ARTICLE
24 September 2015

Partnership Non-Petition Clauses Upheld

MG
Maples Group

Contributor

The Maples Group is a leading service provider offering clients a comprehensive range of legal services on the laws of the British Virgin Islands, the Cayman Islands, Ireland, Jersey and Luxembourg, and is an independent provider of fiduciary, fund services, regulatory and compliance, and entity formation and management services.
The Grand Court of the Cayman Islands has confirmed that limited partnership agreements preventing partners seeking to wind-up the partnership (non-petition clauses) are effective.
Cayman Islands Litigation, Mediation & Arbitration

The Grand Court of the Cayman Islands has confirmed that limited partnership agreements preventing partners seeking to wind-up the partnership (non-petition clauses) are effective.  The decision was reached on the basis that, pursuant to long standing partnership law principles, unaffected by legislation, partners are free to negotiate the method by which a partnership ends.  Having decided that the partners were contractually bound by the relevant clause, the Court held that it was statutorily required to dismiss the winding-up petition.

The Court's reasoning does not expressly extend to companies.  For a company, it is generally established at common law that shareholders are not contractually bound by non-petition clauses contained in the Articles.  No Cayman Islands case has yet considered whether separate contractual non-petition agreements between a company and a shareholder are enforceable.

Maples and Calder will be producing a more detailed analysis shortly.

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.

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