INTERIM RELIEF AVAILABLE IN THE BRITISH VIRGIN ISLANDS In a recent decision by the Judicial Committee of the Privy Council in Broad Idea International Limited v Convoy Collateral Limited, the panel found that in circumstances where the British Virgin Islands (“BVI”) Court has personal jurisdiction over a party, the Court has power to grant a freezing injunction to assist enforcement through the Court’s process of a prospective (or existing) foreign judgment. The BVI continues to strengthen its arsenal of interim remedies to protect the victims of wrongdoers and we set out in the table below a few examples (but certainly not all) of the interim relief that the BVI Court may award.
MAREVA / FREEZING INJUNCTION
CHABRA
NORWICH PHARMACAL
BANKERS
WEBSITE BLOCKING ORDERS
PROPRIETARY INJUNCTION
INTERIM RECEIVERSHIP
Circumstances in which relief is applicable
Where a freezing order is needed to prevent parties from dissipating assets ahead of satisfying a judgment for damages made against them.
Where a claimant needs to ring fence assets of a person against whom he has no direct cause of action, i.e. a person who is not a substantive defendant but may be holding assets for the benefit of a defendant.
Where information is required from a third party, for example, a registered agent of a BVI company, because of suspected wrongdoing by the company against the applicant.
Where information is required from a third party to trace, recover or preserve assets the applicant claims belong to him, and a prima facie case of fraud or breach of trust has been made out against the defendant.
Where a rights owner is trying to get an Internet Service Provider (ISP) to prevent its facilities from being used to commit or facilitate a wrong (e.g. the sale of counterfeit goods).
Where a freezing order is needed to preserve assets to which a claimant has a proprietary interest. No need to show risk of dissipation.
Where there is a need to preserve or recover assets or in aid of equitable execution of judgments.
Who can claim relief?
Any applicant with a judgment or an applicant that has extant or pending litigation whether in the BVI or elsewhere for damages against a BVI company.
An applicant that has proceedings on foot in the BVI or elsewhere (or is about to issue said proceedings).
Any applicant who can prove he has a good reason to suspect a wrong has been carried out by the ultimate wrongdoer against him, and that the respondent third party is likely to have the information necessary to clarify matters.
Applicant who claims his assets were taken by the defendant and who has a prima facie case of fraud or breach of trust against the defendant in relation to the same.
Rights owners, for example, seeking to enforce their copyright against illegal streaming or piracy sites.
Where the applicant has a proprietary or tracing claim to the assets.
Any applicant with an equitable claim to the assets subject to ongoing litigation or a judgment debt.
Does there need to be a cause of action (or prospective cause of action)?
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
Yes.
If yes, does the cause of action have to be in the BVI?
No. BVI Court has jurisdiction to grant stand-alone injunctions in support of foreign proceedings.
No. BVI Court has jurisdiction to grant standalone injunctions in support of foreign proceedings.
No. BVI Court has jurisdiction to grant standalone injunctions in support of foreign proceedings.
No. BVI Court has jurisdiction to grant standalone injunctions in support of foreign proceedings.
No. BVI Court has jurisdiction to grant standalone injunctions in support of foreign proceedings.
No. BVI Court has jurisdiction to grant stand-alone injunctions in support of foreign proceedings.
No, the court has jurisdiction to appoint receivers without there being an underlying claim in the BVI.
BVI Court must have in personam jurisdiction over the respondent, which it will have if the respondent is a BVI company.
BVI Court must have in personam jurisdiction over the respondent, which it will have if the respondent is a BVI company.
BVI Court must have in personam jurisdiction over the respondent which it will have if the respondent is a BVI company.
BVI Court must have in personam jurisdiction over the respondent, which it will have if the respondent is a BVI company.
i. There must be a good arguable case that a wrong has been carried out, or arguably carried out, by an ultimate wrongdoer. ii. The person against whom the order is sought (usually the BVI company’s registered agent) must be mixed up in the wrongdoing so as to have facilitated it and be likely to be able to provide the information necessary to enable the ultimate wrongdoer to be sued.
i. Strong evidence of fraud against the defendant. ii. Applicant has good grounds for thinking the asset is his. iii. A need for urgent action (for example a risk of dissipation).
i. The respondents are intermediaries. ii. The users / operators are infringing the claimant’s rights. iii. The users / operators are using the defendant’s services to infringe. iv. The defendants have actual knowledge of this (for example, because it has been notified of the same by the rights owner). v. The injunction is necessary, effective, and dissuasive, is not unnecessarily complicated or costly, avoids barriers to legitimate trade, is fair and equitable and strikes a ‘fair’ balance between the applicable fundamental rights. vi. It must also be proportionate to do so.
i. Applicant has an arguable case that the assets the subject of the application either belong to him or can be traced into by him. ii. Whether there is a serious question to be tried. iii. Whether damages would be an adequate remedy.
Applicable test
i. A good arguable case against the respondent. ii. Refusal of an injunction would involve a real risk that a judgment / award in favour of the applicant would go unsatisfied. iii. It is just and convenient for the injunction to be granted.
i. Substantive proceedings against cause of action defendant. ii. The Court must have granted or be in the process of granting a freezing order against the cause of action defendant. iii. Good reason to suppose the assets held by the third party respondent are being held on trust, or as agent or nominee for the cause of action defendant or the assets can be in some other way subject to being used to Generally, a Mareva injunction should satisfy a prospective judgment against the not interfere with the ordinary course of cause of action defendant. business of the respondent. iv. A good reason to suppose that assets held Cross-undertaking in damages is by a third party would be amenable to some required from the applicant, and, if process of execution to satisfy an eventual the application is made on an ex parte judgment, or that the third party is holding basis, the applicant has a duty to make assets as a bare trustee. full and frank disclosure of all the v. There must be evidence that the assets of materials. the third party are at risk of dissipation. vi. The Court has or can join the third party to the proceedings as a non-cause of action defendant. vii. It is just and convenient for the Court to grant the injunction.
The scope of the disclosure request must be reasonable and regularly, the Court will require the applicant to give a cross-undertaking in damages.
Cross-undertaking in damages required from the applicant.
BVI Court must have in personam jurisdiction over BVI Court must have in personam jurisdiction the respondent, which it will have if the respondent over the respondent, which it will have if the is a BVI company. respondent is a BVI company.
Cross-undertaking in damages required from the applicant.
Cross-undertaking in damages required from the applicant.
CONTACTS
Matthew Freeman Partner | Dispute Resolution & Insolvency Direct: +1 284 852 3011 Mobile: +1 284 340 3011
Martha Ramtahal Associate | Dispute Resolution & Insolvency Direct: +1 284 852 3047 Mobile: +1 284 340 3047
Generally, a proprietary injunction means the respondent will be required to use his own assets to meet legal and living expenses, in contrast to other injunctions.
(If the application relates to ongoing proceedings and not a enforcement of a judgment debt) There must be a good arguable case in the underlying claim in support of which the interim appointment is sought. i. There must be a real risk of dissipation of assets. ii. The interim appointment of a receiver must be just and convenient.