Voluntary Submission to Jurisdiction: Avoiding Costly Mistakes
21 Aug 2014
Following on from the leading British Virgin Islands ("BVI") case of Star Reefers Pool Inc v JFC Group Co. Ltd 1 ("Star Reefers"), further helpful guidance has been provided as to what can amount to a voluntary submission to jurisdiction in the recently handed down judgment in Concept Oil Services Limited v Alexander Kontsevoy & Ors 2 ("Concept Oil").
The matter was an application without notice under the BVI Reciprocal Enforcement of Judgments Act 1992 to register an English judgment in the BVI. The only live issue under the relevant test was whether the respondents, as defendants in the English proceedings, had voluntarily or otherwise submitted to the jurisdiction of the English Court.
The applicant submitted that the respondents had indeed submitted to the English Court's jurisdiction by any or a combination of:
(a) agreeing to comply with the provisions of an interim freezing order (including the disclosure provisions);
(b) failing in, and/or abandoning, their jurisdictional challenge before the English Court;
(c) agreeing to comply with conservatory orders of the English Court if their jurisdictional challenge were to fail.
Ultimately each of these arguments failed and the application was dismissed on the basis that there was no evidence that the respondents had voluntarily appeared or otherwise submitted to the jurisdiction of the English Courts.
In reaching this conclusion Mr Justice Bannister provided a useful explication of the relevant principles, namely that:
(a) The threshold for voluntary submission to jurisdiction is whether "the foreigner takes some step which is only necessary or useful if no objection to jurisdiction is being taken – or if a prior objection is being waived". Or in an alternative formulation: "what is required from a submission is an indication that a defendant assents to the issues going to trial".
(b) As a result of the respondents openly reserving their right to contest jurisdiction in correspondence, and the applicants recognising this, it was not open to the applicants to treat compliance with a freezing order as submission to jurisdiction.
(c) Neither by abandoning nor by failing in a jurisdictional challenge does a foreigner voluntarily submit to the jurisdiction.
The decision in Concept Oil accords with Bannister J's rejection of English case law, then defunct in England, in Star Reefers which first articulated the BVI test for voluntary submission to jurisdiction. Its value lies not in its novelty but rather in its clarity of expression.
One point worthy of note is the distinction in the two cases between complying with an interim conservatory freezing injunction (Concept Oil) and participating in post judgment freezing order proceedings (Star Reefers). The first does not amount to voluntary submission to jurisdiction whilst the second does.
Defendants can take comfort from this decision. Bannister J's framing of the test makes it clear that accidental 'voluntary' submission to jurisdiction can be avoided with some thought and carefully worded correspondence. However, plainly, care still needs to be taken because unnecessary and potentially costly mistakes can, and still do, happen.
1 BVIHC (COM) 2012-0008
2 BVIHC (COM) 2014-0016
T: +353 1 619 2031
Partner Cayman Islands
T: +1 345 814 5559
Partner Hong Kong
T: +852 3690 7475
T: +353 1 619 2111
Associate Hong Kong
T: +852 3690 7526
Associate Cayman Islands
T: +1 345 814 5534
Of Counsel Cayman Islands
T: +1 345 814 5460
T: +65 6922 8416