In February 2018 BDO Cayman Ltd obtained an anti-suit injunction from the Grand Court of the Cayman Islands restraining the joint official liquidators of Argyle Funds SPC (in official liquidation) from continuing US proceedings that they had commenced against BDO (Argyle's former statutory auditors) in 2017.

In granting the injunction, the court determined that the US proceedings were commenced in breach of, among other things, the exclusive jurisdiction agreements recorded in the parties' letters of engagement.

The court has since ordered Argyle to pay:

  • damages to an amount to be determined relating to BDO's costs of the US proceedings, with such costs to be assessed on the indemnity basis; and
  • BDO's costs of the Cayman injunction proceedings, also to be assessed on the indemnity basis.

The court's ruling confirms that if a party pursues foreign proceedings in breach of a Cayman Islands exclusive jurisdiction (or similar) clause in a contract, that party faces the prospect of having to pay both the Cayman and foreign litigation costs of the counterparty on the indemnity basis.

The award of indemnity costs for Cayman proceedings is consistent with the English authority that it is fair and reasonable to compensate a party that is forced to seek an injunction as a means of dealing with a breach of a jurisdiction clause. The court also concluded that Argyle's conduct was unreasonable in this case. The grant of damages appears to be novel for the Cayman Islands, but is also consistent with English authority.

For further information on this topic please contact Joanne Verbiesen or Aleisha Brown at Harney Westwood & Riegels' Hong Kong office by telephone (+852 3195 7200) or email (jo.verbiesen@harneys.com or aleisha.brown@harneys.com). Alternatively, contact Jessica Williams at Harney Westwood & Riegels' Grand Cayman office by telephone (+1 345 949 8599) or email (jessica.williams@harneys.com). The Harneys website can be accessed at www.harneys.com.

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