Fairfield Sentry Liquidators a step closer to securing assets

Road Town, Tortola, British Virgin Islands

The Liquidators of Fairfield Sentry Limited yesterday obtained an important victory before the Judicial Council of the Privy Council (the court of final appeal for the UK overseas territories) which should bring them closer to procuring $72 million for the benefit of stakeholders.

The matter under appeal related to an anti-suit injunction brought against Stichting Shell Pensioenfonds (“Shell”) by the Liquidators to prevent it from pursuing proceedings in the Netherlands which, if successful, would have resulted in Shell (an investor) enforcing their judgment against cash that Fairfield Sentry Limited currently holds in Ireland (which is frozen subject to an order of the Dutch court) and obtaining an “unjustified priority” ahead of the other stakeholders in the liquidation.

Shell had appealed the decision of the lower Eastern Caribbean Court of Appeal (“the Court”), which had granted the anti-suit injunction in favour of the Liquidators, against it.

The Privy Council considered two factors in assessing the anti-suit injunction: i) Whether Shell had submitted to the court’s jurisdiction ii) Whether it was appropriate to prevent a foreign litigant (Shell being a Dutch entity) from resorting to remedies available to it from the court of its own country

With regard to the first question, the Privy Council determined that Shell had submitted to the Court’s jurisdiction.  The Board found that by defending the anti-suit proceedings there was an acceptance on the part of Shell that the Court had jurisdiction to grant the injunction sought. In addition, the Board found that by submitting a proof of debt in the liquidation proceedings, Shell had submitted to a statutory scheme for the distribution of the liquidation estate’s assets pari passu in satisfaction of their claim and those of other claimants.

As to the second question, the Privy Council also determined that there was no principle which prevented the anti-suit injunction being enforced against a foreign litigant, such as Shell, because the objective of the Court in dealing with an international insolvency matter, such as Fairfield Sentry Limited, is to ensure that both the world-wide assets of it and the world-wide claimants to those assets, are treated on a common basis.  Where a party has submitted to the jurisdiction of the court, brings foreign proceedings which will interfere with the statutory trusts over the assets of the insolvent company, an injunction will be available to restrain their prosecution of these proceedings, irrespective of the nationality or residence of the litigant.

Kenneth Krys, one of the Joint Liquidator’s commented, “We’re pleased to have clarity on the Liquidators’ authority and appropriateness to obtain this anti-suit injunction.  This decision paves the way to bringing in the cash held in Ireland for the benefit of the estate’s stakeholders on a pari passu basis.”

Anti-suit injunctions are an important remedy to consider when actions are being taken by parties to put themselves in an “unjustified priority” position , and is one of many tools that insolvency practitioners and fraud investigators should have in their tool box to pursue and recover assets.