Cayman Islands Non-Petition Clauses: Precision Is Paramount

In a very recent judgment in the wake of the Abraaj Group fallout, the Grand Court of the Cayman Islands refused to strike out a just and equitable winding up petition and, in the process, analysed the effect of a purported "non-petition clause".

Section 95(2) of the Companies Act provides that:

"The Court shall dismiss a winding up petition or adjourn the hearing of a winding up petition on the ground that the petitioner is contractually bound not to present a petition against the company."

The decision makes clear that, when drafting and negotiating these types of contractual provisions, the use of generic or catch-all language should be avoided.

A link to the full judgment is here.