Nilon Limited and another v Royal Westminster Investments S.A. and others [2015] UKPC 2

Key issues: rectification of the share register; service out of the jurisdiction; and forum non conveniens.

Two key questions arose on this appeal: one, whether the statutory mechanism for the rectification of the share register of a BVI company in section 43 of the BVI's Business Companies Act is amenable to be used in proceedings involving an untried allegation of fact that a defendant (D2) has agreed to cause shares in a BVI company (D1) to be allotted to the claimants; and two, is D2 a necessary and proper party to the claim against D1 and is the BVI an appropriate forum for the claim.

In the key English Court of Appeal decision in Re Hoicrest [2000] 1WLR 414 a rectification action was allowed to proceed as part of a dispute about the beneficial ownership of the shares in question. The Privy Council has concluded that Re Hoicrest was wrongly decided.

The statutory rectification provisions, including those in the BVI, are a summary remedy available when the applicant has a right to registration by virtue of a valid transfer of legal title, and not merely a prospective claim against the company dependent on the conversion of an equitable right to a legal title by an order for specific performance.

On the question of leave to serve out and forum conveniens, the Privy expressed the view that because the real issue was a factual dispute about an alleged contract for the allotment of shares, which dispute had very little to do with the BVI other than that the company in question was a BVI company, the BVI was not the forum conveniens. The alleged contract was not governed by BVI law, the commercial relationships underlying it had nothing to do with the BVI, and the witnesses were all elsewhere.

This is not to be seen as a departure from the general conflicts of laws principle that "matters concerning the organization and administration of a company are generally treated as matters ideally suited to be determined in the location where the company has been formed". That continues to be the case "in the context of such issues as those arising between members, or issues relating to the powers of organs of a company, the appointment of directors, the extent of members' liability for debts of the company, or the right of shareholders to bring derivative actions".

Wang Zhongyong and ors v Union Zone Management Limited and ors BVIHCMAP 2013/0024

Key issues: just and equitable winding up; quasi-partnership; frustration of purpose; and affairs of subsidiary.

This decision from the Court of Appeal is an essentially orthodox ruling on a just and equitable winding up petition which, on the facts, was dismissed. Whilst the decision is not surprising, it provides a useful (re)statement of a number of general principles, including the following:

• A court must be cautious to apply equitable principles of fairness to commercial transactions or relations, and it is not the role of the court to impose its particular concept of fairness on the parties and their transactions. The concept must be applied judicially and in accordance with the principles developed in the common law.
• The fact that a company is small or private is not of itself enough to engage equitable considerations.
• An allegation that the business affairs of a company are in disarray does not of itself warrant a winding up order on the just and equitable ground.
• The principle that the affairs of a company can include the affairs of its subsidiary and that the court can make orders regulating the affairs of the holding company based on unfairly prejudicial conduct of the affairs of the subsidiary, applies only to a holding company and its subsidiary.

Hornbeam Corporation v Halliwel Assets Inc and ors BVIHC (COM) 2014/105

Key issue: third party costs orders.

In this case the BVI Commercial Court was asked to join the ultimate beneficial owner of the unsuccessful plaintiff to the proceedings so that a costs order could be made against him pursuant to Civil Procedure Rule 64.10 (costs orders against persons who are not a party). The plaintiff was a Panamanian company, and its ultimate beneficial owner was an individual not resident in the BVI.

Justice Bannister summarised the state of the law as being that "such orders will be made where the justice of the case demands it".

The procedural question arose whether the plaintiff's ultimate beneficial owner would need to be served out of the jurisdiction with the application for third party costs, and if so whether there was any basis for an order giving permission to serve out.

Without deciding the point, Justice Bannister suggested that if the reason for the application was that the third party is the "real" party, it might be that the third party could be said to have submitted to the jurisdiction by conduct and there would be no need for an application for leave to serve out. If, however, leave to serve out needed to be obtained then it would not be possible to do so, for the following reasons:

• There is no gateway in the Civil Procedure Rules (CPR) that covers such an application. Whilst the English CPR have a specific, separate gateway for third party costs orders, the ECSC CPR have no such separate gateway.
• Applications for third party costs orders are not "claims" for the purposes of the leave to serve out rules, in the sense of causes of action requiring acknowledgments of service and defenses to be filed and served to meet them.

As matters stand on the basis of this authority it is not possible to obtain a third party costs order against a non-party who is not subject to the BVI court's jurisdiction, because such an application cannot be served outside the jurisdiction. Notwithstanding the Judge's obiter comments about submission to the jurisdiction, we consider that establishing that (for example) the beneficial owner of a corporate vehicle is the "real" party and has submitted to the jurisdiction by conduct is likely to be a difficult challenge given the doctrine of separate legal personality.

Sonera Holding B.V. v Cukurova Holding A.S. BVIHC (COM) 2011/119

Key issue: anti-arbitration injunctions.

This is another decision in the long-running battle involving Sonera and Cukurova in the BVI and elsewhere, described by Mr Justice Bannister in this judgment as having a "geological timescale".

Here, Sonera sought an anti-suit injunction against Cukurova to prevent Cukurova from (in essence) trying to reopen a Swiss arbitral award which had been enforced as a judgment in the BVI, by means a further set of Swiss arbitral proceedings designed to have the practical effect of overturning or reversing the original award. Sonera complained that this was intended to subvert the BVI judgment by which the first award had been recognised. The application was decided on a short but important point of law.

Section 3(2) of the Arbitration Act 2013 (the "Act"), provides that "[t]he Court shall not interfere in the arbitration of a dispute, save as expressly provided in this Act". There is nothing in the Act expressly providing that the Court may enjoin a party to arbitral proceedings from continuing with them, so the Judge found that he had no jurisdiction to grant the injunction sought by Sonera.

The decision emphasises the BVI's pro-arbitration stance, particularly following 2014′s modernisation of the arbitration regime in the BVI with the passing of the Act and the extension to the BVI of the New York Convention.

Carey Olsen's dispute resolution and litigation practice in the Cayman Islands, Guernsey and Jersey advises clients on the full spectrum of contentious, semi-contentious and advisory work. www.careyolsen.com