Cayman Islands: Freezing Orders

INTRODUCTION

The object of this Memorandum is to provide clients of Walkers with law and procedure in relation to freezing orders in the British Virgin Islands. Freezing orders were formerly called Mareva Injunctions.

BRITISH VIRGIN ISLANDS OVERVIEW

As a British Overseas Territory, the BVI has an independent legal and judicial system based on English Common Law, with a right of final appeal to the Privy Council in London. The territory is responsible for its own internal self-government. The United Kingdom remains responsible for the territory's external affairs, defense, internal security and the courts. The Territory has enacted court rules called the Civil Procedure Rules 2000 which are closely similar, and identical in many respects, to the England and Wales CPR.

Freezing Orders

1. The applicant for a freezing order (whether local or international in operation) begins an action by filing a Claim Form accompanied by a Statement of Claim. If the application for the freezing order is being made ex parte it is made on affidavit only. The affidavit sets out the factual basis for the application including the reasons why the orders are sought urgently or why notice to the other parties to the case would defeat the purpose of the application BVI CPR, rule 17.4(4). In exceptional cases of urgency the claimant may apply for an interim freezing order before issuing a Claim Form.
   
   
2. A freezing order made ex parte may be granted for a period not exceeding 28 days. The court must fix a return date within this time for an inter parties hearing on the grant of the order or for further consideration of the order.
   
   
3. If the major target defendant in the BVI proceedings (the party holding or controlling the bank account and against whom the freezing order is sought) is a BVI company, service out of the jurisdiction on additional foreign defendants may be permitted under CPR, rule 7.3(2)(a). Service out of the jurisdiction is permitted in this case if there is a real issue between the claimant and the BVI company that is reasonable for the court to try and the foreign defendant is a necessary AND proper party to claim.
   
   
4. Where rule 7.3(2)(a) is not applicable and all of the defendants are resident outside the jurisdiction, Siskina-type difficulties may arise. The rule in The Siskina [1977] 3 All ER 803 is good law in the BVI. The claimant will therefore be required to present a substantive claim against the defendants in addition to the application for an interim freezing order.
   
   
5. The BVI courts recognise that BVI proceedings may be brought in aid of foreign proceedings. BVI courts are happy to stay their own proceedings after granting a freezing order, to permit the litigation to be conducted in the jurisdiction where the major battles are being fought.
   
   
6. A claimant who succeeds in obtaining an interim freezing order will invariably be required to give an undertaking in damages with the object of compensating the defendants if the claimant should ultimately be unsuccessful at the trial and the court should later find that the defendants have suffered loss as a result of the grant of the order.
   
   
7. A foreign claimant without sufficient assets in the Territory may, on the application of the defendants, be ordered to provide security for the defendants' costs of the action.
   
   

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.