As a result of the OECD’S global Base Erosion and Profit Shifting (“BEPS”) initiative and the EU Code of Conduct Group substance requirements modelled on BEPS Action 5, the Cayman Islands has enacted The International Tax Co-operation (Economic Substance) Law, 2018 (the “ES Law”) and issued related Regulations and Guidance Notes. Similar legislation has been introduced in numerous jurisdictions, including the Channel Islands and the British Virgin Islands.
The 19 February 2019 judgment of the Grand Court of the Cayman Islands in VRG Linhas Aereas S.A. v Matlin Patterson Global Opportunities Partners (Cayman) II L.P. & Ors is a rare example of the Grand Court refusing to enforce a foreign arbitral award, here on the grounds that the defendants were not parties to the arbitration agreement pursuant to which the award was rendered and that, even if they were, the award went beyond the scope of the arbitration agreement such that its enforcement would be contrary to the principles of natural justice and public policy.
In a judgment delivered on 8 October 2018, the Cayman Islands Court of Appeal (“CICA”) allowed a partial appeal by the joint official liquidators of Argyle Funds SPC Inc. (in Official Liquidation) (“Argyle”) against an anti-suit injunction of the Grand Court of the Cayman Islands that had restrained Argyle from continuing litigation in the Supreme Court of the State of New York against three parties related to Argyle’s former statutory auditor, BDO Cayman Ltd (“BDO Cayman”).
Significant Decision of the Eastern Caribbean Supreme Court – Court of Appeal: Jurisdiction and Service Out21 Sep 2018
On 18 September 2018 the Court of Appeal handed down judgment on the matter of Livingston Properties Equities Inc and Ors v JSC MCC EuroChem and Ors. The case is important because it sets out the criteria to be applied when considering whether a proceeding involving issues of foreign law and foreign defendants should properly be brought in BVI or in some other jurisdiction.
In a judgment likely to have significant consequences for litigants and third parties seeking access to Court documents, the Cayman Islands Court of Appeal (CICA) has clarified what documents third parties to litigation may obtain from the Court file and the parties to litigation before the Grand Court of the Cayman Islands
We note that interest is growing in the new form of British Virgin Islands limited partnership that can be registered under the Limited Partnership Act 2017 (the “Act”). In the context of banking and finance transactions, there is increasing awareness among lenders of the ability to take security over limited partnership interests. Taking security over limited partnership interests can be useful in a variety of finance transactions, whether the security is being granted by the borrower or a third party.
How to strike the balance between open justice and confidentiality? In reasons delivered on 25 July 2018 in respect of an Ex Parte Originating Summons (“Confidentiality Summons”) issued in March 2018 in connection with In the Matter of Settlement dated 16 December 2009, the Grand Court of the Cayman Islands considered whether to make confidentiality orders in the context of a case involving the proper administration of a Cayman Islands discretionary trust. The application raised constitutional and public policy issues pertaining to the tension between the constitutionally-enshrined requirements of open justice and legitimate private grounds for confidentiality.
In a judgment delivered on 18 June 2018, the Privy Council has dismissed the appeal by Emirati businessman Riad Tawfiq Al Sadik against judgments of the Grand Court and the Cayman Islands Court of Appeal which had both dismissed his claim to recover in excess of US$50 million in leveraged investment losses in hedge funds that were suffered during the 2008 financial crisis. The Privy Council rejected all of the arguments advanced by Mr Al Sadik in an attempt to establish liability on the part of Investcorp Bank BSC (“Investcorp”) for his investment losses.
In response to the Financial Action Task Force (“FATF”) recommendations to combat money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction, there have been significant changes to the anti-money laundering laws and practices of the Cayman Islands. On 6 April 2018, the Cayman Islands Monetary Authority (“CIMA”) published a Notice further clarifying the recently issued Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands (“AML Guidance Notes”).
The Court of Appeal of the Cayman Islands (“CICA”) has reversed the Grand Court on an important point of principle for determination of the “fair value” of the shares of a shareholder who dissents from a statutory merger under Part XVI of the Companies Law. See Shanda Games (CICA 12 of 2017, unrep., 6 March 2018).