May 18, 2017

British Virgin Islands Widens Scope of Pre-Action, Norwich Pharmacal Orders - International Asset Recovery

Authored by Eric (Rick) Rein

 in International Asset Recovery

A Norwich Pharmacal order enables an applicant to obtain discovery about a wrong that has been committed from a respondent who is not "mixed-up" in it. Relief was expanded by the court in UNW v. XYC BVHC (Com)108 of 2016 to post-judgement relief in aid of enforcement where disclosure is intertwined with the willful evasion of the judgment debt. The BVI court clarified the power to order a registered agent to provide third party disclosure. This enabled a judgment creditor with evidence of misuse of corporate structure and of a pattern of willful evasive conduct by the judgment debtor to obtain third party disclosure.

There, the judgment debtor was in contempt for failure to comply with a freezing injunction. The applicant believed the BVI registered agent had information regarding the beneficial owner's assets and that the beneficial owner was using BVI companies to conceal assets. The court said it was not necessary to identify specific transactions where assets were transferred. Rather, there needs to be shown a deliberate effort to obstruct or frustrate enforcement to support reasonable suspicion of willful evasion. The court found there was no difference between a company created for the purpose of concealing assets and a company created for a legitimate purpose which evolved into something illegal. Thus, the fact of being a registered agent is enough to find that this agent was "mixed-up" in the company's affairs even if the agent was unaware of how the company was being used. Specific company records were the proper subject of a Norwich Pharmacal application.

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