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The Eastern Caribbean Court of Appeal has handed down a welcome judgment reaffirming the parameters under which a duty of a registered agent in the British Virgin Islands to disclose information under Norwich Pharmacal principles arises.
On 21st February 2011, the Court delivered judgment in JSC BTA Bank v Fidelity Corporate Services Limited and others, Civil Appeal No35 of 2010. Reversing the decision of the Commercial Judge below, the Court held on three main points:
The threshold requirements must be met; there needs to be a wrong, and the respondent must be “mixed up” in that wrong. Once met, the Court has a wide discretion to grant relief that should be necessary and proportionate;
Registered agents performing their professional services cannot be considered mere onlookers. Where companies that they formed and maintained facilitated the commission of a fraud, then the agent was sufficiently involved in the wrong to render a duty to disclose;
That registered agents, by virtue of the services they render coupled with due diligence duties they are obliged to perform, would be expected to have information as to instructing or controlling minds behind the companies implicated in the wrongdoing, and in all probability information pertaining to banking mandates and resolutions passed for the operation of bank accounts in their possession.
As with discretionary remedies such as this, any one case turns on its facts. However, of key importance is the recognition that registered agents are now firmly in the scope of the Norwich Pharmacal jurisdiction merely by performing their professional duties, oblivious to details of the affairs of the company they service. Nothing more is needed to get past the requisite threshold.
Thus, this is the reinforcement of a vital weapon in the asset tracing armoury and one essential to ensuring intrusive and effective steps can be taken in the right cases to get behind fraud and secure assets.
Mark Forte and Tameka Davis of Conyers’ British Virgin Islands office acted as lead lawyers on the case.