Enforceability of foreign judgments in the BVI

9 December, 2013

Key decision before the Eastern Caribbean Court of Appeal

On Thursday 5 December the ECSC Court of Appeal handed down an order bringing much needed clarity to the Eastern Caribbean Civil Procedure Rules (the CPR) relating to leave to serve out for the purpose of enforcing foreign judgments. The previous restrictive reading of the BVI CPR had led to the situation that foreign judgments obtained in all but a small number of countries could not be enforced in the BVI because there was no “gateway” to provide for service out of the jurisdiction.

Part 7.5(3)(b) of the CPR states that service out of a claim for enforcement of a foreign judgment (or arbitral award) may be granted only if it has been registered in the High Court “pursuant to Part 72” of the CPR. Part 72 of the CPR only applies to certain countries, such as England and Wales. Judgments from jurisdictions including the USA, Canada, and most European countries are registrable only at common law and not under Part 72 and therefore, it was previously thought, service out could not be granted for enforcement claims based on such judgments.

This caused an undesirable barrier to those wishing to register a foreign judgment in the BVI against a foreign judgment debtor from a non-Part 72 country, who had assets in the BVI. It produced the odd situation that the registrability of a judgment depended on the chance of where the judgment had been handed down. It also questioned the validity of injunctive relief that had been granted in support of foreign proceedings based on the ability to enforce a future foreign judgment.

At first instance before the BVI High Court Commercial Division the application for service out was refused by Bannister J., who felt constrained by the strict wording of the CPR. However, on 5 December, the Court of Appeal led by Chief Justice Pereira JA agreed that a purposive interpretation of Part 7.3(5)(b) should be deployed and that the provision should be read as granting permission to enforce any judgment or arbitral award made “by a foreign court or tribunal and amenable to be enforced at common law”. This judgment brings the BVI back into line with many other countries which make no automatic distinction between the location of the judgment, but rather leave that to be considered in the Judge’s discretion on the enforcement application itself. The Chief Justice commented that she was grateful that the matter had been brought to her attention by the Appellants and emphasised the willingness of the Court of Appeal to deal with these sorts of issues.

Vernon Flynn QC of Essex Court Chambers, was instructed by Fried, Frank, Harris, Shriver & Jacobson (London) LLP and Harneys (BVI) for the successful Appellant.