Litigation Quick read: Privy Council clarifies law on freezing injunctions in favor of foreign proceedings
On October 4, 2021, the Privy Council rendered its decision on Convoy Collateral Ltd v Broad Idea International Ltd  UKPC 24. The judgment confirms that where the High Court of the British Virgin Islands (BVI) has personal jurisdiction over a party, the court has the power to grant a freezing injunction against a party to assist in the enforcement of a judgment. existing or future foreign currency through the BVI court process. Here, we summarize the history leading up to the ruling and consider what impact the ruling might have on courts in BVI and beyond.
Disputes that take place in the courts of the BVI and which involve requests for freezing orders relating to assets in the local jurisdiction will also often involve foreign defendants who are the subject of other proceedings outside the BVI. In ISA v Harvest View Limited Investment, Black Swan, it was decided that the courts of the BVI (without any statutory authority) had the power to grant an injunction in support of foreign proceedings such as this (similar to the jurisdiction conferred on English courts by section 25 of the Civil Jurisdiction and Judgments Act 1982). This became known as “Black Swan“and has been widely enforced by the BVI court for many years.
In 2019, the Eastern Caribbean Court of Appeal overturned Black Swan’s jurisdiction and ruled that the court had no power to grant a freezing injunction absent a substantial cause of action against the respondent issued in BVI. In arriving at this decision, the Court relied on The Siskina  AC 210 ruling which held that the court does not have the power to exercise equitable jurisdiction to order an interim injunction where the plaintiff has no underlying cause of action against the defendant.
Following the decision of the Court of Appeal, the BVI legislature stepped in and enacted the Eastern Caribbean (Virgin Islands) Supreme Court (Amendment) Act, 2020 which gave the Court legal jurisdiction over ‘grant this remedy. It brought welcome clarity after Black Swan jurisdiction ended. The law provided that the High Court could grant this remedy where proceedings had been or were about to be brought in a foreign jurisdiction.
It also provided that the High Court retained the power to refuse to grant this measure where – in its opinion – it had no jurisdiction, outside the law, over the subject-matter of the proceedings in a foreign jurisdiction and that it was inappropriate in the circumstances to grant such relief. It was not clear how “inappropriate” would be interpreted and this clearly gave the Court wide discretion.
And came Broad Idea International Limited v Convoy Collateral Limited, in which the BVI Court of Appeal held that the courts of the BVI did not have jurisdiction to grant interim relief in favor of a foreign proceeding where the criterion of legal authority was not met, and that Black Swan had been ill-decided. The decision was appealed to the Privy Council and became widely known as “Black Swan appeal “.
In the Privy Council decision, the majority (4-3) held that Black Swan was correctly decided and that the BVI Court of Appeal was wrong to set aside that decision. He also canceled The Siskina to dispel any lingering uncertainty and to clarify that the constraints on the power to grant freezing injunctions set out in this case were “not simply undesirable in modern international trade, but legally unfounded.” The judgment also makes it clear that the rationale for obtaining an injunction, as set out in the decision, is applicable not only to BVI but also to all other jurisdictions “where the courts have inherited equitable powers from the former Court of Chancery “. This therefore calls into question the scope and applicability of this judgment in other jurisdictions.
What is the impact of the decision?
This is a very important decision that has the potential to redefine injunctive relief far beyond BVI. The remedy, however, is limited to the enforcement of a pecuniary judgment and available only against persons subject to the personal jurisdiction of the court of the BVI. There is also a question about the interplay between the statutory and non-statutory powers to grant this exemption. Anyway, while he put the “Black Swan“For now, there is room for other issues that may be the subject of more litigation in the BVI court and beyond.