Tag Archives: British Virgin Islands

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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Case of the Day: Carney v. Beracha

The case of the day is Carney v. Beracha (D. Conn. 2014). Carney was the court-appointed receiver for Highview Point Partners, LLC. The court had appointed him as receiver in connection with an enforcement action by the Securities and Exchange Commission against Francisco Illarramendi for alleged violation of the federal securities laws. Carney, once appointed, filed actions against Moris Beracha and Bradleyville, Ltd., among others, to recover property for the purpose of distributing it to the victims of the fraud Illarramendi is alleged to have committed.
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Case of the Day: Richardson v. Attorney General of the BVI

The case of the day is Richardson v. Attorney General of the British Virgin Islands (D.V.I. 2013). Meaghan and Cyril Richardson were passengers on a powerboat that was stopped by a BVI customs official, who claimed that they were in BVI waters (the Richardsons claimed they were in US waters) and ordered them to leave their vessel and board his. They claim that the customs official operated the boat unsafely and that they suffered injuries. They sued the official, Randy Donovan, in his individual capacity, and the Attorney General of the BVI in his official capacity.

The Richardsons sought a default judgment when the BVI failed to appear. The judge held that the BVI was a political subdivision of the United Kingdom and therefore had to be served with process under 28 U.S.C. § 1608(a). There was no special arrangement for service of process under § 1608(a)(1). Rather than serving process through the BVI central authority under the Hague Service Convention, the Richardsons hired a process server, who personally served the documents on a clerk at the BVI Attorney General’s office. The judge held that this service did not comply with § 1608(a)(2), which requires “delivery of a copy of the summons and complaint in accordance with an applicable international convention on service of judicial documents.”

This seems basically right. Surely the best thing to do when serving a foreign sovereign under § 1608(a)(2) is to seek to make service via the foreign central authority. But what about Article 10? Does the statute permit service by one of the methods permitted by Article 10, namely service by postal channels, service by direct transmission between competent persons of the two states, and service by an interested person through the competent persons of the state of destination. Now, it may be that this is not a good case to test the question: it’s not clear that the process server was a competent person to effect service in the BVI, or that the service was consistent with the UK’s declarations under Article 10. But in principle, can you comply with § 1608(a)(2) by serving documents by postal channels?

I am not sure there is a clear answer in the cases. Perhaps courts will differ on this question depending on whether they hold (like the Ninth Circuit) that the Hague Service Convention permits but does not itself authorize service by the methods of Article 10, or whether on the other hand they hold (like the Second Circuit) that the Convention does affirmative authorize service by those methods.