FHR European Ventures LLP and others v. Cedar Capital Partners LLC [2014]

 A recent decision of English Supreme Court (‘the Court’) decided that a principal owns a bribe or secret commission taken by an agent. Although that seems a simple decision, the question has produced inconsistent judicial decisions over the past 200 years, and a great deal of academic controversy. The heart of the issue is whether the bribe or secret commission received by an agent (the ‘Benefit’) is held by the agent on trust for his principal, or whether the principal is the beneficial owner of the Benefit. Here we look at the decision, why it matters, and the significance of the decision for liquidators.

Richard Addlestone – Living with a Regulatory Creep 10:40am-11:20am Friday 13 February 2015

 

Richard Addlestone, Corporate Partner at Cayman Islands law firm Solomon Harris, invites you to hear him speak at this year’s Cayman Alternative Investment Summit on Friday 13 February 2015 from 10.40am to 11.20am at the Ritz-Carlton, Grand Cayman.

Titan Europe 2006-3 plc v. Colliers International UK (in liquidation)

 

A recent decision of the English High Court shows an increasing judicial reluctance to allow parties to avoid liability for negligence simply because the complexity of the structure used by the owners to hold the assets means that it is difficult to identify who can bring a claim. Here we look at how the court addressed the issue of how a non-recourse Special Purpose Vehicle (‘SPV’) could bring a claim when it has not suffered any loss.

The Cayman Islands Government ('CIG') has decided to keep its existing regime for gathering and maintaining legal and beneficial ownership information ('BOI'). Having considered the issue and following consultation with the financial services industry by the Cayman Ministry of Finance, the CIG has issued a report which concludes that it would be premature for the Cayman Islands ('Cayman') to create a new central registry of BOI before global agreement on appropriate exemptions and safeguards, and a central registry becomes the internationally practiced standard. For more than a decade Cayman has used a method endorsed by the global standards body the Financial Action Task Force ('FATF'), by which licensed and regulated corporate service providers ('CSP's) are required to collect, maintain and update BOI.

Introduction

On 16 January 2015 the Cayman Islands Government brought into force Part 4A of the Insurance Law, 2010 and passed the Insurance (Portfolio Insurance Companies) Regulations, 2015, thereby allowing insurers formed as segregated portfolio companies (“SPCs”) to enjoy the same benefits as incorporated cell companies in other jurisdictions.  Cayman’s form of incorporated cell company (“ICC”) legislation is thought to be more robust than other jurisdictions offering ICCs because the model operates squarely within fundamental and well-understood principles of corporate law.

On 29 October the Cayman Islands ('Cayman') was one of fifty one jurisdictions which signed the 'Multilateral Competent Authority Agreement' ('MCAA'). This agreement is part of the process by which the automatic exchange of tax information ('AEOI') under the Organisation for Economic Cooperation and Development ('OECD') and the G20's new Standard for Automatic Exchange of Financial Information in Tax (the 'Standard') will be implemented. The Standard is made up of two parts - the MCAA being the template for the necessary Intergovernmental Agreements ('IGA's) whilst the reporting and due diligence requirements for AEOI are set out in the Common Reporting Standard ('CRS').

Avonwick Holdings Ltd v Webinvest Ltd and another [2014]UK Court of Appeal Unreported

 

Where parties have a genuine dispute which they are genuinely attempting to settle through written or oral communications they can head a document or begin negotiations with the term ‘without prejudice’. That indicates that the content of the document or negotiation is protected from production in court or disclosure to other parties to the dispute. In certain circumstances the protection can apply where the term is not expressly used, but simply putting ‘without prejudice’ at the top of written communications or documents during negotiations will not of itself protect the document from production. This was confirmed by Avonwick Holdings Ltd v Webinvest Ltd and another [2014] (‘Avonwick’), a decision of the English court of appeal but which would be considered persuasive authority in the Cayman Islands (‘Cayman’) Grand Court.

The Grand Court (Amendment) Bill, 2014

 

On 20 October 2014  the Cayman Islands (‘Cayman’) legislature brought into force a Law which gives the Grand Court the power to appoint a receiver or to grant other interim relief (including an interlocutory injunction) in relation to proceedings outside Cayman. The Grand Court now has the power to grant an injunction to freeze assets held in Cayman, even where the substantive proceedings are not based in Cayman.

 

In the matter of the representation of A Limited as trustee of the B Trust, and In the matter of the Trusts (Jersey) Law 1984 as amended [2014] JRC 032

 

A recent Jersey Royal Court decision provides a timely reminder of when it is appropriate for trustees:

(a) to ask for the court’s assistance; and

(b) for the court to give that assistance; and

(c)  when the court’s assistance can help a company owned and run by a trust.

 Although the decision was taken in the Jersey Royal Court (‘the Court’), the principles could be used to form the basis of a similar application in the Grand Court of the Cayman Islands.

Reasons tech companies should consider the Cayman Islands new Special Economic Zone

The new Cayman Enterprise City ('CEC'), based in a new Special Economic Zone ('SEZ'), has been designed to attract knowledge-based industries to the Cayman Islands ('Cayman'). There are potential benefits for multinationals or start-ups to take advantage of the extra concessions being made by the Cayman Government, provided they operate in the fields of internet or information technology; media, marketing and film; biotech and life sciences; commodities and derivatives, education and training; or academia.

If your organization has taken the decision to buy a company registered in the Cayman Islands (‘Cayman’) here is a brief introduction to the overall process and some of the  issues you might like to consider. Buying a Cayman company may form part of a specific investment strategy or a follow a more general strategic review of the global tax advantages which such a move would bring to your organization, but there are potential pitfalls – and you will need specific legal and tax advice before you act.

Martrade Shipping & Transport GmbH v United Enterprises Corporation [2014] EWHC 1884 (Comm) ; Late Payment of Commercial Debts (Interest) Act 1998

The English High Court has looked at the extent to which the United Kingdom's Late Payment of Commercial Debts (Interest) Act 1998 ('the Act') can apply to international contracts which have express provisions that the contract to be governed by English law, and that any disputes be resolved by a London arbitration. The Act can imply a term for a punitive rate of interest of 8% above base rate but there are exceptions to when it can be applied. Here we look at the Act, the exclusions, and the Court's guidance on when the Act can apply to an international contract.

Standard for Automatic Exchange of Financial Account Information in Tax Matters
On 22 July 2014, the Organisation for Economic Co-operation and Development ('OECD') released the full version of its new global standard for the exchange of tax information between jurisdictions - the Standard for Automatic Exchange of Financial Account Information (the 'Standard'). The new consolidated version includes commentary and guidance for implementation of the Standard by governments and financial institutions, as well as detailed model agreements, standards for harmonised technical and information technology solutions, including a standard format and standard requirements for the secure transmission of data. The OECD will formally present the Standard to G20 Finance Ministers at their next meeting on 20-21 September 2014.

Tchenguiz v Director of the Serious Fraud Office (Non-Party Disclosure) aka Rawlinson and Hunter Trustees SA v Akers UKCA (Civil Division) 20 February 2014 [2014] EWCA Civ 136
The UK Court of Appeal ('UKCA') recently confirmed a decision that liquidators had to disclose reports that they had commissioned at a time when they were not actively involved in  a lawsuit. The liquidators had not established that the reports were protected from disclosure by 'litigation privilege' ('LP') because the dominant purpose behind their creation was not for, or to obtain legal advice on, actual or anticipated litigation. Now would be a good time for liquidators to take a close look at:

The Cayman Islands Exempted Limited Partnership Law, 2014 came into force last week following its gazettal on Wednesday, 2 July 2014.  The new law (the 'Law') is the result of years of consultation with the financial services industry and is designed to make the already popular Exempted Limited Partnership ('ELP') investment vehicle more flexible, easier to establish and to run.

Solomon Harris fixed fee service
 
If you have a redundant Cayman Islands ('Cayman') company then you will not want to keep paying Cayman government fees for it. You could just not pay those fees when they are due and the company will eventually be struck off. However, rather than waiting for that to happen you should consider the advantages of putting your company into Voluntary Liquidation: and quickly, given the length of time it takes to complete the process.

IN THE MATTER OF ICP STRATEGIC CREDIT INCOME FUND LTD AND IN THE MATTER OF ICP STRATEGIC CREDIT INCOME MASTER FUND LTD. CAUSE NO. FSD 82 OF 2010 (AJJ) CAUSE NO. FSD 269 OF 2010 (AJJ) ('Re: ICP')
 
The Grand Court of the Cayman Islands (the 'Court') has sanctioned a contingency fee agreement for a New York law firm ('RCT') to bring proceedings in the US courts on behalf of the Official Liquidators ('Liquidators') of two Cayman Islands ('Cayman') domiciled Funds. This type of agreement is contrary to Cayman public policy and would normally be void and unenforceable for litigation conducted in Cayman. The Judge gave written reasons to guide insolvency practitioners on the criteria for such an agreement to be sanctioned by the Court.

West v Ian Finlay and Associates [2014] EWCA Civ 316

A recent UK Court of Appeal ('UKCA') decision has held that Net Contribution Clause ('NCC') "was a valid and binding clause that ought to have been given effect". Until this decision it was not clear in English law whether having an NCC in a contract with a third party would limit your liability in circumstances where you were jointly and severally liable with other parties. Here we look at the principle of joint and several liability, what NCCs are designed to achieve and how best to incorporate them into your contracts.

On 6th May 2014 the 34 members of the Organisation for Economic Co-operation and Development ('OECD') and thirteen other countries adopted a declaration welcoming the OECD Standard for Automatic Exchange of Financial Account Information (the 'Standard'). The Declaration commits countries to implement a new global standard for the automatic exchange of information ('AEOI') which obliges countries and jurisdictions to obtain all financial information from their financial institutions ('FI's) and exchange that information automatically with other jurisdictions on an annual basis. The Common Reporting and Due Diligence Standard ('CRS') was endorsed by G20 finance ministers in February 2014 and the Cayman Islands ('Cayman') is a member of the Early Adoption Group.

The Directors Registration and Licensing Law, 2014
The Directors Registration and Licensing Law, 2014 (Commencement) Order, 2014
The Directors Registration and Licensing (Registration and Licensing) Regulations 2014

 
The Cayman Islands Directors Registration and Licensing Law, 2014 ('the Law') came into force on 4th June 2014, which means Directors now have three months to submit their applications to register with or obtain a licence from the Cayman Islands Monetary Authority ('CIMA').  As per the law, corporate directors have six months to apply for a license.

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