The Financial Services Division of the Grand Court has just delivered what is already being hailed as a seminal judgment on the subject of directors' duties in the context of offshore hedge funds.

In Weavering Macro Fixed Income Fund Limited (In liquidation) v Peterson and Ekstrom, after a full trial the Court found a fund's independent directors guilty of wilful default in the discharge of their duties, and ordered them to pay damages to the fund's liquidators in the sum of USD 111 million, representing the losses suffered by the fund which were caused by their default.

The findings recorded in the judgment suggest it was a case of extreme facts: the fund's investment manager arranged the appointment of two relatives to serve as the fund's directors on a gratuitous basis. This was purportedly done in order to meet certain minimum legal requirements....

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