On 4 October 2021, the Privy Council handed down its much-anticipated judgment in Broad Idea.(1) By a majority, the Board:
- upheld (albeit obiter) the Black Swan jurisdiction.(2) The original judgment by Bannister J in 2010 had been a vital tool in aid of judgment and award enforcement in the British Virgin Islands, permitting freezing injunctions against BVI respondents to foreign proceedings in aid of potential future enforcement;(3) and
- agreed that, on the rules and law as it then was, the Court did not have jurisdiction to grant service out of a claim seeking only a freezing injunction.
In confirming the Black Swan jurisdiction, the Board curtailed the power of the decision in The Siskina. However, in refusing to permit service out of a claim only for a freezing injunction, the Board expressly refused to sink The Siskina, leaving it merely listing (per Lord Leggatt at paragraph 120):
It is necessary to dispel the residual uncertainty emanating from The Siskina and to make it clear that the constraints on the power, and the exercise of the power, to grant freezing and other interim injunctions which were articulated in that case are not merely undesirable in modern day international commerce but legally unsound. The shades of The Siskina have haunted this area of the law for far too long and they should now finally be laid to rest.
The decision in Broad Idea contains a useful summary of the jurisdiction to grant freezing orders against non-cause of action respondents to foreign proceedings (per Lord Leggatt at paragraph 95):
There is no difference in principle between a case where a freezing injunction is sought in anticipation of (i) a future judgment of a BVI court in substantive proceedings brought in the BVI, (ii) a future judgment of a foreign court enforceable by the BVI court on registration in the BVI, and (iii) a future judgment of a BVI court obtained in an action brought to enforce a foreign judgment. In each case the injunction, if granted, is directed towards the enforcement of obligations to satisfy judgments which do not yet exist. In each case the question is whether there is a sufficient likelihood that a judgment enforceable through the process of the BVI court will be obtained, and a sufficient risk that without a freezing injunction execution of the judgment will be thwarted, to justify the grant of relief.
Dispelling some commonly asserted propositions, Lord Leggatt went on to say (at paragraph 102):
i) There is no requirement that the judgment should be a judgment of the domestic court - the principle applies equally to a foreign judgment or other award capable of enforcement in the same way as a judgment of the domestic court using the court's enforcement powers.
ii) Although it is the usual situation, there is no requirement that the judgment should be a judgment against the respondent.
iii) There is no requirement that proceedings in which the judgment is sought should yet have been commenced nor that a right to bring such proceedings should yet have arisen: it is enough that the court can be satisfied with a sufficient degree of certainty that a right to bring proceedings will arise and that proceedings will be brought (whether in the domestic court or before another court or tribunal).
On the principle of "money box" injunctions, freezing the assets held by the BVI company when it is a non-cause of action defendant, Lord Leggatt confirmed that such injunctions can be permissible (at paragraph 111):
There seems no reason in principle why the expanded form of the enforcement principle should not be applied in an appropriate case to assets held by a "non-cause of action defendant", as it was in Gilfanov v Polyakov.
Although the substantive law of the British Virgin Islands has already been amended to provide a statutory basis for freestanding injunctive relief (similar to section 25 of the Civil Jurisdiction and Judgments Act 1982 in England), and although on the facts of this case the decision in respect of Black Swan was obiter, it is nevertheless a positive endorsement of the long-established practice in the British Virgin Islands.
For further information on this topic please contact Brian Lacy at Ogier by telephone (+44 1481 721 672) or email (b[email protected]). The Ogier website can be accessed at www.ogier.com.
(1) Broad Idea International Ltd (Respondent) v Convoy Collateral Ltd (Appellant) (British Virgin Islands) Convoy Collateral Ltd (Appellant) v Cho Kwai Chee (also known as Cho Kwai Chee Roy) (Respondent) (British Virgin Islands)  UKPC 24.
(2) Black Swan Investment ISA v Harvest View Ltd (BVIHCV 2009/399) (unreported) 23 March 2010.
(3) Since the Court of Appeal's decision in Broad Idea, BVI legislation has been amended to confer a statutory basis for granting freezing injunctions in aid of foreign proceedings.