CAYMAN ISLANDS Law and Practice Contributed by: Alan Bercow, Jae Shin and Ross McLeod, Appleby
The Cayman Islands court confirmed in Renova Resources Private Equity Ltd v Gilbertson (see 1.1 General Characteristics of Fraud Claims ) that shareholders may bring claims under the “fraud on the minority” exception to the rule in Foss v Harbottle. The court in Renova agreed with the principle stated in Gower’s Modern Company Law that where such an action is allowed, the shareholder is not really suing on their own behalf nor on behalf of the members generally, but on behalf of the company itself. For shareholders pursuing such claims, the Cayman Islands court may order interim relief, including injunctions restraining directors’ actions or appointing receivers over company assets pending resolution. 4. Overseas Parties in Fraud Claims 4.1 Joining Overseas Parties to Fraud Claims As a leading international financial centre, fraud proceedings in the Cayman Islands almost invar - iably involve seeking relief against parties from other jurisdictions, and the ability to join over - seas parties is a long-established and vital part of Cayman Islands law and practice. The Cay - man Islands courts may grant leave to serve pro - ceedings on parties outside the Cayman Islands where the court is satisfied that: • there is a serious issue to be tried against the relevant defendants; • there is a good arguable case that the claim falls within at least one of the jurisdictional gateways set out in Order 11, rule 1 of the Grand Court Rules; and • the Cayman Islands is clearly or distinctly the appropriate forum where the case can
be tried in the interests of all parties and for the ends of justice and the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction (see, for example, the helpful summary of these prin - ciples in MYF Maximus Limited v DNB Bank ASA and others – 3 June 2024). The jurisdictional gateways typically relevant to fraud cases include: • a claim for an injunction ordering the defend - ant to do or not to do acts within the Cayman Islands; • a claim to which the defendant is a necessary or proper party where another party has been or will be served within or outside the Cay- man Islands; and • a claim for tort, fraud or breach of duty where the damage was sustained or resulted from an act committed in the Cayman Islands. The defendant against whom leave to serve out of the jurisdiction has been granted can chal - lenge the granting of leave and may challenge the jurisdiction of the Cayman Islands courts on the grounds of forum non conveniens – name - ly, that the Cayman Islands is an inappropriate forum. 4.2 Service of Proceedings out of the Jurisdiction The application is made supported by an affida - vit setting out (among other things) the grounds of the application and the belief that the claimant has a good cause of action. The affidavit should also explain why the case is a proper one for service out of the jurisdiction. The application is usually made without notice to the defendants, and accordingly the applicant is under a duty of full and frank disclosure and fair presentation.
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