Private Client & Offshore Services updates

Bahamas

Contributed by Lennox Paton
Supreme Court evaluates scope of trustees' protection in contentious trust litigation
  • Bahamas
  • 09 August 2018

The Supreme Court recently assessed the protection afforded to trustees by virtue of Section 83 of the Trustee Act 1998, which provides that a trustee cannot be bound or compelled by way of discovery to disclose information and documents about a trust. In Dawson-Damer, a trustee had used Section 83(8) as a basis to refuse a disclosure request. The applicant's case was built primarily on the allegation of a breach of duty (ie, the trustee had failed to consider the applicant's needs).

Payment of preferential debts out of assets subject to floating charge not permitted
  • Bahamas
  • 26 October 2017

The Supreme Court recently considered whether preferential creditors have any claim against the moneys received by receiver-managers for the sale of assets subject to a charge. The court determined that a floating charge which crystallised before the making of a winding-up order takes priority over other creditors.

Privy Council clarifies Bahamian law on appealing interlocutory judgments
  • Bahamas
  • 15 June 2017

There has been some debate over the lack of clarity regarding the concurrent jurisdiction of the Supreme Court and the Court of Appeal as to where and when applications for leave to appeal and stays should be made. A recent Judicial Committee of the Privy Council ruling has clarified this area of the law and given attorneys clear guidance regarding the proper procedure for appealing interlocutory judgments and applying for a stay pending appeal in the Bahamas.

Remittal of assets in cross-border insolvency proceedings
  • Bahamas
  • 20 April 2017

The Bahamas Supreme Court recently considered the relationship between the statutory provisions in recognition proceedings which permit the turnover of property to a debtor (a foreign corporation or other foreign legal entity subject to a foreign proceeding in the country in which it is incorporated or established) and the common law power to direct remittal of assets to the foreign main proceedings where an ancillary liquidation is underway.

Hastings-Bass rule enshrined in law
  • Bahamas
  • 13 April 2017

The recently enacted Trustee (Amendment) Act has clarified the law relating to trustee indemnities and given statutory effect to the rule in Re Hastings-Bass. With the passing of the act, the Bahamas has fortified its position as a leading offshore financial centre. It is expected that the codification of the rule will benefit trustees, protectors, beneficiaries and other persons who can apply to the court to unwind any perceived hard consequences flowing from an exercise of a fiduciary power.


Belize

Contributed by Courtenay Coye LLP
The importance of legal advice for timeshare rights
  • Belize
  • 16 July 2015

The Supreme Court recently highlighted the need to comply strictly with essential legal requirements when investing in property abroad. It found that US citizens who had purchased timeshare interests in a residential resort could not exercise their purported rights in priority of a bank's mortgage interest on the property because they had not registered their timeshares or paid the required stamp duty.

Directors' indemnities foolproof
  • Belize
  • 16 April 2015

The Belize Court of Appeal recently confirmed that indemnities given by a Belizean company to its directors deprived the company of a cause of action to pursue a claim against former directors for decisions taken during their term as company directors. Belize continues to recognise blanket indemnities given by a company to directors as legal.

Appeal Court clarifies procedural law on claims against foreign defendants
  • Belize
  • 04 September 2014

The Belize Court of Appeal has provided guidance to litigants involved in multi-jurisdictional litigation. The court interpreted the rules applicable to commencing a claim against foreign defendants, and service of a claim form and interim injunction on parties outside the jurisdiction. Under the Civil Procedure Rules there is no need to obtain permission to issue a claim form for service abroad.

Enforcement of LCIA award refused as contrary to public policy
  • Belize
  • 22 May 2014

The Caribbean Court of Justice has addressed the issue of whether New York Convention Awards should be enforced. The case is exceptional and should be confined to its unusual facts. However, it stands as highly persuasive authority for the proposition that violations of the constitutional order by a government when affording tax concessions to investors may afford a defence to enforcement of an arbitral award.

Caribbean Court of Justice rules government must arbitrate under treaty
  • Belize
  • 08 August 2013

The Caribbean Court of Justice has delivered a landmark decision which narrows the circumstances in which a government may resort to its domestic courts to restrain international arbitration proceedings. The decision is an important victory for international investors in the Commonwealth Caribbean, since many bilateral investment treaties include clauses for resolution of disputes by international arbitration.


British Virgin Islands

Contributed by Harney Westwood & Riegels
Revisiting costs awards – BVI Court of Appeal varies costs order based on US appeal decision
  • British Virgin Islands
  • 20 September 2018

In Fairfield Sentry Limited (In Liquidation) v Farnum Place LLC the BVI Court of Appeal varied a costs order based on a material change of circumstances – namely, a decision of the US Court of Appeals for the Second Circuit. The BVI court held that the US decision was a "material change of circumstances" which allowed it to vary the costs award by disallowing the costs of Farnum's expert.

Appointing liquidators after alleged loss of substratum
  • British Virgin Islands
  • 06 September 2018

The Court of Appeal recently considered the test for appointing liquidators to a company following an alleged loss of substratum. The case provides insight on the principles of loss of substratum, particularly in a case where a company's object is not prescribed by its memorandum and articles of association.

Discretionary beneficiaries' rights to trust information
  • British Virgin Islands
  • 30 August 2018

In separate but related proceedings, the BVI courts have permitted an applicant to inspect documentation relating to the liquidation of certain BVI companies. The decisions solidify the open justice policy and highlight the importance of allowing beneficiaries to oversee trustees' activities in order to ensure that the trust property is properly managed and that trustees can be held to account accordingly.

Singapore and BVI courts cooperate against cross-border fraud
  • British Virgin Islands
  • 16 August 2018

The Singapore Court of Appeal recently ruled to reinstate and expand a Mareva injunction against fraudster defendants in a conspiracy claim, providing strong support for an earlier decision of the BVI Commercial Court in related proceedings. The decision demonstrates the importance of consistency between courts in multiple jurisdictions in complex cross-border cases.

Court of Appeal reaffirms that it will rarely reverse findings of fact
  • British Virgin Islands
  • 09 August 2018

The BVI Court of Appeal recently dismissed an appeal against the liquidators of BVI company Pioneer Freight Futures Company Limited and reaffirmed the established law regarding reversing findings of fact. The court held that it will intervene only in rare cases, such as when there is no evidence to support the conclusion, the conclusion was based on a misunderstanding of the evidence or the conclusion was one that no reasonable judge could have reached.


Cayman Islands

Grand Court gives directions for dissenters' discovery in appraisal action
  • Cayman Islands
  • 13 September 2018

Following the recent Court of Appeal decision in Qunar, the Grand Court handed down written reasons for its further directions for dissenters' discovery in a Section 238 appraisal action. The reasons acknowledge that the Grand Court's approach to discovery has changed as a result of the Court of Appeal's decision, such that a "general requirement for automatic mutual disclosure" now applies.

Dishonesty is a serious allegation and must not be pleaded lightly: rolled-up plea is insufficient
  • Cayman Islands
  • 23 August 2018

The Grand Court has set out the requirements for pleading a cause of action of dishonest assistance and reaffirmed the established principles of the defence of estoppel. The decision provides welcome comfort to corporate entities with robust and thorough systems for detecting fraud.

AHAB v Saad – importance of a particularised and principled tracing claim
  • Cayman Islands
  • 26 July 2018

In Ahmad Hamad Algosaibi & Brothers Company (AHAB) v Saad, the Grand Court found that AHAB's claims, which attempted to trace its funds into the hands of defendant SIFCO5, were "unparticularised and unprincipled". Further, AHAB was unsuccessful in establishing that funds representing traceable proceeds from the Money Exchange reached SIFCO5 or in articulating any discernible cause of action against SIFCO5 in respect of such funds.

Security for costs – a foreign affair
  • Cayman Islands
  • 19 July 2018

During the early stages of litigation, a well-advised defendant will consider how to enforce a Cayman Islands court costs order in the foreign jurisdiction where the claimant's assets are located, and whether it should seek security from the claimant for the costs of doing so. The Court of Appeal has recently considered whether a foreign claimant should give security limited to the costs of enforcing an order in the foreign jurisdiction only or for the (much greater) amount of defending the appeal.

Grand Court dismisses multibillion-dollar fraud claims in one of largest Ponzi schemes in history
  • Cayman Islands
  • 12 July 2018

In a landmark ruling, the Grand Court emphatically dismissed a multibillion-dollar claim in a case involving allegations of fraud arising from one of the largest corporate collapses of the financial crisis. The case has showcased the court's ability to manage high-profile large-scale litigation, demonstrating especially the quality of the Cayman Islands judiciary and the court's ability to use cutting-edge technology, as well as the resources and flexibility to manage a year-long, multi-jurisdictional trial.


Cyprus

Contributed by A G Paphitis & Co
Taxation of Cyprus international trusts
  • Cyprus
  • 15 March 2018

Cyprus international trusts, which are subject to the International Trusts (Amendment) Law 1992, provide a significant number of tax advantages and can be used as part of an international tax planning strategy. In order to estimate the tax that should be imposed on a trust, its specifications, purpose and any other relevant circumstances must be considered.

Private investments in Cyprus – a bright future
  • Cyprus
  • 14 December 2017

Cyprus saw its highest increase in gross domestic product in almost a decade in the first quarter of 2017. The dark days of the 2013 financial crisis appear to be in the past and foreign investment remains at the heart of government strategy, aided by factors such as the citizenship-by-investment programme, which will help to attract private investment in the property, retail and pharmaceutical sectors.

Tax residency can be obtained by staying in Cyprus for 60 days a year
  • Cyprus
  • 07 September 2017

Foreign tax residents in Cyprus are exempt from taxation on their worldwide dividend and passive interest income. Parliament recently approved a bill granting tax resident status to individuals who spend at least 60 days a year in Cyprus, under certain conditions. Individuals who do not qualify as Cyprus tax residents under the 183-day rule now have the opportunity to consider the 60-day rule, which took effect on January 1 2017.

Cyprus international trusts – an overview
  • Cyprus
  • 06 July 2017

Cyprus international trusts (CITs), also known as Cyprus offshore trusts, are regulated by the International Trusts Law, which complements the Trustees Law. CITs provide multiple benefits – such as anonymity, asset protection, flexibility and taxation incentives and benefits – which high-net-worth individuals around the world can use within the framework of their tax planning and investment strategies.

Cyprus offers tax exemption on worldwide income
  • Cyprus
  • 01 June 2017

In order to provide high-net-worth individuals with additional incentives to relocate to Cyprus or continue conducting their business operations or investments in Cyprus, the government introduced non-domicile rules for the purposes of the Special Defence Contribution Tax Law. As a result, an individual may be resident, but not domiciled, in Cyprus. Tax residents who are not domiciled in Cyprus are exempted from the special defence contribution tax.