British Virgin Islands: Litigation

The most common method of resolving disputes in the British Virgin Islands is by litigation through the BVI Courts. Where a claim has already commenced, the court exercising its general case management powers, may also encourage parties to resolve their dispute using some other ADR method, and in some cases refer that dispute to mediation. However, this referral is uncommon in commercial cases.

It is noteworthy that the past 5 years have also seen an increased interest in arbitration as a viable dispute resolution tool and the BVI International Arbitration Centre is poised and equipped to capitalise on that interest. While an uptick in arbitrations is predicted, it will likely not surpass the popularity of litigation.

All civil proceedings in the BVI including commercial cases are governed by the Eastern Caribbean Supreme Court Civil Procedure Rules (2000) as amended (the “ECSC Rules”). The ECSC Rules do not apply to family proceedings, insolvency proceedings (except as provided for in the BVI Insolvency Rules and BVI Insolvency Act), non-contentious probate proceedings, proceedings when the High Court is acting as a prize court or any other proceedings in the High Court instituted under an enactment in so far as that enactment provides for its own rules to regulate its procedure.

There are currently plans underway to overhaul the ECSC Rules to reflect the evolving litigation landscape, jurisprudential changes and needs of the users of the court.

In addition to the ECSC Rules there a number of bespoke rules and Practice Directions which govern practice and procedure in the the Commercial Division of the BVI High Court (the “Commercial Division”), the division in the High Court with responsibility for commercial claims. The ECSC Rules define a commercial claim as a claim relating to inter alia, the law of business contracts and companies, partnerships, insolvency, trusts, insurance and re-insurance and where the claim or the value of the subject matter of the claim to which relates is at least US$500, 000.

The main procedural elements to consider in the BVI can be best approached in 3 stages, at the commencement of the claim, during the life of the claim and after a claim has concluded, following a trial.

COMMENCEMENT OF THE CLAIM

1. 1. Claims are started by issuing a Claim Form (or Fixed Date Claim) along with a Statement of Claim or if any rule or practice direction requires an affidavit or other document. A Claim Form is appropriate for most causes of action where there is likely to be a significant factual dispute. A Fixed Date Claim is typically deployed in claims arising out of hire-purchase or credit sale agreements, for the possession of land, where required by a rule or Practice Direction or cases which were previously commenced under the old rules by originating summons or motion. A claim commenced by Fixed Date Claim is typically expedited without the need for full trial directions.
   2. Service within and outside the jurisdiction is governed by the ECSC Rules
   3. In order to serve a foreign defendant with a BVI claim, the Claimant will need permission to serve the claim out of the jurisdiction on that foreign defendant.
   4. Once a claim has been issued the general rule is that it must be served within 6 months, 12 months in the case of claims for which permission to serve out has been given, after the date the claim was issued.
   5. A claim is valid for 6 months against a person domiciled in the BVI and 12 months against a foreign defendant.

DURING THE LIFE OF THE CLAIM

1. 1. A party to a BVI claim is required to disclose all documents which are directly relevant to the matters in question in proceedings.
   2. There is power to order the specific disclosure of identified documents.
   3. The court has wide powers to order interim relief in circumstances where it is just to do so.
   4. The court may order security for costs in certain circumstances.
   5. Evidence for trial is given by way of witness statements and hearsay evidence is admissible.

CONCLUSION OF CLAIM FOLLOWING TRIAL

1. Judgments may be enforced by inter alia, a charging order, attachment of debts, the appointment of a receiver, judgment summons and committal to prison of the party in breach of a court order and sequestration of the offending party’s assets.

The Eastern Caribbean Supreme Court is the supreme court of record in the BVI, it consists of two divisions a Court of Appeal and High Court of Justice. The High Court of Justice is commonly referred to as the High Court although its more precise nomenclature is the Supreme Court. The High Court is a court of unlimited jurisdiction and also consists of the Commercial Division which hears commercial claims.

The Court of Appeal is itinerant and travels to each of the nine Member States¹ and Territories², it hears appeals from all subordinate courts namely the High Courts and Magistrate Court.

The Judicial Committee of the Privy Council (i.e. the “Privy Council”) is the court of final appeal for the BVI.

Footnotes

1. Antigua and Barbuda, Dominica, Grenada, St Lucia, St Kitts and Nevis, St Vincent and the Grenadines

2. Anguilla, Monsterrat and the British Virgin Islands

A matter will typically take between 9 months to 3 years to get to trial.

Some hearings are held in public and others private. Trials, hearings to have liquidators appointed over the affairs of a company and the first hearing of a Fixed Date Claim are generally held in public. Interlocutory hearings on the other hand are held private.

In so far as it concerns court documents, on payment of the prescribed fee any person is entitled to inspect and take a copy of a claim form, orders or judgments given or made in court, and a notice of appeal. All other documents filed with the court can only be accessed with the leave of the court.

The BVI Limitation Ordinance governs the periods of limitations for different classes of action. For actions founded on simple contract, tort, to enforce a recognisance, to enforce an award, to recover a sum recoverable by virtue of any enactment, an action for an account, or where the action is by an beneficiary to recover trust property in respect of a breach of trust (where no fraud is alleged) the limitation period is 6 years from the date on which the cause of action accrued.

Where the action is in respect of any judgment it cannot be brought more than 12 years from the date on which the judgment became enforceable.

There is no period of limitation where the action is by a beneficiary under a trust where the action is in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy or to recover trust property or their proceeds from the trustee.

In the case of any action however, where the action is based on the fraud of the defendant or his agent, is concealed by the fraud of the defendant or his agent or is for the relief from the consequences of mistake the prescribed period of limitation will not begin to run until the Claimant had discovered the fraud or mistake or could with reasonable diligence have discovered it.

There are no bespoke rules in the BVI governing the parties conduct before a Claim has started. That said, for the purpose of assessing the quantum of costs payable by an unsuccessful party to a successful party and deciding what would be reasonable one of the circumstances which the court must take into account includes the conduct of the parties before as well as during the proceedings.

Claims are commenced by the issuing of a Claim Form along with a Statement of Claim or if any rule or practice direction so requires an affidavit or other document. The Claim must be served within 6 months or in the case of a claim against a foreign defendant 12 months of its issuance, otherwise it expires.

Save for a limited categories of documents, all documents filed at court are served by the party whose document is to be served, so the Claim will be served by the Claimant and any Defence to the Claim by the defendant.

The BVI court has in personam jurisdiction over all persons domiciled in the BVI.

Where a claim is brought against a foreign defendant the court will only grant leave to serve the claim out of the jurisdiction on that foreign person in any type of case where (i) the claim is made against a person on whom the claim has been or will be served and there is between the claimant and that person a real issue which it is reasonable for the court to try and the claimant wishes to serve the claim out of the jurisdiction and the foreign person is a necessary or proper party to that claim (ii) the claim is for an injunction ordering the defendant to do or refrain from doing some act within the jurisdiction (iii) for a remedy against a person domiciled or ordinarily resident within the BVI.

While the above refers to features arising in any type of case there are rules relating to the circumstances where the court may permit a claim to be served out of the jurisdiction in specified claims. They are as follows:

1. Where the claim concerns a contract, it may be served out of the jurisdiction where (a) it is in respect of a breach of contract committed within the jurisdiction, (b) there is a jurisdiction clause in favour of the BVI, or (c) by its terms or implication the contract is governed by BVI law or (d) was made by or through an agent trading or residing within the jurisdiction or was made in the jurisdiction of (e) the claim is for a declaration that no contract exists.
2. Claims in tort may be served out of the jurisdiction if the act causing the damage was committed within the jurisdiction or the damage was sustained in the jurisdiction.
3. A claim may also be served out of the jurisdiction if it is made to enforce any arbitral award or judgment made by the foreign court and is amenable to being enforce.
4. If the whole subject matter of the dispute relates to property within the jurisdiction.
5. For claims concerning companies a claim may be served out of the jurisdiction if it relates to the constitution, administration, management and conduct of the affairs or the ownership or control of a company incorporated within the jurisdiction.
6. Claims about trusts have several elements which may well give rise to the court giving permission to serve that claim out of the jurisdiction. For example if the claim is made against a defendant as constructive trustee and the defendant’s liability arises out of acts committed in the jurisdiction or is for a remedy that may be obtained in proceedings for the administration of the estate or in probate proceedings relating to a person who died domiciled in the jurisdiction the claim form may be served out of the jurisdiction.
7. Claim for restitution may also be served out of the jurisdiction where the defendant’s alleged liability arise out of acts committed with the jurisdiction or acts wherever committed to the detriment of a person domiciled in the jurisdiction.
8. If the claim is made under an enactment which confers jurisdiction on the Court and the proceedings are not covered by any of the other grounds identified in the ECSC Rules.

In all cases however, irrespective of the nature of the claim, the BVI court will also need to be satisfied that there is a good arguable case on the merits of the claim to be served out of the jurisdiction, and that in all the circumstances the BVI is forum conveniens.

The BVI court will determine the governing law of a claim by reference to the common law choice of law rules. For example a contract is governed by the parties’ choice of governing law and that choice will usually be upheld by the BVI court. The proper law where there is a claim for restitution at common law is where the obligation has it most real and closest connection. Ultimately the relevant rule to be applied will depend significantly on the nature of the claim in question.

There are four main circumstances in which a claim can be disposed of without a trial in the BVI.

1. 1. First, if the Defendant has not responded to, or defended a claim, that has been properly served on it, and that claim is for a sum of money the court office may enter judgment in default of appearance or of a defence, and in the case of non-monetary relief, deal with the matter on application without hearing witnesses.
   2. Second, the court may enter summary judgment on a claim or particular issue if it considers that the claimant has no real prospect of succeeding on the claim or issue or the defendant has no real prospect of successfully defending the claim or issue.
   3. Third, at the first hearing of the Fixed Date Claim, the court may determine the matter summarily based on the affidavit evidence filed as at the date of the first hearing.

Exercising its general case management powers the court may also;

1. Fourth make an order that a statement of case be struck out if a party does not comply with an unless order by a particular date; and
2. Fifth, strike out a statement of case if there has been a failure to comply with a rule, practice direction or order, the statement of case or part to be struck out does not disclose a reasonable ground for bringing or defending a claim, it is an abuse of the process of the court or liable to obstruct the just disposal of proceedings or it does not comply with the requirements of the rule.

The main types of interim remedies available in the BVI are the following

1. an interim declaration;
2. an interim injunction;
3. an order directing a party to prepare and file accounts relating to the dispute;
4. an order directing a party to provide information about the location of property which is the subject of a claim or in relation to which any question may arise on a claim, (“relevant property “) or assets or to provide information about the relevant property or assets which are or may be the subject of an application for a freezing order;
5. an order for a specified fund to be paid into court or otherwise secured where there is a dispute over a party’s right to the fund;
6. an order for interim costs;
7. a freezing order restraining a party from (i) dealing with any asset whether located within the jurisdiction or not; (ii) removing from the jurisdiction assets located there;
8. an order to deliver up goods;
9. a search order
10. an order for interim payment
11. an order appointing Receivers over identified assets

Once a claim is commenced and a defence filed the matter becomes ripe for a case management conference at which stage the court will give the parties directions for trial preparation. The most common directions would be to require the parties to exchange witness statements, serve expert reports (if permission to rely on an expert was previously given) and provide standard disclosure by list. The court may also give directions for the preparation of an agreed statement of fact, law, issues and of any technical matters in issue.

A party to proceedings in the BVI is required to disclose all documents which are directly relevant to matters in question in the proceedings. A party discloses a documents by revealing that the documents exists or has existed. The duty to disclose is limited to documents which are or have been in the control of the party and in this context “control” is defined as documents which either is or was in the physical possession of the party, documents which the party has a right to inspect or take copies of, or documents to which the party would have a right of possession.

A person may have a right to withhold the disclosure or inspection of a document or part of a document on the grounds of privilege, confidentiality or a public interest in the documents not being disclosed.

The general rule is that any fact which needs to be proved by the evidence of a lay witness will be required to be proved at trial by their oral testimony given in public. The court will frequently require the party to serve a witness statement which is a statement of the evidence of fact on which the party intends to rely in relation to any issue to be determine at trial and that evidence will stand as the witness’s evidence in chief.

Once a party has served a witness statement or witness summary and wishes to rely on that evidence the party must call the witness to give evidence orally unless the court orders otherwise.

In the case of an interlocutory hearing, the evidence is by an affidavit and in the case of a commercial claim by a witness statement given on oath.

In so far as it concerns affidavits in particular, the general rule is that a party who filed an affidavit is liable to be cross-examined on its contents.

Yes, expert evidence is permitted but only with the leave of the Court. The application to adduce expert evidence is made by the party seeking to rely on the expertise of the person identified as an expert. Thus the person to be appointed as the expert is typically nominated by the applicant and indeed is usually paid by them but that is as far as it goes. The duty of the expert witness is to assist the court impartially on the matters relevant to his or her expertise, this duty overrides any obligation to the person by whom he is instructed or paid.

Evidence of foreign law is not “expert” evidence as such because evidence on questions of foreign law are questions of fact and arguably no permission is required. That said the BVI court have in the past taken the position that permission is required and thus a litigant will be well advised to seek that permission even if retroactively. A party who intends to adduce evidence on a question of foreign law must give notice to the other side of that intention.

A party has a right to appeal a final decision of the court but save in the cases of interim injunctions and receivership orders, can only appeal an interim decision with the court’s permission.

An appeal as of right must be filed within 42 days of when judgment is delivered or the order is made, whichever is earlier. In the case of an interlocutory appeal an appeal must be filed, where no leave is required within 21 days of the date of the decision being appealed and where leave is required within 21 days of the date when leave is granted.

In the case of both appeals as of right and for which permission is required the appeal is to the Eastern Caribbean Supreme Court, Court of Appeal.

Money judgments from the following countries namely Barbados, Bahamas, Jamaica, New South Wales, Nigeria, Bermuda, Belize, Trinidad and Tobago, Guyana, St Lucia, St Vincent, Grenada, may be registered in the BVI without the need for a retrial of the issues which are the subject of the judgment or any re-examination of the underlying claims once it is shown that that judgment is (i) final and conclusive and (ii) from a superior courts of the foreign court. However a judgment will not be registered in the BVI if

1. The original court acted without jurisdiction.
2. The judgment debtor did not submit or voluntarily appear or agree to submit to the jurisdiction of the original court and was not a person domiciled or ordinarily resident in the jurisdiction of the foreign court
3. The judgment debtor although ordinarily resident or carrying business within the jurisdiction of the Court was not served.
4. The judgment was obtained by fraud.
5. The judgment debtor satisfies the BVI court that an appeal is pending or that they are entitled to and intends to appeal against the judgment.
6. The judgment is in respect of a cause of action which for reasons of public policy or similar reasons including notions of natural justice could not have been entertained by the BVI Court.

Money judgments from all other countries may be enforce at common law by way of an action on the debt.

In so far as it concerns judgments for some other relief, the judgment is recognized and enforced by bringing a fresh action in the BVI but where the parties are the same the principles of res judicata and issue estoppel will likely apply to any intended defence.

Yes, in the BVI the general rule is that the successful party is generally entitled to their costs and that the unsuccessful party is to pay those costs. However, this is a default and not mandatory position. If the circumstances permit, the court may order a successful party to pay all or part of the costs of an unsuccessful party or may make no order as to costs, admittedly orders reversing liability are rare.

There are no “class action” provisions in the ECSC Rules, however where there are 5 or more persons who have the same or a similar interest the rules allow for the appointment of a body having sufficient interest in the proceedings or one of more of those persons to represent all or some of those persons with the similar interest, i.e. a representative party. The effect of the appointment is that an order of the court binds everyone represented by the representative party.

A claimant or ancillary claimant may add a defendant to proceedings without permission at any time before a case management conference.

The court may itself add a new party to proceedings without an application if (a) it is desirable to add that new party to resolve all matters in dispute in the proceedings or (b) there is an issue involving the new party connected to matters in dispute in the proceedings and it is desirable to add that new party in order to resolve that issue.

A person may not be added or substituted as a claimant unless that person’s written consent is filed with the court registry.

There are special provisions about adding or substituting parties after the end of a relevant limitation period. In those circumstances, the court will only add or substantive a party if it necessary and the relevant limitation period was current when the proceedings were commenced. In this context in order to be “necessary” it must be shown that the claim cannot be properly prosecuted by or against an existing party unless the new party is added or substituted or the new party to be substituted for a party was the true party to the proceedings but the existing party was named in error.

In so far as it concerns the consolidation of proceedings, the court does have the power to consolidate proceedings, it is a case management power and an order in those terms can be made on the court’s own initiative.

Third party funding is permissible in the BVI as long as the funding arrangement does not fall foul of the common law rules on champerty and maintenance.

The BVI court does have the power to make an adverse cost award against a person who is not party to the proceedings. However, before such an order is made the third party must be notified of the application and of any intended hearing date fixed to resolve the question of whether they should be asked to the bear the costs of a party.

Practice Direction No 1 of 2021 Emergency Measures was made in response to the covid-19 pandemic to regulate the procedures of the court which were upended as a result of its consequences on in person hearings and face to face interactions. This most recent Practice Direction which came into effect in the BVI on 21 April 2021 revoked and substituted Covid-19 – Emergency Measures (Re-Issue), Practice Direction No 5 of 2020.

In the Commercial Division, all hearings including trials are currently being held remotely with the zoom platform being the principal system being used by the ECSC.

Not only are there detailed protocols for video conferencing and remote hearings to be found in the Emergency Measures but those measures have now made it possible to served claims by email at the email address of a BVI company’s registered agent and for the filing of those matters not commenced under the relatively new e-litigation system by email.

Other notable aspects of the Emergency Measures are that (i) the location from which a Judge conducts a remote hearing is declared a Court for the purpose of the conduct of Court proceedings (ii) in person attendance is impermissible unless the Court gives permission (iii) persons are not permitted to record the hearing although a party can request copies of the audio recordings (iv) in a departure from the ECSC Rules, the first hearing of a Fixed Date Claim is not be to treated as a hearing at which the evidence of any witness is to be given, unless the Court gives a direction to that effect.

There has been no real delay caused by the new procedural rules or litigating in the time of covid-19, indeed the use of technology has allowed for documents to be filed and brought to the attention of the Judge in real time and it may thus be said that this has rendered the court process more (and not less) efficient.

As one of the world’s largest incorporation centres and leading offshore financial centres, the BVI is at the centre of some of the most complex and high value commercial disputes globally. The advantages of litigating in the BVI are many and include the following:

1. The law of the BVI is a combination of common law and statute and heavily based on English law common law system of law. This familiar system of law has global appeal and recognition.
2. The judges of the High Court and Court of Appeal are experts in resolving complex commercial disputes.
3. Matters are litigated in English which is the commercial language of choice.
4. The BVI is supported by a well-developed court system and registry.
5. Legal practitioners in the BVI are experts in commercial cases, familiar with dealing with cross-border matters and working with global teams. There are also a number of international firms based in the BVI with concomitant capabilities.
6. Starting a claim in the BVI is relatively straightforward.
7. Once a claim is commenced the ECSC Rules support active case management by the judges.
8. The BVI judges are responsive and are able to list and hear matters on short notice.
9. The BVI Court has adopted a progressive approach to hearing matters via videoconferencing, so in person attendance of witnesses may not be necessary.
10. The BVI has a loser pays the winner costs system.

The main disadvantages are the following

1. Litigation can be a protracted process,
2. Travel to the BVI can be tedious especially for those litigants based in the Far East
3. Once a claim is commenced it can only be discontinued in limited circumstances and there may be cost consequences involved, common to most common law jurisdictions.
4. Costly. Litigation (irrespective of jurisdiction) is a costly exercise and you will likely only recover 60-90% of those costs from the losing party.

We anticipate continued growth in the fraud and asset tracing sphere, as well as an increase in shareholder disputes. While as at the time of writing there has not been any meaningful growth in insolvency and restructuring disputes as a result of covid- 19 we anticipate that it is only a matter of time before we see that increase filter through to the BVI courts.

There may also be an increase in enforcement actions as third party funders begin to see the commercial value in funding litigation where there are ultimate assets to be recovered.

Finally, recent amendments to the Eastern Caribbean Supreme Court (Virgin Islands) Act which now gives the court the power to grant standalone interim injunctive relief may well mean more injunction work in aid of foreign court or arbitral proceedings.

No doubt technology has had and will continue to have a significant impact on commercial litigation in the BVI. The disadvantages of remoteness will in time become somewhat inconsequential with the increased use of video conferencing and the zoom platform.

We are of the view that remote hearings whether in its current iteration of exclusively being the appearance of choice, or on a case by case basis will likely be here to stay. We may see covid-19 restructuring and insolvency cases but it may be premature to conclude definitively at this stage. Only weeks after the start of the pandemic in March 2020 the Eastern Caribbean Supreme Court was able to mobilise resources to put in place and utilise remote hearing capabilities even in the smaller states. The court was also able to in record time issue Practice Directions and guidance for the conduct of hearings and court administration during covid-19. This is a testimony to how nimble, responsive and resilient our court system is and our predication is that with this firm foundation we will continue to see growth.