British Virgin Islands: The Dispute Resolution Review - Ninth Edition (British Virgin Islands)

I INTRODUCTION TO THE DISPUTE RESOLUTION FRAMEWORK

The British Virgin Islands (BVI) is a British overseas territory, and the British government is responsible for foreign affairs and defence. Executive authority is vested in Queen Elizabeth II and is exercised on her behalf by the Governor, currently His Excellency Mr John Duncan OBE. There is, however, a large degree of internal self-government. A new Constitution was adopted in 2007, and the country is now led by the Premier, who is elected in a general election and who nominates a Cabinet, which is appointed by the Governor. The legislature consists of the Queen (represented by the Governor) and a House of Assembly. The official currency is the US dollar. There are no exchange controls and no restrictions on the free movement of currency.

Since the 1960s, the BVI has steadily moved from an agriculture-based economy towards tourism (mainly boat chartering, although it is also a cruise ship destination and popular beach resort) and financial services. It is now a leading offshore financial centre. Over 1 million companies have been incorporated in the BVI and it is the second-largest domicile for the formation of offshore investment funds.

The Eastern Caribbean Supreme Court (ECSC) is the superior court of record for the BVI, as well as for Anguilla, Montserrat, Antigua and Barbuda, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Grenada and Dominica. The ECSC is headquartered in Saint Lucia, although each Member State has its own High Court Registry and its own High Court Judiciary. Since 2009, the ECSC has had a dedicated Commercial Division, located in the BVI, with its own judge (currently Mr Justice Barry Leon) and its own modern premises. Saint Lucia also has a Commercial Division court, which opened in January 2016. Appeals from the High Court are to the ECSC Court of Appeal, which sits in the BVI approximately three times a year, and appeals from the Court of Appeal are to the Judicial Committee of the Privy Council in London. The BVI also has a Magistrate's Court, which has both a criminal and a civil jurisdiction, and from which appeals lie directly to the Court of Appeal.

II THE YEAR IN REVIEW

i Major actions

The issue of the recoverability of the costs of overseas lawyers assisting in BVI litigation has been the focus of much attention following the Court of Appeal decision in Dimitry Vladimirovich Garkusha v. Ashot Yegiazaryan.2

In this case, the applicant, Mr Yegiazaryan, had made an application for security for costs with respect to Mr Garkusha's appeal against the dismissal of his claim. Maples and Calder acted for Mr Garkusha. Mr Yegiazaryan's application was dismissed and Mr Garkusha sought to recover his costs incurred resisting the application. Both parties filed written submissions and the matter was heard on paper.

In its judgment, the Court set out, in some detail, the position in the BVI prior to the introduction of the Legal Profession Act 2015 (LPA) and confirmed that the fees of overseas lawyers had been generally recoverable under the common law in the BVI prior to the LPA, in contrast with the position in other common law jurisdictions such as the Cayman Islands. However, the Court then went on to conclude that overseas lawyers' costs incurred in BVI legal proceedings after the LPA came into force (on 19 November 2015) were no longer generally recoverable.

The Court primarily based its analysis on its interpretation of Sections 18, 2(1) and 2(2) of the LPA. The Court considered that the LPA now meant that overseas lawyers assisting in a BVI matter were to be deemed as practising BVI law. The Court referred to Section 2(2), which concerned the practice of BVI law outside the BVI and which the Court considered had the implication that the practice of BVI law by overseas lawyers without being on the Roll was unlawful. Consequently, it was held that the fees of lawyers performing such unlawful services could not be recoverable.

It should be noted that this matter was heard on paper and there was no opportunity for the parties to make detailed submissions on the effect of the LPA on the recoverability of overseas lawyers' costs, and indeed neither party addressed these issues in their submissions.

As a result, we are of the opinion that the Court's decision was mistaken in a number of ways, principally in its failure to take into account the fact that Section 2(2) of the LPA was never brought into force and was subsequently repealed. We also consider that the decision was in contradiction to established English authority that a person only acts as a solicitor when they perform acts that can only be performed by a solicitor, which may affect whether the assistance of an overseas lawyer should be considered to be practising BVI law.

A recent decision of the BVI Commercial Court in Gudavadze v. Carlina Overseas

Corporation addressed costs that were incurred before the LPA came into force, and does not assist with costs subsequently incurred.

Although the BVI Commercial Court is presently treating Garkusha as binding authority upon it, this issue is currently before the Court of Appeal in another matter and gment is pending.

Download - The Dispute Resolution Review - Ninth Edition (British Virgin Islands)

Footnotes

* Arabella di Iorio is a partner and John MacDonald is an associate at Maples and Calder.

2 BVIHCMAP2015/0010.

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