the Commercial Division.

Prior to the LPA's commencement, the recoverability of fees charged by foreign lawyers pursuant to a costs order made in a party's favour was 'governed by the common law principle that those fees were recoverable if they were necessarily and reasonably incurred and claimed as a disbursement on the schedule of costs of the BVI admitted legal practitioner'.² Foreign lawyers' fees were typically allowed on assessment at similar rates to BVI legal practitioners' fees.

The LPA changed this. Its provisions include the following:

1. Section 15(1) provides that 'no person may practise law in the [BVI] unless he or she is the holder of a valid practising certificate';
2. Section 15(10) provides that a person who 'practises law in the [BVI] without first obtaining a practising certificate commits an offence';³
3. Section 18(1) provides 'where a person whose name is not registered on the Roll' (relevantly) 'practises law', 'he or she commits an offence'.⁴ The 'Roll' is the register of BVI-admitted legal practitioners maintained by the Registrar of the BVI High Court;
4. Section 18(2) provides that '[a] person who, not being entitled to act as a legal practitioner, acts in any respect as a legal practitioner in any action or matter or in any court in the name or through the agency of a legal practitioner entitled so to act, commits an offence';⁵ and
5. Section 18(3) provides that '[n]o fee in respect of anything done by a person whose name is not registered on the Roll or to whom subsection (2) relates, acting as a legal practitioner is recoverable in any action, suit or matter by any person'.

Admission to the Roll

It follows from these provisions that admission to the Roll is fundamental to the recoverability of legal fees in BVI litigation. Once a legal practitioner has been admitted to the Roll, and unless he or she is later struck off or suspended from practising law, the prohibitions in section 18 of the LPA will not prevent the recovery of his or her fees.

Not every provision in the LPA has been brought into force. Sections 10-13, 16-17 and 45-47 have not yet commenced, but if in future they do commence they will introduce a new regime for the admission of BVI legal practitioners, for the issue of practising certificates to non-BVI residents and for the temporary admission of foreign lawyers. At present, there is no such thing in the BVI as temporary, limited, pro tem or pro hac vice admission. On the other hand, there is no residency requirement either, so there is no immediate need for any circumscribed form of admission.

Until those provisions commence, admission applications will continue to be governed by Part IV of the Eastern Caribbean Supreme Court (Virgin Islands) Act (Cap. 80). This allows a Judge of the BVI High Court to grant BVI admission to inter alia any solicitor or barrister admitted in England, Scotland or Northern Ireland.

The practice has varied over time, but admission applications for partners or associates of BVI law firms, or of international law firms with BVI offices (regardless of whether the applicant is based in the BVI office or an overseas office), have generally been heard by a Judge in the Civil Division of the BVI High Court. Admission hearings have been held via videoconference during the coronavirus pandemic, but the requirement for the applicant to attend the hearing in person (i.e., on island in the BVI) is now recommencing.

Again, the practice has varied over time, but admission applications for foreign...