Cayman Islands: Re Rhone Holdings, L.P. - What Now For The "Non-Petition" Clause?

Last Updated: 12 October 2015
Article by Barnaby Gowrie and Niall Hanna

Most Read Contributor in Cayman Islands, September 2018


A recent decision of the Grand Court of the Cayman Islands has cast some doubt over what has been a long-standing, last-chance remedy for prejudiced, disenfranchised or otherwise aggrieved stakeholders of Cayman entities: the just and equitable winding up petition.

In Rhone Holdings, L.P., Justice Mangatal dismissed such a winding up petition and ordered the petitioner to pay costs on the grounds that it constituted an abuse of process for the petitioner to present a petition, since it had been prohibited from doing so under an agreement to which it and the respondent, Rhone Holdings, L.P. (a Cayman Islands ELP) ("Rhone") were parties; the limited partnership agreement governing Rhone (the "LPA"). The judgment was handed down on 18 August 2015, and written reasons were delivered on 16 September 2015.


The LPA provided that the "approval of all the Parties" was required in order to terminate the partnership. Unable to obtain the approval of one of the general partners (the "Dissenting GP"), the remaining parties (together, the "Petitioners") petitioned the Court on an ex parte basis seeking (among other orders) an order that Rhone be placed into provisional liquidation the ("Petition"); the Court granted the relief sought on 23 July 2015.

Upon discovering the Petition, the Dissenting GP made an application seeking that the Petition be struck out (the "Strike-Out Application"), citing four main grounds:

  1. It was an abuse of process to present the Petition where the Petitioners were precluded from doing so under the LPA.
  2. The availability of alternative relief or remedies.
  3. The lack of tangible interests of the Petitioners in a winding up.
  4. Misuse of confidential information.

The Strike-Out Application was heard over 12 and 13 August 2015 and Justice Mangatal, having been informed in advance of circumstances that necessitated a swift judgment, delivered a short judgment on 18 August 2015 in which she indicated that the first ground had persuaded her that the Petition should be struck out. Accordingly, when subsequently delivering written reasons the Honourable Judge indicated that it would serve no useful purpose to deliberate upon the remaining three grounds, as any such comments would merely serve as obiter.

Section 95(2) of the Companies Law

Justice Mangatal was persuaded by the Dissenting GP's submissions that section 95(2) of the Companies Law (2013 Revision) ("Companies Law"), which provides that:

"[t]he Court shall dismiss a winding up petition or adjourn the hearing of a winding up petition on the ground that the petitioner is contractually bound not to present a petition against the company."

is both (a) drafted in mandatory terms; and (b) incorporated by reference into the relevant parts of the Exempted Limited Partnerships Law (2014 Revision) ("ELP Law"). It therefore followed that if parties, who had been free to agree the terms upon which they contracted, entered into an agreement which expressly forbid the presentation of a winding up petition, then there had been a clear agreement not to issue winding up proceedings and as such, if a petition was presented in contravention of such an agreement, the Court was required to dismiss it under section 95(2).

Public Policy

Under section 92(e) of the Companies Law, a company may be wound up by the Court if "the Court is of the opinion that it is just and equitable that the company should be wound up". The circumstances in which it will be just and equitable to wind up a solvent company are not defined in statute but can be said to fall within the following categories: lack of probity on the part of the directors; the need for an independent investigation of the company's affairs; deadlock; the oppression of minority shareholder; and loss of substratum. The "just and equitable petition" has therefore long been seen as a means of last resort for a creditor or shareholder who may otherwise be deprived of relief and it has been seen as an important matter of public policy that this avenue remains available.

Justice Mangatal did discuss the Public Policy argument in her judgment; taking the view that it is a more important matter of public policy that parties who have freely negotiated and entered into agreements be held to their terms.


The judgment has been questioned amongst local practitioners because the construction applied by Justice Mangatal seems to hold little regard for the purposes of just and equitable relief: it is there to be used if all else fails or to protect innocent victims of fraud or wrongdoing by counterparties, in whose reasonable contemplation such wrongdoing could not have been when the documents containing the (now prohibitive) terms were agreed.

Whilst the decision has not been appealed, we expect to see the judgment and facts of the specific case examined in more detail in future cases.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions