July 13 2010
The BVI Commercial Court recently concluded its trial in the long-running Alfa Telecom v Cukurova litigation. This case concerned the important subject of appropriation under English law. The detailed judgment in this major trial was delivered in just three weeks, proving that the new rules and concept of a Commercial Court are producing dividends.
The Commercial Court recently provided clarity on the ability of an office holder to recover fees before an order placing the company into provisional or full liquidation. The Insolvency Act provides that remuneration of an insolvency practitioner will be fixed by reference to time properly incurred while carrying out his or her duties in the insolvency proceedings. As the proceedings may commence only after an appointment, fees incurred before that date should not be considered for recovery.
Practitioners should be aware of this provision when undertaking pre-liquidation investigations and preparation.
This case is the latest in a line of cases on the costs of insolvency proceedings. For example, in Rich Victory v Sino Union the court reviewed the English case of Mirror Group Newspapers v Maxwell ( BCC 324) and decided not to follow its guidance. The BVI court indicated that in applying the criteria in Section 432 of the Insolvency Act, the court would not apply a test that a reasonably prudent person, faced with the same circumstances in his or her own affairs, would have laid out or hazarded his or her own money in doing what the office holders had done. Accordingly, it is now easier for office holders to recover their fees.
As the British Virgin Islands does not have pre-action disclosure in its court rules, Norwich Pharmacal orders have been an important tool for claimants. In Al Rushaid v TSJ Engineering Consulting Company Limited the Commercial Court took the opportunity to restate the relevant principles. Al Rushaid concerned allegations that former directors had set up a BVI company to receive secret commissions and a BVI disclosure order was sought in support of English proceedings to trace assets.
The court reviewed the authorities and emphasized that the key to the jurisdiction was to enable a claimant to obtain legitimate redress for a wrong which otherwise would be unavailable to the claimant. In granting a tracing disclosure order, the court set out the following general conditions to be satisfied:
For further information on this topic please contact Phillip Kite or Andrew Thorp at Harney Westwood & Riegels by telephone (+1 284 494 2233), fax (+1 284 494 3547) or email (email@example.com or firstname.lastname@example.org
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