BVI courts are well versed in the provision of relief orders designed to preserve assets pending the resolution of a dispute.
Key Facts: The Requirements For Relief
The jurisdiction to grant a freezing order in the BVI is found in section 24 of the West Indies Associated States Supreme Court (Virgin Islands) Ordinance, Cap 80, which provides that an injunction may be granted in all cases in which it appears to the Court to be just or convenient. Orders may be made unconditionally or upon such terms and conditions as the court thinks just.
To succeed, the applicant will need to show that it is in the balance of convenience for relief to be granted, and will need to meet the well-known principles laid down in American Cyanamid Co v Ethicon Ltd  AC 396, namely:
- a good arguable case, one which is neither vexatious nor frivolous, for assets to be frozen;
- a risk which is real and not fanciful that the assets may be dissipated and may not be preserved until the final determination of the rights of the parties; and,
- the order must be one which is just in all the circumstances and must not be disproportionate to the object to be achieved.
Another important weapon in the applicant’s arsenal is that BVI courts have assumed jurisdiction to freeze assets outside as well as within the jurisdiction (based on Derby & Co. Ltd v Weldon  1 WLR 1259 and Danone Asia Pte v Golden Dynasty et al. BVI HCV Case No. 262/2000).
The BVI Angle: Free Standing Relief
Prior to 2010 freezing injunctions in the BVI were only available as "ancillary" relief, i.e. a substantive cause of action against the respondent was required.
However, this approach was overturned by the BVI High Court, Commercial Division in the 2010 decision of Black Swan Investment I.S.A. v Harvest View Limited, BVIHCV COM Case No. 2009/399. There the Court held that it was within its discretion to grant a "stand alone" freezing injunction in support of foreign proceedings where the respondent was within the in personam jurisdiction of the BVI court. The BVI Court followed the English decision of Channel Tunnel Group v Balfour Beatty Ltd  AC 334 and held that The Siskina  AC 210 did not prevent a Court from granting an interlocutory injunction ancillary to a claim for substantive relief to be granted by a foreign court or arbitral body.
The decision was based on the reasoning that since there was no reason in principle why a claimant could not enforce a foreign money judgment in the BVI Courts, there was no logical reason why he should not be able to make a claim for relief which was ancillary to a foreign award or judgment which would lead to a money judgment.
However, the Commercial Court subsequently made it clear in Yukos Investment Limited v Yukos Hydrocarbons Investments Limited and others BVIHCV 2010/85 that the Black Swan jurisdiction is limited to situations where a money judgment could be brought to the jurisdiction and would not extend to other kinds of foreign relief.
It is submitted that this is a sensible and modern approach to the realities of the way frauds and other forms of financial wrongdoing take place in the 21st century. Frequently monies will be transferred internationally and held by a variety of offshore vehicles specifically designed to make it difficult to trace or prevent dissipation of those assets. For example, the real wrongdoer may be located in England and proceedings properly brought against him there, whilst his assets are held by BVI companies of which the shares are held on trust by a nominee, with the wrongdoer being a beneficiary. In these kinds of complex multi-national cases it is sensible for an applicant to have available a swift mechanism in the BVI to stop dissipation, otherwise any litigation in England could prove pointless.
Look Before You Leap: BVI Considerations
The BVI is home to many entities which provide offshore nominee and professional directorship services, meaning that assets are frequently held in the name of another, on bare trust or as nominee for the real wrongdoer. BVI Courts have recognized the desirability of applicants being able to freeze these assets also, based on the reasoning in SCF Finance Co v Masri  1 WLR 876, that such assets can be frozen if there is ‘good reason to suppose’ that the assets are in truth those of the wrongdoer.
In the BVI the ancillary disclosure order has also become of heightened importance and utility because of the existence of these professional nomineeships. Although a wrongdoer subject to a freezing order might frequently violate the terms of such orders and refuse to provide affidavit evidence, third party respondents who are professionals are far more likely to comply. In the BVI, these are therefore often as important as the freezing order itself as they can require a respondent to provide information, usually by list followed by affidavit, relating to the identified assets and other assets presently unknown to the applicant but owned by the wrongdoer.
Nuts and Bolts
- Do ensure the order is not drafted too widely, the applicant is under a duty to seek the minimum relief required to hold the assets and the broader the order, the greater the risk of it being set aside on the return date.
- Bear in mind also that the ex parte duty of full and frank disclosure likely extends to arguments which both the ultimate wrongdoer and the respondent (insofar as they are different) might make. Separate thought should be given to both.
- Don't forget the possibility of a cross-examination order. This is appropriate in circumstances where it would facilitate the location and preservation of assets (see House of Spring Gardens Ltd v Waite  FSR 173).
- Although a fortified cross-undertaking in damages is usually required in a standard BVI case, where the BVI relief is ancillary to main relief elsewhere, based on Black Swan, it is arguable that there should be no need for a claimant to “double up” on the fortification. This is often a helpful tool for a claimant seeking relief in multiple jurisdictions.
BVI Freezing Orders in the 21st Century
Following the decision in Black Swan and with the number of assets held in BVI domiciled vehicles, it is likely that the boundaries of the jurisdiction will continue to be tested.
It is quite possible that the BVI courts will extend free-standing relief to other kinds of proceedings. There is Australian authority that allows relief in support of a foreign injunction (rather than substantive foreign proceedings) which could arguably be deployed in the BVI in cases where the relief required was of the greatest urgency.
Many high net worth individuals hold matrimonial assets in BVI companies and trusts. The Court has an inherent jurisdiction (separate from the Mareva-based relief outlined above) to grant freezing and other relief in support of matrimonial proceedings. The rights of a spouse to recover assets are often stronger than in a standard civil case, making free standing relief an ideal tool to prevent dissipation.
At the time of writing the BVI Court is known to have made at least one such order of this kind ex parte, although there are no reported decisions as yet. This development may be seen as another response to the way in which matrimonial assets can be held and transferred in the 21st century: globally and speedily.