Bermuda: The Appleby 2012 Offshore Round-Up: Civil Procedure

Last Updated: 7 February 2013
Article by Andrew Bolton

Welcome to Appleby's review of the key decisions on matters of civil procedure and remedies handed down in the leading offshore jurisdictions during 2012, compiled by members of our Litigation & Insolvency Practice Group in Bermuda, the British Virgin Islands, the Cayman Islands, Jersey, Guernsey and the Isle of Man. Equivalent updates are available in the areas of insolvency & restructuring, company law, fund disputes and trust litigation. Copies may be obtained from our website or from your usual Appleby contact.

Across the offshore jurisdictions, 2012 has produced a steady flow of judgments in the sphere of civil procedure. The BVI has delivered an important decision relating to time limits for limitation and service, while the Bermuda Court has been busy on issues of costs as well as delivering its first reported decision on 'Springboard relief'. Cross-border issues feature strongly, which is not surprising given the international business presence of each jurisdiction. For example, asset-freezing and anti-suit (and anti-anti-suit) injunctions have been particularly topical in the BVI, Bermuda, Cayman and Jersey Courts and the Isle of Man Court has heard a variety of interlocutory applications concerning proceedings in relation to the litigation surrounding Bitel LLC (a Kyrgyz telecommunications company). In respect of the early determination of litigation, there have been some interesting developments in Cayman regarding strike-out and default judgment. We have also seen cases, especially in Guernsey, involving the questions of service out of the jurisdiction and when a stay on the forum non conveniens ground should be granted.

Asset-Freezing Injunctions

The ability of the courts to grant so-called 'free-standing' injunctive relief (i.e. relief in aid of foreign proceedings in the absence of a local cause of action) has continued to be topical in the offshore jurisdictions. In the BVI, the Black Swan jurisdiction, derived from the decision of Bannister J in Black Swan v. Harvest View BVIHCV 2009/399, affirmed by the Court of Appeal in Yukos CIS Investments v. Yukos Hydrocarbons BVICVAP 2010/028, is authority for the proposition that the Court may in appropriate cases grant free-standing injunctive relief, in aid of foreign proceedings. It thus marks a departure from the rule in The Siskina [1979] AC 210, long since abrogated in England but until then good law in BVI.

The Court has previously sought to keep a keen eye on the development of the jurisdiction, to ensure that the principle is kept within its proper bounds. Thus at first instance in Yukos, Bannister J explained that "Black Swan rests upon the willingness of the Court, in a case when the defendant to foreign proceedings has assets within its jurisdiction, to act in aid of a claimant's prospective entitlement to a money judgment if successful in the foreign proceedings. It depends upon the assumption that the foreign money judgment will be enforceable, by registration or otherwise, in the Court within whose jurisdiction the assets are situated. It is this last feature which founds the jurisdiction". The trend continued throughout 2012. For example, in Gudavadze v. Carlina BVIHCM 2012/0011 the Court left open the question whether summary judgment could ever be appropriate in Black Swan proceedings, but then granted summary judgment (significantly, against the claimant), in part on the grounds that there was no basis for continuing the injunctive relief originally obtained. It is less obvious that summary judgment would be available against the defendant.

In the case of Magot v. Gazin BVIHCM 2012/100, in an oral ex tempore judgment, the Court noted that the Black Swan jurisdiction is quite different from ordinary civil proceedings, and will not be accompanied by pleadings or orders for disclosure. It doubted whether Black Swan clothes the Court with the power to make ancillary orders, such as asset disclosure orders, preferring to take the view that these are best made by the foreign court. A similar approach, differently expressed, might be thought to lie behind the decision of the Commercial Court Judge in VTB v. Nutritek [2011] 11 JBVIC 2301: there the Judge noted the potential for jurisdictional disharmony where orders were made in the satellite proceedings which went beyond the relief granted in the primary, foreign proceedings. In Magot, the Court reserved for further argument the question whether adverse costs orders can be made in Black Swan proceedings.

Meanwhile, in the Cayman Islands, on 13 and 14 February 2012, the Court of Appeal heard an appeal against the decision of the Grand Court (Cresswell J) in January 2012 in VTB Capital plc v Malofeev & Others that there is no jurisdiction to grant a free standing Chabra injunction where the "cause of action defendant" was not a party to the proceedings.

In that case, the Grand Court was asked to grant a free-standing asset-freezing order against three defendants in support of an English worldwide freezing order. The first defendant was not resident within the Cayman Islands and there was no other basis on which he could be sued in Cayman, while the second and third defendants were Cayman companies which, the plaintiff alleged, held and managed an investment portfolio which was truly that of the first defendant.

Cresswell J declined to follow Quin J's decision of only a few months earlier in Gillies-Smith, (Unreported, Quin J, 12 May 2011) and refused to grant the freezing order against the first defendant and leave to serve out of the jurisdiction. He held that the Court was bound by the decision of the majority of the Privy Council in Mercedes- Benz AG v Leiduck [1996] 1 AC 284. The Judge went on to urge the Legislature to give urgent consideration to whether legislation equivalent to section 25 of the English Civil Jurisdiction and Judgments Act 1982 (whereby the English Court may grant a freezing order in support of foreign proceedings) should be introduced in Cayman.

With regard to the second and third defendants (which were Cayman companies) the question was whether the Court was able to grant a free standing Chabra order freezing the Cayman assets of the defendants where no substantive cause of action had been asserted against them. The order was hesitatingly granted by Cresswell J at the ex parte stage on the basis that the issue should be fully argued at an inter partes hearing. The Judge conditionally discharged the order following the inter partes hearing: he concluded that where there is no "cause of action defendant" in proceedings in the Cayman Islands, the Grand Court did not have jurisdiction to grant Chabra relief. The injunction remained in force for a limited time, which gave the plaintiff an opportunity to apply for leave to appeal. Leave to appeal was obtained from the Court of Appeal, which continued the injunction until the hearing of the appeal. Judgment following the appeal is still awaited, but at the end of the hearing of the appeal the Court of Appeal accepted undertakings offered by the second and third defendants and discharged the injunction.

In Bermuda, in the case of E.R.G. Resources v Nabors Global [2012] SC (Bda) 23 Com, the Court similarly considered the scope of the Court's power to grant free-standing injunctive relief in aid of foreign proceedings. Citing the Black Swan authority from the BVI, Kawaley CJ confirmed that the current Bermuda common law position is that interim injunctive relief can be granted generally in support of foreign causes of action wherever the Bermuda Court has personal or territorial jurisdiction over the relevant defendant. Whether or not the primary litigation court would grant similar relief if it had jurisdiction to do so was an important factor. It is safe to assume that this reported decision in Bermuda will invite similar prospective applications.

Interim Injunctions

Also in Bermuda, Springboard Relief [2012] SC (Bda) 15 Com (9 March 2012) is the first reported decision concerning the grant of so-called "springboard" relief pending trial. Springboard relief is a form of injunction designed to prevent former employees conferring a competitive advantage on a competing business through the misuse of their former employer's confidential information. Kawaley J, as he then was, ruled in Springboard that such relief is only available if the Court is satisfied that the departure of the relevant employees and subsequent events is more likely than not to have been part of an unlawful conspiracy. The Court found that in considering where the balance of convenience lies, it must take into account (together with the traditional principles applicable to interim injunctions) (a) the impact of any applicable restrictive covenants, (b) the economic freedom rights of the defendants; and (c) the comparative risks of damage pending trial. In the present case, the Court ordered the relief against the unnamed defendants who appeared to be in breach of non-competition clauses in their contracts.

Anti-Suit (and Anti-Anti-Suit) Injunctions

On 27 September 2012, in the Cayman Islands, Cresswell J delivered a judgment in the case of Origami Partners III, LP v Pursuit Capital Partners (Cayman) Ltd & Ors, in respect of an application for an anti-suit injunction to restrain proceedings in the US Federal Court for the District of Connecticut. The application was refused on the basis that the trial in Cayman was imminent and so there was not the need for an injunction to protect the applicant's interests in the Cayman proceedings for a matter of weeks until the trial. Despite refusing the relief, Cresswell J delivered a meticulous judgment setting out in principles to be followed where there is no jurisdiction or arbitration agreement that gives rise to the right for anti-suit relief (that being the position in the present instance). He added that in those circumstances "it is important for the Courts to tread warily because a precipitous order may prove to be counter-productive and do more harm than good."

In Joliet 2010 Ltd et al v Goji Ltd et al [2012] SC (Bda) 69 Com (5 December 2012), the Bermuda Supreme Court confirmed that the principles applicable to the grant of an anti-suit injunction in Bermuda are those set down in the English case of Glencore International AG v Exeter Shipping Ltd [2002] EWCA Civ 524. In particular: the respondent to the injunction must be subject to the court's jurisdiction, the threatened conduct must be "unconscionable," an injunction must be necessary to protect the applicant's legitimate interest in the domestic proceedings.

In Guernsey, in Credit Suisse Trust Limited v Nemni and others (2/2012), the Royal Court granted the plaintiff trustee company's application for an anti-suit injunction to restrain the first defendant from continuing to pursue substantial parts of proceedings in Italy against the second to fourth defendants. Nearly all the matters mentioned in the Italian proceedings related to issues which had already been determined following a judgment of the Royal Court on 18 November 2011.

The Lieutenant Bailiff dealt in some detail with the jurisdiction of the Royal Court to grant an anti-suit injunction. In summary, the Lieutenant Bailiff:

a. Applied the key relevant principles under English law identified by Toulson L.J in paragraphs 49-50 of Highland Crusader Offshore Partners L.P & others v Deutsche Bank A.G & others [2010] 1 WLR 1023.

b. Held that there was binding guidance in the Court of Appeal's decision in Winnekta Trading Corporation v Bank Julius Baer (2009-10) GLR 260 that English law principles in relation to anti-suit injunctions are equally applicable in Guernsey.

c. Held that under Guernsey law an anti-suit injunction may be granted, if it is otherwise appropriate to grant one, after judgment has been given: Masri v Consolidated Contractors International Co. SAL (No.3) [2009] QB 503 applied.

In Credit Suisse Trust Limited v Nemni and others (13/2012) the Royal Court in Guernsey granted the plaintiff a further anti-suit injunction to restrain the first defendant from continuing to pursue a second set of proceedings in Italy (this time against the plaintiff alone), proceedings in Luxembourg and proceedings anywhere based on the same issues.

There have also been two recent decisions in Cayman and Guernsey in relation to anti-anti-suit injunctions.

In Cayman, on 25 April 2012, Cresswell J delivered a judgment in the case of Asia Pacific On-Line Limited v Marcus A Watson & Others in relation to an application to prevent certain defendants from applying to the Atlanta Bankruptcy Court for prohibitory and mandatory orders which would prevent the plaintiff from pursing legal action in the Cayman Islands. The relief was granted and later discharged, although Cresswell J expressed a desire on both occasions for a protocol to be arrived at between the US and Cayman Courts demonstrating his willingness to work with the foreign court for the benefit of the litigants involved (he made some similar comments in the Origami case mentioned above).

Turning to Guernsey, the Court of Appeal considered, in Carlyle Capital Corporation Limited & Ors v Conway & Ors (20/2012), the basis of the principles governing the grant of an anti-anti-suit injunction and held that the same principles applied as those adopted in respect of an anti-suit injunction, with the caveat that "particular caution" should be applied in granting an anti-anti-suit injunction.

Determination of Preliminary Issue

In the Isle of Man, the complex matter of AK Investments CJSC v. Kyrgyz Mobil et al which involves a dispute concerning the ownership of shares in a Kyrgyz telecommunications company, namely Bitel LLC, has involved various interlocutory applications.

Proceedings were commenced initially in the Isle of Man to enforce a judgment in the Isle of Man against the defendants ("the KFG Companies") who later counterclaimed and joined in various other defendants to that counterclaim.

In February 2012, applications were made by certain defendants to the counterclaim for a split trial seeking determination of a preliminary issue regarding Kyrgyz law of limitation. The Court, agreeing with the KFG Companies who opposed the applications, held that the issue was not well enough developed in the expert evidence and that it would be unreasonable in the circumstances to "assemble the posse of experts that might be called to give evidence" in a preliminary hearing, which could well be a "treacherous shortcut."

Discovery and Letters of Request

Later in the same case in June 2012, an application was made by certain defendants to the counterclaim for the issue by the Isle of Man High Court of a letter of request under the Hague Convention to the judicial authorities of Luxembourg. The applicants were seeking copies of various documents referred to in a judgment of the London Court of International Arbitration from a company incorporated in Luxembourg. The applicants argued that these documents were relevant to the ongoing proceedings in the Isle of Man, but the KFG Companies maintained that this was merely a fishing expedition. The Isle of Man High Court agreed with the KFG Companies and rejected the application saying that it would be improper to request the documents from the Luxembourg Court "on such a speculative basis".

In August 2012, a further application was made because one of the defendants to the counterclaim had redacted documents ordered to be disclosed by the Court following an application by the KFG Companies. The defendant to the counterclaim had purportedly made the redactions on the advice of its Swiss lawyers who said that there was a risk that they would face civil or criminal liability in Switzerland for breaches of Swiss data protection legislation and Articles 162 and 273 of the Swiss Criminal Code. The Court said that it may take into account the possibility that compliance with the order would or might entail a breach of foreign law when deciding whether to order disclosure. However, the Court held that unredacted copies should be disclosed because there was no such risk of prosecution under any of the Swiss law provisions.

Finally, the KFG Companies chose to waive privilege in respect of certain correspondence between the KFG Companies and their Kyrgyz lawyers to demonstrate a lack of knowledge or notice of the dates of hearings in Kyrgyzstan. As a result, an application was made by a defendant to the counterclaim on the basis that fairness required that all communications with the KFG Companies' lawyers on those issues should be disclosed, because there had been a collateral waiver of privilege. The Court held that there had been a collateral waiver of privilege, but that the collateral waiver of privilege was to be narrowly confined.

The obtaining of evidence by way of a letter of request was also considered in Guernsey, in a case that had been commenced by a Guernsey company against a Californian bank before the Superior Court in Los Angeles. As part of those proceedings the defendant sought and obtained a letter of request from the Judge in California seeking the production of documents and examination before a Commissioner appointed by the Royal Court of Guernsey of former directors of the Plaintiff in the US proceedings. The Guernsey witnesses who were sought to be examined (who were not parties to the US litigation) objected to the grant of the order requiring their examination in Guernsey. The Deputy Bailiff considered the objections raised by the witnesses in Perpetual Media Capital Ltd v National Bank of California (unreported 19 July 2012) and made the following findings. It held that there was no dispute that the Royal Court had the power to order the examination of the witnesses under the Evidence (Proceedings in Other Jurisdictions) Act 1975 as extended by the Evidence (Proceedings in Other Jurisdictions) (Guernsey) Order 1980. When considering whether to grant the order permitting the examination of the witnesses the Court found that it ought to follow the principles set out Smith v Phillip Morris Companies Inc [2006] EWHC 916 which include the following:

a. an order for the examination of a witness who is not a party to the litigation shall not be made where the purpose of the examination was an impermissible investigatory exercise, rather than to obtain evidence for use at trial;

b. the Court ought to seek to assist the foreign court where it is appropriate to do so;

c. therefore, if the Court receives a letter of request which is defective but those defects can be remedied it may make an order with amendments which remedy the defects in the letter of request;

d. the Court may grant the order subject to limitations or conditions which afford the witnesses appropriate protection;

e. however, there will come a point where the amendments to the order mean that it becomes too far removed from the original letter of request and ought not to be granted.

The Court ultimately granted the order implementing the letter of request for the examination of the witnesses, subject to certain conditions and safeguards. The Court also permitted the oral examination of the witnesses to be undertaken in Guernsey before the Commissioner by Californian counsel subject to the condition that each party was to ensure their Guernsey Advocate remained in overall control of the examination on behalf of their client.

Strike-Out for Abuse of Process and Default Judgment

Houston Casualty Company (HCC) has succeeded in a hard-fought piece of litigation in the Cayman Islands against Embassy Investments Ltd as owner of the Hyatt Regency Hotel. The decision (Embassy Investments Limited v Houston Casualty Company, Unreported, 26 January 2012) related to an insurance claim arising out of Hurricane Ivan in 2004.

Proceedings were initially commenced against HCC and its co-insurers by Embassy for non-payment of alleged insured losses caused to the Hyatt Regency Hotel. However, no active steps to pursue the claim in the Cayman Islands had been taken by Embassy for some years. Instead of taking such action, Embassy sought (unsuccessfully) to bring proceedings in Texas for punitive damages and also commenced a campaign of public letter writing and media statements with the apparent object of bullying HCC into making a substantial damages payment to Embassy. Embassy even rejected a settlement offer which represented all that it could hope to receive under the policy, which (as the ultimately Court found) indicated that the proceedings in Cayman were only extant for an ulterior and improper commercial purpose.

Following these events HCC successfully obtained a strike-out of Embassy's claim in Cayman on the ground that Embassy had abused the process of the Court. Embassy has appealed this decision to the Cayman Islands Court of Appeal, which will be heard in April 2013.

It is also worth mentioning that another case relating to loss and damage caused by Hurricane Ivan (Sagicor General Insurance (Cayman) Limited and Another v Crawford Adjusters (Cayman) Limited and Others) [2011 (1) CILR 130] ultimately resulted in claims for abuse of process, civil prosecution and fraud being brought by the Crawford parties and dismissed by the Grand Court in 2011. However, the issues are still due for further consideration since following an unsuccessful appeal to the Court of Appeal in 2012, a final appeal is due to be heard by the Privy Council following permission being granted for the appeal by the Court of Appeal in May 2012.

Separate and apart from Embassy's claim relating to policy proceeds, the public statements mentioned above made by Embassy resulted in HCC bringing a counterclaim for an injunction and damages for defamation. HCC obtained default judgment against Embassy and the Court subsequently refused to set aside the default judgment following a challenge by Embassy. This decision not to set aside the judgment was upheld by the Court of Appeal on appeal by Embassy.

The order for strike-out and the order for default judgment are unusual remedies for an insurer in litigation of this kind to obtain, but reflect a willingness by the Court to resort to unusual remedies when faced with unusual circumstances.


The Bermuda Court was faced with a number of applications in relation to the costs of civil litigation during 2012.

The year opened with two decisions that are instructive on the recoverability of certain categories of costs associated with civil litigation. In the first reported decision of 2012, R Moulder v Cox Hallett Wilkinson et al [2012] SC (Bda) 1 Civ Chief Justice Richard Ground remarked obiter that he did not consider that time spent researching law and procedure was recoverable unless the case is unusual or infrequent. This point was revisited in the Court's second written judgment of the year Golar LNG Ltd v World Nordic SE [2012] SC (Bda) 2 Com where the Court confirmed that it was not usual to allow legal research on routine issues and that the higher the expense rate, the more law and procedure the fee earner is expected to know. In addition, the Court agreed with the appellant's complaints that the fifteen minute increments billed by the respondent's attorneys were too large, stating that the appropriate time unit in Bermuda was six minute increments in line with the practice in England. Given the strict scrutiny applied by the Court to previously unchallenged costs such as legal research and quarter hour time units, it is expected parties and their counsel will be reviewing billing and time allocation practices (and opposing counsels' bills of costs) with renewed vigilance in 2013.

In the third reported decision of the year, E Binns et al v K Burrows [2012] SC (Bda) 3 Civ, Kawaley J reviewed whether or not an "issues-based" approach was applicable to costs in civil proceedings in Bermuda. The Court confirmed that it had significantly narrower discretion than was allowed under the post-CPR regime in England which expressly permitted allocation of costs on an issue by issue basis. The Court decided that in general, its duty will be to determine which party has in common sense terms succeeded and if so award that party their costs. There are two partial exceptions which were identified. First, where the Court or the parties have identified discrete issues for determination at the trial of a Bermuda action in advance, an issues based approach may be appropriate. Second, where a party who has been successful overall has failed on one or more issues and consideration of those issues has occupied a material amount of hearing time or otherwise led to the incurring of significant expense, the Court may order a reduction in the award of costs to him. This reduction would in most cases be effected by making a percentage reduction in the award of costs. This decision clarified the position following the Court of Appeal's apparent rejection of the issues-based approach in First Atlantic Commerce Ltd. v. Bank of Bermuda Ltd. [2009] Bda L.R. 18. This judgment enhances the importance of identifying and agreeing issues in advance of trial. Moving into 2013, we expect to see issue identification employed as a method for managing clients' risk of adverse costs orders, particularly in wide-ranging commercial litigation where a "common sense" successful party is often difficult to identify and costs orders (too) often exceed the amount in issue.

In American Patriot Insurance Agency Inc., Kenneth A Hendricks and Diane M Hendricks v Mutual Holdings (Bermuda) Limited, Mutual Indemnity (Bermuda) Limited and others [2012] CA (Bda) 3 Civ (22 March 2012) the Court confirmed that it has the power to order an unsuccessful co-defendant to pay the costs of a successful codefendant. In addition, the Court of Appeal decision is now the leading authority on the principles applicable to indemnity costs in civil proceedings in Bermuda. The Court ruled that indemnity costs should not be ordered in every case where fraud is proved, nor can they only be ordered when the proceedings have been "misconducted" by the losing party. Instead, both "the way the litigation has been conducted" and the "underlying nature of the claim" may be relevant in determining whether or not the circumstances are such as to make an indemnity costs order just.

The issue of indemnity costs also received attention in the Cayman Islands. On 18 May 2012, judgment was delivered by Jones J in respect of the breach of contract and fiduciary duty claims brought by a wealthy Dubai businessman, Riad Tawfiq Al Sadik, against six defendants including Investcorp Bank BSC.

The claims were brought by Al Sadik on the basis of allegations that there was a 'collateral contract' which guaranteed Al Sadik's capital with a significant return and that Investcorp had invested assets in an unauthorized fashion which had been concealed from Al Sadik and Investcorp had also breached fiduciary duties. The claim was in the region of US$56 million.

Jones J dismissed all of Al Sadik's claims, which he noted had evolved over time and the duration of the trial and was scathing about the credibility of the evidence presented by and on behalf of Al Sadik. He found that it was "inherently improbable" that a 'collateral contract' existed and based on the contractual documentation, Investcorp was entitled to invest the assets in the manner that it did and had not concealed matters from Al Sadik. Fiduciary duties existed but there had been no breach of them.

As a result of his findings, Jones J awarded the defendants their costs and on the indemnity basis in relation to the 'collateral contract' claim. The ruling provides useful guidance as to when indemnity costs will be awarded in the Cayman Court. In essence, Jones J stated that indemnity costs are awarded to show the Court's disapproval of a litigant's "improper, unreasonable or negligent" behaviour in the conduct of the litigation and the Court has the power to award indemnity costs irrespective of whether such behaviour resulted in costs being incurred by the opposing party which could have otherwise been avoided. Jones J found that Al Sadik had relentlessly pursued the 'collateral contract' claim to the bitter end, despite knowing that he had no enforceable guarantee in relation to his investment, and this triggered an indemnity costs order to show the Court's disapproval. Jones J went on to confirm that he would not grant a stay of the taxation of costs pending Al Sadik's appeal on the basis that if his decision was reversed there was no suggestion that Al Sadik would not be repaid his costs. He also confirmed that the Court does have inherent jurisdiction to award an interim payment on account of costs prior to their taxation.

Security for Costs

In granting an application for security for costs in Sidney George Jefcoate and Another v Spread Trustee Company Limited and Others (31/2013) the Royal Court of Guernsey had regard to the fact that "the Plaintiffs are suing for the benefit of ... trusts and not for themselves." Whilst the Court considered that there could be some indirect benefit to plaintiffs who are beneficiaries of the trusts, it ultimately regarded the proceedings as an attempt to recover monies into the trust structures and that the plaintiffs were, therefore, 'nominal'. In such circumstances it was available to the Court to order security for costs where the Court considered it was appropriate to do so.

The Deputy Bailiff did not consider that the plaintiffs' actions in settling assets into offshore trusts would satisfy the condition that steps had been taken by the plaintiffs to make it difficult to enforce an order for costs. Although the guidance indicates that there is no requirement to show steps were taken with the specific intention of defeating enforcement, the Court considered that there could, no doubt, be many reasons why financial affairs were managed in this way. However, the Court was satisfied that if the applicants were to successfully defend the claim against them and were awarded their costs, the plaintiff would be unable to pay those costs. In such circumstances the Court considered it was an appropriate case to order security for costs.

Service out of the Jurisdiction

In Cobra Business Ventures Limited et al and Green Field Capital Limited at al (27/2012) the petitioners applied for leave from the Royal Court of Guernsey to effect service of an unfair prejudice application out of the jurisdiction on the third and fourth respondents. Following a thorough examination of the authorities, the Deputy Bailiff granted leave to permit service on the respondents.

The Deputy Bailiff confirmed that the correct approach was that set out in Carlyle Capital Corporation Limited and others v Conway and others (unreported, 22 July 2011) which followed the Privy Council decision in AK Investments CJSC v Kyrgyz Mobil Tel Limited [2011] UK PC7 where the Court confirmed that the applicant would need to demonstrate that there is a serious issue to be tried; that there is a good arguable case that the claim falls into one or more classes of case in which permission to serve out of the jurisdiction may be given; and that in all of the circumstances the jurisdiction is clearly or distinctly the appropriate forum for the trial of the dispute and that in all the circumstances the Court ought to exercise its discretion to permit service of the proceedings outside of the jurisdiction.

The Deputy Bailiff then stated that as Guernsey is not covered by EU measures relating to service, the Hague Service Convention can be regarded as the most important source of the consent of states to service of foreign process within their territory and that service on a party to the Hague Convention by an alternative method should be regarded as exceptional and to be permitted in special circumstances only. Where service is to be effected outside Guernsey, regard must be had to what methods of service are lawful in the place where the document is to be served. However, he also made clear that the Hague Convention is not the only applicable regime and does not exclude alternative means of service.

Forum Non Conveniens

In 2012, the Guernsey Court of Appeal in Carlyle Capital Corporation Limited & Ors v Conway & Ors (11/2012) examined the principles relevant to an application to set aside leave to serve a claim out of the jurisdiction and to stay the proceedings on the grounds of forum non conveniens. The liquidators of Carlyle Capital Corporation had commenced separate proceedings in Guernsey, Delaware, Washington and New York. However the proceedings issued in Washington and New York by the liquidators were discontinued by consent and accordingly the Guernsey Court of Appeal was asked to choose between Delaware and Guernsey. Ultimately, the Court decided that all of the liquidators' claims should be heard in Guernsey rather than in Delaware. As part of its reasoning, the Court noted that "It is for party who contends for fragmentation [of proceedings] to contend that (exceptionally) fragmentation is imperative, rather than vice versa." Furthermore the Court stated that where the principal issues in a dispute relate to the internal management of a corporation and breach of duty, the place of incorporation "will presumptively be the appropriate forum because of its ability to judge matters by its own standards of business conduct."

Time Limits

A BVI case involving redemption claw back claims in relation to a fund provides a timely reminder of the importance not only of statutory limitation periods but also of the time limits within which proceedings, once issued, must be served. Steinberg v. Swisstor & Wise Global Fund Ltd HCVAP 2011/012 was a case where the US Court-appointed receivers of two BVI funds, Lancer Offshore Inc and the Omnifund, brought proceedings against some 45 defendants. The claim stumbled from the start: the proceedings were issued after the expiry of the primary limitation period; it then took the receivers some 18 months to serve the proceedings upon the respondents, during which time they sought and obtained an order extending the life of the claim form, having taken no proper steps to serve the claim form. On 12 March 2012, the Court of Appeal upheld Bannister J's decision to set aside his earlier ex parte order extending the life of the claim form. In a decision which is of considerable procedural importance, it held that the statutory limitation period "should not be made elastic at the whim or sloppiness of a litigant" and that a defendant has a right to be served within the un-extended life of the claim form. It also held the Judge was right to set aside the leave given to serve out of the jurisdiction on the grounds that the claim was statute barred.

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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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