The Petitioner had subscribed for different classes of shares in the Fund by way of two separate agreements. Both agreements contained an identical "non petition" clause providing that the Petitioner “shall not, under any circumstances… institute against the Fund… any liquidation proceedings under any Cayman Islands law.” There was no suggestion that the Petitioner and the Fund, as two sophisticated commercial legal entities, entered into the corporate relationship together without their eyes wide open.

Justice Doyle first considered the law of section 95(2), citing Re Rhone Holdings LP  and FamilyMart China Holding Company v Ting Chuan (Cayman Islands) Holding Corporation: Section 95(2) is in mandatory terms, and requires the court to dismiss the petition or adjourn the hearing of the petition. The court will only adjourn a hearing of the petition, rather than dismiss it, if there is some useful purpose to be served (eg if another creditor, not bound by a non-petition covenant, could be substituted as petitioner). An express agreement not to present a winding up petition is lawful and cannot possibly be contrary to public policy.

His Lordship then analysed in detail the general legal principles to be applied when construing a contract, including that clear and express language is required in order to reach the conclusion that a party intended to give up a valuable right or remedy, but also that a court should not reject the natural meaning of a provision simply because it appears to have been a bad or “uncommercial” bargain for one of the parties. Justice Doyle also noted that these general principles are also applicable subject to any necessary modifications to corporate documents such as articles of association. The clear and detailed analysis by Justice Doyle is likely to result in this case being often cited in the future where parties need to construe contracts and articles of association under Cayman Islands law.

Having regard to the natural and ordinary meaning of the words used in the “non petition” clause and construe them against the agreements and its background, the Grand Court had little difficulty in holding that the express and unambiguous language of the “non petition” clause makes it clear that the Petitioner is contractually bound not to present a winding up petition against the Fund. Accordingly, the Grant Court dismissed the petition under section 95(2).

This case provides a timely reminder to all parties and especially to sophisticated commercial legal entities that they must carefully consider contractual clauses such as any non-petition covenants as the Courts will give effect to these agreements even if they turn out to be bad commercial decisions.