BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Andrew Emery and Mary-Frances Morris, Emery Cooke
Reliance loss • Costs incurred relying on the contract. • Used when profits are too uncertain to prove. Tort damages (fraud and negligence) • Aim – restore position before the wrongdoing. In fraud cases, courts often take a more claimant- friendly approach, resulting in: • broader recovery; and • less strict rules on foreseeability. Equitable compensation Used in: • breach of fiduciary duty; and • trust disputes. Focus is on: • loss to the trust/company; and • gain made by the wrongdoer. Causation, remoteness and mitigation Courts apply three key filters. • Causation – the loss must be caused by the defendant’s wrongdoing (“but for” test + common sense). • Remoteness – only losses that were: (a) foreseeable; or (b) within the parties’ contemplation. • Mitigation – claimants must take reasonable steps to reduce their losses. The BVI has a dedicated International Arbitration Cen- tre that was opened in 2016. It is housed in a dedicat- ed building with staff distinct from the BVI courts. As a result, although still second choice to litigation in the Commercial Court, arbitration has become more prev- alent in the years since the Arbitration Centre opened. Furthermore, the use of arbitration has grown over the past decade, in part due to deliberate policy efforts. • The Arbitration Act 2013 aligns with the UNCITRAL Model Law, giving the BVI a globally familiar frame- work. 3. Arbitration 3.1 Prevalence
• Compensatory damages – to put the claimant in the position they would have been in had the wrong not occurred. • Exemplary or punitive damages – this is rare and normally reserved for cases of fraud, oppressive conduct or defamation. • Declaratory relief – declarations that rights, obliga- tions or status exist and/or are valid. • Injunctions – prohibitory and mandatory. • Specific performance – the losing party is ordered to carry out contractual obligations. • Account of profits – profits of the wrongdoer sur- rendered. • Trust-specific remedies – breach of trust relief (removal of trustees, restoration of trust property and variation of trust terms). • Protective order – preserve trust assets and rights of beneficiaries. 2.8 Damages Damages are assessed according to common law principles, similar to other common law jurisdictions but with some nuances for offshore and commercial disputes. The Core Principle: Compensation, Not Punishment With the caveat in 2.7 Final Relief , “Exemplary or punitive damages” having been made, the BVI courts focus on compensatory damages, not punishing the defendant. • Restore financial position. • No “windfall” for the claimant. • Punitive damages are rare. This mirrors principles from English law (which BVI courts follow closely). Key Types of Damages in BVI Cases Expectation loss (contract cases) • What profit or benefit the claimant expected to receive. Common in:
(a) shareholder agreements; (b) investment contracts; and (c) joint ventures.
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