Privy Council clarifies the scope of the just and equitable winding up jurisdiction in Aquapoint LP

This article first featured in INSOL World Q1 2026.

In Aquapoint LP (in Official Liquidation) v Xiaohu Fan [2025] UKPC 56, the Privy Council has clarified the principles applicable to just and equitable winding up petitions. The Board emphasised that the court’s equitable jurisdiction should not be confined to specific categories of cases and is not dependent on the applicant first establishing the existence of a quasi-partnership.

The court has a broad equitable jurisdiction to subject the exercise of strict legal rights to equitable considerations of a personal character. Whether the parties have negotiated an agreed contractual position is a relevant consideration, but not conclusive. While this appeal concerned an application to wind up a Cayman Islands exempted limited partnership, it will be of a broader relevance to any application seeking the exercise of the court’s equitable winding up jurisdiction.

Background

Aquapoint LP (Aquapoint) was established in 2017 in the Cayman Islands as an exempted limited partnership (ELP) under the Exempted Limited Partnership Act (ELP Act) for the purposes of hholding shares in a Cayman Islands company Legend Biotech Corporation (Legend Cayman). Legend Cayman was incorporated in preparation for an initial public offering and listing on the NASDAQ stock exchange.

Dr Fan (the Petitioner) was a research scientist responsible for the invention of a ground-breaking therapy for the treatment of multiple myeloma patients. He had a limited partnership interest in Aquapoint that equated to approximately 10% of Legend Cayman’s share capital (10% Shareholding). The general partner of Aquapoint (the GP) gave assurances to the Petitioner that he would be able to withdraw the 10% Shareholding six months after Legend Cayman’s IPO. These assurances, the Petitioner argued, induced him to become a limited partner in Aquapoint.

In 2017, the GP and the limited partners (including the Petitioner) negotiated and entered into various agreements and acknowledgements, including an amended and restated limited partnership agreement (together, the 2017 Agreement). The 2017 Agreement included a requirement that any limited partner wanting to withdraw from Aquapoint would need to obtain the prior consent of the GP and such consent could be withheld in the sole absolute discretion of the GP. The 2017 Agreement also included an entire agreement clause which recorded that there were no representations made by the parties other than those expressly set out in the 2017 Agreement. Six months after the listing of the shares of Legend Cayman, the Petitioner sought to withdraw from the ELP. However, the GP prevented him from doing so, exercising its power in the 2017 Agreement to refuse consent to the withdrawal.

The Petitioner filed a petition with the Grand Court of the Cayman Islands (Court) for Aquapoint to be wound up on just and equitable grounds. This was on the basis that the Petitioner had received assurances that he would be entitled to receive his 10% Shareholding and he had relied on those assurances in entering into the 2017 Agreement.

The Grand Court 

The Grand Court heard oral evidence from the Petitioner and others and held that the assurances alleged by the Petitioner had been given and that he had relied on them in entering into the 2017 Agreement and becoming a limited partner in Aquapoint.

The Court held that, on those facts, it was just and equitable to wind up Aquapoint on four separate grounds, being that:

1. The relationship between the GP and the Petitioner was sufficiently akin to a partnership in corporate form (a ‘quasi partnership’) for the assurances to be of a character that made it inequitable for the GP to insist on its strict legal entitlements in the 2017 Agreement. Such insistence was inconsistent with the free-standing duty of good faith owed by the GP;
2. The partners’ relationship was one of mutual trust and confidence in a quasi-partnership which had irretrievably broken down;
3. The Petitioner had justifiably lost trust and confidence in the conduct and management of Aquapoint; and
4. The GP was in breach of its duty to act in good faith and to avoid conflicts of interest when it refused its consent to the Petitioner’s withdrawal from Aquapoint.

It is well established that the court will usually refuse to make a winding up order where alternative remedies are available to a petitioner, who is acting unreasonably in not pursuing them. The Court held that the Petitioner was entitled to the shares represented by his partnership interest and that only a winding-up order could deliver those shares. As no reasonable alternative remedy was available, it was just and equitable to wind up the Partnership.

Court of Appeal 

The Court of Appeal upheld the Court’s decision to order the winding up of the Partnership on all but the second basis set out above. It held that, following Lau v Chu¹, a Petitioner must establish that where an entity was a quasi-partnership, there had been an irretrievable breakdown in trust and confidence between participating quasi-partners in order to justify a winding-up order being made. The Court of Appeal held that the Petitioner could not satisfy the ‘participating’ requirement, because he was only a limited partner, prevented by subsections 14(1) and (2) of the
ELP Act from taking part in the conduct of an ELP’s business. The second basis for winding up was therefore set aside.

Privy Council 

Just and equitable jurisdiction to wind up an ELP

The Court referenced the issue of the correct jurisdictional basis to wind up an ELP, following the inconsistent decisions in In the Matter of Formation Group (Cayman) Fund I, LP² and In The Matter of Padma Fund LP³.

However, as the parties agreed that such jurisdiction existed even if the route was unclear, the lower courts found it unnecessary to decide the point. Similarly, the Privy Council heard no submissions on the jurisdictional basis for its power to order a winding-up. The Board nevertheless expressed its view that the power to wind up an ELP on the just and equitable basis arises ‘simply under section 36(3)(g) of the ELPA.’⁴ Accordingly, at least for now, the position would appear to be that an ELP can be wound up on the just and equitable basis under section 36(3)(g) of the ELP Act.

The Board also highlighted that the Court of Appeal’s invitation to hear argument about whether just and equitable winding-up petitions in relation to ELPs should be considered ‘in an expansive and flexible way, taking full account of the special nature of an ELP…’, as compared to companies, went unanswered. Importantly, the Board hinted that winding-up orders might be more readily available in ELP cases, by saying:

‘Field JA was right to draw attention to the special characteristics of an ELP, which differentiate it from… a registered company’ and

‘Given the status of an ELP as a type of partnership, as opposed to a registered company, it appears to the Board to be highly unlikely that the principles would be less generous to a petitioning partner in an ELP than to a petitioning shareholder of a company.’

We expect that this point will receive significant further attention in future cases.

Scope of the Court’s equitable jurisdiction

The Board referred to the well-known passage in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 where Lord Wilberforce explained that the just and equitable winding up jurisdiction can be used to enable the court to ‘subject the exercise of legal rights to equitable considerations; considerations that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights or to exercise them in a particular way’.⁵

The Board held that the application of equitable principles should not be reduced to categories into which a particular case must fall to invoke the court’s equitable jurisdiction. It emphasised that the role of equity is more general than this. In particular, the relevant circumstances are not restricted to cases where the parties have previously been in partnership or where the arrangement between the parties is in effect a quasi-partnership.

At the same time, the commercial context and the fact that parties have become shareholders in a company, governed by legislation and the articles of association by which they agree to be bound, means that in the great majority of cases, the legislation, articles and any other agreements binding on the shareholders will be asufficient and exhaustive statement of their rights and expectations.

As such, the Board focused on a single determinative issue: In light of the assurances made to the Petitioner to induce him to become a limited partner in Aquapoint, was the GP entitled to rely on its powers under the 2017 Agreement to refuse consent to the Petitioner receiving the 10% Shareholding?

The Board accepted that negotiation of the 2017 Agreement over several months was a relevant, but not a decisive factor when considering whether equitable principles came into play. The critical fact was that the Petitioner entered the 2017 Agreement on the strength of assurances that his unconditional 10% entitlement would be preserved. It was inconsistent with these facts to suggest that by virtue of the terms of the 2017 Agreement the Petitioner and the GP were agreeing that the Petitioner’s entitlement to a 10% Shareholding was cancelled and that the GP could refuse to consent to his withdrawal from Aquapoint without regard to the assurances that had been given. Contractual provisions of this nature are highly relevant on whether equitable considerations come into play, but they are not decisive.

The Board reiterated that equity may restrain the strict exercise of legal rights where personal relationships and mutual understandings make it unjust to insist on them. The Petitioner was a highly respected research scientist that had worked for some years on the project and who received assurances in relation to the 10% Shareholding. The Grand Court and Court of Appeal  had both been correct to conclude that the relationship between the Petitioner and the representatives of the General Partner was a personal relationship of a type that brought equitable considerations into play. The Board was also satisfied that there was no adequate alternative remedy available to the Petitioner.

The Board dismissed the appeal, upholding the winding up of Aquapoint.

Conclusion

The key takeaway from this decision is that the court’s just and equitable winding-up jurisdiction is not restricted to specific categories of cases and is not dependent on establishing a quasi partnership. The courts have a broad equitable jurisdiction to intervene and subject the exercise of strict legal rights to equitable considerations of a personal character. Whether the parties have negotiated an agreed contractual position is not conclusive: the contractual arrangements between parties do not ‘cover the field’ and equitable considerations can still come into play.

It is also noteworthy that representations made to and replied upon by the Petitioner, prior to the establishment of Aquapoint, were of central importance to this case and the Petitioner was not prevented from relying upon them by the entire agreement clause in the 2017 Agreement.

This decision will be of interest not only to Cayman practitioners considering the winding-up of ELPs, but more broadly to any application seeking the exercise of the court’s equitable winding up jurisdiction following Ebrahimi, including in other jurisdictions.