UBS AG New York and others v Fairfield Sentry Ltd (In Liquidation) and others

Section 249 of the Insolvency Act 2003, read with section 2, identifies the BVI High Court as the domestic court exercising statutory avoidance powers. It does not expressly or impliedly prohibit a foreign court assisting a BVI liquidation from applying those powers under its own law. Cross-border assistance provisions reinforce that construction. An anti-suit injunction was inappropriate where liquidators had High Court authority to litigate abroad, the foreign court could determine its own jurisdiction and choice-of-law questions, and the proceedings were not vexatious or oppressive. Comity required caution and normally left the foreign court to decide whether proceedings should continue. A contrary declaration was refused. Appeal dismissed.

Fairfield Sentry Ltd and related feeder funds were placed into liquidation after the collapse of the Madoff investment scheme. Their liquidators brought avoidance proceedings in the United States against investors who had redeemed shares at fraudulently inflated valuations, relying partly on section 249 of the Insolvency Act 2003.

UBS sought an anti-suit injunction, and alternatively declaratory relief, from the BVI courts. Leon J refused the injunction on 11 March 2016. The Court of Appeal of the Eastern Caribbean Supreme Court dismissed UBS’s appeal on 20 November 2017. The central issue before the Board was whether section 249 conferred exclusive jurisdiction on the BVI High Court and thereby prevented a foreign court assisting the liquidation from applying BVI insolvency law.

Appeal dismissed. The Board, in a single judgment delivered by Lord Hodge, rejected UBS’s construction of section 249 of the Insolvency Act 2003.

1. Statutory construction. Section 249, read with the definition of “Court” in section 2, identifies the BVI High Court as the court entitled to exercise the statutory powers within the BVI domestic insolvency regime. It contains no express prohibition on a foreign court exercising those powers at the request of a BVI office-holder, and no such prohibition arises by necessary implication. The question whether a foreign court can use the statutory tools is for that court under its own law. The discretion to make restorative orders after setting aside a voidable transaction does not determine whether the jurisdiction is exclusive.
2. Cross-border assistance. Part XIX of the Insolvency Act 2003, particularly sections 467 and 468, provides a regime for assistance in foreign insolvency proceedings. Section 467(5) permits the High Court to apply BVI law or the law applicable to the foreign proceeding. That regime strongly militates against implying exclusivity in section 249. Part XVIII was not in force, and did not alter the conclusion. The Board also considered comparative assistance provisions and the approach in England v Smith [2001] Ch 419.
3. Anti-suit injunction. The liquidators had commenced the United States proceedings with High Court authority and were officers of that court. If restraint were justified, the High Court could revoke its permission. Comity required caution before interfering with foreign proceedings. The Board applied the approach in Stichting Shell Pensioenfonds v Krys [2014] UKPC 41; [2015] AC 616, under which the foreign court would normally decide whether proceedings in its own court should continue. The proceedings were not vexatious or oppressive within the guidance in Société Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871.
4. Declaration. The proposed declaration sought an interpretation contrary to the Board’s conclusion and was refused. The Board also questioned whether the BVI courts should provide an advisory opinion for use in the United States proceedings. It did not need to determine standing or abuse of process.

The Board advised that the appeal be dismissed.

• Privy Council: Appeal from the Court of Appeal of the Eastern Caribbean Supreme Court dismissed; [2019] UKPC 20.
• Court of Appeal of the Eastern Caribbean Supreme Court (British Virgin Islands): Appeal dismissed on 20 November 2017, upholding Leon J’s refusal of an anti-suit injunction.
• High Court of the British Virgin Islands: Leon J refused UBS’s application for an anti-suit injunction on 11 March 2016.