Source: https://iclg.com/practice-areas/litigation-and-dispute-resolution/litigation-and-dispute-resolution-2017/british-virgin-islands
Timestamp: 2018-01-22 18:01:05
Document Index: 631100867

Matched Legal Cases: ['art 12', 'art 24', 'art 7', 'art 20', 'art 18', 'art 12', 'art 18', 'art 12', 'art 26', 'art 1', 'art 8', 'arts 29']

Litigation & Dispute Resolution 2017 | British Virgin Islands | ICLG
The Territory of the Virgin Islands (as it is officially known) is a largely self-governing British Overseas Territory. The BVI has a common law system, based upon English law. It has its own legislative framework and has adopted some UK legislation (particularly with respect to the implementation of international treaties). English common law was extended to the jurisdiction by the Common Law (Declaration of Application) Act (Cap 13). The result is that English authorities, whilst not strictly binding as precedents are persuasive and, subject to differing authorities from the Eastern Caribbean Supreme Court, are routinely relied upon by the courts in the BVI. Authorities of other Commonwealth or common law jurisdictions, such as Canada and Hong Kong, are also frequently cited.
Civil procedure before the BVI courts is governed by the Eastern Caribbean Supreme Court Civil Procedure Rules 2000 (“the CPR”) as amended from time to time and Civil Practice Directions. The CPR is largely based on the original Civil Procedure Rules of England and Wales with important differences.
The Commercial Division of the High Court of Justice sits permanently in the BVI. The Commercial Court hears claims and applications brought by litigants of any of the nine members of the ECSC provided the criteria for a matter to be placed in the commercial list and proceed in the Commercial Court are met. The conditions are set out in CPR rule 69A.1:
(1) The matter must be a “commercial claim”. This means any claim or application arising out of a transaction of trade and commerce and includes any claim related to:
(2) The claim or value of the subject matter to which the claim relates must be at least US$500,000. However, a judge of the Commercial Division has the discretion to include in the commercial list a claim which does not satisfy the condition as to monetary value if they consider the claim to be of a commercial nature and it warrants being placed in the commercial list.
The Court of Appeal is an itinerant court, whose sittings rotate between the nine members of the ECSC. The Court of Appeal usually sits three times a year in Tortola (BVI) in January, May and September of each year, although more urgent matters may be dealt with in other jurisdictions as the need arises. Appeals from the Court of Appeal are to the Privy Council in the United Kingdom.
A civil suit is commenced by the court issuing a claim form and that being served on a defendant together with a statement of claim. The general rule is that a claim form must be personally served on each defendant (CPR rule 5.1) within six months of the date of issue for service within the BVI and for service of a claim form outside of the jurisdiction, the period is 12 months. An application can be made to extend the time for service.
A defendant who disputes the claim or the BVI court’s jurisdiction must file a defence and/or an acknowledgment of service containing a notice of intention to defend within 14 days after the date on which the claim form was served (CPR rules 9.1 and 9.3). Where a defendant has filed an acknowledgment of service, they have 28 days after the date of service of the claim form to file a defence (CPR rule 10.3). Where a defendant fails to file either an acknowledgment of service or a defence within the time periods set out above then judgment may be entered where CPR Part 12 allows it (CPR rules 9.2(5) and 10.2(4)). Where the court has given permission to serve the claim form and statements of case outside the jurisdiction, it will also make provision for the dates by which filing and service of the acknowledgment of service and defence have to take place by.
Upon the filing of a defence to a civil claim in the High Court, the court office will fix a CMC to be held not less than four weeks and not more than eight weeks after the defence is filed (CPR rule 27.3). If a party is represented by a legal practitioner, that legal practitioner or one who is authorised to negotiate on behalf of the client and competent to deal with the case must attend at the CMC and any pre-trial review (“PTR”) (CPR rule 27.4). The general rule is that at a CMC the court must consider whether to give directions for (a) service of experts’ reports, (b) service of witness statements, and (c) standard disclosure and inspection. The court must fix a date for a PTR unless it is satisfied that having regard to the value, importance and complexity of the case, it may be dealt with justly without one. The court must in any event fix (a) the date on which a listing questionnaire is to be sent out by the court office to the parties, and (b) the trial window period or the trial date (CPR rule 27.5). The above rules do not apply to claims in the Commercial Court. Instead, the claimant must, no later than 14 days after the last party has served his defence, provide to the High Court Registry’s Commercial Division Case Management Unit (“the Unit”) an agreed written statement of the parties’ best estimate of the length of the trial. If no agreement can be reached then separate estimates must be provided by each party. If the longest estimate is more than one full hearing day, the Unit will fix a CMC for the first available date six weeks after the last defendant who intends to defend the claim has filed his defence. At the CMC in addition to any orders or directions given pursuant to the court’s general powers of management conferred by CPR rule 26.1, the court will ordinarily give directions as to:
For urgent matters a party may file a certificate of urgency to seek an early hearing date or request the same at the case management conference stage. The certificate of urgency procedure is on the whole used for urgent applications. Apart from these regimes there are no expedited trial procedures.
The BVI court’s jurisdiction is based on the proper service of a claim form. To serve outside of the jurisdiction permission must be sought pursuant to CPR rule 7.3. Subsection (3) deals with claims about contracts. This provides:
In OBM Limited v LSJ LLC, Indra Hariprashad-Charles, J. cited the dicta of Farwell L.J. in The Hagen [1908] P 189 at page 201, holding that the “jurisdiction to subject a foreigner to the jurisdiction of the court has been described as extraordinary and should only be exercised with great care and it remains open to the court to stay a case on the basis of forum non conveniens”. Hariprashad-Charles, J. held that, in deciding the forum conveniens, the court will look first to see what factors there are which point in the direction of another forum. In that case it was noted there was no exclusive jurisdiction clause but rather a choice of law clause. Nevertheless, the court declined jurisdiction, citing the dicta of Brandon, J., in The Eleftheria [1969] 1 Lloyd’s Rep 237 at page 246, where the court held:
From the above it can be seen that the BVI court is likely to demure to the provisions of an exclusive jurisdiction clause agreed to by the parties to a contract. Subject to the general principle that agreements cannot be made to oust the jurisdiction of the court, the choice of jurisdiction agreed by contracting parties is on the whole respected. In appropriate cases a choice of law clause may support an argument that the BVI is not the appropriate forum.
CPR rule 64.6(1) provides the general rule - the court must order the unsuccessful party to pay the successful party’s costs. The position is much the same with interlocutory applications. Where the interlocutory application is a procedural application of a type falling within CPR rule 65.11(3), the rules provide that the court “must order the applicant to pay the costs of the respondent unless there are special circumstances”. The specified applications are: (a) applications to amend a statement of case; (b) an application for an extension of time; (c) an application for relief from sanctions; and (d) an application which could reasonably have been made at a CMC.
The BVI follows the English common law position in relation to the maintenance of litigation. The statutory developments in England in relation to conditional fee and contingency agreements do not apply within the context of contentious business in the BVI. Therefore, at present the common law rules against maintenance prevent lawyers practising in the BVI from entering into such agreements.
Except to the extent that it has arguably been disapplied by the rules in relation to prescribed costs, the indemnity principle applies to litigation in the BVI. A litigant will therefore be able to recover from his opponent only to the extent that he was contractually liable to his lawyers. Since the introduction of the Legal Professional Act 2015 the ability of a successful litigant to recover foreign lawyers’ fees incurred in litigation has been challenged and precise scope for recoverability has been uncertain (see Garkusha v Yegiazaryan and Others BVIHCMAP 2015/0010, Inna Gudavadze and Others v Ivane Chkhartishvili BVIHC (Com) 2012/0011) and Shrimpton and Pitcairn Limited v Scriven and others BVIHCMAP 2016/0031).
The security for costs regime in the BVI is governed by CPR Part 24. A defendant, including a defendant to a counterclaim, may apply for an order requiring the claimant to give security for the defendant’s costs of the proceedings. On a successful application the amount and nature of the security to be provided is in the court’s discretion. Before making an order the court must be satisfied on evidence that it is just to make the order and one or more of the following are established: (a) some other person has contributed or agreed to contribute to the claimant’s costs in return for a share of any money or property recovered; (b) the claimant failed to give his address in the form, entered an incorrect address or has changed his address since the claim was commenced with a view to evading the consequences of litigation; (c) the claimant has taken steps with a view to placing its assets beyond the jurisdiction of the court; (d) the claimant is acting as a nominal claimant and there is reason to believe that the claimant will be unable to pay the defendant’s costs if ordered to do so; (e) the claimant is an assignee of the right to claim and the assignment was made with a view to avoiding the possibility of a costs order against the assignor; (f) the claimant is an external company; or (g) the claimant is ordinarily resident out of the jurisdiction. On making an order for security for costs the court must also stay the claim until such time as security for costs have been provided in accordance with the terms of the order and if security is not provided by the date specified in the order the claim or counterclaim is struck out.
Proceedings are commenced in the BVI by issuing and serving a claim form. The claim form is issued at the High Court Registry and service is effected by the claimant. The general rule is that the claim form must be served personally on each defendant (CPR rule 5.1). A claim form is served personally on an individual by handing it to, or leaving it with, the person to be served (CPR rule 5.3). Personal service must be proved by affidavit (CPR rule 5.5). Service must be effected on a party’s legal practitioner where they have been authorised to accept service on behalf of that party and the legal practitioner has notified the claimant in writing that he or she is so authorised (CPR rule 5.6). Service may be effected on a limited company in the following ways:
The service of foreign proceedings is governed by CPR Part 7. The general rule is that a claim form may only be served out of the jurisdiction if CPR rule 7.3 allows it or the court gives permission (CPR rule 7.2). CPR rule 7.3 provides that a claim form may be served out of the jurisdiction if a claim is made:
(a) claims in contract (where the contract provides for the BVI court to have jurisdiction or it was made within the jurisdiction or made by or through an agent trading or residing in the jurisdiction);
CPR rule 7.3 was amended by the Civil Procedure (Amendment) Rules 2014 to allow a claim form to be served out of the jurisdiction if a claim is made to enforce any judgment or arbitral award which was made by a foreign court or tribunal and is amenable to be enforced at common law.
As regards the service of court process (other than claim forms), for example an application, order or notice issued, made or given in any proceedings, these may be served out of the jurisdiction without the court’s permission if it is served in proceedings in which permission has been given to serve the claim form out of the jurisdiction provided the same method of service as for the claim form is used (CPR rule 7.14).
(j) an order restraining a party from:
(l) an order requiring a party to admit another party to premises for the purposes of preserving evidence, etc (search order).; and/or
(m) an order for payment by a defendant on account of any damages, debt or other sum which the court may find the defendant liable to pay (order for interim payment).
Each interim remedy has its own criteria which needs to be met by an applicant. In relation to interim injunctions, the BVI court applies the test set out in the English authority of American Cyanamid v Ethicon Ltd [1975] AC 396: there must be a serious issue to be tried, damages would be an inadequate remedy, and on the “balance of convenience” test an injunction should be granted particularly having regard to preserving the status quo .
Pursuant to CPR rule 8.6, the claim form must include a short description of the nature of the claim, specify any remedy that the claimant seeks and give an address for service in accordance with CPR rule 3.11. The claimant must set out in the claim form or in the statement of claim an account of all of the facts on which he relies which must be as short as practicable. In addition, the claim form or the statement of claim must identify any document which the claimant considers to be necessary to his or her case and, in respect of the recovery of any property, the claimant’s estimate of its value must be stated. Finally the statement of claim must include a certificate of truth in accordance with rule 3.12. (CPR rule 8.7).
Part 20 of the CPR (as amended by the Eastern Caribbean Supreme Court Civil Procedure (Amendment) (No 2) Rules (No 48 of 2014)) governs changes to statements of case. CPR rule 20.1(1) provides that a statement of case may be amended once, without the court’s permission, at any time prior to the date fixed by the court for the first case management conference. However, CPR rule 20.1(3) provides that a statement of case may not be amended without permission if the change is sought to be made after the end of a relevant limitation period. This includes adding or substituting parties after such a period. In such circumstances the court, on an application, may allow an amendment to add or substitute a new claim but only if the new claim arises out of the same or substantially the same facts as the claim for which the party wishing to change the statement of case has already claimed a remedy in the proceedings (CPR rule 20.2). The court will only allow an amendment to correct a mistake as to the name of a party where the mistake was genuine and not one which would in all the circumstances cause reasonable doubt as to the identity of the party in question (CPR rule 20.2).
There is no limit as to when the claimant can abandon all or part of its claim. As a general rule a claimant may discontinue all or part of a claim without the permission of the court. However, where an element of the claim has required any party to give an undertaking to the court or the court has granted an interim injunction the permission of the court is required before the claimant can discontinue. Likewise, where a claimant has received an interim payment in relation to a claim, the claimant may discontinue only with the permission of the court or the where the defendant who made the payment consents in writing. If there is more than one claimant, every claimant has to consent in writing or the court’s permission is required to discontinue. If there is more than one defendant the claimant may discontinue all or part of the claim against all or any of the defendants.
It is also possible for a defendant to rely on a defence of set-off or to bring an ancillary claim against either the claimant (i.e. a counterclaim) or a claim against an additional party. A counterclaim or additional claim should be pleaded in the same way as a claim (CPR Part 18).
Generally a defendant who disputes the claim or the BVI court’s jurisdiction must file a defence in the period of 28 days after the service of the claim form. An acknowledgment of service containing a notice of intention to defend can be filed within 14 days after the date of service of the claim form (CPR rules 9.1 and 9.3). If no acknowledgment of service is filed and no defence is filed within 14 days or where a defendant fails to file either an acknowledgment of service or a defence within the prescribed time periods then judgment may be entered where CPR Part 12 allows it (CPR rules 9.2(5) and 10.2(4)).
Yes, it is possible for a defendant to bring an ancillary claim against a third party. This is pleaded in the same way as a counterclaim (see CPR Part 18).
CPR Part 12 contains provisions under which a claimant may obtain default judgment by an application in Form 7 made to the court office without trial where the defendant has failed to file a defence or an acknowledgment of service.
It is not unusual for the BVI court, and in particular for the Commercial Division, to order a split trial. This typically arises where an assessment of damages is likely to involve different evidence from that to be advanced on the issue of liability and the court is of the view that a trial on the latter first is likely to save costs in the event that the claimant is unsuccessful. Again, the court has the power to order a split trial pursuant to its broad case management powers in CPR Part 26 and specifically CPR rule 26.1(3). In making any such order, the court is required to have regard to the overriding objective in CPR Part 1 as set out above.
(d) the statement of case or the part to be struck out is prolix or does not comply with the requirements of CPR Part 8 or 10” (form and content of claim form, statement of case and defence).
Tthe general rule is that a claimant may discontinue all or part of a claim without the permission of the court (CPR rule 37.2). See the answer to question 3.5.
As in England and Wales, there is an obligation to produce a list of documents by way of disclosure. A person who claims the right to withhold inspection of documents must make that claim within their list for example documents which are privileged.
Applications for pre-action disclosure and specific disclosure for a document or class of documents can also be made.
The English common law rule in Norwich Pharmacal v Commissioners of Customs and Excise [1974] AC 133 (disclosure orders against third party wrong-doers) is followed in the BVI. It was relied upon extensively by JSC Bank in its quest to recover the fruits of the fraud said to have been perpetrated by its former chairman, Mukhtar Ablyazov. In JSC BTA Bank v Fidelity Corporate Services & Others [2011] JBVIC 2101, the Court of Appeal reversed a judgment of the Commercial Court Judge which doubted whether Registered Agents had the necessary degree of participation to the found jurisdiction to obtain relief against them. It has recently been applied in PT Ventures SGPS SA v Tokeyna Management Limited (BVIHC (Com) 2015/0134. However, the BVI court will not permit a party to apply for a Norwich Pharmacal Order simply to strengthen its own case and will be less inclined to grant such relief if the applicant already knows of the location of assets, or the identity of a requisite party. The court will be especially slow to make such an order if the effect of it would be to pre-empt the disclosure that is likely to be given in the ordinary course under the CPR. These principles were espoused in Morgan & Morgan Trust Corporation Limited v Fiona Trust & Holding Corporation [2006] ECSC J0403-5 and TSJ Engineering Consulting Limited v (1) Al-Rushaid Petroleum Investment Company (2) Al-Rushaid Parker Drilling Limited [2010] ECSC J0727-3. Bannister J emphasised that it is not open for litigants in foreign proceedings to seek to obtain information from BVI entities about their assets which ought to be sought in the foreign jurisdiction where the main proceedings were under way (Bascuñan and others v Elsaca and others BVIHC2015/0128 applying Osetinskaya v Usilett Properties Inc BVIHC(Com) 2013/0037).
The courts in the BVI, as part of their case management functions or upon application by a party for specific disclosure or a Norwich Pharmacal Order, may make orders for disclosure of documents or classes of documents.
The rules governing the form of evidence in the BVI are set out in Parts 29-33 of the Civil Procedure Rules, the Evidence Act 2006, the Oaths Act, 1911 and the common law. As set out above, under the CPR the parties are normally required to provide advance disclosure of all “directly relevant” material before trial. In the usual course, the court will give directions at a CMC for the exchange of expert reports and witness statements on which the parties seek to rely at trial. Hearsay evidence is admissible at trial provided that adequate notice identifying the hearsay notice is given to the other parties in advance.
(b) consent orders (agreement between the parties as to the terms of the order); and
(c) Tomlin orders (a form of contractual consent order the terms of which are set out in a schedule which remains confidential to the parties save for enforcement in the event of breach).
It is open to a creditor to apply for the appointment of a liquidator to a defaulting debtor company where the debt is not the subject of a bona fide dispute on substantial grounds (Sparkasse Bregenz Bank v Associated Capital Corporation [2003] ECSC JO618-5). In any case where a judgment (local or foreign) has first been obtained, this is usually easily established. In addition, the debtor company must not have the benefit of a counterclaim which exceeds its own liability to the creditor or reduces it to below the statutory minimum of US$2,000 (Rule 149 of the Insolvency Rules, 2005).
Attempts to enforce foreign judgments and to convert them into judgments of the BVI court have been relatively uncommon in the past. Where it is desired to do so perhaps in order to obtain a charging order over shares or apply for a receiver to be appointed by way of equitable execution to recover a judgment debt, foreign judgments may be enforced in the BVI at common law, or in limited instances, by statute.
Section 3(1) provides that an application for registration may be made within 12 months of the date of the judgment and the court may make an order when it is just and convenient for it to do so. Section 3(2) of the Act excludes judgments: which were obtained by fraud (section 3(2)(d)); where an appeal is pending or the time for appealing has not expired (section 3(2)(e)); or it would be contrary to public policy to enforce the award. The BVI court would generally look to English decisions as to the types of conduct which may affront public policy but as a matter of policy in the BVI the courts will not enforce, directly or indirectly, foreign tax claims. In JSC BTA Bank v Mukhtar Ablyazov (2014), the Court of Appeal held that it was not open to a defendant to use the test of just and convenient in section 3(1) to challenge the underlying processes of the English Court where the tests set out in section 3(2) had been met. In that case, the defendant wished to challenge the validity of the English judgment on the basis that he had filed an appeal with the European Court of Human Rights (“ECHR”). The court rejected the defendant’s argument that his appeal to the ECHR represented an appeal of the English judgments and, noting that the criteria in section 3(2) had been met, held that the judge had been correct to refuse to consider the defendant’s case pursuant to a separate consideration of section 3(1).
to re-litigate matters decided before a court of competent jurisdiction - even where the judgment of the foreign court cannot be enforced at common law, it may nevertheless be possible to argue that the losing party should not re-litigate those issues that were decided by the foreign judgment; and
to litigate matters in subsequent proceedings which ought to have been advanced in the original proceedings - as a rule, the courts will expect a party to advance all of his case at the same time, so as to prevent the other party being vexed twice by the same matter (see the rule in Henderson v Henderson 1843-60 All ER Rep 378).
The most frequently encountered method of alternative dispute resolution in the BVI is arbitration. However, at present, parties normally conduct their arbitrations in other jurisdictions (such as the London Court of International Arbitration) and then seek to enforce the terms of the order in the BVI.
On 23 January 2014, the BVI passed the Arbitration Act 2013 which came into force on 1 October 2014. The 2013 Act repeals and replaces the previous 1976 Ordinance. The New York Convention was also extended directly to the BVI from 24 May 2014.
The 2013 Act seeks to address a number of difficulties in the previous law. The 1976 Ordinance was based on a mixture of older English statutes and was widely considered to be unsuitable to deal with modern commercial litigation. The 2013 Act introduces the UNICITRAL Model Law on arbitration (as amended on 7 July 2006) to the territory with some minor exceptions. In addition, the fact that the New York Convention had not previously been extended directly to the territory meant that BVI arbitral awards were largely unenforceable outside of the jurisdiction. Until now the BVI has rarely been the seat of arbitration hearings but this has been addressed by the establishment of the BVI International Arbitration Centre (the BVI IAC).
The establishment of the BVI International Arbitration Centre (see above) as a result of the Arbitration Act 2013.
The authors would like to acknowledge the assistance of their colleague Daian Sumner in the preparation of this chapter. Daian is an Associate in the Litigation Department of the BVI office. She routinely handles complex corporate and commercial disputes including shareholder disputes, insolvency matters, fraud and asset tracing, and trust litigation. Prior to relocating to the BVI in 2016, she was a practising barrister with a strong commercial and chancery practice. She has extensive court experience, including trial work, complex applications and enforcement proceedings. Daian has had great success in applying to appoint receivers to assist creditors in recovering debts owed to them by BVI companies. Such applications often include an element of injunctive relief to assist the creditor and the receiver in securing the assets and allowing better recovery. She has taught law at undergraduate and postgraduate degree level at a number of institutions, including Hong Kong University.