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Nicholas Fox

Nicholas Fox

Partner | Cayman Islands

Offshore Litigator's Perspective - Q1 2020

20 January 2020

Welcome to our quarterly Litigation round up, which brings you Mourant's perspective on legal developments that we see in our work advising on many of the most challenging and complex cases in the offshore courts.

The end of 2019 and beginning of 2020 has been another very busy period for Mourant. 2019 closed with a lot of activity, including our acting for dissenters in a three-week trial of the largest s.238 valuation dispute ever to have been litigated in the Cayman Islands. 2020 has begun in a similar vein, including with the handing-down of an important Privy Council judgment earlier this week, which brings welcome clarity by confirming that hedge funds incorporated in the Cayman Islands must distribute to unredeemed investors in accordance with their contractual rights and not on any other basis. It is our client's second win in the Privy Council in this litigation and our briefing on it is vital reading for those interested in the offshore funds industry

Our other Cayman Islands briefings include an exploration of a nuanced application of the law of restitution by the Cayman Court of Appeal's decision, in the context of a claim for the recovery of sums paid under a repudiated contract. We also delve into a recent Cryptocurrency Anti-Money Laundering Report, which makes for interesting reading. The cryptocurrency sector is burgeoning, and while the regulatory environment surrounding cryptocurrency becomes more focussed and effective at reducing risk, for the time being, large scale fraud and theft continue to present an issue to guard against for exchanges and investors alike. Our final article from Cayman, 'Reflective Loss: the Unprincipled Principle', was first published in the South Square Digest in November. It takes a closer look at the reflective loss principle, which is designed to prevent a claimant from recovering damages for loss suffered because the company in which the claimant is invested has suffered loss.

Across the water, we take a closer look at amendments to Guernsey's company law, which are aimed at further improving and updating the island's corporate insolvency regime. The legislation was approved by the States of Guernsey on 15 January 2020, and will come into force on a date to be fixed, likely in early 2020. The amendment ordinance introduces a number of key changes to the law, which are covered in our update.

When the Westminster Parliament recently sought to introduce public registers of beneficial owners on the British Overseas Territories, it dropped at the last minute equivalent provisions in relation to the Crown Dependencies. This led our Jersey team to consider the hot topic of Westminster's ability to legislate for Jersey without the consent of the Island, as the precise nature of Westminster's limits has never been fully tested and determined. We have also contributed to the Chambers and Partners Insolvency Law and Practice Guide for 2019, and consider a case in which the Jersey Court of Appeal confirmed that costs incurred by a lender may be secured by a judicial hypothec. The decision will be welcomed by secured lenders who will now enjoy better protection in the event of a defaulting loan.

Last but not least, the BVI team touch upon the jurisdictional basis for the making of charging orders under Part 48 of the CPR, which was thrown into doubt in 2018, when the BVI court delivered its judgment in Stichting Nems v Gitlin (Claim No. BVIHC (COM) 0001 of 2018). In that case, the court applied undoubted Privy Council authority which held that court rules relating to the making of charging orders could regulate the exercise of an existing jurisdiction, but could not themselves confer jurisdiction. The Court of Appeal recently held that the BVI court has, and has had the jurisdiction, to grant charging orders since the enactment of the Supreme Court Act.

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Contact

Nicholas Fox

Nicholas Fox

Partner | Cayman Islands

About Mourant

Mourant is a law firm-led, professional services business with over 60 years' experience in the financial services sector. We advise on the laws of the British Virgin Islands, the Cayman Islands, Guernsey, Jersey and Luxembourg and provide specialist entity management, governance, regulatory and consulting services.

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