BRITISH VIRGIN ISLANDS Trends and Developments Contributed by: Andrew Emery and Mary-Frances Morris, Emery Cooke
The courts have grappled with these issues on a case- by-case basis, seeking to balance the integrity of the sanctions regime against fundamental principles of due process. General OFSI licences for legal repre- sentation in BVI proceedings have provided some relief, but the application and scope of licensing con- ditions continue to generate uncertainty and dispute. Further judicial guidance is anticipated as the sanc- tions landscape evolves. The Insolvency (Amendment) Act 2024’s inclusion of sanctions violations as a ground for FSC-appointed liquidation adds a further dimension, creating a poten- tial mechanism by which sanctioned entities’ BVI structures can be wound up on regulatory grounds without a conventional creditor-driven insolvency process. The interaction between this provision and access to justice principles for sanctioned parties is likely to be tested in the coming period. Insolvency and restructuring Directors ’ duties : West Mercia affirmed The BVI Court of Appeal’s decision in Byers and Rich- ardson ( as Joint Liquidators of Pioneer Freight Futures Company Limited ) v Chen Ningning reaffirmed the rule in West Mercia that directors owe a common law duty to consider and give appropriate weight to the inter- ests of the company’s creditors when they know or ought to know that the company is insolvent or bor- dering on insolvency. The decision strengthens credi- tor protection and imposes heightened responsibilities on directors in financial distress, positioning liquida- tors to pursue claims for asset depletion even in cases where traditional accounting losses are not evident. Servis - Terminal and foreign judgments in insolvency The English Court of Appeal’s decision in Servis - Ter- minal LLC v Drelle (2025) EWCA Civ 62 – holding that an unrecognised foreign court judgment cannot found an insolvency petition as a matter of English law – was followed by the BVI Commercial Court, creating uncertainty about the previously settled practice of using undomesticated foreign judgments as the basis for liquidation applications. However, the general view in the BVI is that the courts will continue to be willing, in appropriate cases, to grant liquidation orders on the basis of foreign judgment debts not formally rec- ognised or domesticated, distinguishing the English
position on grounds of policy considerations particular to the offshore context. The English Supreme Court is expected to consider a further appeal. Market conditions and distressed directorships Despite the legislative and jurisprudential activity, the traditional insolvency market in the BVI has remained relatively flat throughout 2025, with the number of court-appointed liquidations not significantly increas- ing. Practitioners identify the rise of distressed direc- torships as a notable trend: rather than proceeding immediately to formal insolvency, companies in finan- cial difficulty are increasingly turning to experienced insolvency practitioners to serve as distressed direc- tors, helping to navigate financial hardship and pre- serve value while exploring restructuring options. This approach has found increasing traction in the BVI and reflects the maturation of the jurisdiction’s restructur- ing market. Arbitration developments The arbitration / insolvency interface : Privy Council pending As noted above, the interaction between arbitration clauses and insolvency proceedings remains one of the most actively litigated areas of BVI law following Sian Participation . The BVI courts applied and devel- oped the test throughout 2025, and the pending Privy Council appeal in Caldicott will resolve the impor- tant question of whether arbitration agreements can be deployed to stay shareholder disputes between shareholders themselves. The answer will have pro- found implications for minority shareholder protection in the BVI, where unfair prejudice petitions are a staple of the Commercial Court’s caseload. In Spa II , the court’s willingness to treat findings from an HKIAC partial award as capable of being carried through to a winding-up application without reliti- gation is a welcome and pragmatic development. It reduces the risk that awards obtained at significant cost in arbitration proceedings are rendered com- mercially worthless by subsequent insolvency appli- cations requiring the same issues to be tried again from scratch.
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