British Virgin Islands: Asset Tracing Services – BVI Norwich Pharmacal Orders: How To Obtain One And Key Points To Keep In Mind

Norwich Pharmacal orders have long been a powerful tool employed in the BVI in aiding foreign proceedings. It is also quite a welcome development that the BVI Commercial Court¹ has confirmed that a Norwich Pharmacal order is not a remedy of last resort provided the relevant criteria as set out in the English House of Lords case Norwich Pharmacal v Customs and Excise Commissioners² have been met.

Criteria to obtain a Norwich Pharmacal order

To obtain a Norwich Pharmacal order against a third party, the applicant must satisfy the BVI Commercial Court of the following criteria:
(i) A wrong must have been carried out by an ultimate wrongdoer;
(ii) The third party must be 'mixed up' in or have facilitated the wrongdoing; and
(iii) The Norwich Pharmacal order must be necessary to establish the wrong has been committed or to identify the wrongdoer.

The wrong envisioned by the first limb may be a crime, tort, breach of contract, equitable wrong or contempt of court.

With respect to the second limb, the Eastern Caribbean Court of Appeal in JSC BTA Bank v Fidelity Corporate Services Limited & Ors³ has since confirmed that a registered agent by nature of the services they provide is capable of being 'mixed up' in or having facilitated the wrongdoing. This is usually the case where the ultimate wrongdoer has created the BVI company for the purpose of concealing assets or committing fraud.

The registered agent in such circumstances is likely to have in its possession documentation and information necessary to trace misappropriated assets or to reveal the identity of the beneficiary of those assets. In the event that the identity of the ultimate wrongdoer is confirmed, the applicant can consider seeking emergency interim relief (e.g. a freezing order to prevent dissipation of identified assets).

The third limb comes into play only after the first two criteria have been met and involves an exercise of the Court's discretionary jurisdiction to determine whether Norwich Pharmacal relief is necessary and proportionate in all the circumstances.

A practical guide to obtaining Norwich Pharmacal relief

As of recent years, the BVI Commercial Court has emphasised a two-stage approach in seeking Norwich Pharmacal relief. The two-stage approach involves the applicant first obtaining a seal and gag order to ensure the alleged wrongdoer is not 'tipped-off.' Without the seal and gag order, the registered agent would be obligated to notify its client on record or the ultimate beneficial owner of the proceedings, who may be encouraged to conceal or dissipate assets.

Once the gag order is obtained, the second stage involves making your application for Norwich Pharmacal relief on notice to the registered agent. This is not to say that the BVI Commercial Court will not entertain applications made by way of the 'wrap-up approach' if it is appropriate to do so. The wrap-up approach would involve the applicant seeking both a gag and Norwich Pharmacal order simultaneously at an ex parte hearing. Like other ex parte applications, the wrap-up approach will only be entertained by the BVI Commercial Court in cases of extreme urgency or where there are special or exceptional circumstances.

The registered agent will usually take a neutral approach to the application, provided that its costs are met in compliance with the Norwich Pharmacal Order. The applicant should ensure that the parameters of the disclosure order are reasonable and that the information sought is likely to be in the possession of the registered agent.

Finally, the applicant should ensure that the undertaking to pay the respondent's costs for compliance are for the reasonable sums incurred and if possible set an estimated or maximum figure for compliance. This approach should assist in providing transparency and accountability on the costs incurred by the respondent, particularly in uncontested applications.

Footnotes

1 Claim No.BVIHC (COM) 108 of 2016 UVW v XYZ (A Registered Agent) delivered 27 September 2016
2 [1973] 3 WLR 164.
3 HCVAP 2010/035 (delivered 21 February 2011). Conyers represented the successful bank in Fidelity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.