Exploring Offshore Litigation

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Exploring Offshore Litigation is a captivating podcast series containing audio of written blog content that dives deep into the intriguing world of offshore litigation, including the BVI and Cayman. Each episode sails through complex legal waters, bringing you up-to-date analysis of recent high-stakes cases and expert commentary from the leading minds in this specialised field. Our episodes demystify legal jargon and break down complex cases to make them accessible to all. Harneys, an international law firm with entrepreneurial thinking, brings each episode to you.

  1. 3d ago

    Drelle overruled: what the Supreme Court's judgment means for BVI and Cayman insolvency Summary of Supreme Court decision BVI implications Cayman Islands implications Conclusion

    The UK Supreme Court's judgment in Servis-Terminal LLC v Drelle overruled the English Court of Appeal's January 2025 decision and has significant potential implications for offshore practice in the BVI and Cayman Islands with respect to the issue of when unrecognised foreign judgments can be used to found a bankruptcy or winding up petition. This blog first summarises the Supreme Court decision before considering its potential impact in the BVI and Cayman Islands. In Drelle, a Russian creditor company presented a bankruptcy petition against a Russian national on the basis of a RUB 2 billion "debt" owed as a result of a Russian Court judgment which had not been recognised in England. The Supreme Court was primarily concerned with whether the unrecognised foreign judgment gave rise to a "debt" within the meaning of s267 of the English Insolvency Act 1986. The obligation principle The Supreme Court held that it did, finding that at common law there had been a long-established principle, referred to in the judgment as the "obligation" principle. Pursuant to this "obligation" principle, the legal effect of a foreign judgment for a debt or definite sum of money is that an obligation arises at English common law to pay the judgment sum. This obligation arises as a result of the foreign judgment and is not dependent on that foreign judgment being recognised in England. There was, accordingly in Drelle, a "debt" at common law. In turn, the Supreme Court held that there was no reason to find that s267 of the Insolvency Act adopted a narrower definition of "debt" than at common law such that the unrecognised foreign judgment created a "debt" within the meaning of s267 of the Insolvency Act 1986. In so finding, the Supreme Court rejected the contrary reasoning of the Court of Appeal noting that it had not considered the "obligation" principle in detail. The Supreme Court also noted that the Court of Appeal was wrong in finding that an unrecognised foreign judgment could only be used as a "shield" to defend a claim and not as a "sword" to found a claim. The common law obligation that arose out of a foreign judgment could in principle be used to found a claim. Direct versus indirect operation The Supreme Court also found that the Court of Appeal misapplied the principle that an unrecognised foreign judgment has "no direct operation" in England such that the Court of Appeal had wrongly concluded that an unrecognised foreign judgment was incapable of giving rise to a "debt" in English law. The "no direct operation" principle, properly understood, only meant that an unrecognised foreign judgment could not be enforced as a judgment by execution in England. The principle did not mean, as the Court of Appeal had incorrectly found, that the unrecognised foreign judgment was wholly without legal effect in English law. Instead, the unrecognised foreign judgment gave rise to an English common law right (ie a "debt") on the obligation principle which could be enforced before the English Courts. The revenue rule distinguished The Supreme Court also found that the Court of Appeal had erroneously relied on the rule that English Court has no jurisdiction to entertain an action, either directly or indirectly, of a penal, revenue or other public law of a foreign state. That rule was, the Supreme Court found, simply irrelevant to the present case and the Court of Appeal had been wrong to rely on it. A foreign Court issuing a judgment for a private right such as a debt did not engage the rule: "There is a world of difference between a sovereign authority asserting a sovereign right, such as to a tax or penalty, and a private person bringing a claim asserting a private right, as in the present case." Insolvency proceedings are not enforcement proceedings The Supreme Court also noted that bankruptcy and winding up proceedings are often loosely categorised as a means of collective enforcement of debts. However, despite that, such proceedings are "in no releva...

  2. 3d ago

    Drelle overruled: what the Supreme Court's judgment means for BVI and Cayman insolvency Summary of Supreme Court decision BVI implications Cayman Islands implications Conclusion

    The UK Supreme Court's judgment in Servis-Terminal LLC v Drelle overruled the English Court of Appeal's January 2025 decision and has significant potential implications for offshore practice in the BVI and Cayman Islands with respect to the issue of when unrecognised foreign judgments can be used to found a bankruptcy or winding up petition. This blog first summarises the Supreme Court decision before considering its potential impact in the BVI and Cayman Islands. In Drelle, a Russian creditor company presented a bankruptcy petition against a Russian national on the basis of a RUB 2 billion "debt" owed as a result of a Russian Court judgment which had not been recognised in England. The Supreme Court was primarily concerned with whether the unrecognised foreign judgment gave rise to a "debt" within the meaning of s267 of the English Insolvency Act 1986. The obligation principle The Supreme Court held that it did, finding that at common law there had been a long-established principle, referred to in the judgment as the "obligation" principle. Pursuant to this "obligation" principle, the legal effect of a foreign judgment for a debt or definite sum of money is that an obligation arises at English common law to pay the judgment sum. This obligation arises as a result of the foreign judgment and is not dependent on that foreign judgment being recognised in England. There was, accordingly in Drelle, a "debt" at common law. In turn, the Supreme Court held that there was no reason to find that s267 of the Insolvency Act adopted a narrower definition of "debt" than at common law such that the unrecognised foreign judgment created a "debt" within the meaning of s267 of the Insolvency Act 1986. In so finding, the Supreme Court rejected the contrary reasoning of the Court of Appeal noting that it had not considered the "obligation" principle in detail. The Supreme Court also noted that the Court of Appeal was wrong in finding that an unrecognised foreign judgment could only be used as a "shield" to defend a claim and not as a "sword" to found a claim. The common law obligation that arose out of a foreign judgment could in principle be used to found a claim. Direct versus indirect operation The Supreme Court also found that the Court of Appeal misapplied the principle that an unrecognised foreign judgment has "no direct operation" in England such that the Court of Appeal had wrongly concluded that an unrecognised foreign judgment was incapable of giving rise to a "debt" in English law. The "no direct operation" principle, properly understood, only meant that an unrecognised foreign judgment could not be enforced as a judgment by execution in England. The principle did not mean, as the Court of Appeal had incorrectly found, that the unrecognised foreign judgment was wholly without legal effect in English law. Instead, the unrecognised foreign judgment gave rise to an English common law right (ie a "debt") on the obligation principle which could be enforced before the English Courts. The revenue rule distinguished The Supreme Court also found that the Court of Appeal had erroneously relied on the rule that English Court has no jurisdiction to entertain an action, either directly or indirectly, of a penal, revenue or other public law of a foreign state. That rule was, the Supreme Court found, simply irrelevant to the present case and the Court of Appeal had been wrong to rely on it. A foreign Court issuing a judgment for a private right such as a debt did not engage the rule: "There is a world of difference between a sovereign authority asserting a sovereign right, such as to a tax or penalty, and a private person bringing a claim asserting a private right, as in the present case." Insolvency proceedings are not enforcement proceedings The Supreme Court also noted that bankruptcy and winding up proceedings are often loosely categorised as a means of collective enforcement of debts. However, despite that, such proceedings are "in no releva...

  3. 5d ago

    Crypto-fraud, injunctions against persons unknown and the cost of Exchange non-cooperation Facts Freezing injunction Disclosure Costs Conclusions

    In the recent English High Court decision in Wilden v Person Unknown, DHCJ Guy Vassall-Adams KC continued a proprietary and worldwide freezing order against an unknown cryptocurrency fraudster, reaffirming that crypto assets are property to which rights can attach and that exchanges which refuse to cooperate with fraud victims risk adverse costs orders. The Court also granted a Bankers' Trust disclosure order against the cryptocurrency exchange, HTX, on which the assets were held. While Harneys does not advise on the law of England and Wales, this judgment may be considered in other common law jurisdictions such as the BVI, Cayman Islands, Bermuda and Cyprus, where freezing injunctions and disclosure orders in crypto-fraud cases are increasingly common. Mr Wilden, a German businessman, was the victim of a targeted cryptocurrency fraud. A person unknown, using the alias "Brian Smith", contacted Mr Wilden about Bitcoin he considered lost following the closure of the EuropeFX platform. Smith claimed to be a UK-based investment adviser working for a company called LedgerLock, which he said was working with EuropeFX to recover lost Bitcoin and transfer it to new wallets. The person unknown demonstrated detailed knowledge of Mr Wilden's EuropeFX transactions, including specific dates of purchase, account balances, trades, credits and withdrawals. Mr Wilden's forensic investigators subsequently concluded that this information may have been obtained from publicly available blockchain data or purchased databases. Believing the person unknown to be legitimate, Mr Wilden was persuaded to make a series of Bitcoin payments said to be necessary to satisfy technical and regulatory requirements. Between December 2025 and January 2026, Mr Wilden paid approximately EUR 2.5 million, converted into 32.46 BTC. Person unknown transferred a small amount back before locking Mr Wilden out of the LedgerLock platform and ceasing all contact. Forensic investigators traced the funds to the HTX exchange (owned by Huobi Global SA, a company incorporated in Panama). The judge noted that HTX was on the FCA Warning List for operating in the UK without proper authorisation and is the subject of FCA enforcement proceedings for communicating financial promotions contrary to s21 of the Financial Services and Markets Act 2000. The judge held that HTX responded to Mr Wilden's lawyers in a dismissive and formulaic manner, recommending Mr Wilden contact the police. The judge characterised HTX as "unwilling properly to engage with a legitimate request for the return of stolen cryptocurrency and is thereby providing a safe haven for the proceeds of crime". The applicant for a freezing injunction must persuade the Court that: the claimant has a good arguable case on the merits against the defendant; there is a real risk that a judgment or award will go unsatisfied by reason of the unjustified disposal by the defendant of his assets; and it is just and appropriate for the Court to grant the injunction. The Court did not separately assess the requirements for a proprietary injunction although as is well known such injunctions are governed on a justice and convenience test usually applying the American Cyanamid guidelines and do not require risk of dissipation to be proved. England and Wales, like the BVI, treats crypto assets as property to which rights can attach. The judge was satisfied on the basis of Mr Wilden's expert report that the identity of the crypto assets had been preserved. Importantly, following the principle established in D'Aloia v Persons Unknown, it was held that not only the remedy of tracing but also the remedy of following is available where the identity of the crypto asset is preserved despite mixing – a significant point for practitioners. It was held to be self-evident that there was a risk of dissipation, as Mr Wilden's expert evidence showed that person unknown had already attempted to dissipate the funds through "pooling transactions" in whic...

  4. Sep 11

    Denali v Manson and the intersection of sanctions law and insolvency

    The consequences of getting it wrong are severe yet the legislation often leaves practitioners without clear answers to commercially significant questions. The recent English High Court decision in Denali Corp – FZCO v Manson considers one of those unanswered questions: when a designated person holds contractual rights whose value is uncertain, do those rights constitute "funds" or an "economic resource" under the UK sanctions regime? The distinction is not academic. It determines the scope of the asset freeze, the range of conduct that could amount to a criminal offence, and as the liquidators in this case discovered, whether administrative acts such as consenting to an assignment can lawfully proceed at all. In Denali Corp, the court had to determine whether the liquidators of Petropavlovsk plc (Petro) could consent to the assignment of contractual rights from Atlas JSC, a designated person, to Denali Corp-FZCO without breaching the UK sanctions regime under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) and the Russia (Sanctions) (EU Exit) Regulations 2019. The case turned on a seemingly simple question. Were the contractual rights being assigned a "fund" within the meaning of section 60(1) of SAMLA, or an "economic resource" under section 60(2)? The distinction was important with far-reaching implications. Under Regulation 11(4), "dealing with" funds is defined broadly and captures any use, alteration, transfer, or change in ownership, possession, or character. By contrast, "dealing with" an economic resource under Regulation 11(5) is defined more narrowly and is limited to exchanging the resource for funds, goods, or services, or using it in exchange by way of pledge or otherwise. In practical terms, if the contractual rights were classified as an economic resource rather than a fund, then the range of conduct that could give rise to a sanctions breach was significantly reduced. In considering the issue, the court built on the framework established by the English Court of Appeal in PJSC National Bank Trust v Mints, where it was held that a claim or cause of action was not a fund but rather an economic resource. The key distinguishing factor in Mints was uncertainty. The items listed in the statutory definition of "funds" share a common feature of having an intrinsic financial value, typically for a liquidated or definite sum. A claim for damages, being inherently uncertain in outcome, did not fit that mould. HHJ Johns KC applied the same reasoning to the contractual rights. The rights arose under a share sale deed entered into between Petro and Atlas and specifically related to, with the liquidators' consent, the rights to receive liquidation surplus proceeds, residual amounts from a US$20 million administration fund, and a US$6 million contingency fund. The court found that the rights being assigned were, in practice, a right to prove in the liquidation for what was an uncertain sum dependent on the outcome of asset realisations, the level of claims and ongoing costs and expenses of the liquidation. The court acknowledged that while the rights were probably closer to the border between a fund and an economic resource, the uncertainty inherent in the rights was sufficient to bring them within the definition of "economic resource" under section 60(2) of SAMLA. Having classified the rights as an economic resource, the court concluded that the liquidators' consent to the assignment did not constitute "dealing with" those resources. The consent required did not involve any exchange of the rights for funds, nor any use of them by the liquidators in exchange for funds. Importantly for insolvency practitioners, the court held that the words "deals with" were simply not apt to describe the administrative act of giving consent to an assignment between two other parties. Although Denali Corp is an English decision, the court's reasoning will be highly persuasive to the courts, and instructive to insolvency practitioner...

  5. Sep 10

    At your own risk: the Grand Court reaffirms the costs consequences of winding-up petitions on disputed debts Point 1: Costs follow the event Point 2: Foreign lawyers' fees, a point of general application Point 3: Interest on costs Comment

    The recent judgment in China Export & Credit Insurance Corporation v Hyalroute Communication Group Limited (No.3) sets out the costs consequences of a dismissed winding-up petition based on a bona fide dispute. It also clarifies the scope of GCR O62, r18, which governs recovery of foreign lawyers' fees, a point Justice Asif described as "of general application within the Cayman Islands". China Export & Credit Insurance Corporation (the Petitioner) petitioned to wind up Hyalroute Communication Group Limited (the Respondent) to recover approximately US$26 million. The Petitioner claimed to be subrogated to guarantees given by the Respondent over its subsidiary's PRC-law loan facilities with China Development Bank. It had indemnified the bank under its insurance policies prior to bringing that claim. The Respondent successfully resisted the petition on the ground that the debt was bona fide disputed on substantial grounds, and the petition was dismissed in May 2026. The costs decision addressed three issues: 1. whether costs should follow the event or whether exceptional circumstances justified no order; 2. the proper treatment of fees incurred by PRC lawyers who had not been temporarily admitted in the Cayman Islands; and 3. whether the Respondent was entitled to interest on its costs. The Respondent's position was that costs should follow the event under GCR O62, r4, relying on the English case of Re Fernforest and the Cayman Islands Court of Appeal's decision in Aramid Entertainment Fund Ltd v KBC Investments Ltd. The Respondent argued that a contrary result would undermine the deterrent effect of the costs regime and encourage unmeritorious petitions. The Petitioner argued this was an exceptional case warranting no order for costs, relying on the English case of In Re Sykes & Sons Ltd. In doing so, it maintained that it had acted reasonably throughout and argued that the principle derived from Re Fernforest Ltd presupposes that the Respondent's dispute had been articulated to the Petitioner, but that Petitioner elected to pursue the petition in any event. Justice Asif rejected the Petitioner's submissions and ordered costs to follow the event. In considering Re Fernforest, Justice Asif held that the Petitioner's reading was "directly contradicted" by the passages he had set out from that case and the Court of Appeal's explanation of them in Re Aramid. The company in Re Fernforest had not detailed its defence until after the petition was presented, yet Mr Justice Warner still ordered costs against the petitioner, stating that it is "no part of the duty" of a respondent to formulate its defence in advance". On reasonableness, Justice Asif held that whether the Petitioner had behaved reasonably in filing and pursuing the petition was "irrelevant to the question of costs". This followed the principle established by Mr Justice Warner in Re Fernforest – and confirmed by the Court of Appeal's confirmation in Re Aramid – that, save in an exceptional case, a petitioner in a known disputed-debt case presents his petition "at his own risk". The Court also held that the facts did not come "anywhere close" to the circumstances in Re Sykes, where the debtor company had produced documents of questionable authenticity and made untruthful statements about its liability. The conclusion from these findings is that a winding-up petition is not a debt-collection shortcut and treating it as one carries real costs risks. Neither the Petitioner's reasonableness nor the Respondent's failure to formulate its defence before the petition was filed will displace the ordinary costs rule. GCR O62, r18(1) allows work done by foreign lawyers to be recovered on taxation on the standard basis, but only if the foreign lawyer has been temporarily admitted in the Cayman Islands. The Court of Appeal recently confirmed in Al Jomaih Power Limited v IGCF SPV 21 Limited that there is no power to grant a dispensation from r18, closing off the route taken at first in...

  6. Sep 8

    Director liability in offshore contracts: what Said v Butt still teaches us The principle in Said v Butt [1920] 3 KB 497 When can personal liability arise? Practical steps for offshore boards and in-house counsel

    Boards of offshore companies often have to make difficult commercial decisions where the contractual consequences are not clear-cut. This can be particularly challenging in structures involving SPVs, holding companies and joint venture vehicles, where contractual obligations may sit with one entity while decisions are taken within a wider group. If a decision later gives rise to a breach of contract claim, can the directors who approved it also be pursued personally? For boards and in-house counsel, that question matters. If recovery against the contracting entity becomes difficult, a claimant may look beyond the company and examine the conduct of the individuals involved. The principle in Said v Butt, recently applied in IBM United Kingdom Ltd v LZLABS GmbH [2025] EWHC 532 (TCC) is that a director or other agent who causes a company to breach its contract will not ordinarily be personally liable for inducing that breach, provided they were acting bona fide in the course of their duties and within the scope of their authority. In IBM, the Court summarised the rule as: quote start The effect of the rule in Said v Butt is that a director of a company who caused his company to act in breach of contract cannot be found to have committed the tort of inducing a breach of a contract to which the company is party, provided that the director acted bona fide in the course of his duties as a director. The Court went on to explain that the good faith enquiry is concerned with the proper performance of the director's duties and functions. The UK Supreme Court also considered the principle in Lifestyle Equities CV v Ahmed [2024] UKSC 17. The Court emphasised that the normal position is that, where an agent causes its principal to break a contract, liability rests with the principal rather than the agent. If a contracting party wants direct recourse against the other party's agent, "it must ordinarily bargain for it". The use of an SPV, holding company or other ring-fenced entity does not, without more, make its directors guarantors of the company's contractual liabilities. However, Said v Butt is not a general immunity from personal liability. As Lifestyle Equities makes clear, the principle is concerned with procuring a company's breach of contract. It does not protect a director from liability for an independent tort which they personally commit or participate in. The limits of the principle were considered in Antuzis v DJ Houghton Catching Services Ltd [2019] EWHC 843 (QB). The Court made clear that the focus of the bona fide enquiry is the director's conduct towards the company, rather than towards the contractual counterparty. The directors in Antuzis had procured systematic breaches of workers' contractual and statutory rights. Their conduct could not properly be characterised as bona fide conduct in the company's interests, and they were held personally liable. The BVI statutory position starts from a similar premise. Section 30 of the BVI Business Companies Act, Revised Edition 2020 provides that a director is not personally liable for the company's debts, obligations or defaults merely because they hold office, although liability may arise from the director's own conduct or under specific statutory provisions. Those duties include acting honestly, in good faith and for a proper purpose, and exercising the required standard of care, diligence and skill. In group structures, directors should also be clear about the particular company whose interests they are considering. A decision that appears sensible at group level will not necessarily be appropriate for the individual contracting entity. Where a company is in financial difficulty, directors also need to keep creditor interests in mind. Separate insolvency-related liabilities, including misfeasance and insolvent trading, may also come into play. Falling within the Said v Butt principle does not, however, resolve every question of personal liability. Separate exposure may arise ...

  7. Sep 2

    Foreign judgment enforcement in the BVI: what you need to know in 2026 Two routes to enforcement A. Statutory registration under the Reciprocal Enforcement of Judgments Act B. Common law enforcement for non-scheduled jurisdictions Defences to enforcemen

    The British Virgin Islands (BVI) offers two principal routes for enforcing foreign judgments: (A) statutory registration under the Reciprocal Enforcement of Judgments Act 1922; and (B) common law enforcement by fresh action, each backed by a robust suite of interim remedies and post-judgment enforcement tools that make the jurisdiction a critical venue for cross-border creditors. The right route depends mainly on the jurisdiction of origin, the status of the judgment and the assets available in or through the BVI. Early classification is critical. A creditor should identify the judgment's originating jurisdiction, confirm that the judgment is final and map the debtor's BVI assets before choosing the procedure. That avoids avoidable delay and preserves the option of seeking protective relief before the debtor can move or restructure assets. Registration is available for judgments from scheduled territories. The territories are England and Wales, Northern Ireland, Scotland, the Bahamas, Barbados, Bermuda, Belize, Trinidad and Tobago, Guyana, St Lucia, St Vincent, Grenada, Jamaica, New South Wales and Nigeria. This route is usually more direct because the creditor does not need to start a new claim on the underlying debt. An application must be made within 12 months of the date of the judgment unless the BVI Court allows a longer period. The application proceeds under Eastern Caribbean Supreme Court Civil Procedure Rules (Revised Edition) 2023 (EC CPR) Part 74 and should be supported by affidavit evidence and a verified or certified copy of the judgment. The judgment must be final and must order payment of a definite sum. The BVI Court must also consider it just and convenient to enforce the judgment. For statutory registration, the debtor must not be appealing or have the right and intention to appeal. A pending appeal can therefore justify opposition or an application to set aside statutory registration. The BVI Court will not use enforcement proceedings to conduct a general review of the foreign decision, but it will examine whether local enforcement requirements are met. Before filing, the creditor should: Confirm the judgment is final and enforceable in the originating jurisdiction. Check whether any appeal is pending or intended and obtain evidence of the position. Evidence the foreign court's jurisdiction, service and amount outstanding. Arrange a certified English translation where the judgment is not in English. Once registered, the judgment can be enforced as if it were a BVI judgment. Registration is not the end of the process. The order must be served and the debtor may apply to set it aside. A pending appeal can prevent registration and enforcement, so the creditor should obtain clear evidence of whether an appeal has been filed or is intended. For a judgment from a non-scheduled jurisdiction, the creditor normally starts a fresh BVI proceeding to enforce the foreign judgment as a debt. The claim is not a re-trial. It relies on the foreign judgment as the source of the obligation and seeks a BVI judgment that can then be executed against local assets. The creditor must show that the judgment is final and conclusive, is in personam and is for a definite sum. It must also show that the foreign court had jurisdiction under principles recognised by the BVI Court. The usual gateways are submission to the foreign court's jurisdiction or residence or business in that jurisdiction together with due service. Those issues should be addressed directly in the evidence: Finality: Confirm the judgment is not subject to further decision or an unresolved appeal. Personal liability: Show that the judgment binds the debtor personally rather than operating only in rem. Jurisdiction and service: Exhibit the jurisdiction clause, evidence of submission or presence and proof of service. Where the evidence is clear, the creditor can seek summary judgment rather than proceed to a full trial. The BVI Court focuses on the recognised require...

  8. Aug 25

    Estoppel explained: What the UK Supreme Court's latest decisions mean for offshore litigation What is estoppel? The narrow limits of issue estoppel Practical guidance for offshore litigators

    The UK Supreme Court has recently delivered judgment in Skatteforvaltningen v MCML Ltd which has helped focus the parameters of estoppel, together with previous landmark decisions, such as Tinkler v HMRC estoppel by convention (Harneys' article on Tinkler can be viewed here), and Guest v Guest, regarding proprietary estoppel (Harneys' article on Guest can be viewed here). In this article, we analyse the key decisions and consider what they mean for practitioners in the BVI and other offshore jurisdictions. Estoppel is a term used to refer to a collection of legal doctrines, all of which are underpinned by the concepts of equity, unconscionability and the prevention of injustice. The most common estoppels are as follows: Issue estoppel prevents a party from re-litigating an issue of fact or law that has been finally determined in earlier proceedings between the same parties. It promotes finality and efficiency. Estoppel by convention prevents a party from resiling from a common assumption of fact or law on which both parties have conducted their dealings, where it would be unconscionable to permit departure from that assumption. Proprietary estoppel arises where a person has been given an assurance regarding rights in property, has relied on that assurance to their detriment, and it would be unconscionable not to give effect to the expectation created. Estoppel by representation operates to protect against a departure from an assertion of fact or law intending it to be relied on and which was relied on by the other party to their detriment. Whilst issue estoppel can have a 'very powerful effect', the Supreme Court has recently confirmed that it is a narrow doctrine, which has a different role than the abuse of process doctrine (see the rule in Henderson v Henderson). Any unfairness created by a party failing to put some point in issue, when they could have, will be addressed by the Henderson rule. In Skatteforvaltningen, the Supreme Court considered whether SKAT, the Danish Customs and Tax Administration, could bring a fraud claim after an earlier claim for negligent misrepresentation had been brought, and dismissed, against the same financial brokerage business. The Court of Appeal treated the earlier decision as creating an issue estoppel; whereas the Supreme Court disagreed and unanimously allowed the appeal. The case gave the Supreme Court the opportunity to consider issue estoppel in more detail and the court concluded that when carrying out an estoppel analysis, the question to ask is whether the issue was necessary and fundamental to the prior decision; with the pleadings being a critical consideration during this analysis. The court found that the factual and legal bases of the fraud claim were not traversable to the negligent misrepresentation claim. As a result of the court's findings, it was unnecessary for the court to look at ground 1 of the appeal which argued that an issue estoppel could arise from a prior court's formulation of a legal principle or articulation of legal reasoning. From the perspective of a claimant, the case confirms that they can bring a new claim if it arises out of new or different legal or factual circumstances. Defendants will have to grapple with the fact that issue estoppel will only intervene in narrow circumstances where the issue decided in the prior proceedings were necessary and fundamental to the decision; and 'whether an issue arose on the parties' pleadings in the prior civil proceedings is critical in deciding whether its determination was necessary and fundamental'. The message to commercial litigators from this case is clear: ensure your pleadings are precise and properly framed from the outset of the litigation. For offshore practitioners, particularly in fraud and asset-recovery litigation involving overlapping parties or successive causes of action, Skatteforvaltningen is a warning against treating a previous dismissal as a general answer to a subsequent case pleaded diff...

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Exploring Offshore Litigation is a captivating podcast series containing audio of written blog content that dives deep into the intriguing world of offshore litigation, including the BVI and Cayman. Each episode sails through complex legal waters, bringing you up-to-date analysis of recent high-stakes cases and expert commentary from the leading minds in this specialised field. Our episodes demystify legal jargon and break down complex cases to make them accessible to all. Harneys, an international law firm with entrepreneurial thinking, brings each episode to you.

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