Cayman Islands Clawbacks: Another Brick In The Wall

The recent decision of the Cayman Islands Grand Court in RMF Market Neutral Strategies (Master) Limited v DD Growth Premium 2X Fund (unreported, 17 November 2014) is a further reminder of the serious challenges associated with bringing clawback actions against "innocent" third party fund investors who have received redemption proceeds from a Cayman Islands fund in the period leading up to the fund's collapse.  It is a decision which should be welcomed by fund investors who are seeking certainty in this area – and in that regard, it is a useful companion-piece to the Privy Council's recent decision in Fairfield Sentry v Migani and others.¹ 

DD Growth 2X ("2X Fund") was an open-ended feeder fund incorporated in the Cayman Islands.  As with many funds, it encountered serious difficulties in late 2008 and early 2009, and was faced with large redemptions.  2X Fund's difficulties were compounded as a result of the NAV having been massively overstated as a result of a