What makes this decision stand-out is not that the Court has the power to grant this powerful relief to liquidators (which is prescribed for at sections 284 and 285 of the BVI Insolvency Act, 2003 (as amended) (the IA). Rather, as this article’s title foreshadows, it is the fact that the Court determined that such powers extend extraterritorially.

Departing from Chu

In making her judgment Justice Small-Davis KC departed from a finding of her brother judge, Wallbank J in Ocean Sino Limited (in Liquidation) Chu Kong v John Greenwood and Roy Bailey (Chu). In Chu, His Lordship held “sections 284 and 285 have no extra territorial effect” [para 34]. It is important to highlight that the Applicant was initially successful in Chu, at an ex parte hearing. It was at the subsequent return date where the Judge set-aside his original order citing “breaches…[of]…full and frank disclosure [which]…infect the entire order” [82 and 93]. Even then His Lordship stated “the conclusion I have reached rather surprises me” and “[His Lorsdship] had “no great enthusiasm…to say that the Court simply did not have power to make the Examination Order” [135]. On reflection therefore and contrary to what might be perceived at first glance Her Ladyship’s judgment is likely to be embraced within the jurisdiction.

Relevant Principles

In Her Ladyship’s written judgment (at paras [36-38]) Small-Davis KC J summarises Mr Richard Fisher KC’s submissions as to why the Court should depart from Chu which “[found] favour with me and make a great deal of sense in their logic and application of fundamental legal principles”:

1.       The BVI Court can exercise personal jurisdiction over any person who is (i) within the jurisdiction (ii) or whom proceedings can be served out or (iii) has submitted voluntarily.

2.       The BVI Court can permit service out under CPR7.3(7)(a) where the claim relates to the constitution, administration, management or conduct of the affairs of a BVI company.

3.       S. 284 and 285 of the IA must be construed in context, alongside CPR7.3(7)(a) (above) and the fact that the persons being sought to be examined is abroad should be a discretionary (not a prohibitory) factor.

4.       That the persons being sought to be examined can be taken to have submitted to the jurisdiction as they were directors (of 3AC) at the time the liquidation commenced and, in the present circumstance, were the same directors who initiated the liquidation of the company. Here, the Learned Judge found that, in accepting the office of directors, they have submitted to the jurisdiction of this court for the purpose of any enquiry into the Company’s affairs.

Departing from English law

In her written judgment, Her Ladyship examines and distinguishes the UK Court of Appeal’s decision in Re Tucker [1990] 1 CH 148 which (under the English insolvency act) “expressly limited jurisdiction to persons within England”. At [48] Small-Davis KC J highlights the distinguishing factors of the British Virgin Islands (vis-à-vis England):

(a)    It is an offshore jurisdiction;

(b)    Directors of companies are (more often than not) resident overseas and may never come to the BVI;

(c)     The companies have no other physical connection with the BVI other than a registered agent and office.

In her reasoning, Her Ladyship’s written judgment cites and finds favour with the Privy Council decision in AWH Fund Ltd (in compulsory liquidation) v ZCM Asset Holding Company (Bermuda) Limited [2019] UKPC 37, in which Bahamian bankruptcy legislation was found to have extra-territorial effect.

Conclusion

The written judgment is comprehensive and expands upon the summary above which I encourage everyone to read. Justice Small-Davis KC no longer sits in the BVI Court but is anticipated that this decision will be very well received by the islands’ insolvency practitioners.

Key Contacts

Daniel Mitchell

Partner: BVI

T +1 284 393 5306
E Email Daniel

Andrew Willins

Partner: BVI

T +1 284 393 5323
E Email Andrew

Simon Jerrum

Partner: BVI

T +1 284 393 5303
E Email Simon

Olwyn Barry

Group Partner: BVI

T +44 (0)1534 818 357 or + 1 (284) 393 5345
E Email Olwyn

Tamara Cameron

Senior Associate: BVI

T +1 284 393 5344
E Email Tamara

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