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Meridan Trust Company Ltd v Batista & others: Free standing receiverships in the Cayman Islands

Section 11A of the Grand Court Law may be less than four years old, however, the statutory jurisdiction to grant interim, ancillary relief in support of foreign proceedings has resulted in a not insignificant body of case law in a relatively short period of time.

The jurisdiction has been relied on to grant freezing orders ancillary to proceedings in Hong Kong (Classroom Investment Inc v China Hospitals Inc), New York (Johnson & Johnson v Medford), Australia (Harvey River Estate Pty Ltd v Foster) and Florida (Meridian Trust Company Ltd v Batista) establishing that the Cayman Courts are willing to assist the victims of international fraud, where possible.

In the most recent installment of the Meridian Trust Company Ltd v Batista saga, the applicants sought to vary an existing world-wide freezing order (WFO) by the appointment of joint receivers to certain respondents. The applicants had successfully applied for a WFO in the Cayman Islands in October 2016, against the backdrop of the failure of Mr. Batista’s Brazilian oil exploration business (and subsequent allegations of fraud).

The respondent companies resisted the receivership application, describing the remedy as ”more intrusive, more expensive, and less reversible than the granting of an injunction.”

Addressing the issue of disclosure, which was a live issue in both the Florida and Cayman proceedings, Justice Mangatal emphasized the ancillary nature of the Cayman proceedings and the need to view the disclosure obligations “through the prism of the proceedings in the US”.  As disclosure had been stayed in the US pending the outcome of various motions to dismiss and Mr. Batista had signed various authority letters which would assist the respondent companies in complying with their Cayman disclosure obligations, it was unjust and inconvenient to grant the relief sought at that stage.

While the Grand Court’s jurisdiction to grant interim, ancillary relief in aid of foreign proceedings is flexible and robust, including the draconian remedy of a receivership where merited, it will always be tempered by the principle of comity and parties seeking to invoke this jurisdiction will need to keep a keen eye on the status of matters in the main foreign proceedings before moving such applications.

 

Cayman harbour

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