Exploring Offshore Litigation

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Oct 2026

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Exploring Offshore Litigation is a captivating podcast series containing audio of written blog content that dives deep into the intriguing world of offshore litigation, including the BVI and Cayman. Each episode sails through complex legal waters, bringing you up-to-date analysis of recent high-stakes cases and expert commentary from the leading minds in this specialised field. Our episodes demystify legal jargon and break down complex cases to make them accessible to all. Harneys, an international law firm with entrepreneurial thinking, brings each episode to you.

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October 29, 20266 min

A filter, not a formality: BVI derivative action leave after Dekel Derivative action or unfair prejudice? The leave requirement under section 184C of the BCA A realistic prospect of success Practical lessons Comment

A BVI derivative action lets a minority shareholder sue on behalf of the company when those in control will not, but leave is far from automatic. The Court of Appeal's recent decision in Dekel v Clerkenwell Lifestyle Ltd is a timely reminder of how high the bar is. It also provides a good opportunity to recap how the derivative route differs from the more familiar unfair prejudice claim. Minority shareholders who are unhappy with how a BVI company is run usually have two main statutory options under the BVI Business Companies Act, Revised Edition 2020 (BCA). An unfair prejudice claim (governed by s184I of the BCA) is a personal claim: the shareholder complains that the company's affairs have been conducted in a way that is unfairly prejudicial to them as a member, and the court has wide powers to remedy that, often by ordering a buy-out. A derivative action is different. The claim belongs to the company, the shareholder is simply the vehicle for bringing it, and any recovery goes to the company rather than to the shareholder personally. That distinction matters. Where directors have caused loss to the company itself, for example through breaches of duty, conflicted transactions or diverting value to connected parties, the shareholder's own loss will usually just reflect the company's loss. The reflective loss rule, as explained in the UK Supreme Court case of Sevilleja v Marex, generally prevents a shareholder recovering that loss in its own name. In that situation the derivative action is often the only way to get the claim in front of a court. A shareholder cannot bring a derivative claim without the court's leave under section 184C of the BCA. The power is discretionary and the court must consider a series of statutory factors, including: whether the member is acting in good faith; whether the proceedings are in the company's interests taking account of the views of the company's directors on commercial matters; whether the proceedings are likely to succeed; the costs of the proceedings compared with the relief likely to be obtained; and whether an alternative remedy to the derivative claim is available. The availability of an alternative remedy is where the two routes meet. If the shareholder's complaint can properly be addressed through an unfair prejudice claim, that may weigh against leave for a derivative action, although the Court of Appeal in Dekel did not rule on this point. The judge did, however, take the parallel English proceedings and the availability of alternative remedies into account. Although there is no strict merits threshold, the court must be satisfied, on an evaluative assessment of the evidence, that the proposed claim has a realistic prospect of success. The Court of Appeal endorsed the judge's approach. In Dekel, a shareholder in a BVI holding company that had raised investor funds for a failed London hotel development sought leave to sue directors, service providers and connected lenders in proceedings in England and Wales. He had invested about £4 million, of which about £2.8 million was lost. The BVI Commercial Court refused leave, and the Court of Appeal upheld that decision. The decision in Dekel gives several practical lessons for shareholders considering this route: Dishonesty needs evidence. Dishonesty is rarely proved directly at an early stage, but conflicts of interest, related-party loans and expensive financing will often be consistent with commercial decisions that went wrong. Without primary facts capable of supporting an inference of dishonesty, the claim will not get off the ground. A failed project is not negligence. The shareholder must show why decisions were negligent when they were made, not just unsuccessful in hindsight, and link the breach to identifiable loss. Check the company's articles. An indemnity in the articles that mirrors section 132 of the BCA can give directors a broad defence to non-fraudulent claims, including claims brought derivatively in the company's na...

October 20, 20266 min

Disclosure and collateral use lessons for litigants

The English High Court in Bourlakova v Estate of Bourlakov has confirmed that an order to disclose arbitral material is to be honoured even where the arbitral tribunal has refused permission to do so. The judgment is also a timely reminder that arbitral confidentiality is not a trump card, and that collateral use must be justified document by document. The case forms part of long-running litigation over assets of the late Oleg Bourlakov. Edelweiss, one of the defendants, had promised the English court not to deal with its assets outside the ordinary course of business. When Edelweiss faced a Moscow arbitration claim of over US$101m, the English court ordered it to give the Bourlakovas documents from the arbitration, including a recording or transcript of the main hearing, so that the undertaking could be policed. The arbitral claim was dismissed in January 2026, although the claimant in those proceedings sought to challenge the award. Meanwhile, Mr Korovin, who had given evidence for the claimant in that arbitration, then commenced a new arbitration claiming around US$272.4m from Hermitage One, one of the claimants in the English proceedings. Hermitage One said the new claim bore striking similarities to the first. A number of applications ensued. The order required Edelweiss to ask the arbitral tribunal for permission to record the hearing and to provide a copy of the recording. The tribunal had already allowed recording but refused permission to disclose it, so Edelweiss argued that its obligation to disclose fell away. The English court disagreed: Construed objectively, the order imposed two separate obligations. The word "and" was disjunctive and the duty to disclose was not subject to the tribunal's permission. There was no ambiguity to resolve in Edelweiss's favour, and the context of the original hearing confirmed that permission was only ever in issue for making the recording. There was no material change of circumstances which would justify variation of the disclosure order. The order existed to protect Edelweiss's assets and, while the arbitration was ongoing, the threat remained. The tribunal's refusals were not sufficiently material. The apparent refusal of Edelweiss's Russian lawyers to hand over the recording was no answer without cogent evidence that they were entitled to refuse to provide a copy to their own client. Edelweiss also sought an order that the documents provided under the disclosure order be deleted by the Bourlakovas. The court adjourned that application. The court considered that deletion is best considered once the arbitration has ended, as the documents may become public or fall to be disclosed in the English proceedings. Hermitage One sought permission to use the disclosed material to defend the Korovin arbitration. Permission requires special circumstances giving a cogent reason to release the party from the collateral use restriction. Edelweiss wanted permission limited to three documents. The court considered: Cogent reasons existed. The Korovin arbitration claimed very substantial sums, there were very substantial similarities between the arbitrations and it would be relevant to see what Mr Korovin and the other witnesses did and did not say in the first arbitration. Arbitral confidentiality was relevant but not of great weight. Both sides accepted the first arbitration was bogus, its claimant was unlikely to complain about further use, and there was a real prospect of the documents being aired in open court in Russia. Separately, the way both claims were made – under English law, in foreign arbitral tribunals, long after the relevant limitation period would have expired and without prior warning – heightened the need for the tribunal in the new arbitration to have access to all of the relevant material. Without deciding whether the Bourlakovas had breached their undertaking on use, the court held that the alleged breaches were no reason to penalise a separate entity, Hermitage One. Ther...

October 9, 20264 min

An expanded BVI Commercial Court: strengthening the infrastructure for international disputes A Commercial Court built around international disputes Why does this matter? The expanded Court is only part of the story What should clients take from the development?

The British Virgin Islands is set to expand its specialist commercial litigation offering. At its meeting on 19 August 2026, Cabinet approved the expansion, together with funding through to 2029 for an additional Commercial Judge, supporting court administration staff and commercial rental space. It is expected this expanded Court will commence hearing matters in the fourth quarter of 2026. The announcement reflects a broader investment in the capacity and infrastructure of the BVI's commercial justice system at a time when the disputes arising from the jurisdiction's role as an international financial centre are increasingly complex, cross-border and time-sensitive. The BVI Commercial Court was established in 2009 and has developed into a specialist forum for commercial disputes. The Court has jurisdiction to hear commercial matters across the nine member jurisdictions of the ECSC, although its work is predominantly BVI-focused. Claims ordinarily falling within its jurisdiction have a minimum value of US$500,000, with many matters significantly exceeding that threshold. The nature of the Court's work reflects the international use of BVI corporate structures. The ECSC has itself described the BVI Commercial Court's caseload as consisting of "high value, complex, cross-border litigation", with particular concentrations in company, insolvency, trusts, asset recovery and enforcement matters. Its recruitment materials also recognise the wider significance of the Court's work, noting that its decisions are influential in other common law jurisdictions. For a dispute involving a BVI company, the issues rarely stop at the BVI's borders. Parties, assets, witnesses, financing arrangements and related proceedings may be spread across multiple jurisdictions. The Court must therefore be equipped not only to determine substantive commercial disputes, but also to deal efficiently with the procedural and interim issues that commonly arise in international litigation. Commercial proceedings may require urgent injunctive relief, applications concerning assets located overseas, service outside the jurisdiction, evidence from foreign witnesses, recognition of foreign insolvency officeholders or coordination with proceedings in another jurisdiction. The addition of an expanded Commercial Court will provide further capacity to support these objectives. The Cabinet announcement is also notable because the investment extends beyond the Judge, Court space and staff. In addition, the Government's 2026 budget programme identifies a number of technological developments intended to improve the wider court experience. These include the continued development of the electronic case management platform, additional training for Judges and support staff, voice-to-text technology for Court reporters and work towards an improved electronic search facility for Registry records. For businesses and investors using BVI structures, access to the BVI's specialist Commercial Court which is familiar with complex corporate, insolvency and cross-border issues can be an important consideration. An expanded Commercial Court, together with investment in court administration, technology and physical infrastructure, represents a further strengthening of that framework and ensures the BVI will continue to be a significant centre for the resolution of international commercial disputes.

October 2, 202611 min

Freezing orders, delay and proprietary injunctions: key lessons from Alliance Petrochemical v Mazzagatti Background The WWFO application The applicable principles The impact of delay API's three new grounds: all rejected The proprietary injunction A BVI perspective Freezing orders in the BVI Practical takeaways for offshore litigators

The English Commercial Court has confirmed that delay in seeking a freezing order and proprietary injunction can be fatal to the application. In Alliance Petrochemical Investment (Singapore) Pte Ltd v Mazzagatti , the Court refused API's application for a worldwide freezing order (WWFO) and a proprietary injunction after Alliance Petrochemical Investment (Singapore) Pte Ltd (API) waited approximately 17 months to apply and did not produce new evidence of dissipation. The judgment arose from allegations that at least €143 million had been misappropriated from API, a Singapore-incorporated petrochemical company, and its subsidiary, Alliance Petrochemicals Trading LLC (APT). API alleged that its former CEO, Mr Mazzagatti, and his associate, Mr Dixit, misappropriated at least €143,808,798.66 from API and APT. It said the money was diverted through customer payments, profits routed through Napag IT Limited, and direct withdrawals from API and APT's bank accounts. API alleged that a substantial portion of the misappropriated funds financed the acquisition of RockRose Energy plc by Viaro Energy Limited, a company indirectly 96.4 per cent owned by Mr Mazzagatti. API also alleged that Viaro Energy relied on forged loan facility documents, purportedly from two Abu Dhabi individuals for £250 million each (the Abu Dhabi Loan Facilities), to present the acquisition as having legitimate financing. The court refused API's application for a WWFO, which sought to restrain assets up to €160 million. API had established serious issues to be tried. The decisive question was whether there was a real risk of unjustified dissipation of assets. The test for a freezing injunction is well established. The applicant must show: 1. a good arguable case/serious issue to be tried; 2. a real risk, judged objectively, that a future judgment would not be met because of an unjustified dissipation of assets; and 3. that it would be just and convenient to grant the order. The court also noted, citing Holyoake v Candy, that such orders "have the nuclear effect of prohibiting the affected party from dealing with his assets". The court's refusal turned principally on delay. API first requested freezing undertakings from the Defendants in a letter dated 8 August 2024, the day after the Claim Form was issued. The Defendants declined to provide the undertakings, characterising API's claimed risk of dissipation as "risible". Approximately 17 months later, API issued its WWFO application in January 2026. During that period, API's principal allegations of fraud and forgery had not materially changed. Drawing on the principles in Madoff Securities International Ltd v Raven, the court acknowledged that delay alone is not dispositive but held that it can be "a powerful consideration". Critically, the court required API to demonstrate new evidence of dissipation risk that had emerged since the delay. API relied on three developments to justify the timing of its application: Viaro Investment Limited's financial vulnerability: API's expert suggested that Viaro Investment, Viaro Energy and RockRose were financially vulnerable. The court found that API's case "conflates assets belonging to the Defendants, on the one hand, and assets belonging to the Viaro Group, on the other" and that transactions by the companies did not amount to dissipation by Mr Mazzagatti personally. The TAQA Court of Appeal decision: The court held that this did not suggest a propensity to strip assets, noting that the first instance findings favourable to Mr Mazzagatti "have not been disturbed by the Court of Appeal". Excessive remuneration: Whilst acknowledging that the Defendants' salaries were "undoubtedly extremely generous" (Mr Mazzagatti received £68.4 million and Mr Dixit £20.1 million between 2022 and 2024), the court found that Mr Mazzagatti's remuneration was contractually linked to a fixed percentage of EBITDA, fully disclosed in company accounts, and made in the ordinary course of business. ...

September 23, 20266 min

When Irrevocable Becomes Revocable: Jersey Royal Court Blesses Reversal of Settlor Exclusion Following Abolition of the Non-Dom Regime Background The Article 47 variation The B Trust The Article 51 Blessing Comment

In In the Matter of the Affinity Trust and the V Trust, the Jersey Royal Court approved the variation of a discretionary trust to reverse the irrevocable exclusion of its settlor as a beneficiary and blessed the trustee's decisions to re-admit the settlor and distribute approximately £4.8 million to him. The decision addresses the application of Articles 47 and 51 of the Trusts (Jersey) Law 1984 in the context of trust restructurings prompted by the abolition of the UK Non-Dom regime. The V Trust was a Jersey discretionary trust established in 2001. In 2017, the Settlor was irrevocably excluded as a beneficiary on English tax advice, the objective being to prevent the Trust from being treated as "settlor interested" by HMRC. However, the exclusion proved ineffective as the Settlor's wife had not been simultaneously excluded, and her potential addition as a beneficiary was sufficient to attribute Trust income to the Settlor for UK tax purposes. Following the abolition of the Non-Dom regime from 6 April 2025, annual UK tax liabilities were projected to reach "tens or hundreds of thousands of pounds", with substantial inheritance tax charges arising every ten years. The Settlor therefore asked the trustee to apply to the Royal Court to reverse his exclusion, re-admit him as a beneficiary, and distribute approximately £4.8 million to him, which he would then gift to his four adult children. The proposed distribution was structured to take advantage of the UK's Temporary Repatriation Facility (TRF), which permits distributions at a 12% rate if made by 5 April 2027. The Court was asked to approve the variation of the Trust under Article 47 of the Trusts (Jersey) Law 1984 on behalf of the minor and unborn beneficiaries, so as to reverse the Settlor's irrevocable exclusion. Article 47 empowers the court to approve, on behalf of persons unable to consent, any arrangement varying or revoking the terms of a trust or enlarging the trustee's powers of management and administration. The Court followed previous decisions, confirming that its understanding of the word "arrangement" has a wide construction, so long as it benefits to some extent those persons who cannot consent, citing Mubarik v Mubarik [2008]. The Court noted that this approach had already been taken to revoke a settlor's irrevocable exclusion from the class of beneficiaries, most recently in IQEQ (Jersey) Limited Re B Trust [2024]. On the question of "benefit", the Court also applied the broad principles of construction endorsed in Re Weston's Settlements [1969], in which Lord Denning MR observed that "nearly every variation" before the court has tax avoidance as its principal object and "no one has ever suggested that this is undesirable or contrary to public policy." The Court acknowledged previous warnings against "overt tax avoidance" and noted that, where a variation affects the irrevocable exercise of a power, it will give "particularly close examination" to the underlying motivation. It held that legitimate tax planning would usually benefit those who cannot look to their own interests, and that this threshold was therefore met on the facts. The Court ordered the variation so as to render the Settlor's exclusion revocable. In reaching its decision, the Court assessed the balance of risk by reference to the points raised by the Court in The B Trust [2024]: why would a settlor not be expected to provide for their family if the assets are appointed back to them; and what would the Court say to the minor and unborn beneficiaries if it refused the variation? The Court in the present case adopted the same reasoning as in The B Trust. Without the proposed arrangement, annual tax charges would steadily drain the Trust's assets, and the Settlor's additional US tax position further constrained the trustee's ability to make tax-efficient appointments. The Settlor could reasonably be expected to pass the wealth to the next generation, an expectation supported by the Trustee, th...

September 17, 202612 min

Drelle overruled: what the Supreme Court's judgment means for BVI and Cayman insolvency Summary of Supreme Court decision BVI implications Cayman Islands implications Conclusion

The UK Supreme Court's judgment in Servis-Terminal LLC v Drelle overruled the English Court of Appeal's January 2025 decision and has significant potential implications for offshore practice in the BVI and Cayman Islands with respect to the issue of when unrecognised foreign judgments can be used to found a bankruptcy or winding up petition. This blog first summarises the Supreme Court decision before considering its potential impact in the BVI and Cayman Islands. In Drelle, a Russian creditor company presented a bankruptcy petition against a Russian national on the basis of a RUB 2 billion "debt" owed as a result of a Russian Court judgment which had not been recognised in England. The Supreme Court was primarily concerned with whether the unrecognised foreign judgment gave rise to a "debt" within the meaning of s267 of the English Insolvency Act 1986. The obligation principle The Supreme Court held that it did, finding that at common law there had been a long-established principle, referred to in the judgment as the "obligation" principle. Pursuant to this "obligation" principle, the legal effect of a foreign judgment for a debt or definite sum of money is that an obligation arises at English common law to pay the judgment sum. This obligation arises as a result of the foreign judgment and is not dependent on that foreign judgment being recognised in England. There was, accordingly in Drelle, a "debt" at common law. In turn, the Supreme Court held that there was no reason to find that s267 of the Insolvency Act adopted a narrower definition of "debt" than at common law such that the unrecognised foreign judgment created a "debt" within the meaning of s267 of the Insolvency Act 1986. In so finding, the Supreme Court rejected the contrary reasoning of the Court of Appeal noting that it had not considered the "obligation" principle in detail. The Supreme Court also noted that the Court of Appeal was wrong in finding that an unrecognised foreign judgment could only be used as a "shield" to defend a claim and not as a "sword" to found a claim. The common law obligation that arose out of a foreign judgment could in principle be used to found a claim. Direct versus indirect operation The Supreme Court also found that the Court of Appeal misapplied the principle that an unrecognised foreign judgment has "no direct operation" in England such that the Court of Appeal had wrongly concluded that an unrecognised foreign judgment was incapable of giving rise to a "debt" in English law. The "no direct operation" principle, properly understood, only meant that an unrecognised foreign judgment could not be enforced as a judgment by execution in England. The principle did not mean, as the Court of Appeal had incorrectly found, that the unrecognised foreign judgment was wholly without legal effect in English law. Instead, the unrecognised foreign judgment gave rise to an English common law right (ie a "debt") on the obligation principle which could be enforced before the English Courts. The revenue rule distinguished The Supreme Court also found that the Court of Appeal had erroneously relied on the rule that English Court has no jurisdiction to entertain an action, either directly or indirectly, of a penal, revenue or other public law of a foreign state. That rule was, the Supreme Court found, simply irrelevant to the present case and the Court of Appeal had been wrong to rely on it. A foreign Court issuing a judgment for a private right such as a debt did not engage the rule: "There is a world of difference between a sovereign authority asserting a sovereign right, such as to a tax or penalty, and a private person bringing a claim asserting a private right, as in the present case." Insolvency proceedings are not enforcement proceedings The Supreme Court also noted that bankruptcy and winding up proceedings are often loosely categorised as a means of collective enforcement of debts. However, despite that, such proceedings are "in no releva...

September 15, 20266 min

Crypto-fraud, injunctions against persons unknown and the cost of Exchange non-cooperation Facts Freezing injunction Disclosure Costs Conclusions

In the recent English High Court decision in Wilden v Person Unknown, DHCJ Guy Vassall-Adams KC continued a proprietary and worldwide freezing order against an unknown cryptocurrency fraudster, reaffirming that crypto assets are property to which rights can attach and that exchanges which refuse to cooperate with fraud victims risk adverse costs orders. The Court also granted a Bankers' Trust disclosure order against the cryptocurrency exchange, HTX, on which the assets were held. While Harneys does not advise on the law of England and Wales, this judgment may be considered in other common law jurisdictions such as the BVI, Cayman Islands, Bermuda and Cyprus, where freezing injunctions and disclosure orders in crypto-fraud cases are increasingly common. Mr Wilden, a German businessman, was the victim of a targeted cryptocurrency fraud. A person unknown, using the alias "Brian Smith", contacted Mr Wilden about Bitcoin he considered lost following the closure of the EuropeFX platform. Smith claimed to be a UK-based investment adviser working for a company called LedgerLock, which he said was working with EuropeFX to recover lost Bitcoin and transfer it to new wallets. The person unknown demonstrated detailed knowledge of Mr Wilden's EuropeFX transactions, including specific dates of purchase, account balances, trades, credits and withdrawals. Mr Wilden's forensic investigators subsequently concluded that this information may have been obtained from publicly available blockchain data or purchased databases. Believing the person unknown to be legitimate, Mr Wilden was persuaded to make a series of Bitcoin payments said to be necessary to satisfy technical and regulatory requirements. Between December 2025 and January 2026, Mr Wilden paid approximately EUR 2.5 million, converted into 32.46 BTC. Person unknown transferred a small amount back before locking Mr Wilden out of the LedgerLock platform and ceasing all contact. Forensic investigators traced the funds to the HTX exchange (owned by Huobi Global SA, a company incorporated in Panama). The judge noted that HTX was on the FCA Warning List for operating in the UK without proper authorisation and is the subject of FCA enforcement proceedings for communicating financial promotions contrary to s21 of the Financial Services and Markets Act 2000. The judge held that HTX responded to Mr Wilden's lawyers in a dismissive and formulaic manner, recommending Mr Wilden contact the police. The judge characterised HTX as "unwilling properly to engage with a legitimate request for the return of stolen cryptocurrency and is thereby providing a safe haven for the proceeds of crime". The applicant for a freezing injunction must persuade the Court that: the claimant has a good arguable case on the merits against the defendant; there is a real risk that a judgment or award will go unsatisfied by reason of the unjustified disposal by the defendant of his assets; and it is just and appropriate for the Court to grant the injunction. The Court did not separately assess the requirements for a proprietary injunction although as is well known such injunctions are governed on a justice and convenience test usually applying the American Cyanamid guidelines and do not require risk of dissipation to be proved. England and Wales, like the BVI, treats crypto assets as property to which rights can attach. The judge was satisfied on the basis of Mr Wilden's expert report that the identity of the crypto assets had been preserved. Importantly, following the principle established in D'Aloia v Persons Unknown, it was held that not only the remedy of tracing but also the remedy of following is available where the identity of the crypto asset is preserved despite mixing – a significant point for practitioners. It was held to be self-evident that there was a risk of dissipation, as Mr Wilden's expert evidence showed that person unknown had already attempted to dissipate the funds through "pooling transactions" in whic...

September 11, 20264 min

Denali v Manson and the intersection of sanctions law and insolvency

The consequences of getting it wrong are severe yet the legislation often leaves practitioners without clear answers to commercially significant questions. The recent English High Court decision in Denali Corp – FZCO v Manson considers one of those unanswered questions: when a designated person holds contractual rights whose value is uncertain, do those rights constitute "funds" or an "economic resource" under the UK sanctions regime? The distinction is not academic. It determines the scope of the asset freeze, the range of conduct that could amount to a criminal offence, and as the liquidators in this case discovered, whether administrative acts such as consenting to an assignment can lawfully proceed at all. In Denali Corp, the court had to determine whether the liquidators of Petropavlovsk plc (Petro) could consent to the assignment of contractual rights from Atlas JSC, a designated person, to Denali Corp-FZCO without breaching the UK sanctions regime under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) and the Russia (Sanctions) (EU Exit) Regulations 2019. The case turned on a seemingly simple question. Were the contractual rights being assigned a "fund" within the meaning of section 60(1) of SAMLA, or an "economic resource" under section 60(2)? The distinction was important with far-reaching implications. Under Regulation 11(4), "dealing with" funds is defined broadly and captures any use, alteration, transfer, or change in ownership, possession, or character. By contrast, "dealing with" an economic resource under Regulation 11(5) is defined more narrowly and is limited to exchanging the resource for funds, goods, or services, or using it in exchange by way of pledge or otherwise. In practical terms, if the contractual rights were classified as an economic resource rather than a fund, then the range of conduct that could give rise to a sanctions breach was significantly reduced. In considering the issue, the court built on the framework established by the English Court of Appeal in PJSC National Bank Trust v Mints, where it was held that a claim or cause of action was not a fund but rather an economic resource. The key distinguishing factor in Mints was uncertainty. The items listed in the statutory definition of "funds" share a common feature of having an intrinsic financial value, typically for a liquidated or definite sum. A claim for damages, being inherently uncertain in outcome, did not fit that mould. HHJ Johns KC applied the same reasoning to the contractual rights. The rights arose under a share sale deed entered into between Petro and Atlas and specifically related to, with the liquidators' consent, the rights to receive liquidation surplus proceeds, residual amounts from a US$20 million administration fund, and a US$6 million contingency fund. The court found that the rights being assigned were, in practice, a right to prove in the liquidation for what was an uncertain sum dependent on the outcome of asset realisations, the level of claims and ongoing costs and expenses of the liquidation. The court acknowledged that while the rights were probably closer to the border between a fund and an economic resource, the uncertainty inherent in the rights was sufficient to bring them within the definition of "economic resource" under section 60(2) of SAMLA. Having classified the rights as an economic resource, the court concluded that the liquidators' consent to the assignment did not constitute "dealing with" those resources. The consent required did not involve any exchange of the rights for funds, nor any use of them by the liquidators in exchange for funds. Importantly for insolvency practitioners, the court held that the words "deals with" were simply not apt to describe the administrative act of giving consent to an assignment between two other parties. Although Denali Corp is an English decision, the court's reasoning will be highly persuasive to the courts, and instructive to insolvency practitioner...

September 10, 20268 min

At your own risk: the Grand Court reaffirms the costs consequences of winding-up petitions on disputed debts Point 1: Costs follow the event Point 2: Foreign lawyers' fees, a point of general application Point 3: Interest on costs Comment

The recent judgment in China Export & Credit Insurance Corporation v Hyalroute Communication Group Limited (No.3) sets out the costs consequences of a dismissed winding-up petition based on a bona fide dispute. It also clarifies the scope of GCR O62, r18, which governs recovery of foreign lawyers' fees, a point Justice Asif described as "of general application within the Cayman Islands". China Export & Credit Insurance Corporation (the Petitioner) petitioned to wind up Hyalroute Communication Group Limited (the Respondent) to recover approximately US$26 million. The Petitioner claimed to be subrogated to guarantees given by the Respondent over its subsidiary's PRC-law loan facilities with China Development Bank. It had indemnified the bank under its insurance policies prior to bringing that claim. The Respondent successfully resisted the petition on the ground that the debt was bona fide disputed on substantial grounds, and the petition was dismissed in May 2026. The costs decision addressed three issues: 1. whether costs should follow the event or whether exceptional circumstances justified no order; 2. the proper treatment of fees incurred by PRC lawyers who had not been temporarily admitted in the Cayman Islands; and 3. whether the Respondent was entitled to interest on its costs. The Respondent's position was that costs should follow the event under GCR O62, r4, relying on the English case of Re Fernforest and the Cayman Islands Court of Appeal's decision in Aramid Entertainment Fund Ltd v KBC Investments Ltd. The Respondent argued that a contrary result would undermine the deterrent effect of the costs regime and encourage unmeritorious petitions. The Petitioner argued this was an exceptional case warranting no order for costs, relying on the English case of In Re Sykes & Sons Ltd. In doing so, it maintained that it had acted reasonably throughout and argued that the principle derived from Re Fernforest Ltd presupposes that the Respondent's dispute had been articulated to the Petitioner, but that Petitioner elected to pursue the petition in any event. Justice Asif rejected the Petitioner's submissions and ordered costs to follow the event. In considering Re Fernforest, Justice Asif held that the Petitioner's reading was "directly contradicted" by the passages he had set out from that case and the Court of Appeal's explanation of them in Re Aramid. The company in Re Fernforest had not detailed its defence until after the petition was presented, yet Mr Justice Warner still ordered costs against the petitioner, stating that it is "no part of the duty" of a respondent to formulate its defence in advance". On reasonableness, Justice Asif held that whether the Petitioner had behaved reasonably in filing and pursuing the petition was "irrelevant to the question of costs". This followed the principle established by Mr Justice Warner in Re Fernforest – and confirmed by the Court of Appeal's confirmation in Re Aramid – that, save in an exceptional case, a petitioner in a known disputed-debt case presents his petition "at his own risk". The Court also held that the facts did not come "anywhere close" to the circumstances in Re Sykes, where the debtor company had produced documents of questionable authenticity and made untruthful statements about its liability. The conclusion from these findings is that a winding-up petition is not a debt-collection shortcut and treating it as one carries real costs risks. Neither the Petitioner's reasonableness nor the Respondent's failure to formulate its defence before the petition was filed will displace the ordinary costs rule. GCR O62, r18(1) allows work done by foreign lawyers to be recovered on taxation on the standard basis, but only if the foreign lawyer has been temporarily admitted in the Cayman Islands. The Court of Appeal recently confirmed in Al Jomaih Power Limited v IGCF SPV 21 Limited that there is no power to grant a dispensation from r18, closing off the route taken at first in...

September 8, 20266 min

Director liability in offshore contracts: what Said v Butt still teaches us The principle in Said v Butt [1920] 3 KB 497 When can personal liability arise? Practical steps for offshore boards and in-house counsel

Boards of offshore companies often have to make difficult commercial decisions where the contractual consequences are not clear-cut. This can be particularly challenging in structures involving SPVs, holding companies and joint venture vehicles, where contractual obligations may sit with one entity while decisions are taken within a wider group. If a decision later gives rise to a breach of contract claim, can the directors who approved it also be pursued personally? For boards and in-house counsel, that question matters. If recovery against the contracting entity becomes difficult, a claimant may look beyond the company and examine the conduct of the individuals involved. The principle in Said v Butt, recently applied in IBM United Kingdom Ltd v LZLABS GmbH [2025] EWHC 532 (TCC) is that a director or other agent who causes a company to breach its contract will not ordinarily be personally liable for inducing that breach, provided they were acting bona fide in the course of their duties and within the scope of their authority. In IBM, the Court summarised the rule as: quote start The effect of the rule in Said v Butt is that a director of a company who caused his company to act in breach of contract cannot be found to have committed the tort of inducing a breach of a contract to which the company is party, provided that the director acted bona fide in the course of his duties as a director. The Court went on to explain that the good faith enquiry is concerned with the proper performance of the director's duties and functions. The UK Supreme Court also considered the principle in Lifestyle Equities CV v Ahmed [2024] UKSC 17. The Court emphasised that the normal position is that, where an agent causes its principal to break a contract, liability rests with the principal rather than the agent. If a contracting party wants direct recourse against the other party's agent, "it must ordinarily bargain for it". The use of an SPV, holding company or other ring-fenced entity does not, without more, make its directors guarantors of the company's contractual liabilities. However, Said v Butt is not a general immunity from personal liability. As Lifestyle Equities makes clear, the principle is concerned with procuring a company's breach of contract. It does not protect a director from liability for an independent tort which they personally commit or participate in. The limits of the principle were considered in Antuzis v DJ Houghton Catching Services Ltd [2019] EWHC 843 (QB). The Court made clear that the focus of the bona fide enquiry is the director's conduct towards the company, rather than towards the contractual counterparty. The directors in Antuzis had procured systematic breaches of workers' contractual and statutory rights. Their conduct could not properly be characterised as bona fide conduct in the company's interests, and they were held personally liable. The BVI statutory position starts from a similar premise. Section 30 of the BVI Business Companies Act, Revised Edition 2020 provides that a director is not personally liable for the company's debts, obligations or defaults merely because they hold office, although liability may arise from the director's own conduct or under specific statutory provisions. Those duties include acting honestly, in good faith and for a proper purpose, and exercising the required standard of care, diligence and skill. In group structures, directors should also be clear about the particular company whose interests they are considering. A decision that appears sensible at group level will not necessarily be appropriate for the individual contracting entity. Where a company is in financial difficulty, directors also need to keep creditor interests in mind. Separate insolvency-related liabilities, including misfeasance and insolvent trading, may also come into play. Falling within the Said v Butt principle does not, however, resolve every question of personal liability. Separate exposure may arise ...