Grant Thornton were appointed as receivers over a BVI company under Section 43 of the Arbitration Act 2013 to preserve the value of the company pending the determination of foreign arbitration proceedings. The defendant in the arbitration owned the shares of the BVI Company.
Section 43 of the Arbitration Act 2013 provides that the Court may grant an interim measure in respect of any arbitration proceedings that have been or are to be commenced in or outside the BVI. Section 33(2)(c) defines interim measure as any temporary measure by which, at any time prior to the issuance of the award, the tribunal orders a party to provide a means of preserving assets out of which a subsequent award may be satisfied.
This is a powerful tool in the judgment creditor’s arsenal and demonstrates the pro-arbitration approach taken by the BVI courts to preserve the value of assets pending the outcome of foreign arbitration proceedings.
The creditor needed to show a real risk of a significant loss in value if a receiver was not appointed immediately to oversee the underlying business and take active steps to preserve its value. Justice Kaye was convinced and appointed receivers over the shares of the BVI defendant company on an interim basis for the purpose of preserving its value (including its subsidiary and its assets).
The order provided that the receivers were able to exercise all the powers, authorities and things which they would be capable of exercising (including without limitation voting rights) if, and as if, they were the absolute beneficial owners of the shares. In practice this allowed the receivers to change the directors of the subsidiaries, change legal representation and borrow funds (with the Court’s sanction) to ensure that the business remained a going concern and a valuable asset against which the subsequent award could be enforced.
This illustrates the effectiveness of the interim relief provisions in the Arbitration Act to preserve assets against which an arbitration award will be enforced. This is a useful tool for parties to bear in mind when commencing arbitration if they will ultimately be seeking to enforce against the debtor’s shares in a BVI company. Section 33 is clear that interim measures are available prior to issuance of the award. This is a reminder to parties to seek advice on enforcement and options for preserving assets while the arbitration is ongoing rather than waiting until they have an award, by which time the horse may have bolted.