Re Al Sabah
| Jurisdiction | UK Non-devolved |
| Judge | (Lord Hoffmann, Lord Scott of Foscote, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe and Lord Brown of Eaton-under-Heywood) |
| Judgment Date | 11 January 2005 |
| Court | Privy Council |
| Date | 11 January 2005 |
(Lord Hoffmann, Lord Scott of Foscote, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe and Lord Brown of Eaton-under-Heywood)
R. Dicker, Q.C. and A. Beltrami for the appellants;
A. Popplewell, Q.C. and P. Wright for the respondents.
(1) Ayers, Re, ex p. EvansUNK (1981), 34 A.L.R. 582; on appeal, sub nom. Ayers v. EvansUNK(1981), 39 A.L.R. 129, referred to.
(2) Bank of Credit & Comm. Intl. S.A. (No. 9), Re, [1994] 3 All E.R. 764; [1994] 2 BCLC 636, followed.
(3) Callender, Sykes & Co. v. Colonial Secy. of Lagos, [1891] A.C. 460, referred to.
(4) Dallhold Estates (UK) Pty. Ltd., Re, [1992] BCLC 621; [1992] BCC 394, followed.
(5) Debtor (Order in Aid No. 1 of 1979), In re a, ex p. Viscount of Royal Court of Jersey, ELR[1981] Ch. 384; [1980] 3 All E.R. 665, dicta of Goulding J. applied.
(6) Galbraith v. Grimshaw, [1910] A.C. 508; [190810] All E.R. Rep. 561, considered.
(7) Grupo Torras S.A. v. Al-Sabah, [1999] CLC 1, 469, referred to.
(8) Hall v. WoolfUNK(1908), 7 C.L.R. 207; 15 Argus L.R. 60, referred to.
(9) Hart, In re, ex p. Green, [1912] 3 K.B. 6; [191113] All E.R. Rep. Ext. 1164, followed.
(10) Hughes v. Hannover Rckversicherungs-A.G., [1997] 1 BCLC 497; [1997] BCC 921, followed.
(11) Osborn, In re, ex p. Trustee, [193132] B. & C.R. 189, referred to.
(12) R. v. Jameson, [1896] 2 Q.B. 425; (1896), 75 L.T. 77; 12 T.L.R. 551, referred to.
(13) Radich v. Bank of New ZealandUNK(1993), 116 A.L.R. 676, referred to.
(14) Tucker, In re, 198789 MLR 220, referred to.
(15) Ukley v. Ukley, [1977] V.R. 121, considered.
Bankruptcy Law (1997 Revision) (Laws of the Cayman Islands, 1964, cap. 7, revised 1997), s.107(1): The relevant terms of this sub-section are set out at para. 6.
s.156: The relevant terms of this section are set out at para. 21.
Revised Edition (Laws of the Cayman Islands) Law 1960 (Law 19 of 1960), s.6: The relevant terms of this section are set out at para. 20.
Bankruptcy Act 1914 (4 & 5 Geo. V., c.59), s.122: The relevant terms of this section are set out at para. 15.
Insolvency Act 1985 (c.65), s.235(3): The relevant terms of this sub-section are set out at para. 29.
s.236: The relevant terms of this section are set out at para. 29.
Insolvency Act 1986 (c.45), s.426: The relevant terms of this section are set out at para. 38.
Statute Law (Repeals) Act 1995 (c.44), s.2(3): The relevant terms of this sub-section are set out at para. 31.
Bankruptcy Act 1966 (Australia, Act No. 33 of 1966), s.29: The relevant terms of this section are set out at para. 43.
Bankruptcy Law, 1871 (Jamaica, No. 25 of 1871), s.64: The relevant terms of this section are set out at para. 17.
Cayman Islands Administration of Justice Law 1894 (Laws of Jamaica, 1953, cap. 421), s.41: The relevant terms of this section are set out at para. 17.
Bankruptcy and Insolvency-assistance to foreign court-enforcement of foreign bankruptcy order-avoidance provisions-under Bankruptcy Act 1914, s.122, Grand Court may authorize foreign trustee in bankruptcy to apply under s.107 to avoid Cayman trust if decides Cayman bankruptcy law applicable-application of Cayman law based on hypothesis of Cayman bankruptcy-no power under Bankruptcy Law, s.156 for Grand Court to assist foreign bankruptcy court-section refers only to sole Cayman bankruptcy court and of no current practical effect
The parties sought orders with respect to the Grand Courts recognition of the appointment of a foreign trustee in bankruptcy for the purpose of recovering Cayman assets.
On the petition of Grupo Torras S.A. (GT), a company owned by the Kuwaiti Government, the Bahamian Supreme Court made an order of bankruptcy against Sheikh Fahad Mohammed Al Sabah, on the basis of judgment against him in the English High Court for the repayment of funds he had obtained by fraud from GT. To assist in the recovery of assets held in two Cayman trusts (one of which was originally governed by Bahamian Law but was switched to the Cayman Islands when the English proceedings against the debtor were already imminent), of which the bankrupt was the settlor and primary beneficiary, the Bahamian court obtained, by letters of request, an ex parte order from the Grand Court (Smellie, C.J.) recognizing the appointment of a trustee in bankruptcy and granting him the powers accorded to a trustee in bankruptcy in the Cayman Islands, including the powers under s.107 of the Bankruptcy Law (1997 Revision). The proceedings are reported at 2002 CILR 148.
The order was granted under s.156 of the Bankruptcy Law (1997 Revision), by which all the Courts in bankruptcy were to assist one another, and by which an order made by one court in bankruptcy could,
on application to another, be made an order of that court. The English Parliament had conferred the power on Jamaica, in 1863, to legislate for the Cayman Islands, and s.64 of the Jamaican Bankruptcy Law of 1871, which was identical to the modern s.156, had applied in the Cayman Islands until the Cayman Bankruptcy Law was passed in 1964. Both provisions referred to Courts, although there was only one bankruptcy court in the Cayman Islands, in contrast to Jamaica, where there were several and where a purely domestic meaning was therefore possible.
The Grand Court identified the English Bankruptcy Act 1914, s.122, as another potential source of jurisdiction for its order. Section 122 imposed on all British courts, including those of The Bahamas and Jamaica, the duty to assist each other in bankruptcy matters. The 1914 Act had been repealed in England and replaced by a new regime, which did not have effect in the Cayman Islands.
In 1995, GT commenced an action in the Grand Court against Al Sabah and others, bringing proprietary tracing claims against the Bank of Butterfield International (Cayman) Ltd., the trustee of one of the Cayman trusts settled by Al Sabah. It applied for leave to seek declarations, inter alia, that the trusts were void under s.107 of the Cayman Bankruptcy Law (1997 Revision), on the basis that they would defeat Al Sabahs creditors. Al Sabahs wife and son, defendants in the tracing actions, sought judicial review of the Chief Justices order.
On review, the Grand Court (Henderson, Ag. J.) upheld the Chief Justices order and allowed the trustee in bankruptcy to apply for relief under s.107 of the Bankruptcy Law. It ruled that the Grand Court had the power, under s.156 of the Bankruptcy Law, to respond to requests from any bankruptcy court in the world. Dismissing the appellants claim that the Bahamian trustee in bankruptcy should be denied the benefit of Cayman statutory bankruptcy provisions because he was forum shopping, it held that by giving the court power to apply either Cayman law or that of the requesting jurisdiction, s.156 authorized the application of law other than that most closely connected with the bankrupt or bankruptcy, in the interests of justice. Although the trustee in bankruptcy was authorized to make an application under s.107(1) to avoid the trusts, the court exercised its discretion to defer its determination of that claim until all the evidence was available. Those proceedings are reported at 2002 CILR 550.
On appeal, the Court of Appeal upheld the order of the Grand Court and allowed the trustee in bankruptcy to apply for relief under s.107 of the Bankruptcy Law. It ruled, however, that the Grand Court had the power, under s.156 of the Bankruptcy Law, to respond to requests only from British bankruptcy courts. Section 156 gave the court discretion to apply Bahamian or Cayman bankruptcy law, the application of Cayman law being contingent on the hypothesis that the Bahamian bankruptcy was a Cayman one and that the foreign trustee in bankruptcy was also in the Cayman Islands. In order for relief to be granted under s.107, there had to be a substantial connection between the circumstances of the case
and this jurisdiction, such that it would be fair and just to apply Cayman law. The proper law of the transactions establishing the trusts was not determinative, and the purpose of the bankrupt in establishing the trusts in this jurisdiction was to be considered. Determination of the application for relief under s.107 would, however, be deferred until all the evidence was available. The proceedings in the Court of Appeal are reported at 2003 CILR 413.
On further appeal by the wife and son of the debtor, the appellants submitted that (a) s.156 of the Bankruptcy Law only applied to domestic courts and did not authorize the Grand Court to respond to a request from a foreign court; (b) s.122 was no longer in force in the Cayman Islands, having been repealed by the Insolvency Acts of 1985 and 1986, as the presumption against extraterritorial operation of a United Kingdom statute did not apply to a repeal and no clear words of exception were used; (c) even if the Grand Court could respond to a request from the Bahamian court, that power did not extend to granting to the Bahamian trustee in bankruptcy the benefit of s.107 of the Bankruptcy Law, as relief under s.107 could not be extended to the foreign trustee in bankruptcy; and (d) s.426 of the Insolvency Act 1986 was different and in wider terms than s.122 of the Bankruptcy Act 1914 and therefore the authorities on s.426 were irrelevant to s.122.
The respondents submitted in reply that (a) s.156 referred to all British courts in bankruptcy wherever they might be (including the Bahamian court); (b) the Insolvency Act 1985 repealed s.122 of the Bankruptcy Act 1914 only in relation to the United Kingdom and as there had been no extension of the repeal to the Cayman Islands it remained in force there; (c) alternatively, the Grand Court had inherent jurisdiction...
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