Walkers Launches Compliance Services Offering

Walkers Compliance complements Walkers' legal, corporate and fiduciary services to deliver a one-stop-shop for clients looking to use the Cayman Islands jurisdiction for their business needs.

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Brexit

Following the result in the United Kingdom's EU referendum, Walkers has created a Brexit page dedicated to providing our clients relevant information about the jurisdictions in which we practise.

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Walkers is a leading international law firm. We advise on the laws of Bermuda*, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland and Jersey.
GlobalMap Oct2018
Admissions April2019

Walkers Announces Admissions of 50th and 51st Caymanian Attorneys-at-Law

We are pleased to announce that Articled Clerks Gemma Cowan and Sophie Dibb have completed their legal training, both being called to the Cayman Islands Bar. 

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Ireland Cross-Border Fund Distribution - Update

Following on from our recent publication (click here) and in advance of the forthcoming EU elections, the European Parliament voted on 16 April 2019 to adopt the trilogue agreement on the Commission's initiatives to ease cross-border distribution of collective investment schemes.

The legislative texts will enter into force 20 days after their official publication in the Official Journal and in light of the 24 month transposition period the current expectation is that the new regime will go live in 2021.

ESMA has been mandated to develop implementing technical standards within 18 months of entry into force of the Regulation to determine standard forms, templates and procedures for the publications and notifications provided for therein.

EFAMA has also issued a statement welcoming the Parliament's decision to adopt the new harmonising regime and the recognition of the need to postpone the application of the PRIIPs disclosure regime for UCITS by two years.

Temporary Permissions Regime – Update

The Financial Conduct Authority ("FCA")confirmed that given the delay of the UK's withdrawal from the EU, firms and funds wanting to avail of the Temporary Permissions Regime ("TPR") now have until 30 May 2019 (rather than 11 April 2019) to notify them of this. The FCA has also confirmed that updates to any submitted TPR notification will be possible to reflect any updates to fund ranges during the newly extended notification window.

Any fund managers that, as a result of this extension, wish to update their notification should email This email address is being protected from spambots. You need JavaScript enabled to view it. by the end of 16 May 2019.

Please do not hesitate to contact your usual Walkers contact if you have any questions relating to this update and/or the Temporary Permissions Regime more broadly.

Walkers Welcomes the Return of Leading Disputes Partner Nigel Sanders

Leading offshore law firm Walkers is pleased to announce that Nigel Sanders has joined the firm as a partner to help lead Jersey's Insolvency and Dispute Resolution practice.

Nigel has been practising as a litigation lawyer for 27 years, the last sixteen of which have been spent offshore. Nigel first joined Walkers in the firm's Cayman Islands office in 2003 after a number of years working at two highly regarded firms in London. He moved to Jersey in 2006 where he ultimately became head of a leading offshore firm's dispute resolution team.

Nigel brings with him a wealth of experience; he has a broad dispute resolution practice much of which involves cross border issues. He specialises in representing clients in contentious matters arising in the financial services sector particularly those involving trusts, probate, insolvency, fraud and asset tracing and corporate and commercial disputes. Nigel is also experienced in advising on complex regulatory matters and has assisted clients in responding to regulators' inspections and investigations and appeared for the regulator in the first competition law appeal in Jersey.

Walker's Group partner and head of the Channel Islands, Fraser Hern said:-
"We are delighted to have Nigel join the team here in Jersey. Nigel stands out for the breadth of his expertise and his ability to perform at a high level in a broad range of practice areas, this coupled with his excellent reputation and network, means that he is an invaluable addition to the Jersey IDR team and as we grow the Walkers Channel Islands offering."

Commenting on his appointment Nigel Sanders added:-
"I am delighted to have re-joined Walkers which is clearly at an exciting juncture in its growth story. It has a thriving and expanding Channel Islands offering, which is just part of the firm's already well established and highly regarded global offering. I very much look forward to contributing to the further growth of the business in Jersey and the firm as a whole, and particularly to being part of the already hugely successful Insolvency and Dispute Resolution practice."

Effective, Economic or Expeditious: the Grand Court Appoints Both FTI Consulting and BDO as Official Liquidators

Walkers acted for the sole participating shareholder (the "Shareholder") of Asia Private Credit Fund Limited (in Voluntary Liquidation) (the "Fund") and sought orders that the voluntary liquidation of the Fund continue under the supervision of the Court pursuant to section 131 of the Companies Law (2018 Revision) (the "Companies Law") and that the Shareholder's nominated liquidators, FTI Consulting, be appointed as the joint official liquidators of the Fund. The Shareholder principally advanced the argument that a Court-supervised liquidation would facilitate a more effective, economic or expeditious liquidation of the Fund in the interests of the sole contributory and would allow the official liquidators to conduct a comprehensive and independent investigation into the affairs of the Fund. The manager of the fund (the "Manager") opposed the application on the grounds that the Shareholder had failed to meet the test in section 131 of the Companies Law and the incumbent voluntary liquidators, BDO, were already in office and they did not consider it necessary at that point in time to bring the liquidation under the supervision of the Court.

McMillan J heard the application on 27 February 2019 and immediately indicated that he was minded to make a supervision order as it was clear that there had been a deterioration of the relationship between the Manager and the Shareholder and that there were serious matters to be investigated in an official liquidation. However, on the question of the identity of the official liquidators, McMillan J indicated that he considered that the appropriate solution would be a supervision order combined with a joint appointment of FTI and BDO. It was submitted on behalf of the Shareholder that there were a number of unintended consequences that would arise from a joint appointment and that the views of the only economically enfranchised stakeholder should be of paramount importance with respect to the identity of the official liquidators.

Notwithstanding the Shareholder's submissions on the unintended consequences of a joint appointment and the fact that wishes of the only economically enfranchised stakeholder should be respected, McMillan J ordered the joint appointment of FTI and BDO as the official liquidators of the Fund, with written reasons for his decision delivered on 19 March 2019. The approach taken by the Grand Court in this matter is a novel development and loosely follows a separate decision by McMillan J In the matter of Pacific Harbor Asia Fund I, Ltd (In Official Liquidation) where the Grand Court appointed joint official liquidators from different firms due to the differing opinions of various stakeholders as to the identity of the liquidators.

Court Grants Mandatory Arbitration Stay in Winding Up Proceedings

In the recent case of In the matter of China CVS (Cayman Islands) Holding Corp., Kawaley J of the Grand Court of the Cayman Islands (the "Court") provided some helpful clarity in determining the question of when the mandatory arbitration stay under Section 4 of the Foreign Arbitral Awards Enforcement Law (1997 Revision) ("FAAEL") would apply in the context of winding up proceedings.

Background

In October 2018, Family Mart China Holding Co., Ltd, a Japanese company (the "Petitioner"), petitioned to wind up China CVS (Cayman Islands) Holding Corp. (the "Company") on the just and equitable ground under Section 92(e) of the Cayman Islands Companies Law (2018 Revision) (the "Companies Law"). In the alternative, the Petitioner sought an order requiring Ting Chuan (Cayman Islands) Holding Corporation ("Ting Chuan") to sell its shares in the Company to the Petitioner pursuant to Section 95(3) of the Companies Law. Ting Chuan responded in November 2018 seeking orders, inter alia, that the petition be struck out, or in the alternative, that the petition be dismissed or stayed pursuant to Section 4 of the FAAEL and/or the inherent jurisdiction of the Court.

Section 4 of the FAAEL provides that: "If any party to an arbitration agreement, or any person claiming through or under him, commences any legal proceedings in any court against any other party to the agreement, or any person claiming through or under him, in respect of any matter agreed to be referred, any party to the proceedings may at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceedings, and the court, unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings."

The Decision

Kawaley J declined to strike-out the petition, but granted Ting Chuan's alternative application for a stay under Section 4 of the FAAEL, allowing the Petitioner the liberty to further prosecute the petition after the arbitrable disputes had been contractually adjudicated.

The stay was granted because Kawaley J found that the allegations raised in the petition related to the subject matter of the Amended and Restated Shareholders Agreement ("SHA"), which contained a broadly drafted mandatory arbitration clause. Kawaley J rejected the Petitioner's submission that the subject matter of the petition was not arbitrable because only the Court can grant relevant statutory relief, clarifying that there was a fundamental distinction between the question of whether the underlying disputes are arbitrable and the question of whether only the Court can grant the statutory relief of, inter alia, winding up. Although the case of Cybernaut Growth Fund LP (unreported, 23 July 2013, Jones J) was relied upon by the Petitioner in support of the proposition that "winding-up orders, supervision orders and orders for the appointment/removal of liquidators as class remedies…fall within the exclusive jurisdiction of the Cayman Court", Kawaley J accepted Ting Chuan's argument that the present case could be distinguished factually from Cybernaut because no winding-up order was actually sought. As the petition included matters which clearly constituted claims falling within the arbitration agreement that could be properly "hived off" for determination by the arbitration tribunal, the present proceedings could be stayed. Should the Petitioner succeed in the arbitration, it could then (if appropriate) (a) apply for leave to lift the stay of the present petition and leave to make appropriate amendments to the petition; and (b) by way of enforcement of or reliance upon the award, seek appropriate statutory relief from the Court on the grounds that the tribunal's findings supported the summary or conclusory finding that there had been a loss of confidence sufficient to justify a winding-up and/or alternative statutory relief.

Conclusion

The purpose of Section 4 of the FAAEL, as Kawaley J accepted, is "to give effect to the strong legal policy that where parties to a contract have agreed to exclusively refer a suite of disputes to arbitration, they should be held to their contractual bargain." In the present case, the Petitioner was unable to identify any authority which clearly supported the proposition that the mere fact that a litigant was seeking ultimate relief which could only be granted by a court rendered the underlying dispute non-arbitrable.

 

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