Below is a summary of recent cases out of the British Virgin
Islands (BVI) Commercial Court, compiled by Harneys' Litigation
team.
Ruling on the use and status of ancillary relief
proceedings and forum non conveniens
issues.
VTB Capital plc v Nutritek International Corp and ors BVIHC (Com)
103 of 2011, 18 September 2013
Following the dismissal of the English proceedings in the
VTB v Nutritek litigation by the Supreme Court
earlier this year on forum non conveniens grounds, the BVI
Commercial Court has refused to lift a stay of the related BVI
proceedings and has held that the BVI is not, in any event, the
appropriate forum for the claim.
The BVI proceedings had initially been issued predominantly for
the purpose of obtaining injunctive relief in support of the
English proceedings, following the procedure commonly used prior to
the Black Swan decision (see
http://www.harneys.com/recent-experience/further-developments-in-black-swan-relief).
Following that procedure, the BVI proceedings were issued in the
form of a substantive claim but were immediately stayed in favour
of the English proceedings. Bannister J described such
ancillary relief proceedings as a device which "should not be
used in future in cases where orders are sought in aid of foreign
proceedings. It has no secure legal foundation and is
calculated only to cause confusion". It was therefore not
appropriate for such proceedings to be converted into substantive
proceedings after the foreign proceedings had been dismissed.
Bannister J then ruled on a hypothetical jurisdictional challenge
brought by the non-BVI defendants on forum non conveniens
grounds. After considering the circumstances of the case, the
Judge found that Russia, and not the BVI, was clearly the most
appropriate forum for the claim. A major issue that followed
from that was whether Russia was an "available" forum -
Bannister J held that it was, despite some evidence that the
Claimant may not be able to bring fraud claims there on technical
grounds due to the interplay between the Russian Civil and Criminal
Codes. However, most significantly for the purposes of BVI
jurisprudence, Bannister J held that the mere fact that two out of
the five parties were incorporated in the BVI was not sufficient to
make the BVI the most appropriate forum, ruling that the existence
of BVI companies as defendants to an action should only lead to a
presumption that the BVI was the most appropriate forum where the
proceedings related to the ownership or control, constitution or
administration of those companies. An allegation that a BVI
entity was involved in an alleged fraud was "neutral for forum
purposes". This was particularly the case where the
"real target" of the claim was a non-BVI resident.
"Wishful thinking: intention versus
construction": BVI Court rules on the Construction of
Trusts
The BVI court recently considered the construction of the Trust
Deed of a BVI administered trust (the Trust). The Trust Deed
listed a number of beneficiaries under the Trust defined as
Specified Beneficiaries. Each Specified Beneficiary was
listed with a percentage figure that purported to indicate their
entitlement under the trust fund of the Trust (Percentage
Entitlements). Harneys acted for the trustee (the Trustee)
and brought an action for the court's assistance with
interpretation of the Trust Deed and a declaration from the court
that the Trustee is within its powers to amend the list of
Specified Beneficiaries and the related Percentage
Entitlements. The Trustee is in possession of a Letter of
Wishes from the now deceased settlor, indicating his wish to amend
the list of Specified Beneficiaries by deleting one name and adding
two more, the Additional Beneficiaries, and to vary the Percentage
Entitlements accordingly.
Mr Justice Bannister found that the Percentage Entitlements did
not create a fixed interest in the trust fund of the Trust for the
Specified Beneficiaries and that the trustees had a legitimate
power to vary, amend and delete persons from the list of Specified
Beneficiaries and the related Percentage Entitlements under the
Trust Deed. Mr Justice Bannister made further comment on the
construction of the Trust Deed considering the status of superadded
terms and definitions in relation to those that exist in a typed
precedent document. The Judge found that although the
Specified Beneficiaries and Percentage Entitlements were
"undoubtedly" unique to the Trust Deed, it did not follow
that "those words of entitlement are to be accorded any
special status of priority over the other provisions of the trust
deed". The Judge found that it was not possible to infer
the settlor's intention from this addition to the Trust Deed
and that, because this Trust Deed is not a standard form commercial
document in common use between merchants requiring completion or
adaptation to conform it to the particular transaction in question,
the typed/printed distinction therefore did not arise.
Exercising caution in the pleading of oral agreements
– summary judgment:
Clearlie Todman-Brown v The National Bank of the Virgin
Islands Limited, BVI HCV 64 of 2013, Byer J.
This case follows the recent line of BVI authority clarifying the
scope of the Court's discretion in deciding whether to grant
summary judgment under CPR 15. The Applicant was the defendant bank
which sought to argue that the cause of action, as pleaded against
it, was based on a bald assertion of an obligation owed by the bank
and disclosed no viable claim.
The Court held that in making the requisite assessment for summary
judgment, all of the evidence and pleadings as filed had to be
taken into account. Having examined these in depth, the Court
concluded that the lack of specificity in the pleadings surrounding
the nature of the relevant agreement was a fatal flaw. In
particular, any oral agreement must have pleaded specifics so the
party against whom it is alleged can know the case against it.
There would need to be an indication somewhere in the pleadings of
when, where, in what manner, and the subject matter of nature of
the agreement.
Approving the wording of the Saunders CJ(Ag) in Bank of Bermuda
Ltd v Pentium, Civ App no 14 of 2003 BVI, at paragraph [18], the
Court recognised that in exercising its discretion a judge should
not allow a matter to proceed to trial where a party has produced
nothing to persuade the court that there is a realistic prospect of
success. Speculative claims should not be fostered or encouraged by
the Court.
The application for summary judgment was therefore granted.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.