Cayman Islands: Anti-Suit Injunction Allows Winding Up To Proceed In Harmony

In Re Ardent Harmony Fund Inc (In Official Liquidation)(FSD 54 of 2016), Chief Justice Smellie granted an anti-suit injunction restraining the largest creditor of Ardent Harmony Fund Inc (the Fund) from continuing proceedings in the Supreme Court of Barbados in which it had sought a receivership order and the appointment of a bankruptcy trustee over the Fund (the Barbados Proceedings). In his reasons for judgment, the Chief Justice provided a useful examination of the principles which apply to anti-suit injunctions in the insolvency context.


The Fund is a Cayman Islands exempted company which operated as an open ended investment fund. On 26 April 2016, the sole holder of the Fund's voting shares appointed voluntary liquidators to the Fund. As the directors of the Fund were unable to provide a declaration of insolvency, an application was made by a Petition dated 28 April 2016 to bring the voluntary liquidation under the supervision of the Cayman Court. On 10 May 2016, the Court ordered that the liquidation continue under its supervision and appointed Joint Official Liquidators (JOLs) to continue its winding up.

International Tropical Timber Organisation (ITTO) is a Japanese entity, and a member and creditor of the Fund. Subject to the final resolution of its Proof of Debt, ITTO appears to be the Fund's largest creditor, with a claim representing approximately half of the Fund's debt.

The application

Although ITTO had made no objection to the Cayman Islands liquidation proceedings and had not expressed any concern regarding the conduct of the liquidation, it commenced the Barbados Proceedings by a Petition dated 13 May 2016 without notice to the JOLs. ITTO submitted its Proof of Debt in the Cayman Islands liquidation on 19 May 2016.

On 24 May 2016, the JOLs applied without notice to ITTO for an antisuit injunction restraining ITTO from continuing the Barbados Proceedings. In seeking the anti-suit injunction, the JOLs expressed their firm view that nothing had arisen in their investigations to date which suggested there was any need to commence proceedings in Barbados. In particular, the JOLs had not identified any assets or debtors in Barbados, other than the Fund's bank accounts with CIBC FirstCaribbean International Bank, the balances of which had been transferred to accounts opened by the JOLs in the Cayman Islands.

The anti-suit injunction was sought in circumstances where there was a risk that the Barbados Court would appoint a receiver over the Fund's assets at a hearing on 27 May 2016 and that such an appointment would conflict with the role of the JOLs. The JOLs had sought to engage with ITTO on why it had commenced the Barbados Proceedings, but the JOLs remained concerned that it was not clear from ITTO's application or subsequent correspondence with the JOLs that the Barbados Proceedings would benefit the estate or that ITTO had even considered that the conduct of the liquidation in the Cayman Islands had been unsatisfactory. The JOLs' position was that the pursuit of the Barbados Proceedings and the appointment of a bankruptcy trustee would result in confusion for creditors and debtors and increased costs to the estate.

Anti-suit injunctions in the insolvency context

The Chief Justice noted in his judgment that it is "trite principle" that once the Fund was placed into liquidation in the Cayman Islands, it "became vested trustee of its assets for its creditors and this includes assets wherever situate", referring to the Privy Council's decision in Wight v Eckhardt Marine GmbH [2004] 1 AC 147. Accordingly, Smellie CJ explained:

"It follows that the Court has jurisdiction to restrain a creditor over whom it has personal jurisdiction from the institution or continuance of proceedings in a foreign court, where the effect of those proceedings would be to subvert the universal collective process of the liquidation..."

The Chief Justice also referred to the judgment of Lords Sumption and Toulson in the Privy Council in Stichting Shell Pensienfonds v Krys and another [2015] 2 WLR 289 (Stichting Shell). In Stichting Shell, the Privy Council granted an injunction to restrain proceedings commenced in Holland which were an attempt by a creditor of Fairfield Sentry to secure priority over assets held by a Dutch custodian. Lords Sumption and Toulson explained that, in granting an anti-suit injunction:

"The Court does not purport to interfere with any foreign court, but may act personally upon a defendant by restraining him from commencing or continuing proceedings in a foreign court where the ends of justice require."

The "ends of justice" may require the grant of an anti-suit injunction in cases, for example, where the pursuit of proceedings abroad on the same subject matter is "vexatious and harassing of the opposite party"; or where the foreign proceedings are brought in an inappropriate forum or are otherwise "contrary to equity and good conscience". Where a creditor commences foreign proceedings to obtain prior access to an insolvent estate that conduct may amount to vexatious or oppressive conduct. However, as their Lordships explained in Stichting Shell and as the Chief Justice also observed:

"Where a company is being wound up in the jurisdiction of its incorporation, other interests are engaged. The court acts not in the interest of any particular creditor or member, but in that of the general body of creditors and members. Moreover ... there is a broader public interest in the ability of a court exercising insolvency jurisdiction in the place of the company's incorporation to conduct an orderly winding up of its affairs on a worldwide basis, notwithstanding the territorial limits of its jurisdiction."

The Chief Justice stated that the Court is "concerned to act" in such cases to avoid a "free for all" to grab the assets of a company in liquidation.


The JOLs primarily relied on the fact that ITTO had submitted its Proof of Debt to satisfy the Court that it had personal jurisdiction over ITTO. The Chief Justice was satisfied that the Court had jurisdiction, both because ITTO was a shareholder of the Fund and because it had submitted a Proof of Debt. The Chief Justice concluded that it was "obvious" that the appointment of a bankruptcy trustee in Barbados would interfere with the conduct of the Cayman Islands liquidation and would be contrary to the "ordinary principle of international law that only the jurisdiction of a person's domicile can effect a universal succession to its assets", as stated by the Privy Council in Stichting Shell. In the circumstances, the injunction was granted.


The decision is a timely reminder that, in appropriate cases, the Grand Court will act to protect the orderly winding up of Cayman Islands companies for the benefit of the estate. In a similar vein, the Chief Justice was also prepared to make an order for substituted service to allow the Fund to serve ITTO via its Barbados attorneys on the bases that "effecting service on ITTO in Japan may be a time consuming and costly exercise" and that "[t]here is no anticipated prejudice to ITTO in being served ... in that way."

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
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