Bringing a claim - initial considerations

Key issues to consider

What key issues should a party consider before bringing a claim?

As in all jurisdictions, one of the chief considerations will be whether litigation is a necessary and appropriate method of achieving the desired result. In particular, a party will want to ensure that the relief it is seeking will be effective in law and in practice. That will entail a consideration of whether the court will have jurisdiction to determine the claim and whether any judgment can be enforced against the defendant and, where applicable, the defendant’s assets. Parties should also consider the potential time and costs that will be incurred in engaging in litigation and whether it is likely that costs could be recovered from the defendant in the event the claimant is successful.

Other methods of dispute resolution should be weighed against litigation to determine whether they offer any advantages in the circumstances.

Where there is a possibility that steps will be taken by a defendant to frustrate any potential judgment against it, a prospective claimant should also consider the availability of interim relief to protect their position pending determination of their claim.

Establishing jurisdiction

How is jurisdiction established?

The court’s jurisdiction is founded upon proper service of originating process. A claim form must be served at a place within the jurisdiction, except where permission to serve a party outside of the jurisdiction is permitted. Where a defendant can be served within the jurisdiction, the court will generally have jurisdiction over them in personam.

Permission to serve outside of the jurisdiction may only be granted if the case comes within one or more of the gateways provided for in CPR Part 7.3. Even where a claimant has a good arguable case that the claim falls within one of these gateways, the court has a residual discretion to decide whether or not to allow service outside of the jurisdiction.

A defendant who wishes to dispute the BVI court’s jurisdiction to try the claim or argue that the court should not exercise its jurisdiction, including on forum non conveniens grounds, can apply to the court for a declaration to that effect. The commencement of such an application should follow an acknowledgment of service containing a notice of intention to defend, and will have the effect of extending the deadline for filing a defence until such a time as the court determines the application and sets a new date (if a declaration is not given).

Where proceedings already exist in the BVI and there is reason to believe parallel proceedings have been or may be commenced in another jurisdiction, the court has the power to grant an antisuit injunction prohibiting the commencement or continuation of other proceedings.

Preclusion

Res judicata: is preclusion applicable, and if so how?

Yes. Once a cause of action has been adjudicated upon, whether in the BVI or by a foreign court, it becomes res judicata and the parties are estopped from rearguing the matter. This estoppel relates both to the cause of action as a whole and to any issue which is determined in the course of the trial.

Applicability of foreign laws

In what circumstances will the courts apply foreign laws to determine issues being litigated before them?

The BVI courts will apply foreign law to the extent a dispute before it requires issues to be determined in accordance with foreign law. For example, the BVI court may be asked to determine a contractual dispute where the contract is governed by a foreign law but the BVI court has jurisdiction to try the claim. In these circumstances, the BVI court will determine the dispute in the usual way, but will deal with points of foreign law by requiring that the analysis of the foreign law is undertaken by an expert qualified to practice the law in question.

Given that expert evidence of the applicable foreign laws will be adduced and an expert’s duty is owed to the court rather than any of the parties, there is no obvious tactical advantage in applying foreign law in the BVI.

Initial steps

What initial steps should a claimant consider to ensure that any eventual judgment is satisfied? Can a defendant take steps to make themselves ‘judgment proof’?

At the outset, consideration should be given as to whether the defendant has the means and capacity to satisfy a judgment made against it (eg, third-party disclosure order or specific disclosure). Where a claimant anticipates enforcing a judgment against a defendant’s assets, it should take steps to determine whether a BVI judgment will be recognised in the jurisdiction where those assets are held. If there is a risk that a defendant will dissipate their assets, then the claimant should consider the availability of interim that would prevent the defendant them from doing so (eg, by obtaining a freezing order).

While a defendant can, in practice, take measures to make enforcement of a judgment against them or their assets more difficult, there may be grounds on which a claimant can unwind transactions intended to frustrate enforcement of defraud existing or expectant creditors, or a claimant may have a tracing claim allowing them to claim against the proceeds of sale of any assets disposed of by the defendant.

Freezing assets

When is it appropriate for a claimant to consider obtaining an order freezing a defendant’s assets? What are the preconditions and other considerations?

A claimant should consider obtaining a freezing order if there is a risk that a defendant will dissipate assets that the claimant intends to recover or enforce against.

The BVI courts have a statutory discretion to grant a freezing injunction in all cases in which it appears to the court to be just and convenient. However, the governing principles for the availability of freezing injunctions are accepted as being the same as under the general common law. To succeed, the applicant will need to show: (i) a good arguable case; (ii) that the refusal of an injunction would involve a real risk that a judgment or award in favour of the claimants would remain unsatisfied; and (iii) that it is just and convenient for the injunction to be granted.

It is worth noting that freezing injunctions may be granted in aid of foreign proceedings against a respondent within the in personam jurisdiction of the court in cases where there is no substantive cause of action already existing in the BVI.

Pre-action conduct requirements

Are there requirements for pre-action conduct and what are the consequences of non-compliance?

While there are no pre-action protocols set out in the CPR, when making cost awards the court is entitled to consider any relevant aspect of the conduct of the parties, including their conduct in relation to the matter that gave rise to the litigation. All aspects of litigation (including pre-action conduct) should, in any event, be conducted in accordance with the overriding objective.

Other interim relief

What other forms of interim relief can be sought?

Besides freezing orders and other injunctive relief, there are other forms of interim relief potentially available to parties to litigation.

Where a claimant or potential claimant requires further information held by a third party before it is able to make or fully particularise a claim then it may seek the provision of information from that third party in accordance with the Norwich Pharmacal principles.

Where a claimant intends to enforce a debt against the assets of a defendant, it may seek to obtain a charging order over those assets with a view to ultimately appoint receivers to sell those assets to satisfy the debt. In addition, or alternatively, a claimant may seek to appoint provisional receivers to take control of assets in circumstances, the powers of whom can be determined by the court accordance.

Both parties may be able to obtain security for costs if there is a concern that the other side will not be able to satisfy any costs award made against it, although this is usually a form of relief reserved for defendants in circumstances where the claim is impecunious.

Alternative dispute resolution

Does the court require or expect parties to engage in ADR at the pre-action stage or later in the case? What are the consequences of failing to engage in ADR at these stages?

Although there is no formal requirement for parties to engage in ADR at the pre-action stage or any other stage of a case, it may be a relevant factor for the court to consider when assessing costs.

Claims against natural persons versus corporations

Are there different considerations for claims against natural persons as opposed to corporations?

Save for directors, natural persons who are defendants to high-value complex claims commenced in the BVI are rarely domiciled within the jurisdiction, it will often be necessary to seek the court’s permission to serve out of the jurisdiction on the individual, so consideration will need to be given as to whether the court is likely to grant that permission.

Another consideration is that it may be more difficult to obtain information relating to natural persons than corporations. Depending on where corporations are registered, they will often be required to file certain documents that can be inspected as a matter of public record and will have a registered address. BVI-domiciled companies are required to have a registered agent that will be responsible for keeping certain documents on behalf of the company that may be possible for a claimant to obtain by way of Norwich Pharmacal relief. It can be much more difficult to obtain information such as details of an individual’s location or net worth than it would be when dealing with a corporation.

Class actions

Are any of the considerations different for class actions, multi-party or group litigations?

Although class actions are not specifically recognised in the BVI, the CPR does allow groups of five or more persons having a similar interest in proceedings to be represented by a single claimant or defendant.

In all cases where there are numerous parties, an additional consideration to bear in mind is the dynamic between the numerous parties and whether that dynamic is likely to provide a claimant or defendant with any particular tactical strengths or weaknesses that could be exploited (eg, the potential for numerous defendants to provide conflicting evidence).

Third-party funding

What restrictions are there on third parties funding the costs of the litigation or agreeing to pay adverse costs?

There is no legislation in the BVI governing third-party funding of litigation. However, a recent decision of the Commercial Court (Hugh Brown & Associates v Kermas Limited [2011] (BVIHCV(COM)) indicates that third-party funding is not unlawful and that a third-party funder will be entitled to share of profits.