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Case of the Day: Stichting Shell Pensionenfonds v. Krys

The case of the day is Stichting Shell Pensionenfonds v. Krys [2014] UKPC 41. Shell, a Dutch pension fund, had invested in shares of Fairfield Sentry Ltd., a BVI mutual fund and the largest “feeder fund” for Bernard L. Madoff Investment Securities LLC, which needs no introduction. After Madoff’s arrest, Shell immediately sought to redeem its shares in Fairfield, but of course it received nothing. So Shell applied to a court in Amsterdam, its home jurisdiction, for an order attaching bank accounts of Fairfield held by Citco Bank Nederland BV, Fairfield’s asset custodian, in its Dublin branch. The Dutch court approved the attachment; everyone agreed that the Dutch court had jurisdiction over Citco. The High Court of the BVI ordered Fairfield to be wound up and appointed Krys and Lau as liquidators. Shell submitted a claim in the BVI insolvency claim but its claim was rejected. So the situation was that if Shell was allowed to litigate the merits of its claim in the Netherlands and succeeded there, then it would receive the full amount of its claim on account of the attachment, and in effect to have priority over other creditors, who could not hope for such a recovery in the BVI insolvency proceedings. Indeed, as Shell admitted, that was the point of the attachment. Krys and Lau moved in the BVI court for an anti-suit injunction enjoining Shell from prosecuting its claim in the Netherlands and requiring Shell to procure a release of the attachment. The BVI Court of Appeal held in favor of the liquidators, and Shell appealed to the Privy Council.
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