Offshore Services- British Virgin Islands

The High Court of the British Virgin Islands (BVI) is often called to adjudicate upon applications for stays on the grounds of forum non conveniens (ie, inconvenient forum). In Febvre Company Limited v Grape Expectations SA the court considered - it seems for the first time - the issue of whether it was appropriate to stay a claim for rectification of the share register of the defendant BVI company on the grounds of forum non conveniens.

Facts

The claimant contended that it was entitled to be registered with shares in the defendant pursuant to an oral subscription agreement. The defendant alleged that any entitlement to shares was part of a wider joint venture arrangement and was contingent on the satisfactory performance by the claimant of distribution and administration agreements between the parties, which the defendant contended had not been satisfactorily performed. The defendant sued the claimant for alleged breaches of the distribution and administration agreements in Ireland. Before the BVI court, the claimant disputed that there were any binding distribution or administration agreements or, if there were, that it was in breach of these agreements. In any event, the claimant argued that any such agreements post-dated the subscription agreement and had no bearing upon it.

The claimant applied for summary judgment. The application was dismissed on the grounds that there were triable issues. The defendant applied for a stay on the basis that Ireland was the most appropriate forum, as there were pre-existing and ongoing proceedings between the parties in that country. The claimant contended that only the BVI High Court had jurisdiction to order rectification of the share register of a BVI company pursuant to the relevant BVI companies statute. The defendant did not dispute this argument, but argued that the claimant could counterclaim for a declaration that it was entitled to be registered with shares in the defendant in the Irish proceedings. The defendant stated that it would abide by any decision of the Irish court on such a counterclaim.

The claimant relied on the dictum of Justice Harman in the English case of International Credit and Investment Co (Overseas) Ltd v Adhan:(1)

"Rectification of a share register is plainly a matter for the court of the country of incorporation of the company whose register is sought to be rectified, under which laws and which alone the company has its being."

Decision

Justice Olivetti preferred to follow the approach of the English Court of Appeal in In re Harrods (Buenos Aires) Ltd,(2) where it was held that the fact that the claimant sought relief under English companies legislation (in that case, an unfair prejudice remedy) in respect of an English company did not preclude the application of the general principles of forum non conveniens or render England the appropriate forum automatically. Applying the general principles of forum non conveniens to the facts and having regard to the ability of the claimant to obtain substantial justice (albeit not its preferred remedy) in Ireland, the judge granted a stay.

Comment

The BVI is a major offshore incorporation jurisdiction. It was submitted on behalf of the claimant that the grant of a stay of a claim on the membership and statutory records of a company incorporated within its jurisdiction in favour of an overseas tribunal, if accepted, would have many undesirable ramifications for BVI company law. This decision demonstrates that the court is not afraid to apply the general principles of forum non conveniens to such a claim if substantial justice can be done, notwithstanding that a preferred statutory remedy cannot be obtained.

ILO