BVI Court Appoints Liquidators to Foreign Dissolved Company

Background Facts

The evidence before the Court was extensive, with the hearing bundles exceeding 11,000 pages. To summarise the key facts:

• Rana Al-Aggad (Rana) has three siblings, Talal (Talal), Tarek (Tarek) and Lama Al-Aggad who are the children of (i) the late Omar Al-Aggad (Omar), a Saudi Arabian national, who was a very successful entrepreneur, who had a particular focus in Saudi Arabia, Palestine and Jordan; and (ii) their mother, Mrs Murad.

• Omar founded three (relevant) companies: (i) AICO Bahrain (ii) AICO Abdul-Fattah Al-Aggad & CO (AICO Saudi) (which has limited relevance to these proceedings) and (iii) APIC.

• Prior to his passing Omar transferred much of his wealth to his children; of particular relevance are the senior positions taken up by his sons: (1) Talal, as the Chairman and director of AICO Saudi (a company that is the subject of related but independent proceedings in England); and (2) Tarek as the Chairman, CEO and director of APIC. Both Talal (initially) and Tarek (subsequently and presently) were directors of a BVI company, Arab International Investment Company (AIIC).
• AIIC, Talal and Tarek (together the Set Aside Applicants) applied to discharge the PL, oppose the liquidation application and to set aside an associated ex parte proprietary injunction obtained against AIIC over the APIC Shares in March 2024.

Underlying allegations of fraud

• Tarek is said to have held valuable shares in APIC (the APIC Shares) on trust for AICO Bahrain;

• Transactions took place which facilitated the APIC Shares being removed from AICO Bahrain and transferred to AIIC in the BVI;

• Rana says she only became aware of the transfer after AICO Bahrain had already been liquidated and dissolved in Bahrain.

• One of the key questions for the Court therefore was whether it had jurisdiction to appoint a liquidator to AICO Bahrain, the foreign, dissolved, company to enable it to pursue a proprietary claim (for the recovery of the APIC Shares) in the BVI.

Statutory power to appoint a liquidator to a foreign dissolved company

Section 163 of the IA provides the BVI Court the power to appoint a (BVI) liquidator to a foreign company “if the court is satisfied that the company has a connection with the Virgin Islands.”

Section 163 goes on to provide an expanded list of grounds to support a winding up petition (of a foreign company) where the Court is satisfied that the Company has a connection with the Virgin Islands. Specifically, s.163(d) provides that the Court can appoint a liquidator to a foreign company if “the company is dissolved or has otherwise ceased to exist under or by virtue of the laws of the country in which it was last registered”.  This statute invokes what is known as ‘the doctrine of reanimation’; this doctrine empowers the Court to artificially revivify a dissolved (foreign) company in specific circumstances. Despite the above powers being enshrined in English law following Re Azoff-Don Commercial Bank [1954] Ch. 315 this (also) appears to be the first time this doctrine has been applied in the BVI.

Connection to the Virgin Islands/Ownership of the APIC Shares

The Claimants’ position was that AICO Bahrain had a clear and compelling connection to the BVI: the company has (amongst other things) a proprietary claim against AIIC (a BVI company) for the recovery (and determination of ownership) of shares in another BVI company (the APIC Shares). The Claimants relied upon s. 245 of the Business Companies Act, 2004 (as amended) (the BCA) which states that “for the purposes of determining matters relating to title and jurisdiction but not for purposes of taxation, the situs of the ownership of shares, debt obligations or other securities of a company is in the Virgin Islands.”

Moreover, while the Claimants acknowledged that, at the time of the transfer of the APIC Shares (from Tarek to AIIC), Tarek held the legal title to the shares, the Claimants’ position was that this was simply irrelevant as their claim is rooted in AICO Bahrain’s beneficial (not legal) ownership of the assets. This contention was heavily opposed by the Set Aside Applicants who, amongst other things, sought to rely on expert evidence of foreign law to suggest that the mere concept of a trust simply did not exist under the applicable, foreign law [para 105].

While noting the determination of the trust dispute was a matter for trial, the learned Judge (at [para 81] of the Judgment) identified a clear weakness in the Set-Aside Applicants’ position (that there was no trust arrangement): the Judge observed that the Court is “left with a choice of two falsehoods”. Either (i) Tarek held the shares beneficially on behalf of AICO Bahrain (as contended by the Claimants), or (ii) “Omar, Ernst & Young and all other directors, officers and staff of AICO Bahrain and APIC responsible for preparing audited financial statements and reports were lying that the APIC shares were an asset of AICO Bahrain.” Moreover, it is apparent from the Judgment that the Judge was not persuaded by the Set Aside Applicants’ argument: “Tarek’s argument in this regard is, to [the Judge’s] mind, not sufficiently strong to render Rana’s position unlikely”.

Standing

Rana’s standing to bring the winding up petition was said to exist on the basis that she (like her siblings) is a former member of AICO Bahrain. Rana submitted that her status as a ‘member’ was established by (1) her 4,000 shares inherited on the passing of her father, Omar; (2) separately, she was, according to AICO Bahrain’s register of members, the owner of 8,000 shares at the time of the company’s liquidation; and/or (3) she was appointed by the BVI Court as an administratix ad colligenda bona over Omar’s estate in the BVI.

By contrast, the Set-Aside Applicants submitted that Rana was not a ‘member’ under the IA; and, as recorded in the Judgment, the Judge agreed with their position on 2 of the 3 grounds above: First, the Judge, in following Bell Group Finance (Pty) Ltd (in liq) v Bell Group (UK) Holding Ltd, determined that the (8,000) shares that Rana held at the time of liquidation were held as a bare trustee for her siblings which ultimately disqualified them for use as a petitioner. Secondly, the Judge also found that the scope of the Court’s appointment ad colligenda bona was not sufficiently broad to include a power to use those shares as a petitioning member.

Notwithstanding the above, the Court did go on to find that Rana was a ‘member’ under the third ground (that the shares vested with Rana following Omar’s passing). The opposing arguments (to this ground) led by the Set-Aside Applicants here were elaborate, seeking to (amongst other things), rely on “half a sentence” in Palmer’s Company Law (Winding Up in Scotland), 2020 Edition and Re Welsh Highland Railway Light Railway Co [1993] BCLC 338, with the crux of the argument being that a ‘member’ under s. 163 of the IA should be constrained to the UK Companies Act 1985 definition of ‘contributory’. The basis for this argument was linked to the fact that prior to the enactment of the IA, winding up of foreign companies in the BVI was governed by the Companies Act, 1885 (which draws parallels to the UK Companies Act 1985) and absent clear words (Al-Thani v Al-Thani [2024] UKPC 35) the legislature would not have sought to make such a change.

In dismissing the Set Aside Applicants’ argument, the Judge gave five (5) clear reasons for his decision: (i) AICO Bahrain was a solvent liquidation (where contributories would not, typically, be relevant); (ii) S. 163 IA does not make reference to a ‘contributory’; (iii) the dicta in the authorities relied on (see above) were clearly obiter (and therefore irrelevant here); (iv) if there were a long standing rule (on members solely being contributories) under English law, this would be apparent from various reported cases (and it is not); (v) the IA provides a codified scheme in the BVI and it is an unattractive proposition to impose historic rules (for example, on contributories) that are simply not contained within the act.

Discretion

At the hearing, neither side disputed that the Court retains a general discretion to wind up AICO Bahrain. Whether the Judge should exercise this discretion on this occasion remained a contentious issue.

On balance, the Judge preferred Rana’s evidence and legal argument. These were (to summarise) (i) that she is not the only person seeking to benefit from the liquidation, her late mother’s estate would also stand to receive a benefit; (ii) the (general) strength of the contemporaneous evidence filed by Rana alleging that a fraud has  been committed by her siblings; (iii) the strength of evidence supporting the submission that the APIC Shares were held on trust for AICO Bahrain (which is subject to a claim already commenced in the BVI); (iv) the fact that the resistance/opposition to the winding up petition is precisely by those people who are alleged to have committed the underlying fraud and who voted for the initial winding up of the company in Bahrain; (v) Rana cannot conduct legal proceedings in Bahrain (for reasons which are confidential to the public).

In opposition, the Set-Aside Applicants argued that the Court should only exercise its discretion if there would be a benefit to the company’s creditors – and as there apparently were none – that discretion should be withheld. The Judge identified two main flaws with the Set Aside Applicants’ argument: (i) the IA does not express any such limitation; (ii) the court’s discretion is there to serve the interests of justice (not solely the company’s creditors).

Overall, the judge made it very clear how he considered his discretion should be applied:

“I am persuaded by Rana’s evidence that Tarek is not the only one implicated in the alleged fraud – Talal appears to have assisted Tarek in perpetrating it, and Lama did not only vote for AICO Bahrain’s original liquidation, she has derived subsequent financial benefit from it through dividends from APIC in the proportion of her shareholding in AICO Bahrain.  So, it comes as no surprise that Tarek, Talal and Lama oppose Rana’s application for the appointment of a liquidator: they have a strong self-interest in opposing this. It would be wrong of this Court to accord greater weight to the wishes of those who have perpetrated an alleged fraud, and who have derived benefit from it, than to the wishes of the putative victims of the alleged fraud.  Administering justice is not an exercise in democracy; the will of the majority does not trump discernment of right and wrong, truth and falsehood, procedural fairness and substantive justice. I accept the authorities relied upon by Rana, which are to the effect that the views of persons in the position of Tarek, Talal and Lama should be accorded little or no weight.” [269]

“Whilst I accept that the course of action proposed by Rana will involve considerable cost all round, at the same time, the interests of justice would not be served by allowing what appears to be a serious and high value fraud to remain un-investigated and unchallenged.” [270]

“…[Rana] appears to be a victim of a serious, high-value fraud, with a viable cause of action, which, in justice, she should be permitted to pursue….” [273]

Full & Frank Disclosure

As an additional limb to their applications, the Set Aside Applicants submitted that the Claimants failed to give full and frank disclosure and a fair presentation at the ex parte hearing.

Little to no time was spent on these points with the Court adopting the English law approach in RE OJSC Ank Yugraneft v Sibir Energy PLC [2010] BCC 475. The Judge did also, helpfully, clarify in his Judgment that the principles are well established in the BVI, in Commercial Bank – Cameroun v Nixon Financial Group Limited HCVAP 2011/005 (unreported). The Judge held that when the Court is considering the question of whether or not an application was fairly presented, a balance must be struck between competing policy objectives.  On the one hand, the Court may “deprive a wrongdoer of an advantage improperly obtained and to serve as a deterrent to others to ensure they comply with their duty of full and frank disclosure and fair representation on an ex parte application” (Congentra Ag v Sixteen Thirteen Marine SA (‘The Nicholas M’ [2008] EWHC 1615). But that on the other, “An ex parte hearing such as those before this Court, which covered some three days, cannot realistically or sensibly be required to turn into a marathon mini-trial with Counsel for the applicant rehearsing all the arguments the respondent might think up, and giving all the emphasis that the respondent’s Counsel might give the details.”

Rejecting the allegation that a breach of the duty of full and frank disclosure had occurred, the judge held that the Claimants’ presentation was, if anything, over scrupulous: “I was the judge who heard the (seemingly interminable) three-day ex parte hearings. If anything, Mr Weekes KC, for Rana, was overly scrupulous to try to cover all the material bases.” [para 294]

And at [296] “This was not a case where Rana has deliberately, or in some other way culpably, misled the Court through some key omission or distorted presentation.  Usually when that happens the breach is clear enough.  Here that has not happened.  This is the typical case where an imaginative respondent has identified and seized upon peripheral points and waved them like trophies to clamour for a discharge. It is all too easy for a Judge to succumb to such pressure, particularly when presented by an excellent advocate.  But the overarching interests of justice must be robustly kept in view and upheld.”

Final Remarks

This Judgment is one of the last written judgments handed down by Wallbank J prior to the Judge demitting office in October 2025. After presiding as a BVI Commercial Court Judge for over a decade, the Judge’s clear and thorough Judgment stands as a testament to his hard work and industry, the breadth of the Court’s jurisdiction to provide a remedy to those that allege that they have fallen victim to fraudulent conduct, which stresses the need for the Court to approach allegations relating to the breach of the duty of full and frank disclosure proportionately and realistically.

Further Article – APIC attempted Redomiciliation

In August 2024, APIC sought to redomicile itself from the BVI to Palestine. Following a series of applications, on 6 May 2025, Justice Wallbank granted the Claimants injunctive relief, preventing (amongst other things) the redomiciliation. Details of this, ex-tempore judgment will be the subject of a separate article. APIC are seeking to appeal the decision.