Caribbean two-step? – update on Norwich Pharmacal relief against BVI registered agents

A BVI company is required to have a licensed registered agent within the BVI which provides corporate services, including, but not limited to, keeping the company's statutory records, details of the company's ultimate beneficial owners and the documents required to satisfy the requirements of the BVI's AML laws. As a result, BVI registered agents are often the target of Norwich Pharmacal applications where there is evidence of fraud suspected to involve the BVI company concerned, its assets or owners, and the BVI Court has historically demonstrated a commercial and flexible approach to such applications where the need arises to identify individuals, or to trace assets, involved in fraud or wrongdoing.

It is usual, when seeking Norwich Pharmacal relief, to couple the substantive order for disclosure with a "seal-and-gag" order which prevents the respondent alerting the alleged wrongdoer that disclosure is being sought. The main procedural question for determination in CIF v (1) DLG and (2) GIY was whether such applications can and should be dealt with at a single hearing, with both a seal-and-gag and the substantive disclosure order being dealt with together ex parte, sometimes referred to as a "wrap-up" application, or whether the applicant must first apply for and then serve a seal-and-gag order and then make the application for disclosure inter partes on full notice to the respondent.

In CIF v (1) DLG and (2) GIY, the applicant, a judgment creditor in respect of an unsatisfied foreign money judgment, successfully sought a seal-and-gag and a disclosure order against two BVI registered agents. Wallbank J confirmed the appropriate approach in most circumstances is a two-stage process. An applicant should:

1. Firstly apply ex parte for a seal-and-gag order, which may be determined on the papers or at a hearing; and
2. Following service of the gagging order, make the disclosure application on notice to the respondent inter partes.

The judgment makes it clear that the one-step approach, the wrap-up application, is still an available option, but that it would only be likely to be appropriate in exceptional cases, for example where disclosure was extremely urgent.

Key take-away

This case provides welcome clarification of the procedure to be adopted by applicants seeking Norwich Pharmacal relief before the BVI Court. As a result of this decision, it is clear that, whilst a one-step approach is still available in circumstances where it can be specifically justified on grounds of urgency, the Court will ordinarily expect an applicant for Norwich Pharmacal relief first to adopt the two stage approach: first applying for the seal-and-gag order ex parte, and making the application for disclosure at an inter partes hearing on notice to the respondent following service of the seal-and-gag.

Walkers frequently acts for applicants seeking Norwich Pharmacal relief before the BVI Courts and brings both extensive practical experience and substantial expertise to such applications.