{"id":5894,"date":"2020-06-02T08:52:47","date_gmt":"2020-06-02T13:52:47","guid":{"rendered":"https:\/\/www.campbellslegal.com\/?p=5894"},"modified":"2020-06-02T09:37:56","modified_gmt":"2020-06-02T14:37:56","slug":"black-swan-jurisdiction-in-the-british-virgin-islands-flown-the-nest","status":"publish","type":"post","link":"https:\/\/www.campbellslegal.com\/client-advisory\/black-swan-jurisdiction-in-the-british-virgin-islands-flown-the-nest-5894\/","title":{"rendered":"Black Swan jurisdiction in the British Virgin Islands \u2013 Flown the Nest?"},"content":{"rendered":"

BVIHCMAP2019\/0026 Broad Idea International Limited v Convoy Collateral Limited<\/em><\/h2>\n

On 29 May 2020 the Eastern Caribbean Supreme Court, Court of Appeal (the \u201cCourt of Appeal<\/strong>\u201d) handed down a judgment which found that the BVI Court has no jurisdiction to grant free-standing freezing injunctions against a BVI company where no cause of action exists against that entity and an injunction is only sought against it for the purpose of preserving assets beneficially owned by a party to the proceedings.<\/p>\n

This is a marked departure from relief often sought and frequently (until now) granted in cases coming before the Commercial Division where a party to substantive proceedings, either in the BVI or elsewhere, would apply to the BVI Court for a freezing injunction to safeguard assets of a defendant, which are in the possession and control of a third party (whether before the BVI court or elsewhere), pending the outcome of the case. The inability to obtain this relief puts claimants in BVI at a disadvantage until the same is remedied either upon a successful appeal or through amended legislation.<\/p>\n

A more complete summary follows.\u00a0 Any member of Campbells\u2019 BVI litigation team is available to answer any questions you may have regarding this decision.<\/p>\n

The Decision<\/strong><\/h2>\n

On 29 May 2020 judgment was handed down by the Court of Appeal in the matter of Broad Idea International Limited<\/em> v Convoy Collateral Limited<\/em>. By allowing the appeal, the Court of Appeal overturned over twenty years of BVI law originating with the seminal decision of the Commercial Division of the Eastern Caribbean Supreme Court, Black Swan Investment I.S.A. v Harvest View Limited et al[1]<\/strong><\/a> <\/em>(\u201cBlack Swan<\/strong>\u201d).<\/p>\n

Background<\/strong><\/h2>\n

Convoy Collateral Limited (\u201cConvoy Collateral<\/strong>\u201d), a company incorporated in Hong Kong, commenced proceedings in Hong Kong against a shareholder of Broad Idea International Limited (\u201cBroad Idea<\/strong>\u201d), Dr Cho Kwai Chee (\u201cDr Cho<\/strong>\u201d), claiming, amongst other things, breach of fiduciary duty. Broad Idea is a company incorporated in the BVI. Convoy Collateral also applied to the Eastern Caribbean Supreme Court, Commercial Division in the BVI for a freezing injunction against Broad Idea and Dr Cho to freeze Dr Cho\u2019s assets and, importantly for the purposes of the later Court of Appeal decision, to restrain Broad Idea from transferring Dr Cho\u2019s shares in Broad Idea. Convoy Collateral succeeded in obtaining the injunction at first instance. Convoy Collateral sought to continue this injunction, however Dr Cho applied to set it aside. Subsequently, Convoy Collateral made an additional application seeking a freezing injunction against Broad Idea in support of the proceedings against Dr Cho in Hong Kong. Dr Cho\u2019s application to set aside the first instance judgment in relation to Broad Idea was granted and the BVI freezing order was discharged.<\/p>\n

The subsequent application brought by Convoy Collateral against Broad Idea was granted by the Honourable Mr Justice Adderley. In his judgment the Judge reasoned that, pursuant to the decision in Black Swan<\/em>, he had jurisdiction and continued the freezing order against Broad Idea. It is this order that Broad Idea appealed.<\/p>\n

The Appeal<\/strong><\/h2>\n

As outlined by Madam Justice Blenman, the following issues stood to be determined by the Court of Appeal:<\/p>\n