The British Virgin Islands (BVI) legal system is based on a combination of English common law and equitable principles, local enactments and English statutes which have been incorporated into local law by executive orders. As a major offshore financial centre with a high volume of company incorporations, the common law as applied in the BVI has been modified to keep pace with the developing landscape.

Civil asset recovery proceedings in the BVI are dealt with primarily by the High Court which is comprised of a robust Civil Division and a specialized Commercial Division. Appeals are first made to the Court of Appeal of the Eastern Caribbean Supreme Court with the final appellate jurisdiction resting in the Judicial Committee of the Privy Council.

The principles governing civil asset recovery in the BVI are derived principally from common law and equity and supplemented by diverse statutes, rules and regulations. Some of the key statutes include the BVI Business Companies Act, 2004 (as amended) which deals with rights and title to shares in BVI companies; the Eastern Caribbean Supreme Court (Virgin Islands) Act which (amongst other things) empowers the Court to grant charging orders and injunctive relief and to appoint receivers; the Insolvency Act 2003 (as amended) which grants liquidators wide authority to recover the company’s assets for the benefit of creditors; and the Conveyancing and Law of Property Act and Fraudulent Conveyances Act 1571, which deal with avoiding a conveyance of property made with intent to defraud creditors. The nature of the asset and the surrounding circumstances will dictate which statute is relied upon. The procedural framework within which the courts in the BVI operate is set out in the Eastern Caribbean Supreme Court Civil Procedure Rules, 2023 (as amended).

Various international conventions apply to the BVI and are instrumental in aiding litigants in proceedings to recover assets, such as the New York Convention which facilitates the enforcement of foreign arbitral awards and the Hague Convention which governs the service of process.

The BVI Court adopts an expansive definition of ‘assets’ or ‘property’. Under the Conveyancing and Law of Property Act 1961, ‘property’ is defined as including “anything in action, and any interest in real or personal property”. The definition of asset under the BVI Insolvency Act, 2003 (the Insolvency Act), is equally liberal and includes “money, goods, things in action, land and every description of property wherever situated and obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property”. The types of assets recoverable by a litigant are therefore fairly unrestricted.

In the context of civil asset recovery proceedings, the BVI Courts have been prepared to recognise all forms of tangible and intangible assets, including notably, non-traditional assets such as cryptocurrencies (Philip Smith v Torque Group Holdings Limited BVIHC (COM) 0031 of 2021). In recent years, the BVI Courts have dealt with a number of cases involving the recovery of cryptoassets which have been misappropriated, lost or become otherwise inaccessible as a result of fraudulent or erroneous transfers.

Under BVI civil law, several recognised causes of action and mechanisms under statute, common law and equity are available to a claimant seeking to recover assets. Claims in tort and contract for recovery of the asset based on fraudulent misrepresentation, misappropriation, breach of contract, breach of fiduciary duties, and deceit commonly arise before the BVI High Court, and in particular, the Commercial Division. Equitable claims against third parties who have facilitated the wrongful disposal or dealing with the claimant’s assets or the proceeds are particularly valuable where the primary wrongdoer is insolvent or otherwise unable to provide relief to the claimant. These causes of action include unjust enrichment, dishonest assistance, conspiracy (unlawful and lawful means), and knowing receipt, to name a few.

Further avenues for civil asset recovery are available under statute to not only private litigants but also officeholders and enforcement authorities. Under the Insolvency Act, for example, a liquidator is empowered to bring proceedings on behalf of the company to recover assets for the benefit of creditors including claw back claims against recipients of the company’s assets, claims against directors for misfeasance and fraudulent trading and claims to set aside insolvency transactions. A liquidator has statutory power to require specified persons to provide him with information concerning the company’s assets and to examine such persons under oath. Under the BVI Business Companies Act, persons aggrieved by the omission of their names from the share register may bring rectification claims to restore their right if that right is not in dispute.

Under the Proceeds of Criminal Conduct Act 1997, confiscation orders may be sought to recover the proceeds of criminal conduct. This is distinct from civil proceedings and is enforced, not by the claimant, but by the appropriate enforcement authority who, in addition to confiscation orders, may also seek the imposition by the Court of substantial terms of imprisonment and/or fines on a defendant convicted of an offence.

Overall, the choice of cause of action and mechanism depends on the specific facts of the case, the nature of the assets involved, and the remedies sought.

Any legal person with a sufficient legal or equitable interest in the relevant asset and a viable cause of action may initiate civil asset recovery proceedings. In addition to private individuals, corporations and public entities claiming in their own right, asset recovery claims may be brought by persons acting in a representative capacity such as a trustee, insolvency practitioner or receiver on behalf of the person or entity for whom they have been appointed.

Certain restrictions apply in respect of standing to bring a claim in relation to company property. For example, a shareholder may not bring a claim to recover the assets of the company unless leave to bring a derivative claim has been granted by the BVI Court under the BVI Business Companies Act, 2004. Likewise, if a company is in liquidation, it will be the liquidator who has standing to bring proceedings in the name of the company.

A foreign state or governmental entity may bring proceedings as an ordinary claimant to recover assets, save that the BVI Court will not assist a foreign entity to enforce its taxation, penalty or revenue laws as this would offend the revenue rule. The BVI Courts are regularly involved in complex litigation involving asset recovery claims or enforcement proceedings being brought by or against foreign state entities.

Claims against foreign states are generally prohibited by state immunity under the State Immunity Act 1978 of England and Wales (which was incorporated in the BVI by executive order) unless an exception under that statute is satisfied. If the foreign state itself issues proceedings in the BVI, it will be taken to have submitted to the jurisdiction of the BVI Court and cannot avail itself of the immunity under the statute in respect of those proceedings.

Proceedings brought by a foreign state in the BVI may be challenged on jurisdictional grounds, and the BVI Court may, in the usual way, decline to exercise jurisdiction on the grounds of forum non conveniens.

The BVI Commercial Court has a strong, established track record dealing with complex, multi-layered corporate and trust structures in asset tracing claims and has a substantial arsenal of tools at its disposal to remedy wrongdoing.

In cases of civil fraud, the BVI Court will look beyond the formal corporate or trust structure to the underlying reality of the arrangement, particularly focusing on ultimate control and beneficial ownership. As in other common law jurisdictions, the BVI Court has the power to pierce the corporate veil in appropriate circumstances (in accordance with the principles set out in Prest v Petrodel Resources Ltd [2013] UKSC 34) or to identify and award relief against the true alter ego (Tethyan Copper Company v Islamic Republic of Pakistan and ors).

However, the principle of separate legal personality remains sacrosanct in BVI company law. The BVI Court takes a restrictive approach to veil-piercing and will only do so in exceptional circumstances (Convoy Collateral Ltd v Broad Idea International Ltd [2021] UKPC 24) for example where the company is a sham or façade set up or used to intentionally evade existing legal obligations.

The BVI Court has jurisdiction to entertain a claim in personam against a defendant who is present in the BVI and is served with the process in the jurisdiction. BVI incorporated companies are deemed to be present in the jurisdiction and the BVI Court will ordinarily exercise jurisdiction over such companies once they have been served at their registered office. The BVI Court is also able to exercise jurisdiction in cases where the parties have contractually agreed to submit to the jurisdiction of the BVI Court, or where the defendant has otherwise submitted to its jurisdiction, for example by unequivocally taking a step in the proceedings which impliedly affirms the correctness of the proceedings and the defendant’s willingness to go along with the determination of the Court.

The Civil Procedure Rules now permit a claimant to serve a defendant outside the jurisdiction once the claim falls within one of the jurisdictional gateways under rule 7.3. However, notwithstanding that the BVI Court is able to exercise jurisdiction, it may decline to do so if satisfied on a challenge being made by a defendant that there is clearly or distinctly a more appropriate forum in which the case should be decided. The BVI Court will consider which forum has the most real and natural connection with the dispute, engaging in a balancing exercise of the “connecting factors” such as the location of witnesses and documents, the place where the parties reside or carry on business, the likely languages they speak and the law governing the transaction.

Foreign civil judgments or awards relating to asset recovery may be recognised and enforced by the BVI Court. The Reciprocal Enforcement of Judgments Act (Cap 65) sets out a simplified and streamlined procedure for recognition and enforcement, without the need to re-examine the underlying claim, if the judgment is for money and has been issued in civil proceedings by a court in a “relevant foreign country” as designated under the statute. For non-monetary judgments or judgments not emanating from a “designated country”, a fresh claim would need to be issued under common law.

The application for recognition must be made within 12 months of the date of the judgment or such longer period permitted by the Court and must be served on the defendant who will be entitled to file a defence within a prescribed timeframe. It is common for claimants to apply for summary judgment whether or not a defence has been filed, on the basis that the merits of the underlying claim have already been decided by the foreign court and the defendant has no realistic defence.

The BVI Court will refuse to recognize a judgment or award where: (i) the foreign court acted without jurisdiction; (ii) the judgment debtor, being a person who was neither carrying on business nor ordinarily resident in the foreign jurisdiction, did not voluntarily appear or otherwise submit or agree to submit to the jurisdiction of the foreign court; (iii) the judgment debtor was not properly served with the process and did not appear, notwithstanding that he was ordinarily resident or carrying on business in the foreign country or agreed to submit to the jurisdiction of the foreign court; (iv) the judgment was obtained by fraud; (v) the judgment debtor satisfies the BVI Court that either an appeal is pending or he is entitled and intends to appeal against the judgment; or (vi) the judgment was in respect of a cause of action which for reasons of public policy or some other similar reason could not have been entertained by the BVI Court such as where the judgment is for a penalty, taxes or other fiscal obligations levied by a foreign state.

Although the BVI has enacted provisions under Part XVIII of the Insolvency Act, 2003 based on the UNCITRAL Model Law on Cross-Border Insolvency which is aimed at cooperation between the BVI Court and courts or competent authorities of foreign jurisdictions, those provisions are not yet in force. Nonetheless, there are various statutory mechanisms which permit the BVI Court to provide some measure of assistance to foreign courts, authorities and officeholders in civil cross-border asset recovery.

Under section 467 of the Insolvency Act, 2003, the BVI Court is empowered to grant orders in aid of foreign proceedings in a relevant foreign country on the application of a foreign representative such as a liquidator or other officeholder appointed by the foreign country to deal with the debtor’s property or affairs. This includes orders requiring any person to deliver up to the foreign representative the property of the debtor or its proceeds, examination orders and orders restraining the exercise or enforcement of any right or remedy over the debtor’s property. The BVI Court has a wide discretion to order such relief as it deems appropriate.

The Proceeds of Criminal Conduct (Enforcement of External Confiscation Orders) Order allows the BVI Court to provide assistance to the appropriate authority in a requesting foreign country in respect of proceedings instituted or to be instituted in that country for an external confiscation order. Through assistance from the relevant BVI authority, being the Attorney General or Governor, the foreign confiscation order may be recognised and enforced by the BVI Court against assets located in the BVI.

The Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters 1970 (Hague Convention) does not apply in the British Virgin Islands. However, the Hague Convention is included as a schedule to the Evidence (Proceedings in Foreign Jurisdictions) Ordinance (Cap 24) 1988 (the 1988 Act) enacted in the BVI which specifically states that the 1988 Act should be construed as nearly as possible so as to conform with the Hague Convention. The relevant provisions of the 1988 Act are similar to the UK Evidence (Proceedings in other Jurisdictions) Act 1975.

Part 71 of the Civil Procedure Rules sets out the procedure for obtaining evidence from a witness in the BVI for the purposes of foreign proceedings. A foreign court may issue a letter of request seeking assistance from the BVI Court including for the examination of witnesses in the BVI or the production of information or documents. The BVI Court, in the spirit of comity, will render such assistance to the foreign requesting court in support of existing or contemplated proceedings.

The BVI Court has broad powers to grant interim relief to protect and preserve assets pending the determination of court or arbitral proceedings in or outside the BVI or pending the enforcement of a judgment or award. Applications for all forms of injunctions and receivership orders are a regular feature of the BVI legal landscape since the need to prevent illegitimate dealings with the shares and assets of BVI companies will often arise. The Court’s power to grant injunctive relief and to appoint receivers is derived from section 24 of the Eastern Caribbean Supreme Court (Virgin Islands) Act and is exercisable where it is just and convenient to do so. It is now well-established that the BVI Court is empowered to grant injunctive relief in aid of existing or contemplated foreign proceedings without a substantive cause of action in the BVI (Black Swan relief) or against a person against whom there is no direct claim but who holds assets beneficially owned or controlled by the debtor (Chabra Order) (Convoy Collateral Limited v Broad Idea International Limited [2021] UKPC 24).

Interim relief is often granted on an urgent basis and without notice, but the claimant is bound by the duty to give full and frank disclosure of all matters material to the Court’s decision, including any matters which might be adverse to the application. For injunctions, the applicant will be required to provide a cross-undertaking in damages and in appropriate cases, fortification may be ordered by the Court. The most commonly sought forms of interim relief are:

Freezing Injunction. Perhaps the most commonly sought interim remedy, a freezing injunction, provides significant protection to claimants by prohibiting the diminution of the value of the defendant’s assets pending determination of the substantive claim. As in other common law jurisdictions, the Court must be satisfied that (i) the applicant has a good arguable case in the substantive claim against the defendant; (ii) the defendant holds assets against which judgment may be enforced; (iii) there is a risk of unjustifiable dissipation of the assets; and (iv) the balance of convenience lies in favour of granting the order.

Proprietary Injunction. This form of equitable relief is a powerful tool to preserve specific assets held in the hands of wrongdoers or third parties over which the claimant asserts a proprietary right, pending determination of the substantive claim. This type of relief is particularly useful in cases involving misappropriation of digital assets. The claimant is required to show that (i) there is a serious issue to be tried on the substantive claim; (ii) on a balance of convenience, the order should be granted; and (iii) it is just and convenient to grant the injunction. No risk of dissipation is required to be shown.

Receivership Order. The BVI Court has a wide discretion to appoint a receiver in a broad range of circumstances. As an interim remedy, a receiver will usually be appointed over certain assets to ‘hold the ring’, that is, to protect and preserve the assets pending determination of a claim or enforcement of a judgment. The Court must be satisfied that (i) there is a good arguable case for the appointment of a receiver; (ii) there is a real risk of dissipation; and (iii) it is just or convenient to appoint a receiver (Vinogradova v Vinogradova BVIHCMAP2018/052 (decided 30 July 2019)). A receiver may also be appointed in appropriate circumstances to ‘police’ a freezing injunction.

Stop Notices and Orders. Where a claimant can establish a beneficial interest in shares in a BVI company which is held in the name of another, the claimant may obtain a Stop Notice from the Court Office in accordance with Part 49 of the Civil Procedure Rules to require any person served to give 14 days’ notice to the claimant of any steps proposed to be taken in relation to the shares. The Stop Notice is obtained on affidavit evidence without a hearing and is usually served on the company and its registered agent. A Stop Order may be obtained from the Court (on notice to the defendant and following a hearing) in relation to shares or funds in court to prevent any transfer, sale or other dealing with the shares or funds, any payment of dividends or interest, or any registration of a transfer of the shares.

Norwich Pharmacal relief. Information concerning the legal or beneficial owners of a BVI company is not generally available to the public nor are the financial records of the company. In the BVI, companies are required to have a registered agent who must maintain the books and records of the company including information about beneficial owners, due diligence information and corporate records. It is therefore unsurprising that the usual targets of Norwich Pharmacal orders in the BVI are registered agents. The order is usually obtained to allow the claimant to identify the ultimate wrongdoers, to investigate the wrongdoing or to determine whether there are any recoverable assets which would warrant the proceedings worth pursuing. The circumstances in which the order may be granted are not limited, and the Court has demonstrated a willingness to grant the order to assist a claimant in finding “the missing piece of the jigsaw”. A Norwich Pharmacal order is therefore a potent and commonly utilised disclosure tool available to litigants in the BVI to identify and trace assets.

The Court will grant the order in circumstances where the third party has become innocently mixed up in the wrongdoing of others (by virtue of it holding the relevant documents and information) and where the information or documents held by the third party are necessary for the claimant to identify the wrongdoers or relevant assets or to investigate the wrongdoing. The Court will grant the order if the order is necessary and proportionate for the claimant to plead his claim. In urgent cases, the order may be granted ex parte and accompanied by a ‘seal and gag’ order which prevents the recipient of the order from giving notice of the order to others.

Bankers trust Order. The Bankers Trust Order is another disclosure and tracing tool which allows the claimant to obtain information from third parties, usually financial institutions, in order to locate or trace assets held by the third party over which the claimant asserts a claim. The order is sought where there is strong evidence that the claimant’s asset has been misappropriated, although the third party itself might be innocent of the wrongdoing.

The applicable principles as set out in Kyriakou v Christie, Manson & Woods Ltd are that: (i) there must be good grounds for considering that the assets about which information is sought, belong to the applicant; (ii) there must be a real prospect that the information sought will lead to the location of the assets; (iii) the order should be directed at uncovering the location of the particular assets; (iv) the interests of obtaining the order must be balanced against the detriment to the respondents in complying with the order; and (v) the applicant must provide an undertaking to first pay the costs of the respondents’ compliance with an order; second to compensate for any loss which may be suffered as a result of the order; and third to only use information and documents obtained for the purpose of tracing the assets receivers. The appointment of a receiver is a powerful weapon in the arsenal available to litigants pursuing asset recovery measures before the BVI court. The BVI Court has a wide discretion to grant such relief where it is just and convenient to do so and increasingly, has demonstrated a willingness to appoint receivers over shares in BVI companies and the company’s underlying assets. The receiver will have the powers granted under the order which in the case of shares will usually include the power to vote the shares, thereby allowing the receiver to take effective control of the board of the company.

Under the Insolvency Act, a receiver has power to demand and inspect all books, documents and information relating to the assets from the company and every officer who must give the receiver such assistance as he may reasonably require. The receiver therefore sits in a unique position to investigate the assets of the company and to identify recoverable assets against which judgment may be enforced.

Ancillary Disclosure Orders. It is also common for a freezing order to include ancillary disclosure provisions requiring the respondent or a third party such as a registered agent to disclose evidence of relevant assets.

In addition to proprietary injunctions (discussed above), the BVI Court has power to grant various types of proprietary remedies to recover misappropriated assets. A claimant may assert a claim in rem in respect of property that was misappropriated or fraudulently transferred. The claim may be asserted not only against the wrongdoer but anyone to whom the claimant’s property was transferred or who subsequently received it. If an equitable proprietary right to the property is established, the BVI Court may make an order for restitution or an order that the asset is held on constructive trust for the claimant (Nissan Motor Co Ltd v Ghosn BVIHCM2019/0121). In cases of fraud where the assets are transferred pursuant to a transaction tainted or induced by fraud, the underlying transaction will be void ab initio or voidable.

A liquidator has authority under the Insolvency Act to apply to the Court to set aside certain transactions including transactions at an undervalue or which give a creditor an unfair preference and the Court may, on such application, order that the assets transferred as part of the transaction be re-vested in the company.

On any claim for the recovery of assets, a defendant may have a valid defence where they acquired the property in good faith for valuable consideration and without notice of the fraud or wrongdoing or where there has been a change in the position such that it would be inequitable to order that they return the property. If the return of the property is not possible, the claimant may receive equitable compensation in the form of damages.

The limitation period for claims in tort and simple contract is six years from the date the cause of action accrued, while a limitation period of 12 years will apply to claims to recover land.

Where a claim is being made against a defendant for fraud or the right of action is concealed by fraud, or where the claim is for relief from the consequences of a mistake, the limitation period will not begin to run until the claimant has discovered the fraud or mistake or could with reasonable diligence have discovered it. Limitation periods do not apply to claims by a beneficiary under a trust for recovery of trust property or its proceeds from the trustee or in respect of a claim for fraud to which the trustee was a party or privy.

The applicable standard of proof in civil asset recovery proceedings is a balance of probabilities. Unlike the higher criminal standard of proof which requires each element of the offence to be proved beyond a reasonable doubt, a claimant in civil proceedings is required to prove that the fact in issue more probably occurred than not.

The well-established maxim is that “he who asserts must prove”. Therefore, the onus to prove the claim lies with the claimant throughout the proceedings but the onus is on the defendant to prove any defence raised by him to the claim.

Limitation and Laches. As in other common law jurisdictions, the defences available under common law and equity are applicable in the BVI. A defendant can therefore raise the expiry of a relevant limitation period as a defence or where there has been unreasonable delay by the claimant in pursuing their claim, the defendant may plead the equitable defence of laches. The length of the delay will depend on the circumstances of the case but the Court will dismiss the claim if it finds that the delay is such as to make it unjust to grant the relief being sought.

Bona Fide Purchaser for Value. A defendant into whose hands misappropriated assets have been traced may be able to defeat a claim for recovery if they can show that they are a bona fide purchaser for value without notice of the wrongdoing.

Change of Position. A valid defence to a claim for recovery of assets is that the defendant has changed his position in such a manner that he would suffer an injustice if called upon to make restitution. To rely on this defence, the defendant must show a causal link between the unjust enrichment and the change in position and that they acted in good faith without knowledge of the mistake or wrongdoing.

Covenant not to sue. Where a creditor covenants with his debtor not to sue at any time, this will release the debtor from liability. Careful review of the covenant will determine whether it is applicable in the particular circumstances.

A third party in receipt of misappropriated assets may find himself subject to a number of claims including knowing receipt, dishonest assistance, conspiracy and unjust enrichment. If he is innocent of wrongdoing and is in receipt of the misappropriated asset without knowledge of the wrongdoing, he may have certain defences available to him including change of position as discussed above.

If the third party acquired the asset in good faith for valuable consideration without notice of the wrongdoing, he has a valid defence to a claim for recovery. Equity will protect a bona fide purchaser for value.

In an insolvency, a secured creditor will enjoy the benefit of having the secured assets ring-fenced from the general pool of assets which will be distributed pari passu to unsecured creditors.

Cryptocurrency is treated as property under BVI law and may be subject to claims for recovery as well as proprietary relief such as constructive trust and restitution (Philip Smith v Torque Group Holdings Limited (in liquidation) BVIHCOM 0031 of 2021; Chainswap Limited v Persons Unknown BVIHCOM 2022/0031).

The BVI Court has taken a robust and practical approach to digital assets which is a fast-developing practice area and has demonstrated a willingness to assist claimants who come before the court with recovery claims. As with other traditional types of assets, interim relief including freezing orders and proprietary injunctions may be granted to protect and preserve digital assets. In Chainswap Limited, the BVI Court granted a worldwide freezing order against the defendants whose identities were unknown but who were alleged to be responsible for cybercrimes consisting of theft of the digital assets.

The anonymous and decentralised nature of digital assets lend itself to practical difficulties when it comes to identifying and following the assets and related transactions. Since ostensibly only the person with the private key to the wallet can transfer the crypto assets in the wallet, where such assets have been misappropriated, practical challenges can arise in identifying the parties who transferred or received the assets.

As with traditional assets, the BVI Court has power to grant disclosure orders such as Norwich Pharmacal or Bankers Trust Orders to allow a claimant to identify the identity of the wallet holders into which the misappropriated assets were transferred. In Fetch.ai Ltd v Persons Unknown Category A [2021] EWHC 2254 (Comm), a decision which would likely be followed by the BVI Court, cryptocurrency in the claimants’ trading accounts was accessed by persons unknown and fraudulently transferred to other accounts. The claimants obtained a worldwide freezing injunction and a proprietary injunction against persons unknown. The English Court held that the requirements for a Bankers Trust order and Norwich Pharmacal order against the companies which maintained the trading accounts containing cryptocurrencies had been met.

The general rule in relation to costs is that the successful party is entitled to recover his costs from the losing party. However, the BVI Court has a discretion under the Civil Procedure Rules to disallow costs or to order the successful party to pay costs in appropriate cases, having regard to all the circumstances including, among other things, the conduct of the parties before and during the proceedings, the manner in which a party has pursued a particular issue or the case, or whether the party acted reasonably in pursuing a particular allegation or issue.

In Russell Crumpler and David Standish as Joint Liquidators of Exential Investments Inc (In Liquidation) v Exential Investments Inc (In Liquidation) BVIHC (COM) 81 of 2020 the BVI Commercial Court sanctioned a third-party funding agreement on the basis that it was not contrary to public policy, and that it was, on the facts of that case, essential to ensure access to justice. In that case, liquidators of a company were seeking the Court’s sanction to draw down on a funding agreement between the liquidators, the company and a litigation funder, on the basis that it was in the best interest of the creditors as a whole, did not offend the principles of maintenance and champerty and was lawful and enforceable as a matter of BVI law.

The judge reviewed the authorities and considered the BVI’s Criminal Code 1997 and noted the following:-

1. the common law criminal offences of maintenance and champerty were abolished;
2. the mere fact that litigation services were provided in return for a promise in the share of the proceeds was not by itself sufficient to justify that promise being held to be unenforceable;
3. in considering whether an agreement was unlawful on grounds of maintenance or champerty, the question was whether the agreement had a tendency to corrupt public justice and that such a question required the closest attention to the nature and surrounding circumstances of a particular agreement;
4. the modern authorities demonstrated a flexible approach where courts have generally declined to hold that an agreement under which a party provided assistance with litigation in return for a share of the proceeds was unenforceable; and
5. the rules against champerty, insofar as they have survived, are primarily concerned with the protection of the integrity of the litigation process.

Hence, it can be said that third-party litigation funding is available in the BVI in an appropriate case where funding is in the public interest and contributes to access to justice.

The legal position is less clear in relation to contingency fees, conditional fee arrangements and damages-based agreements. The BVI High Court has held (in Abdel-Karim Taher Itum v Forbes Hare BVIHCV 2016/0199) that a conditional fee agreement would be contrary to public policy and therefore unenforceable.

However, the Legal Profession Act, 2015 (the LPA) confirms that
fair and reasonable conditional fee arrangements are permissible in relation to non-contentious work only. In the absence of statutory provisions expressly permitting conditional fee arrangements in relation to contentious legal work, arguably the public policy rule at common law against champerty as applied in Abdel-Karim would preclude conditional fee arrangements.

But there are conflicting views on this among BVI legal practitioners, particularly arising from the fact that clause 6(2) of Part B of the Code of Ethics, which is annexed to the LPA at Schedule 4, says that “it is not improper for a legal practitioner to enter into a written agreement with a client for a contingency fee provided that such fee is fair and reasonable”.

Given the uncertainty surrounding the enforceability of contingence fee arrangements and the possible impact on the recovery of legal fees incurred arising from such a retainer, such arrangements are not commonplace in the BVI, but some practitioners may be willing to act on a contingency basis in certain cases.

First, it is important to highlight that a statutory moratorium is immediately imposed on a company’s court proceedings upon the appointment of a liquidator in the BVI under the Insolvency Act. The effect is that a claimant pursuing a proprietary claim against a company that is in liquidation would need to first seek the Court’s leave in order to either initiate or proceed with such a claim. Further, a standard appointment order in the BVI appoints a liquidator with the powers contained within Schedule 2 of the Insolvency Act, paragraph 4 of which grants a liquidator the power to commence, continue, discontinue or defend Court proceedings. However, the practice has developed in the BVI that this power under the appointment order will only be exercised with the Court’s prior sanction, although this may be modified in appropriate circumstances.

Assuming that leave to bring proceedings is granted to a claimant, if it is asserted that a specific asset held by an insolvent company belongs to the claimant and not to the company, if that claim is successful, the asset in question will be excluded from the pool of assets forming the insolvent estate that is to be distributed to the company’s unsecured creditors on a pari passu basis. A claimant with a proprietary claim is best advised to immediately correspond with a newly appointed liquidator so that their claim can be considered (and the appropriate asset to not, without consideration of the claim, be sold).

A claim for the recovery of assets that have been misappropriated by an insolvent company must either be brought or continued with the leave of the Court. If those assets are found to be owned, not by the insolvent company, but by the claimant, they do not form part of the company’s insolvent estate and are therefore unavailable for distribution to the company’s creditors.
Regarding the relationship between civil recovery and insolvency clawback or avoidance provisions, the BVI Insolvency Act endows liquidators with the power to commence, continue, discontinue or defend any action or other legal proceedings in the name and on behalf of the company. Specifically, the Insolvency Act allows the BVI Court, on the application of the office holder, to make an order setting aside a “voidable transaction”, such as an unfair preference, an undervalue transaction, a voidable floating charge or an extortionate credit transaction. The most relevant of these within the context of civil recovery is an undervalue transaction.

This arises where the transaction is an “insolvency transaction” (meaning that it took place when the company was either insolvent, or it caused the company to become insolvent) and was entered into within the “vulnerability period” (that is, for a transaction entered into with a connected person, the period commencing 2 years prior to the onset of insolvency and ending with the appointment of the liquidator, or if in the case of any other person, the period commencing 6 months prior to the onset of insolvency and ending on the liquidator’s appointment).

Amongst the orders that the Court may make if it is satisfied that a voidable transaction has occurred are:-

i. an order requiring any assets transferred as part of the transaction to be vested in the company; and

ii. an order requiring any assets to be vested in the company if it represents in any person’s hands the application either of the proceeds of sale of assets transferred or of money transferred as part of the transaction.

The BVI Insolvency Act also empowers the Court, on an application by the liquidator, to make orders requiring the wrongdoer to compensate the company where the Court finds that the person (usually an officer of the company) has misapplied, retained or become accountable for any money or other assets of the company; or has been guilty of any misfeasance or breach of fiduciary duty in relation to the company.

BVI companies are regularly established and structured to hold underlying assets in other jurisdictions. As such, the only material asset that is usually available to enforce against in the jurisdiction is BVI shares. While all BVI companies are not only required to hold up-to-date registers of members and directors, they should also have details of the company’s ultimate beneficial owners. Only the register of directors (as well as the memorandum and articles of association) is available by means of a public search. To forcibly obtain the additional company information, a potential creditor or claimant would need to obtain disclosure relief from the Court – usually in the form of a Norwich Pharmacal Order or as part of an injunction order.

Registered Agents (the gatekeepers to every BVI offshore company) have no issue in disclosing a company’s records should they be ordered to do so by the Court. Obtaining further information on, for example, the company’s assets outside of the jurisdiction can be a complicated task. However most, if not all of the most common challenges in this field can be mitigated by obtaining early legal advice.

Each of these decisions, as to whether to pursue multiple causes of action, usually depends on the merits of each individual case. In most circumstances, a claimant would be best advised to keep all causes of action on the table i.e. to seek relief on all fronts. Where any form of proprietary claim can be established, this is likely to be prudent to pursue given the remedy, if successful, will see the property recovered in specie (as opposed to in damages).

It is possible (and it is not uncommon) to stay proceedings when another Court is considering an issue which is interrelated – particularly if the parties agree. This is not automatic, however, and does require leave of the Court.

The notable recent case of Rana Al-Aggad -and- Aico International EC (BVIHCM2024/0081 and BVIHCM2024/112) is significant because it highlights the BVI Courts’ anti-fraud approach. In the former proceedings, a liquidator was appointed over a foreign, dissolved Bahraini company for the predominant purpose of clawing back assets into the company which were alleged to have been fraudulently dissipated prior to the company’s dissolution. With the underlying assets being domiciled in the BVI (i.e. BVI shares), the Court saw the practical advantage of granting the appointment order.

As the BVI sits within the list of top jurisdictions for the incorporation of cryptocurrency companies, funds and exchanges, the jurisprudence on this emerging area of law has kept pace in the BVI. A recent significant judicial development in the BVI in recent times has been the Court’s approach in aiding the owners of cryptocurrency who have been the victims of fraud. The BVI Court’s willingness to treat cryptocurrency as property and to grant injunctive relief in the same way as traditional assets, including against persons unknown but by reference to crypto wallets, is significant. In one decision, the BVI Court permitted service of a claim by means of a non-fungible token airdrop to the digital wallet addresses associated with the relevant respondents, whose identities were unknown. The judgment underscores the novel ways in which the BVI Court is prepared to render assistance to the victims of misappropriated virtual assets.

It has also been judicially recognised that in determining the lex situs of cryptoassets, regard should be given to whether there is any centralised control in the jurisdiction. So that, where the relevant cryptocurrency has been issued and centrally controlled by an entity incorporated in the BVI, this has been sufficient in establishing the situs of those assets.