Repatriation of wrongfully dissipated moneys ordered in support of arbitration award enforcement (BVI Commercial Court)

The underlying arbitration concerned a dispute between the shareholders of a BVI company, Soremi Investments Ltd (SIL). Its shareholders, Global Mining Development LP (Global) and Gerald Metals LLC (Gerald) sold a 65% stake in SIL to China National Gold Group Hong Kong Ltd (CNG) and entered into a shareholders' agreement (SHA).

Global exercised a right of first refusal under the SHA to purchase CNG's shares in SIL. CNG refused to effect the transfer and so Global commenced arbitration in Hong Kong. By a first partial award (FPA), the tribunal found that Global was the rightful owner of 100% of the shares in SIL and ordered CNG to transfer its 65% shareholding in SIL to Global for USD86.32 million.

CNG did not comply, and Gerald obtained an order for specific performance from the tribunal (SPA). Global and Gerald applied to the BVI Commercial Court for orders recognising both the FPA and SPA as orders of the BVI courts. These orders were granted. CNG applied unsuccessfully to set aside these orders.

In breach of an undertaking given to Global, CNG caused around USD200 million to be transferred out of certain Paris accounts in the name of SIL to an account in China, held by an SIL subsidiary. Global and Gerald applied to the BVI Commercial Court for, and were granted, both a freezing injunction against CNG's assets and a mandatory order requiring that the monies transferred be repatriated to SIL's French bank account. Global argued that the court had power to grant the order sought where Global was the beneficiary of two arbitration awards and the beneficial owner of 100% of the shares of SIL.

While the discharge application for both the freezing and mandatory injunctions is still to be heard, the making of the orders demonstrates the pro-enforcement attitude of the BVI Court and the measures it is prepared to grant in support of enforcement of foreign arbitral awards in the BVI.

Global and Gerald were represented in the BVI by Harney Westwood & Riegels (BVI) LP.

Reproduced from Practical Law with the permission of the publishers. For further information visit www.practicallaw.com.