Recent cases out of the British Virgin Islands (BVI) Commercial Court deal with issues including third party costs and the applicability of Black Swan freezing relief in support of foreign derivative claims. In addition a Harneys litigator considers the duties of nominee directors in remarks delivered at the recently concluded Offshore Alert conference.

Court rules on third party costs

Harneys recently acted for a third party objector in an appointment of liquidator proceedings. 

The liquidator applied to the Court for a costs order against Harneys' client seeking the full costs of their application. Harneys submitted that the client was in fact a non party and as such the common law rules and the Eastern Caribbean Supreme Court's Civil Procedure Rule 64.10 applied since non-party costs awards are exceptional in the Territory. 

Furthermore, the party seeking the appointment of a liquidator had not joined the client, therefore they were a sole party in their application and should not be indemnified for their costs merely because the non-party's conduct within the proceedings was closely linked. 
 
Harneys submitted in the alternative, that the non-party could only be liable for costs insofar as they had added to the extra burden of costs. The Court agreed and assessed the extra burden of costs to have been a de minimis amount incurred as a result of attendance on the day of the hearing. The applicant was seeking $180,000 and the court awarded $4000 only. 

The judgment is now authority for the proposition that a nonparty cannot be liable for costs in proceedings where he has not been joined; over which he had neither control nor influence; and which were not being conducted with his approval or for his benefit. 
 
In this case the Court was persuaded that the client's involvement had little real impact hence the minimal costs awarded. From a tactical point of view it assists greatly to know that as a third party objector, one can arguably remain vigilant and serve an application and evidence later in the day only where strictly necessary and be insulated as a non-party knowing that the only costs one should be liable for would be those that added to the costs flowing from one's own application. 

Court grants Black Swan freezing relief 

The Court recently granted a Black Swan freezing injunction in support of a foreign claim in which part of the relief abroad was sought derivatively. Harneys acted for the successful BVI applicant. This is believed to be the first example in the BVI of the Black Swan jurisdiction being used to support a foreign derivative action.

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.