The Commercial Court of the British Virgin Islands had, at first instance, refused a shareholder’s application for leave to bring a derivative claim before the English Court and then refused an application to vary or revoke the dismissal of the leave application after the shareholder offered to indemnify the company against loss arising from the grant of leave. The Court of Appeal has now dismissed the shareholder’s appeal against both orders in its judgment here.

The Court of Appeal held that the proposed claims did not have a real prospect of success and that the offering of an indemnity was not a substitute for a meritorious claim (see [92]). For that reason, leave to pursue the claims in the name of the Company was refused.

The Court of Appeal’s judgment on the following matters may be of broader interest to practitioners:

(1) The Court of Appeal considered an indemnity in the Articles of Association of the Company that is in a standard form, replicating the terms of s. 132 of the Business Companies Act 2004: see [148]-[160].

(2) The Court of Appeal held that the Business Companies Act 2004 has no concept of a “shadow director” and that a person alleged to be a “shadow director” is, therefore, not subject to the statutory duties set out in ss. 120-122 of that Act: at [173]-[184].

(3) The Court of Appeal also proceeded on the basis that the judge had power to vary or revoke his prior order (the Court did not address the ground raised by the respondent’s notice that the judge had no such power in the absence of a rule of the kind found in the English CPR): at [88]-[96].

Further information about the proceedings is set out in our report on the first instance judgment of Mithani J (Ag.) here.

Ryan James Turner acted unled at a first instance and on appeal on behalf of the respondent, Clerkenwell Lifestyle Limited. He appeared with Tamara Cameron of Appleby (BVI), with assistance in the Court of Appeal from Oliver Clement.

Read the judgment in full: Dekel v Clerkenwell Lifestyle Limited