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24 September 2020
Where a potential judgment debtor in onshore proceedings threatens to dissipate its assets, the plaintiff may face a pyrrhic victory with no assets against which to enforce its judgment. Where the defendant is a Cayman company or has assets in the Cayman Islands, the Cayman court has statutory jurisdiction to grant a freezing injunction in aid of those foreign proceedings, which can extend to the worldwide assets of the defendant.
An application may be made ex parte on short notice to the defendant or, in exceptional cases, with no notice. The Cayman court also has jurisdiction to appoint receivers in support of the injunction where there is a need to ensure the proper management, preservation or exploitation of the defendant's assets.
While its jurisdiction is statutory, the Cayman court will nevertheless apply the American Cyanamid principles, save with a higher threshold in assessing the plaintiff's case given the stringent nature of the relief.
Accordingly, the plaintiff must establish that:
In order to seek the ancillary appointment of a receiver, the plaintiff must also show that:
The appointment of receivers is more intrusive, more expensive and less reversible than the granting of an injunction. The receivers are not the agents of the plaintiff, but rather agents of the court with a duty to act independently to preserve assets.
Similarly, a freezing injunction does not create any security right for the plaintiff or rewrite insolvency laws to give the plaintiff priority over other creditors. However, it does provide the plaintiff with access to information as to the status of the assets and the best prospect that they will remain in place until the plaintiff can enforce its judgment.
For further information on this topic please contact Jeremy Snead at Ogier's London office by telephone (+44 1481 752301) or email (email@example.com). Alternatively, contact Marc Kish or Victoria King at Ogier's Grand Cayman office by telephone (+1 345 949 9876) or email (firstname.lastname@example.org or email@example.com). The Ogier website can be accessed at www.ogier.com.
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