British Virgin Islands

BVI Commercial Court Enhances Jurisdiction’s Profile

By Hélène Anne Lewis LLB TEP, Partner, Simonette Lewis, British Virgin Islands (01/10/2011)

The British Virgin Islands is a member of the Eastern Caribbean Supreme Court, a circuit which comprises nine states of the geographic region known as the Eastern Caribbean. Among them only Montserrat, Anguilla and the British Virgin Islands are UK Overseas Territories - all the others being independent states of the Commonwealth.

The nine member states share 18 high court judges and an itinerant five member Court of Appeal, which sits on a rotational basis in each of the nine jurisdictions during the court year which commences in the middle of September.

The Eastern Caribbean Supreme Court was established in 1967 by the West Indies Associated States Supreme Court Order No. 223 of 1967.  The Court is headquartered in Saint Lucia, from where it is administered by the Chief Justice who is appointed by agreement amongst the nine Heads of Government of the states comprising the Organisation of the Eastern Caribbean States (OECS).

In 2009, recognising that the volume of commercial matters generated by the financial services sector in the BVI was threatening to overwhelm the two resident High Court Judges, a decision was taken to establish a commercial division of the Eastern Caribbean Supreme Court in the British Virgin Islands. Thus in May 2009 the Commercial Division began sitting in temporary facilities pending the eventual opening in October of that year of a new court building dedicated entirely to the commercial division.

Mr Justice Edward Bannister QC was appointed as a third resident judge to preside over the Commercial Court, although he does have jurisdiction to sit in non-commercial matters as well, and any of the other two judges may also sit in the Commercial Court. At the opening ceremony of the court His Lordship the Chief Justice Hugh Anthony Rawlins noted that the court would “bring a new and dynamic dimension to the specialist practice of cross border litigation in the jurisdiction” and said that “the aim of the Commercial Division of the ECSC was to enable the court to maintain a competitive international profile and provide support to the international business sector in the Territory”.

In the two years since the court’s establishment, it has proven to be an exceedingly attractive feature of the British Virgin Islands’ profile as a premier international financial centre. The court has established parameters qualifying matters which may be placed before it.

In order to qualify as a commercial claim the claim or application must relate to a transaction of trade and commerce and may include any claim relating to the law of business contracts and companies, partnerships, insolvency, the law of trust, the carriage of goods by sea, air or pipeline, the exploitation of oil and gas reserves, insurance and reinsurance, banking and financial services, collective investment schemes, the operation of markets and exchanges, mercantile agency and usages and arbitration. Such a claim must also be grounded in a value of at least US$500,000.00 although the judge has a discretion to waive this requirement.

As testimony to the volume of work being assigned to the court it has become necessary for the court establish a registry, independent from the Supreme Court Registry, which has hitherto handled all claims and applications filed at the Supreme Court.

High court registrar, Paula Ajarie, explained that the commercial court registry became necessary in order to provide full time administrative support to the commercial court. She further explained: “Case management of all commercial matters is now undertaken from the Commercial Registry whereby dates are fixed for the matters to be heard by the Commercial Court Judge. This process ensures that cases are allotted an appropriate share of the court’s resources and are dealt with expeditiously.”

The Commercial Court Registry will be staffed by an assistant registrar and three administrators including court reporters and judges’ clerks.

Members of the BVI legal profession have greeted the development with great enthusiasm as the British Virgin Islands on the whole is a busy litigation jurisdiction and the advent of the Commercial Court has in fact provided an opportunity for commercial matters to be dealt with on a prioritised basis. The establishment of the Commercial Court Registry is seen as the natural evolution in the development of the court.

In addition to having its own registry, the Commercial Court has, with effect from September, 2011, introduced a separate scale of fees for the filing of claims and applications. The schedule of fees approved by Cabinet in February, 2011 was brought into force in September, 2011 and has been set with the value of commercial matters in mind. It is thought that litigants should have no difficulty meeting the new fee requirements in order to enjoy the sophisticated facilities provided by the court. The court building is in fact equipped with highly specialist information technology software, including video link capability for witnesses who cannot attend hearings in the British Virgin Islands. The court can seat up to 30 lawyers at tables that are specially equipped with individual microphones and other audio technical aids. There is a separate Chamber Court Hearing Room similarly equipped with audio visual aids that can accommodate up to 20 lawyers. The building is also completely sound proofed and provides fully secured entry arrangements, including metal detectors and other alarm equipment.

Immediately upon its establishment, Commercial Court Rules were introduced after extensive consultation with the Bar and it is thought that the Rules, which closely track the provisions governing the operation of the English Commercial Court, significantly enhance the profile of the jurisdiction as a forum of choice for commercial litigation arising out of business conducted by the more than 600,000 active companies on the BVI Register of Business Companies.

Since its inauguration just over two years ago the Commercial Court has presided over more than 350 applications several of them dealing with complex issues arising out of the Madoff Scandal.

In a June 2011 decision the court was called upon to balance the potential pitfalls of determining preliminary issues against the benefits of hearing the substantive claim. The court had been successfully petitioned by the defendants against the liquidators of the Fairfield Fund (a BVI feeder fund that was part of the Madoff fund structure) to hear a preliminary issue. The liquidators applied for leave to appeal the order but were denied.   

The Court has also dealt with significant insolvency applications and has often been called upon to exercise its jurisdiction in Norwich Pharmacal matters.

Recent decisions of the Commercial Court have led to relief being granted in matrimonial litigation to assist in the discovery of assets where one spouse was attempting to conceal matrimonial assets, as well as against the registered agent of a company involved in fraudulent conversion of assets of a shareholder.

Most interestingly, several Beddoe applications have also been heard, although regrettably the records have been sealed in order to protect the confidentiality of the parties, and no written judgements delivered. 

Even before the advent of the Commercial Court, the importance of the British Virgin Islands as an international finance centre had started to attract top English litigators to the BVI Bar, and the establishment of the Court has deepened the appeal of practicing at the BVI Bar. Several renowned English silk have been admitted to practice, appearing in matters ranging from heavily contested insolvency applications to aggressively defended shareholder disputes.

The Court is generally accepted to be a significant adjunct to what is marketed as the ‘BVI Advantage’, in that it provides a solid underpinning for the jurisdiction’s financial services sector providing an additional pillar on which the reputation of the British Virgin Islands as a premier international financial centre can proudly stand.