BVI Adopts Guidelines For Communication & Cooperation Between Courts

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On Monday 15 May, the British Virgin Islands formally joined a number of leading insolvency and restructuring jurisdictions in implementing the Guidelines for Communication and Cooperation between Courts in Cross-border Insolvency Matters.

The Guidelines open the door for better communication and cooperation between jurisdictions as it relates to cross-border insolvency matters and are expected to improve efficiency and effectiveness in complex cases by minimizing litigation time, and expense.

This implementation is the completion of a process that commenced at the Judicial Insolvency Network (JIN) conference in Singapore in October 2016. At that conference BVI Commercial Court Judge Justice Barry Leon and nine other judges approached the drafting of the Guidelines.

The judges who were representing Australia, Canada, the Cayman Islands, England and Wales, Hong Kong SAR (as an observer), Singapore and the United States of America discussed various ways and means of improving cross-border insolvency matters.

The adoption of the Guidelines in the Territory was considered by the recently-formed Chief Justice’s Insolvency Committee, with broad stakeholder consultation. Justice of Appeal Paul Webster, QC, is Chairman of the Committee, Justice Barry Leon is Deputy Chairman, and the members are Gerard Farara QC, Arabella di Iorio, and Andrew Thorp. The document to implement the Guidelines was signed by Chief Justice Dame Janice M. Pereira DBE on 10 May, published in the Gazette on 11 May, and took effect in the Territory on Monday.

Justice Leon who was part of the drafting of the Guidelines in Singapore told The Island Sun newspaper: “The overarching objective of the Guidelines is to improve the interests of all stakeholders (including parties, creditors, debtors and office-holders).” The Commercial Court judge explained that the “Guidelines promote efficiency and effectiveness of cross-border proceedings relating to insolvency or adjustment of debt opened in more than one jurisdiction.”

Further Justice Leon explained that the central aim of the Guidelines is to enhance coordination and cooperation amongst courts under whose supervision the proceedings are being conducted. He noted that the Guidelines represent best practice for dealing with these parallel proceedings.

“I am delighted that the Guidelines have been implemented in the BVI, and in a critical mass of important cross-border insolvency and restructuring jurisdictions, including Bermuda, Delaware, England and Wales, Singapore, and the Southern District of New York. I look forward to their implementation in other jurisdictions, and importantly, I look forward to lawyers and insolvency practitioners in the BVI and the other jurisdictions in which they have been implemented starting to consider regularly and seriously their use in appropriate situations. We are moving forward in an era of cultural change for cross-border insolvency and restructuring, which should benefit all stakeholders,” the Commercial Court judge added.

The Guidelines

The first Guideline stipulates that liquidators, court appointed judicial trustees, office-holders and others in parallel (cross-border) proceedings should cooperate in all aspects of the case especially as it relates to providing notice to the courts as soon as possible of any issues, present and potential, that may affect the proceedings and may benefit from communication and coordination between courts.

The third Guideline addresses the issue of time, and stressed that any protocol or order issued by the courts should promote the efficient and timely administration of parallel proceedings. This specific Guideline also calls for coordination as it relates to requests for court approvals of related decisions and actions. Furthermore, it stresses the avoidance of time-wasting procedures that may cause unnecessary and costly court hearings and other proceedings.

However, it is noted that the Guidelines are not the “be all and end all,” and as such the fourth Guideline is detailed in explaining the limitations. In general it is noted that the Guideline is not meant to interfere with or derogate from the jurisdiction or the exercise of jurisdiction or judicial discretion by a court in any proceedings. Additionally, it was learned that the Guidelines are not expected to interfere with, or derogate from the rules or ethical principles by which a liquidator, court appointed judicial trustee, office-holder or other ‘administrator’ is bound according to any applicable law and professional rules.

The sixth Guideline is specific in noting that the international nature of the Guidelines should be taken into consideration as it relates to various interpretation: “In the interpretation of these Guidelines or any protocol or order under this Practice Direction, due regard shall be given to their international origin and to the need to promote good faith and uniformity in their application,” the document says.

The seventh Guideline makes it possible for a court to receive and respond to communications from a foreign court in order to facilitate timely submissions and decision-making, the orderly making of submissions and rendering of decisions by the courts, and the coordination and resolution concerning any procedural, administrative or preliminary matters relating to any joint hearing.

Significantly, the tenth Guideline enables a court to authorize a person to appear before and be heard by a foreign court that has given approval for such appearance. The flip side is contained in the eleventh Guideline which enables a court, if permitted by its law and otherwise appropriate, to authorize a party to a foreign proceeding, or an appropriate person, to appear and be heard before it on a specific matter.

Annex A to the Guidelines concerns the innovative concept of joint hearings. A court may conduct a joint hearing with another court if the courts give their assent to the Annex. The Annex outlines eight areas that shall be considered for inclusion in a protocol between the parties and in a court order.  Each court shall have sole and exclusive jurisdiction and power over the conduct of its own proceedings and the hearing and determination of matters arising in its proceedings.

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