Exploring Offshore Litigation

The Cayman Islands Court of Appeal has issued a strong warning on the risks of using generative artificial intelligence in court proceedings in the recent decision in Samuel Johnson v Cayman Islands Health Services Authority [2025] CICA (Civ) 15 (Johnson v HSA). The judgment is the first in the jurisdiction to directly address the use of AI in legal submissions and highlights the duty of candour owed by litigants, whether they are represented by counsel or appearing on their own. Background The Appellant, a self-represented litigant, brought an appeal against the Cayman Islands Health Services Authority. Johnson filed a skeleton argument that included references to two legal cases but was unable to produce copies of those cases when requested by the Court. The Appellant admitted that the cases had been generated using a generative AI tool and confirmed that at least one of them did not exist. At first, the Appellant did not disclose that he had relied on AI at all, only acknowledging it when questioned by the Court. This raised a serious and unprecedented issue for the Court with regard to the reliability of AI-generated legal research and the potential for misleading submissions undermining the administration of justice. The Court's response The Court of Appeal, led by Justice Clare Montgomery KC, was unequivocal in its criticism. It emphasised the following: litigants-in-person are subject to the same duty as lawyers not to mislead the court, intentionally or otherwise; the Appellant's actions as a breach of this duty, particularly because he initially failed to disclose the use of AI and only admitted it when pressed; while it chose not to impose sanctions in this instance, it issued a stern warning about the future consequences of such conduct. These could include contempt of court proceedings, referral for criminal investigation, costs orders, and/or the case being stayed or struck out; and the Court made clear that any future use of AI in preparing court documents must be disclosed, and the party submitting those documents remains personally responsible for ensuring their accuracy. The risks of Generative AI Citing the English case of R (Ayinde) v London Borough of Haringey [2025] EWHC 1383, which similarly explored the pitfalls of relying on generative AI tools such as ChatGPT for legal research, the Court highlighted that, while AI can be a helpful tool, it cannot replace human judgment or legal expertise. The English court likened the use of AI to relying on the work of a trainee solicitor or pupil barrister: just as a lawyer remains fully responsible for checking the accuracy of their junior's work before it goes before the court, so too must anyone using AI take personal responsibility for verifying the results. A regional perspective: Turks & Caicos The Cayman decision in Johnson v HSA comes at a time when other Caribbean jurisdictions are beginning to grapple with how generative AI should fit within court processes. Just weeks before this judgment, the Turks & Caicos Islands Judiciary issued Practice Direction 1 of 2025, a landmark step in setting clear boundaries for AI use in litigation. This practice direction applies to all courts in Turks & Caicos and introduces a structured framework for managing the risks of AI-generated content. It requires parties to explicitly disclose when AI has been used in preparing submissions, skeleton arguments, or other documents, and to independently verify all legal authorities and factual content before filing. It also prohibits the use of AI for creating evidentiary material, such as affidavits and witness statements, recognising that these must reflect first-hand human knowledge and accountability. Perhaps most importantly, the Practice Direction empowers judges to sanction non-compliance, including striking out improperly prepared documents, imposing adverse costs orders, and, in serious cases, referring matters for further investigation. This signals a strong judicial c...

In Sandoz AG v Bayer Intellectual Property GMBH, the English High Court provided important clarification that a claimant in an inquiry for damages is not entitled to an account of profits under the standard cross-undertaking as to damages. Background The Inquiry Defendants had obtained certain interim injunctions against the Inquiry Plaintiffs which were subsequently discharged. Following the discharge, the Court ordered an inquiry as to damages caused to the Inquiry Plaintiffs as a consequence of the interim injunctions, pursuant to cross-undertakings given by the Inquiry Defendants. The Inquiry Plaintiffs' principal claim was for an account of the profits that the Inquiry Defendants had made as a result of the injunctions being in place. They also made an alternative claim for loss of profits, though they pleaded that such a remedy would not provide adequate compensation in the circumstances. Terms of the cross-undertaking The cross-undertaking contained the key provision that if the Court found that the injunction "has caused loss" to the Inquiry Plaintiffs and decided that they "should be compensated for that loss", then the Inquiry Defendants would comply with any order the Court may make and would be "jointly and severally liable for any monetary award relating to such loss". The Court's analysis and decision Citing various authorities, the Court considered that the purpose of cross-undertakings is to compensate for loss caused by the injunction which was wrongly granted. In construing the terms of the cross-undertakings with regard to their underlying purpose, the Court found that the Inquiry Defendants had undertaken to comply with any order requiring them to compensate the Inquiry Plaintiffs for losses suffered as a result of the injunctions, and to be jointly and severally liable for any monetary award made to that end. However, crucially, they had not undertaken to disgorge profits they made as a result of the injunctions. The Court specifically rejected the Inquiry Plaintiffs' construction that, so long as the court decided they had suffered loss for which they should be compensated, the Inquiry Defendants had undertaken to comply with any order the court might make, even if that order was not an award of compensation for that loss. The Court found this interpretation would be inconsistent with the purpose of a cross-undertaking, which is to ensure that a party which has suffered loss as a result of an injunction that should not have been granted is compensated for that loss. The Court also rejected the argument that, under a cross-undertaking, monetary relief should be assessed as if there had been a contract in which the applicant agreed not to prevent the respondent from doing that which the injunction prevented them from doing. Significance of the decision While Harneys does not practice the law of England and Wales, this decision provides important guidance on the interpretation and scope of standard cross-undertakings given in interim injunction proceedings, which are also typically given in the offshore jurisdictions in which we practice. A standard cross-undertaking is compensatory in nature and does not extend to restitutionary remedies.

In Maso Capital Investments Ltd v Trina Solar Ltd the Privy Council reinstated the first instance decision of the Grand Court, confirming that the task for the trial judge in an assessment of fair value pursuant to section 238 of the Companies Act (as revised) is highly fact specific and will depend on the relative reliability of the valuation methodologies contended for. The Privy Council also reiterated that the principles to be applied by an appellate court to findings of fact or evaluative assessments of a lower court are restrictive and designed to be so. The petition of the Appellant, Trina Solar, was heard by the Grand Court in May and June 2019. The Judge's carefully and thoroughly reasoned judgment comprised 353 paragraphs over 249 pages. The Judge heard extensive expert evidence over sixteen days and determined the values per ADS reached by applying three valuation measures, after a minority discount, to be Merger Price US$11.37; Market Price US$7.26; and Discounted Cash Flow (DCF) Value US$17.81. The Judge then applied a weighting of 45 per cent to the Merger Price, 30 per cent to the Market Price and 25 per cent to the DCF Value in reaching his decision that a fair value was US$11.75 per ADS. In an equally thorough judgment, the Cayman Islands Court of Appeal (CICA) correctly identified the appropriate legal principles which would allow an appellate court to interfere with findings of fact or evaluative assessments. In short, it would need to satisfy itself that the Judge's conclusions were plainly wrong; conclusions which no reasonable judge could have reached on the evidence. The CICA concluded that: "On the facts of this case … I do not see that any reliance can safely be placed on the Merger Price. The whole point of the protections and processes which have been developed in the Delaware jurisprudence and adopted in this jurisdiction is to give the court comfort that the merger price can be probative of fair value." The CICA concluded that the Judge's assessment of Merger Price was indeed plainly wrong and decided it should interfere by giving it no weight. It was not persuaded that the Judge's assessment of Market Price was ultimately in error and, in effect, redistributed the relative weighting of the three methodologies so that fair value would be comprised 30 per cent Market Price and 70 per cent DCF (almost three times that attributed by the Judge). The JCPC restored the Judge's original decision. It concluded that the reasoning adopted by the CICA for interfering with the Judge's assessment of the weight to be accorded to the Merger Price was flawed. Instead, the JCPC held the Judge's nuanced assessment based on a sea of evidence, which acknowledged deficiencies in the sales process, was within the reasonable bounds of evaluation and that while the CICA had "correctly identified the limits on its entitlement to interfere … it seems to the Board that it impermissibly strayed into the realm of substituting its own evaluation for that of the Judge". The JCPC criticised the CICA's approach to reliability in this context, explaining that it is a comparative concept which allows the court to attribute weight even where it concludes that there are weaknesses or uncertainties. The JCPC also concluded that the CICA was not justified in treating the Judge's conclusions on Management Projections as plainly wrong. It disapproved of the CICA approach characterising it as a "calculation exercise" as opposed to an exercise in estimation which could produce a range of reasonable results. The CICA's alternative figures were arbitrary and unsupported by evidence - the figures were "plucked out of the air" and had "no greater claim to validity" than Trina Solar's projections. The Judge was ultimately better placed to make an assessment of the relevant inputs and the reliability of the Management Projections. In the highly valued and complex area of appraisal litigation in the Cayman Islands, the JCPC's decision to restor...

The Privy Council has just handed down judgment in Fang Ankong & Anor v Green Elite (in liquidation) which clearly restates how the Duomatic principle is to be applied and, in particular, the need for certainty, knowledge and an actual assent that can be objectively established. At first instance the BVI Commercial Court found that a historical understanding between joint venture partners (and eventual shareholders in Green Elite) did not objectively evince an intention to create a binding shareholder agreement. In this case, the proceeds of a sale of shares were paid directly to one of the directors of Green Elite who paid them on to the intended beneficiaries of a share incentive scheme for key employees. The appellants argued that the payments were properly made to implement Green Elite's agreed purpose to provide an employee share incentive scheme. If the payments would otherwise have constituted breaches of duty, the appellants' case was that the payments were made with the unanimous approval of the shareholders and therefore duly authorised. They argued that such approval was given when the shareholders agreed that Green Elite would act as the vehicle for the employee share incentive scheme for the intended beneficiaries. The first instance judge determined that "there was never any meeting of minds on the terms which Mr Fang believed gave him the absolute power to deal with the proceeds of sale of the… shares held by Green Elite" such that the Duomatic principle could not apply. The Court of Appeal upheld this decision, which has now been followed by the Privy Council. The Duomatic principle operates so as to allow the shareholders of a company to approve matters informally which would otherwise require a formal shareholder resolution. In this case, the shareholders could have authorised or ratified the director's actions by unanimous informal consent. However, on the facts, those actions and the breaches of duty involved were not approved. Whilst it was agreed that Green Elite would be used to provide an employee share incentive scheme, all other matters relating to the scheme were to be agreed at a later date and in fact were never agreed. It was impossible to see how the shareholders of Green Elite would have agreed by way of formal resolution to something which lacked critical details; given that there could not have been a formal resolution, the Duomatic principle could not regard equivalent approval to have been given informally. The first instance judge had previously couched his finding in the language of contract; but the Privy Council found that assent given in accordance with the Duomatic principle need not have the particular features of a binding contract. It is not a question of creating legal relations, as understood in the law of contract, nor whether the assent is "legally enforceable" or has "legal effect", but whether the shareholders intended to bind themselves legally "as if they had passed a formal resolution." While the judgments of the lower courts had also considered the scope of section 175 of the BVI Business Companies Act, Revised Edition 2020, which applies where there is a disposal of more than 50 per cent of the assets of a company outside the company's "usual or regular course of business", the Privy Council found that since a valid Duomatic assent did not arise, it was unnecessary to consider the issues in relation to section 175. The Privy Council decision upholds the lower courts' clarification on the application of the Duomatic principle in the BVI, building on the landmark decision of the Privy Council in Ciban Management Corp v Citco (BVI) Ltd, and in particular the need for objective certainty and knowledge by the shareholders. Harneys has represented Green Elite (acting through its liquidators) throughout the proceedings.

The decision of Justice Mangatal in Ming v JF Ming Inc is the latest judgment from the long-running family dispute and unfair prejudice proceedings over JF Ming Inc (JFM), a BVI holding company with subsidiaries holding substantial real estate in Hong Kong. The judgment is notable as it is the first detailed BVI decision that deals with the valuation of real estate-holding companies in Hong Kong in unfair prejudice proceedings and the question of whether a minority discount should be applied in a non-quasi partnership case. In 2014, the Claimants, three of seven siblings, jointly commenced unfair prejudice proceedings against their brother (Lawrence) and JFM. The proceedings were bifurcated and structured in phases: In 2016, the BVI Court found in favour of the Claimants on all aspects of their claim and granted them the relief sought, including a buyout. On appeal by Lawrence, in 2017 the Eastern Caribbean Court of Appeal set aside the buyout order but otherwise upheld all findings of Lawrence's unfairly prejudicial conduct and the other discrete remedies granted to the Claimants. In 2021, the Claimants appealed successfully to the Privy Council, which reinstated the buyout order, concluding the liability phase of proceedings (see our blog on the judgment here). In 2022, at the first stage of the valuation phase, the BVI Court (i) fixed the valuation date, (ii) determined the share entitlement of each Claimant, and (iii) decided that certain contested claims should be excluded as assets of JFM for the purpose of valuing JFM's shares. The matter then proceeded to trial before Justice Mangatal, where the principal issue for determination was the fair value of the Claimants' shares as at the valuation date. The Court was concerned with two main issues: first, which expert's valuation was to be preferred, and second, whether a minority discount should be applied in valuing the Claimants' shareholdings. Property valuation methodology On the first issue, both share valuation and property valuation experts were instructed, but by the time of trial the only dispute concerned the property valuations of Kyoto Plaza, the most valuable real estate in JFM's portfolio: The experts adopted different methodologies, leading to differing valuations. The Claimants' expert relied primarily on an income approach, with a market approach used as a cross-check, producing valuations of HK$1.44 billion (income approach) and HK$1.40 billion (market approach). Lawrence's expert, by contrast, relied exclusively on the market approach and arrived at a lower valuation of HK$1.27 billion. The Claimants argued that Lawrence's expert erred in failing to apply the income approach or, at the very least, an alternative method as a cross-check. They contended that best practice, informed by the International Valuation Standards (IVS), required the income approach where the property's critical attribute was its income-generating ability from a market participant perspective. Lawrence disagreed, arguing that in Hong Kong commercial real estate is valued both for capital appreciation and income-generation, such that the income-producing ability of Kyoto Plaza was not a critical element, and therefore did not mandate the application of the income approach. Lawrence also argued that there were insufficient reliable rental comparables to support a meaningful income approach adopted by the Claimants. The difference between the experts' market approach valuations turned largely on their treatment of ground-floor units (in particular a unit with an unusual layout) and their selection of comparables and adjustments for factors such as location and age. Ultimately, the Court preferred the evidence of the Claimants' expert, finding that it better complied with the IVS, particularly IVS 105, which emphasises the income approach for income-generating properties. In doing so, the Court implicitly accepted, without elaboration, that Kyoto Plaza's income-producing potential wa...

In Hyalroute Communication Group Limited v Industrial and Commercial Bank of China (Asia) (Hyalroute), the Hong Kong Court dismissed an application by a Cayman Islands-incorporated company for anti-suit relief to restrain a creditor from filing a winding-up petition in the Grand Court of the Cayman Islands. This is the first time the Hong Kong Court has had to consider the circumstances in which it should restrain winding-up proceedings in a similar common law jurisdiction (here, the Cayman Islands) in circumstances where the two jurisdictions have conflicting approaches as to how they deal with winding-up proceedings in favour of arbitration. Background The underlying dispute arose from a Term Facility Agreement (TFA) containing an arbitration clause mandating resolution of disputes in Hong Kong: the creditor had served a statutory demand in the Cayman Islands for a debt allegedly owed under the TFA and other arrangements. The company disputed the debt was due. The company applied to the Hong Kong Court to injunct presentation of a winding-up petition in Cayman arguing that it would be in breach of the TFA's arbitration clause. The Hong Kong Court had to ascertain whether the Cayman Islands winding-up proceedings would have the effect of finally resolving the dispute regarding the Plaintiff's indebtedness under the TFA. The judgment In order to reach a determination, Mr Recorder William Wong SC considered (at [31]) that the starting point for the Court was to "[evaluate] the foreign proceedings on broader grounds, such as whether they are vexatious, oppressive, or inconsistent with principles of forum non conveniens. In such cases, the Court is mindful of international comity and adopts a more cautious and restrained approach". [emphasis added]. The Court's reasoning in determining whether to grant anti-suit injunctive relief then continued as follows (at [38]): "[The] Court's focus here is on enforcing the arbitration agreement, not to prejudge or evaluate the merits of the underlying dispute. This approach ensures respect for the parties' contractual choice to arbitrate and avoids undermining the arbitral process by prematurely addressing issues that are properly reserved for the arbitral tribunal." [emphasis added] By considering the tension between the approach taken by the Hong Kong Court and that of the Cayman Islands, the Court held that the intended Cayman Islands winding-up proceedings did not breach the TFA, and even if it had, there were strong reasons not to grant the injunction. Analysis: the approach in Hong Kong In Re Lam Kwok Hung Guy (Re Guy Lam), the Hong Kong Court (G Lam JA) specifically considered and rejected the principle that winding-up proceedings based on a disputed debt do not, in themselves, determine the dispute and therefore do not contravene a relevant arbitration clause. Drawing an analogy between a winding-up proceeding and a summary judgment, G Lam JA explained that both processes can determine a dispute because both of them can give rise to an estoppel over the precise issues decided (subject to the usual conditions being satisfied). A proceeding which determines a dispute is a proceeding which is capable of giving rise to an estoppel. Put simply, the Court held (at [64]) that: "[t]he starting point is that a pursuit of foreign proceedings in breach of an arbitration agreement would be liable to be restrained by an anti-suit injunction" and since "the Plaintiff seeks a contractual anti-suit injunction by invoking the arbitration agreement … it has to establish a breach … by the Defendant. The burden is on the Plaintiff to show a "high probability of success" that the Defendant's pursuit of the anticipated Cayman winding-up proceedings breaches [the arbitration clause of the TFA]". Analysis: the approach in the Cayman Islands The Court then turned to the Judicial Committee of the Privy Council decision of Sian Participation Corp v Halimeda International (which is binding in the Cayman Isla...

In the recent decision of Suning International Group Co Ltd v Carrefour Nederland BV the Cayman Islands Court of Appeal provided guidance on the procedure to be followed under Order 73, rule 31(6) of the Grand Court Rules for service of proceedings to enforce a foreign arbitral award. In doing so, the Court of Appeal emphasised the policy of Cayman Islands law in favour of swift enforcement of arbitral awards. It also cautioned that failure to follow the guidance in this judgment will likely result in a service order being set aside. Background The respondent obtained an arbitral award in Hong Kong requiring the appellants to pay RMB1 billion (plus interest and costs) arising out of the failure by appellants to make payment pursuant to a put option for shares exercised by the respondent. Pursuant to section 5 of the Foreign Arbitral Awards Enforcement Act (1997 Revision) and with leave of the Court a Convention award may be enforced in the same manner as a judgment or order of the Grand Court. GCR Order 73, rule 31 deals with the procedure to be followed. Rule 31(6) provides that an order giving leave may be served personally, by sending to the respondent's usual or last known place of residence or business, or in such other manner as the Court may direct, including electronically. Grand Court's decision The Grand Court made an order ex parte granting leave to enforce the arbitral award in the Cayman Islands and directed that the order and associated documents be served on the appellants by delivery to their Hong Kong counsel in the arbitration proceedings. The respondent arranged service pursuant to the terms of the order, and also effected service by hand and registered post on each appellant respectively. The appellants then applied to set aside the order on various grounds including that the method of service ordered by the Judge was allegedly not in accordance with the relevant law. The appellants submitted that service of an ex parte order pursuant to rule 31(6) should be by way of service on a body corporate at its principal office or registered address and that the option of serving in some other manner should only be utilised on exceptional grounds. They submitted there was no evidence before the Court to show that service in according with the Hague Convention would cause any particular difficulty or delay, and there was no justification for in effect ordering substituted service. Justice Kawaley rejected these submissions and held that the wording of rule 31(6) gave the Court a suite of equal options rather than a suite of options sequentially ranked. He drew a distinction with the wording of GCR Order 65, rule 4 permitting substituted service where personal service is "impractical". He also noted there was no suggestion that serving the documents on the appellants' arbitration attorneys was contrary to Hong Kong law. The Grand Court dismissed the application to set aside the order but granted leave to appeal on the basis that the manner in which service of an ex parte order giving leave to enforce a foreign arbitral award is a matter of public interest which would benefit from a decision from the Court of Appeal. The appeal The Court of Appeal dismissed the appeal. Policy of "speedy finality" The Court of Appeal endorsed Mr Justice Foxton's comments in the English decision of M v N. In particular, the policy of speedy finality reflected in the approach to arbitration cases is even more compelling in connection with applications for enforcement of awards. Mr Justice Foxton set out factors that he held justified an order for alternative service notwithstanding that the Hague Service Convention applied. These included that the application was brought to assist with the enforcement of an arbitral award which engages the policy of speedy finality, the respondent had fully engaged (through counsel) with the proceedings that culminated in the award, the award had been outstanding for a considerable period of time (two ...

The Company operates predominantly in China. It is in the business of assisting with screening and diagnosis of cancers of various kinds and has developed products to provide early screening, particularly for bowel cancer. It appeared to have been successful for a number of years. However, in 2023, complaints were made by a third party that the Company's sales figures did not appear to be justifiable. This triggered an internal investigation which raised questions about the reliability of sales data within the Company and some suggestions that the Company's revenue had been overstated. Due to the question marks over the accuracy of the figures, the Company's accounts for 2023 were not completed. Moreover, the Company's auditors, Deloitte, resigned and new auditors were appointed but were not (as at the date of the petition hearing) able to complete their audit of the 2023 accounts. The investigations continued but the issues remain unresolved. As a result, HKEX suspended trading in the Company's shares in March 2024. HKEX further warned that if the company failed to resolve matters to its satisfaction by 27 September 2025, the shares would be de-listed. The board of the Company determined that it would be in the Company's best interests to appoint PLs to continue to carry out the investigations and at the same time attempt to achieve a rescue, or perhaps a restructuring, to allow it to continue its operations. On 6 August 2025, in an ex tempore judgment, Justice Asif KC, sitting in the Cayman Court, ordered the appointment of the PLs. The Court considered that it was clear from the material before it that the Company held valuable assets and appeared to have a viable business (provided that its internal difficulties can be resolved). Justice Asif KC observed that although no restructuring plan had yet been formulated, the board had demonstrated an intention to pursue a restructuring. In those circumstances, the case fell within the scope of appointing PLs to facilitate potential restructuring, if achievable. The Court was taken to section 104(1) of the Cayman Companies Act which establishes the Court's jurisdiction to appoint PLs. The Court then considered the difference between the appointment of PLs and the appointment of restructuring officers (ROs) and the two cases of Kingkey Financial International (Holdings) Limited (unreported, 12/04/24) and Oakwise Value Fund SPC (unreported, 16/12/24). Justice Asif KC concluded that in this case, a restructuring officer's powers "would not be sufficiently broad or are unlikely to be sufficiently broad to cover all the various steps that this company is likely to need to happen in order for a rescue to be successful. The additional powers that are likely to be available to a provisional liquidator makes the appointment of provisional liquidators a preferable one for this particular company." Accordingly, it was appropriate for PLs to be appointed within the meaning of Section 104(3) of the Act. Following Kingkey, Oakwise and now most recently New Horizon Health, it is certainly not the case, as a matter of practice, that the RO regime has displaced the restructuring provisional liquidator regime. The jurisdiction of the Court to appoint PLs on the application of the company is now broader than it was prior to the coming into effect of the RO regime. Whereas formerly, restructuring PLs could be appointed on the application of the company where it was unable to pay its debts and intended to present a compromise to creditors, the position now is that upon an application by the company, the Court may appoint PLs "if it considers it appropriate to do so." This is, on its terms, a broader and far less prescriptive jurisdiction. For a more in-depth discussion of this important issue, see our article Restructuring the Cayman Islands segregated portfolio company: A closer look at in re Oakwise Value Fund SPC.

The rise of digital assets and cryptocurrency has transformed financial markets, but it has also raised novel legal and practical challenges, particularly in the context of corporate insolvency. For insolvency professionals, trustees and investors navigating the murky waters of cryptoasset recovery, recent common law authorities provide an important guide toward legal certainty, particularly for questions of ownership, fiduciary obligation and the treatment of unclaimed or misappropriated tokens. Against this backdrop, the Singapore High Court's recent decision in Re Genesis Asia Pacific Pte Ltd (in liquidation), commonly referred to as Re Taylor, is a pivotal moment in the common law's evolving engagement with digital asset ownership. The decision, which underscores the importance of clarity in custodial arrangements and offers useful guidance on when a trust over cryptoassets may be inferred or implied, is relevant across jurisdictions that regularly deal with digital asset structures, such as the British Virgin Islands, the Cayman Islands and Bermuda. These offshore centres often host the holding companies, token issuers and custodian structures that underpin crypto exchanges or decentralised finance platforms. The Singapore High Court in Re Taylor considered whether unclaimed cryptocurrency held by a liquidated exchange could be distributed to customers on the basis that it was held on trust. The joint liquidators of Eqonex Capital Pte Ltd said the assets were either held on express trust (based on the exchange's user agreements) or that a resulting or Quistclose trust could be inferred. The court applied orthodox trust principles, requiring the "three certainties" of intention, subject matter and objects. Despite the user agreements stating that digital assets "are custodial assets held by the Eqonex Group for your benefit" and that "title … will at all times remain with you," the court found this insufficient to constitute certainty of intent. The mere fact that assets were segregated and designated for customer use was insufficient to evidence an intent to create a fiduciary relationship. Additionally, the court rejected the existence of resulting or Quistclose trusts due to the absence of a clear purpose or mutual intention. A similar approach was taken by the Hong Kong courts in Re Gatecoin (in liquidation). This decision is significant for two reasons. First, it demonstrates that courts are increasingly prepared to apply conventional trust and property principles to blockchain-based assets. Second, it highlights the importance of documentation, platform terms and wallet architecture in determining ownership and fiduciary obligations. For liquidators and trustees, Re Taylor offers a roadmap. Where a trust can be clearly identified, recovered digital assets can be distributed back to beneficial owners or, in some cases, to shareholders through established trust mechanisms. Where no trust exists, these assets may instead be applied in satisfaction of the company's general liabilities. Asset recovery during liquidation creates legal, technical maze Recovering digital assets during liquidation is often a multi-jurisdictional and multidisciplinary exercise. The process typically begins with asset tracing, including reviews of internal ledgers, blockchain transactions and exchange accounts to identify and secure relevant wallets. In jurisdictions such as Singapore, Hong Kong, the British Virgin Islands, the Cayman Islands and Bermuda, liquidators have powerful tools for summoning former officers, compelling document production and initiating proceedings for non-cooperation. These powers, however, only go so far. In many instances, access to wallets may depend on seed phrases, keys or multifactor authentication devices retained by former insiders. Liquidator roles are also made difficult by the practical hurdles that necessarily exist with digital and cryptoassets. These include: Identifying fraudsters who routinely explo...

In a recent decision of In the matter of TROOPS Inc, the Grand Court declined to appoint joint provisional liquidators (JPLs) on an ex parte basis over TROOPS Inc. (the Company). The ruling provides a useful reminder of the Court's "especially cautious" approach to pressing the "nuclear button" of appointing JPLs, especially when that appointment is sought on an ex parte without notice basis. The application was brought by Real Estate and Finance Fund (in official liquidation) (the Petitioner), which had obtained a Hong Kong High Court judgment against in the Company and others for approximately HK$405 million (c.US$52 million). The Petitioner alleged that the Company had been involved in a fraudulent restructuring and asset diversion scheme designed to strip value from the Petitioner's assets. Fearing dissipation of assets, the Petitioner applied without notice for the urgent appointment of JPLs to preserve the Company's assets pending enforcement and/or determination of an appeal of the Hong Kong judgment. In an earlier decision, Position Mobile Ltd SEZC (7 April 2022 and 31 October 2023) (Position Mobile), Justice Doyle set out (by reference to various earlier authorities) the four "main hurdles" for the appointment of provisional liquidators. These are: The presentation of the winding up petition hurdle: a winding up petition has been duly presented and a winding up order has not yet been made. The standing hurdle: the applicant has standing to make the application, i.e. the applicant is a creditor, contributory or CIMA. The prima facie case hurdle: there is a prima facie case for making a winding up order. The necessity hurdle: the appointment of JPLs is necessary in order to prevent the dissipation or misuse of the company's assets; and/or the oppression of minority shareholders; and/or mismanagement or misconduct on the part of the company's directors. In the present case, the same judge presided and affirmed Position Mobile, holding that the Petitioner had overcome the first three of these hurdles. However, he was not persuaded that the fourth "necessity hurdle" was satisfied. Therefore, the Petitioner did not succeed. In the judgment, the Judge emphasised that the appointment of JPLs is "one of the most intrusive remedies in the court's armoury" and requires clear and strong evidence. The Judge also reiterated that where less draconian remedies are available, such as injunctive relief, JPLs should not be appointed. In the present case, the Petitioner's position was that the existing injunction that it had obtained in Hong Kong (the HK Injunction) was limited in scope and essentially inadequate to prevent the dissipation of assets. However, Doyle J was not persuaded by this argument and suggested that there was nothing stopping it from returning to Hong Kong to seek further relief. Ex parte applications for JPL appointments: applicants must be prepared for the Court to heavily scrutinise an application for the appointment of JPLs on an ex parte basis. The appointment of JPLs is the "nuclear option". Necessity and proportionality: even with a strong prima facie case, the Court will not appoint JPLs unless it is strictly necessary, and proportionate, to protect the petitioner's position. The existence of alterative remedies may be considered adequate protection, making the appointment of JPLs unnecessary. Form of order of appointment: the Court criticised various aspects of the draft order (albeit these criticisms were academic, as the relief sought was declined). For example, it was inappropriate for an order providing for the Company to be wound up on an application for the appointment of JPLs on an ex parte basis. The Judge also questioned why the petition was proposed to be advertised only in the Cayman Islands, and not elsewhere, for example in Hong Kong. The Judge noted that he would have needed to be satisfied as to the wide JPL powers sought, and would have needed to be heard on the issue of the stifling of an...

The Grand Court's recent decision in Re Superb Summit International Group Ltd [2025] CIGC (FSD) 62 offers a legally straightforward, albeit unusual, illustration of how Cayman Islands restoration and winding-up procedures can be utilised to support foreign regulatory enforcement efforts, particularly where cross-border fraud is alleged and local recovery action is essential. Background On 22 April 2025 a petition was presented by creditors seeking: orders restoring Superb Summit International Group Limited (the Company), a Cayman Islands entity, to the register; a winding up order on insolvency and/or just and equitable grounds; and the appointment of joint official liquidators. The petitioners' evidence showed that they had each entered into subscription agreements with the Company in 2014 paying HK$10 million in return for interest payment obligations assumed by the Company which fell due in 2019. They were apparently not alone in having their commercial expectations disappointed. In 2020 the Company was delisted from the Hong Kong Stock Exchange and on 18 December 2020, Hong Kong's Securities and Futures Commission (SFC) commenced proceedings against the Company's former management and the company in respect of (amongst other things), alleged fraud (the HK Proceedings). However, the fact that the Company had been struck off the register posed a procedural hurdle. The petitioners therefore brought a restoration application pursuant to section 159 of the Companies Act (2025 Revision). Section 159 relevantly provides: "Company, member or creditor may apply to court for company to be reinstated 159.(1) If a company or any member or creditor of a company feels aggrieved by the company having been struck off the register in accordance with this Act, the company, member or creditor may apply to the Court to have the company restored to the register. (2) An application referred to in subsection (1) shall be made by the company or any member or creditor of the company (a) within two years after the date on which the company was struck off the register; or (b) where the Cabinet allows, after the two-year period referred to in paragraph (a) but not more than ten years after the date on which the company was struck off the register. (3) Upon an application under subsection (1), if the Court is satisfied that (a) the company was, at the time of the striking off, carrying on business or in operation, or otherwise; and (b) it is just that the company be restored to the register, the Court may order that the name of the company be restored to the register on payment by the company of a reinstatement fee equivalent to two times the original incorporation or registration fee, and on terms and conditions as to the Court may seem just…" [Emphasis added] The legal framework Justice Kawaley granted the restoration under section 159, which, as set out above, permits a company to be restored where "just," even outside the initial two-year window (with Cabinet approval, which was obtained). Restoration was sought to enable the company to: participate in the HK Proceedings; receive any compensation awarded; and potentially pursue claims against former management. Winding-up and liquidation It was also held that as the aim of restoration was to enable the Company to take part in the HK Proceedings where the former management were the defendants, it was entirely logical to place the Company into official liquidation. The Court appointed joint official liquidators (JOLs) and granted targeted powers, including the power to: participate in and bring ancillary proceedings in Hong Kong; engage counsel locally and abroad; and seek recognition from the Hong Kong courts of their appointment. Takeaways This case underscores several key themes for offshore practitioners: Discretion should ordinarily be exercised in favour of restoration: where there is some valid purpose for seeking restoration, for instance the recovery and/or distribution of assets, the di...

In Target Global Growth Fund II v Liu Xun, the Grand Court of the Cayman Islands granted the Plaintiffs' application for a worldwide freezing injunction against the Defendant's assets up to a value of US$35 million, as well as a proprietary injunction targeting specific assets. The Court clarified the test for the grant of a worldwide freezing order and the standards by which to evaluate the factors concerning a real risk of dissipation. The Plaintiffs are venture capital entities that invested significant funds of about US$31.5 million pursuant to a subscription agreement signed among the Plaintiffs, the Defendant, Artem Ibragimov and a Cayman Islands company XanGroup holdings Corp (XanGroup). The Plaintiffs allege that their investment was induced by the Defendant through fraudulent misrepresentation - namely, they were led to believe that the investment funds would be used to further XanGroup's business when in fact the funds were diverted from XanGroup's bank account to an account in the Defendant's name for his personal benefit. Holding dual Dutch and Hong Kong citizenship, the Defendant is an individual with worldwide connections who seems to also have residency and employment rights in Singapore. Further, the Defendant provided an address in China and stayed in Vietnam during the periods in question. Among other questionable behaviours, the Defendant purportedly signed a false share repurchase agreement on behalf of XanGroup to disguise the payment transfer from XanGroup's account to his own. The Plaintiffs, having obtained a worldwide freezing order against the Defendant in Singapore, now brought suit in the Cayman Court seeking a freezing injunction against the Defendant's worldwide assets and a proprietary injunction against specific assets. Legal principles At the outset, Justice Doyle noted that a worldwide freezing order is "a very big step to take" and the court must "scrutinise the basis for such an injunction with the utmost care". The central question in granting such an injunction is a requirement that there be a real risk of dissipation of assets, ie, that absent an injunction, the defendant will deal with such assets with the result of leaving the judgment unsatisfied. The legal test for a freezing order is set out in the recent decision of the Court of Appeal of England and Wales in Dos Santos v Unitel SA, which is followed by Cayman courts. Specifically, the applicant must show: A good arguable case on the merits (which in effect is equivalent to a "serious issue to be tried", and does not necessarily have to have a better than 50% chance of success); A real risk of dissipation of assets (defined as "something which is more than fanciful", with no requirement to show a high probability thereof or that dissipation is more likely than not); and That it would be just and convenient to grant the order. The plaintiff has the burden of satisfying the threshold of a real risk of dissipation, and in making this determination, the court evaluates the totality of the evidence, looking at the relevant factors cumulatively. As regards proprietary injunctions, it is well within the court's power to grant such injunctions, provided that there is a serious issue to be tried (meaning that the facts alleged, if proven, would afford the claimant a proprietary remedy), the balance of convenience comes down in favour of granting the proprietary injunctive relief, and it is just and convenient to do so. Decision Noting that the application for freezing injunctions was dealt with at an interlocutory stage without complete discovery and any cross-examination of witnesses, the Court was satisfied that all three limbs of the test for freezing injunctions were met. In particular, the totality of the circumstances in this case shows that there was a real risk, judged objectively, that a future judgment would not be satisfied because of dissipation of assets. In so ruling, Justice Doyle had regard of the following factors: The De...

In the course of complex contested succession proceedings in the case of ATH v BNU, Justice Mithani gave an (anonymised) judgment dated 10 July 2025 in the BVI High Court. This is an important judgment of particular significance to practitioners dealing with estates pending a full grant of administration. Two sisters, BNU and ATH, disputed the division of the estate of their late father. Their late father's will named an executor, but the executor renounced his right to apply for probate. While the authority of an executor stems from their appointment in a will and takes effect from the death of the testator, an administrator is in a different position because their title depends on the grant of administration itself. BNU applied ex parte under the Non-Contentious Probate Rules to the BVI Probate Court for the appointment of herself as administratrix ad colligenda bona (AACB) of the BVI estate. A grant AACB is a limited form of authority to collect and preserve the assets of a deceased person's estate before a full grant is issued. Justice Young made an order appointing BNU as AACB and granted BNU permission to bring a derivative action under section 184C(1) of the BVI Business Companies Act, Revised Edition 2020 (Permission Application). Following the obtaining of that order, BNU applied for and obtained ex parte freezing and proprietary injunctions against ATH's husband and a company of which he was the executive director (Injunction Application). ATH, her husband and the company subsequently applied to set aside Justice Young's order and discharge the injunctions respectively. Justice Mithani strongly disapproved of BNU's appointment as an administratrix of an estate on a temporary or emergency basis for multiple reasons, including that the application had been made ex parte, there had been a failure to give immediate notice of the appointment to ATH, and BNU had later applied without notice for a grant to perfect that entitlement. His Lordship concluded that Justice Young's order did not permit BNU to act without taking out a formal grant of representation. The documents necessary for a formal grant of representation to be issued were not before Justice Young and, therefore, Her Ladyship had had no power to issue the grant to follow on from the order she made appointing BNU as AACB. Justice Mithani rejected a further contention that he, sitting in the Commercial Court, should issue a grant, rather than a Judge of the Probate Court. A claim based on a cause of action, where legal capacity to sue is lacking, is a nullity. Accordingly, the High Court held that the Permission Application was simply not valid on account of the lack of authority on the part of BNU to bring it. Further, the Injunction Application, which was brought in the course of the Permission Application, also fell away. In any event, Justice Mithani concluded that Justice Young's order should itself be set aside because the procedure initiated by BNU to apply for her appointment as AACB was wholly inappropriate. This is an insightful judgment that that merits careful reading by all those interested in this specialist field.

In Stevens v Hotel Portfolio II UK Ltd (HPII), a judgment handed down by the Supreme Court on 23 July 2025, Lord Briggs gave the leading judgment (with only Lord Burrows dissenting), providing a clear statement of the law on compensation for breach of constructive trust by a trustee and a dishonest assistant. In 2005, HPII sold three hotels to a company owned by Mr Stevens. In fact, both the company and Mr Stevens were nominees for Mr Ruhan who concealed from HPII that he was the real purchaser. The hotels were sold at market value. Accordingly, HPII suffered no loss at that stage. Between 2006 and 2008, the company sold the hotels at a significant profit. Mr Ruhan benefitted from a dividend by the company of £95 million, which he dissipated for his own purposes and subsequently lost in poor investments. When the loss was discovered by the liquidators of HPII, HPII sued Mr Ruhan and Mr Stevens; Mr Ruhan for breach of his fiduciary duties and Mr Stevens for dishonest assistance. The High Court in this case found that Mr Stevens had dishonestly assisted Mr Ruhan in both the acquisition of profits and their dissipation. The Judge found that the dissipation of the profits caused HPII an equivalent loss and ordered Mr Stevens to compensate HPII accordingly. However, the Court of Appeal allowed an appeal on the basis that (a) HPII was only the temporary beneficial owner since both the gain and the loss were parts of a single pre-arranged fraudulent scheme by Mr Ruhan and (b) the loss caused to HPII by the dissipation was set off by an equivalent gain caused by Mr Ruhan's related breach of fiduciary duty such that there was no loss. The Supreme Court took a step back and stated that the argument that a complete dissipation by a trustee can have caused the beneficiary no loss defied both equity and ordinary common sense. There is no fundamental difference between the relationship between trustee and beneficiary and the analogous relationship between fiduciary and principal (such as a director and company). The recipient becomes a constructive trustee of the dividend immediately upon its receipt with a duty to conserve the trust property for the benefit of the beneficiary and not destroy the beneficiary's proprietary interest in it. From the moment of receipt, the dividend belongs to the beneficiary. A dissipation of the fund is a breach of trust for which the trustee is liable to compensate the beneficiary. A dishonest assistant is jointly liable with the trustee. If the dissipation caused the beneficiary a loss, and if no equitable set-off is available, then that is a loss for which compensation is due. The questions for the Supreme Court to answer were whether the court can order compensation for loss caused by breach of a constructive trust; whether the dissipation of the dividend caused HPII a loss; and whether Mr Stevens could pray in aid an equitable set-off of the gain made by HPII. The constructive trust imposed the usual obligation on the trustee not to dissipate the trust property and the usual obligation on both him, and any dishonest assistant, to compensate the beneficiary for that loss. Applying a but-for analysis, the dissipation caused HPII to lose the whole value of its beneficial interest in the trust property regardless of the fact that the dividend was the fruit of an earlier breach of trust in making the profit in the first place. The purpose of the constructive trust would be entirely defeated by allowing a set-off of the gain represented by the profit against the loss, since this would wipe out any personal liability by the trustee and dishonest assistant. The fundamental principles were therefore unaffected by (a) whether there was an earlier breach of fiduciary duty to the same beneficiary; (b) whether the making of the profits caused the beneficiary no loss (and in this case it did not); and (c) whether the effect of the constructive trust was to confer a gain on the beneficiary. While Harneys does not pra...

In Commercial Bank of Dubai PSC v Al Sari, the English Commercial Court granted a declaration sought by the Bank that a United Arab Emirates Court judgment in favour of the defendants was obtained by fraud. The decision also clarifies that the rule in House of Spring Gardens v Waite (No 2) does not apply to enforcement proceedings, such that a party is not precluded from re-litigating the issue of fraud in a domestic court where the same issue had been dismissed in the foreign court. The Bank obtained a judgment in the Sharjah Court in the UAE against the Al Sari defendants. The Bank sought to enforce the judgment by taking control of the shares of several BVI companies formerly owned by the second and third defendants. The Bank had been unable to realise any value from the real properties held by the BVI companies by reason of what the Bank described as a dishonest scheme designed by the defendants to preserve the properties and their proceeds of sale for the benefit of the Al Sari family, via a series of sham contracts. The sham contracts first emerged after the Bank commenced enforcement proceedings against the BVI companies. The contracts purported to impose a debt on the BVI companies in favour of the seventh defendant. The Al Sari defendants commenced proceedings in the Sharjah Court seeking recovery of the purported debt arising under the sham documents, and were successful on appeal in obtaining a judgment against the BVI companies (UAE Appeal Judgment) in a sum significantly exceeding the earlier judgment due from the defendants to the Bank (Bank's Judgment). The BVI companies (as parties) and the Bank (as non-party) requested the Sharjah Court of Appeal to review its decision in the UAE Appeal Judgment arguing that the contracts between the Al Sari defendants and the BVI companies were fabricated. The Sharjah Court of Appeal rejected the request for a review. In connection with UK enforcement proceedings of the Bank Judgment, the Bank sought a declaration from the Commercial Court that the UAE Appeal Judgment had been obtained by fraud and sought an injunction restraining the enforcement of the UAE Appeal Judgment against the BVI companies. In finding that the Bank had established that the contractual documents relied upon were shams, the English Commercial Court concluded that the UAE Appeal Judgment was similarly obtained by fraud and should not be recognised or enforced at common law in the UK. The English Court granted the Bank's claim for declaratory relief, and a permanent anti-enforcement injunction restrain the Al Sari defendants from enforcing the UAE Appeal Judgment in the UK. In giving its decision, the English Court gave guidance on the scope of application of the rule in House of Spring Gardens v Waite (No 2) and held that the Bank was not precluded from alleging fraud in the English proceedings by reason of bringing a review procedure within the UAE Appeal proceedings in which the allegation of fraud was rejected. Specifically, the decision clarifies that: 1. The principle is a rule of estoppel or abuse of process. It would operate only where the issue has already been raised and adjudicated upon in a separate action, or in new proceedings after a final and enforceable judgment has been entered in earlier foreign proceedings. 2. The review procedure under the civil law of Sharjah does not constitute a separate action and did not determine whether the UAE Appeal Judgment had been obtained by fraud. Rather, the review amounted to a procedural mechanism for the same court to reconsider its judgment, which is fundamentally different to a fresh action before a new court to set aside a prior judgment for fraud. 3. There was no issue estoppel and it was not an abuse of process for the Bank to argue new matters which the Bank could not have argued before the Sharjah appeal proceedings, which was not party to the Sharjah appeal proceedings. The decision confirms the broad discretion of the English courts to g...