The BVI Court of Appeal on Joinder, Service Out and the Architecture of Proprietary Enforcement
Cross-border enforcement has become the decisive phase of high-value arbitration. Awards of substantial scale increasingly encounter layered corporate structures, nominee shareholdings and offshore holding vehicles.
The recent decision of the Eastern Caribbean Supreme Court, Court of Appeal, arising from efforts to enforce a US$1.6 billion ICC award in the British Virgin Islands, offers a clear statement of how such structures are likely to be treated when subjected to proprietary enforcement.
Although framed as an appeal concerning joinder and service out, the judgment addresses a more fundamental issue: whether shares registered in the name of a third party may be charged on the basis that they are beneficially owned by the award debtor. The Court of Appeal dismissed the appeal and, in doing so, clarified the scope and coherence of the BVI court’s enforcement jurisdiction.
The Enforcement Setting
The Eastern Caribbean Supreme Court in Tortola, where the BVI Commercial Court hears high-value arbitration enforcement disputes.
The respondents had obtained an ICC arbitration award seated in the Dubai International Financial Centre against Sirwan Saber Mustapha, also known as Mr. Barzani, in excess of US$1.6 billion.
The award was subsequently registered in the Commercial Division of the High Court of the British Virgin Islands pursuant to the Arbitration Act. It remains wholly unsatisfied.
During enforcement investigations, the respondents asserted that Mr. Barzani held a beneficial interest in shares of OS International Limited, a BVI company. Those shares were not registered in his name. They were registered in the name of Mr. Zekri Basheer Shani and another individual.
The respondents’ case was that the registered shareholder held the shares as nominee for the award debtor. On that footing, they sought a provisional charging order under CPR Part 48.
The Commercial Court granted the provisional order, joined Mr. Shani to the enforcement proceedings, and permitted service out of the jurisdiction. Proprietary and freezing relief was also granted.
Mr. Shani sought to set aside those orders. His application was largely unsuccessful. He appealed.
Proceedings Do Not End at Judgment
A central argument on appeal was that the original arbitration recognition proceedings contained no pleaded claim against Mr. Shani. The award had already been registered. It was contended that, in the absence of a pleaded cause of action, joinder was impermissible.
The Court of Appeal rejected that proposition.
Under CPR 19.2(3), the court may add a party if it is desirable to do so in order to resolve all matters in dispute, or if there is an issue involving the new party connected to matters already in dispute. The Court emphasised that enforcement steps taken after registration of an award remain part of the same “proceedings”. The term is to be given a broad and functional interpretation.
Joinder does not require the existence of a freestanding cause of action against the party to be added. What is required is a connected issue that the court must resolve in order to give effect to the judgment. Here, that issue was beneficial ownership of shares alleged to be amenable to proprietary enforcement.
The Court further observed that joinder in these circumstances serves procedural fairness. It ensures that the registered shareholder may be heard on the issue and will be bound by the outcome.
The judgment therefore confirms that post-judgment joinder is available where necessary to adjudicate disputes directly affecting enforcement.
Service Out and the Necessary or Proper Party Gateway
Because Mr. Shani resided outside the jurisdiction, service out required satisfaction of the CPR Part 7 gateways. The Court applied the established principles: the existence of a serious issue to be tried, a good arguable case that a gateway applies, and the appropriateness of the forum.
The serious issue was the identity of the beneficial owner of the shares. That dispute had crystallised once the respondents asserted beneficial ownership and the award debtor denied holding assets within the jurisdiction.
The Court held that, once joinder was proper, the “necessary or proper party” gateway under CPR 7.3(2)(a) was engaged. The scope of that gateway was described as no narrower than the court’s power to add a party under CPR 19. In practical terms, if it is proper to join a party to resolve an enforcement dispute, it will ordinarily be proper to serve them under that gateway.
As to forum, the analysis was direct. Under section 245 of the Business Companies Act, the situs of shares in a BVI company is in the Virgin Islands. The application was statutory in nature and concerned property located within the jurisdiction. There was no credible basis to contend that another forum was more appropriate.
The service-out challenge therefore failed.
Charging Orders as Proprietary Remedies
The more structurally significant aspect of the decision concerns the nature of charging orders.
A charging order creates a proprietary interest in the asset charged. It is distinct from a freezing injunction, which operates in personam and does not confer security. Section 14 of the Judgments Act 1838 empowers the court to charge stocks and shares beneficially owned by a judgment debtor, whether standing in his own name or in the name of another holding on trust.
The Court reaffirmed that beneficial ownership is the decisive question. Legal title is neither necessary nor sufficient. If the judgment debtor is beneficially entitled to the shares, a charging order may attach notwithstanding nominee registration.
This analysis reinforces a core feature of offshore enforcement: nominee structures do not insulate assets where beneficial ownership can be established.
Personal Jurisdiction and the Lex Situs Principle
The appellant argued that personal jurisdiction over him was required before a final charging order could be made. The Court did not accept that personal jurisdiction was determinative.
The proprietary character of a charging order, combined with the lex situs principle, means that the court’s authority derives from the location of the property. Shares in a BVI company are situate in the BVI. The court’s power over them is territorial and proprietary.
Where beneficial ownership is disputed, the appropriate course is to direct a trial within the charging order proceedings. The judgment creditor is not required to abandon enforcement and commence entirely separate litigation.
The Court’s reasoning confirms that enforcement against shares in offshore companies is grounded in proprietary jurisdiction rather than purely personal jurisdiction.
The Evidential Dimension of Enforcement
Although the appeal turned on procedural grounds, the decision underscores the evidential demands of modern enforcement.
CPR Part 48 requires affidavit evidence asserting that the debtor is beneficially entitled to the shares. Where that assertion is contested, the court may direct a trial. Such disputes are rarely resolved by reference to registration alone.
Beneficial ownership inquiries in complex corporate structures frequently require examination of shareholding histories, corporate governance arrangements, funding flows, trust relationships and control mechanisms. The burden lies initially on the judgment creditor to establish a prima facie case. Once that threshold is crossed, the registered holder must respond.
The Court’s approach reflects an acceptance that high-value award enforcement will often involve substantive factual adjudication rather than purely mechanical execution.
Structural Implications for Arbitration Enforcement
The appeal was dismissed in its entirety, with costs awarded against the appellant.
The decision confirms several structural features of offshore enforcement practice.
Enforcement proceedings remain live after registration of an award and may expand to resolve disputes necessary to give effect to it. Nominee shareholding arrangements do not preclude proprietary enforcement where beneficial ownership is alleged. Charging orders attach to assets within the jurisdiction by reference to their situs, not merely the residence of the registered holder.
For arbitration practitioners, the message is clear. Enforcement planning must anticipate disputes over beneficial ownership in offshore structures. Asset mapping and evidential preparation are not ancillary considerations; they are integral to the enforcement strategy.
For expert witnesses operating in the arbitration sphere, the decision illustrates the terrain on which enforcement disputes increasingly unfold. Beneficial ownership challenges in offshore jurisdictions are unlikely to be resolved on procedural technicalities alone. They turn on evidence.
In that respect, the judgment is less about joinder and more about the architecture of modern arbitration enforcement. It confirms that proprietary remedies, applied within the correct jurisdictional framework, remain a powerful instrument in the post-award phase — even where assets are held through nominee structures.
