CAYMAN ISLANDS Law and Practice Contributed by: Alan Bercow and Jae Shin, Appleby
lish authorities (which will have persuasive effect in the Cayman Islands) in the crypto-fraud context are likely to be illustrative for similar cases in the Cay - man Islands. In 2022, in the case of D’Aloia v Per- sons Unknown [2022] EWHC 1723 (Ch), the English High Court authorised service on unknown crypto- fraudsters in the form of non-fungible tokens via Air - drop into the digital wallets into which the claimant had been fraudulently induced into transferring their crypto-assets. 2.9 Compelling Witnesses to Give Evidence The Cayman Islands courts have the power to issue subpoenas to compel witnesses to give oral evidence in legal proceedings. Further, where a person (whether or not a party to the proceedings) swears an affidavit in the litigation, the court has the power to order that person to attend the court for cross-examination in respect of their affidavit evidence. In fraud proceedings, it can be important to cross-examine a defendant on their asset disclo - sure affidavit – for example, where it is incomplete or inaccurate, as part of the policing of the freezing injunction. However, the court does not have power to compel a witness who is not within the Cayman Islands to attend for cross-examination ( In The Matter of a Company [2025] CIGC (FSB) 13). The Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters has been extended to the Cayman Islands by the UK. In respect of witnesses who are outside the Cayman Islands, the Cayman Islands courts will grant letters of request for information and testimony, and likewise will receive letters of request and make orders for a witness in the Cayman Islands to be examined in relation to pro - ceedings in another convention state. 3. Corporate Entities, Ultimate Beneficial Owners and Shareholders 3.1 Imposing Liability for Fraud on a Corporate Entity In the Cayman Islands, the attribution of an individ - ual’s knowledge to a corporate entity follows English common law principles – primarily, the “identification
doctrine” articulated in Meridian Global Funds Man- agement Asia Ltd v Securities Commission (1995) 2 AC 500 and Bilta (UK) Ltd v Nazir (2015) UKSC 23. Under this approach, a corporate entity can be liable for fraud when: • the fraudulent acts or knowledge are attributable to individuals who represent the company’s “directing mind and will” – typically, directors, senior officers, or those with authority to bind the company; • the individual was acting within the scope of their authority; and • the acts were performed in the course of corporate business. The Cayman Islands courts have confirmed this approach ( Primeo Fund (in Official Liquidation) v Bank of Bermuda (Cayman) Ltd [2023] UKPC 40 and HSBC Securities Services (Luxembourg) SA [2017] 2 CILR 334). An important limitation applies through the “fraud on the company” exception recognised in In re Hampshire Land Co [1896] 2 Ch 743 . Where a director or officer perpetrates fraud against the company itself, their knowledge is not attributed to the company. For financial services companies operating in the Cayman Islands, the Anti-Money Laundering Regula - tions (2025 Revision) impose additional requirements designed to prevent fraud, with potential corporate liability for regulatory breaches even without direct board knowledge, if proper systems were not estab - lished. 3.2 Claims Against Ultimate Beneficial Owners Direct claims against ultimate beneficial owners (UBOs) are possible in Cayman Islands courts by piercing or lifting the corporate veil in limited circum - stances. Cayman Islands courts have confirmed in Algosaibi v Saad [2018] 3 CILR 1 that they will take the same approach as in Prest v Petrodel Resources in the UK Supreme Court – namely, where the cor - porate structure is a mere “façade” concealing true facts, the company is being used as a device to evade legal obligations or frustrate legal remedies, and there is evidence of impropriety beyond the fact that the company was used for wrongdoing.
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