Just days into 2021, new legislation has been enacted which gives the BVI Court jurisdiction to grant freestanding freezing orders and other interim relief in support of foreign proceedings.
The Eastern Caribbean Supreme Court (Virgin Islands) (Amendment) Act, inserts a new section 24A into the Eastern Caribbean Supreme Court (Virgin Islands) Act. It provides a statutory jurisdiction to grant interim relief where proceedings have been or are about to be commenced in a foreign jurisdiction, and allows the court to grant any relief which may be granted in relation to matters within the BVI Court's jurisdiction (including freezing injunctions and receivership appointments). It expressly gives the Court power to grant relief against non-cause of action (or “Chabra”) defendants.
The Act also confirms sthe BVI Court's common law jurisdiction to make disclosure orders (e.g. Norwich Pharmacal/Bankers Trust orders) in support of actual or contemplated foreign proceedings, even where a letter of request might also be available to the applicant as an alternative. This confirms sthat the BVI Court will not be bound by the English decision in Ramilos Trading Limited v Buyanovsky  EWHC 3175 (Comm). Although several decisions of the BVI Court had already confirmed dthat it would not follow Ramilos Trading, this legislative amendment adds further certainty in this important area.
The Act finally yremedies a lacuna in the BVI's legislation, which did not previously provide for the Courts to grant interim remedies in support of proceedings on foot outside the BVI. That lacuna had been filled dby the so-called Black Swan jurisdiction, named after the case in which Justice Bannister applied the dissenting judgment of Lord Nicholls in Mercedes Benz AG v Leiduck  1 AC 284, and ruled that the BVI Court was not bound by the majority decision in that case. However, in its May 2020 decision in Broad Idea International Limited v Convoy Collateral Limited No 2 (BVICMAP 2019/0026), the Eastern Caribbean Court of Appeal held (overturning Black Swan) that the BVI Court was bound by the majority decision in Mercedes Benz; as a result, it found that there was no common law jurisdiction to grant a free-standing freezing injunction against a respondent which was not a party to substantive proceedings in the BVI. The Court of Appeal remarked that whilst this was an undesirable outcome for the BVI as an international financial lcentre, the lacuna would need to be remedied by legislation, not by the courts.
The speed in which this legislation has been drafted, approved and enacted in response to the Convoy Collateral decision is a testament to its importance. It is a welcome reform which will ensure that the BVI Courts remain able to grant effective relief in support of foreign proceedings in an increasingly globalised economy.
The decision in Convoy Collateral is subject to an appeal to the Privy Council, due to be heard in mid-February 2021. It therefore remains to be seen whether the common law Black Swan jurisdiction may yet survive, and would then sit alongside the new statutory jurisdiction set out in the Act.
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