Re Al Sabah

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 27 March 2002
• Court: Grand Court (Cayman Islands)
• Date: 27 March 2002

Grand Court

(Smellie, C.J.)

IN THE MATTER OF AL SABAH

G.F.R. Ritchie and Mrs. R.M. Whittaker-Myles for the Bahamian trustee in bankruptcy.

Cases cited:

(1) Al Sabah, In re, Supreme Ct. of The Bahamas, Cause No. 511 of 2001, March 12th, 2002, unreported, applied.

(2) Blum v. Bruce Campbell & Co., 1992–93 CILR 591, referred to.

(3) Callender, Sykes & Co. v. Colonial Secy. of Lagos, [1891] A.C. 460, applied.

(4) Clunies-Ross, ex p. Totterdell, Re(1988), 82 Aust. L.R. 475; on appeal, 20 Fed. C.R. 358, referred to.

(5) Didisheim v. London & Westminster Bank, [1900] 2 Ch. 15; [1900] W.N. 87, dicta of Lindley, M.R. applied.

(6) Gibbons, Re, ex p. Walter(1960), 26 Ir. Jur. 60, referred to.

(7) Gray v. Royal Bank of Canada, 1997 CILR N–10, referred to.

(8) Kilderkin Invs. v. Player, 1984–85 CILR 63, applied.

(9) Lee, In re, [1933] Jam. L.R. 10, referred to.

(10) Nadan v. R.ELR, [1926] A.C. 482; (1926), 95 L.J.P.C. 114, sub nom. R. v. Nadan, [1926] 1 W.W.R. 801; [1926] 2 D.L.R. 177, referred to.

(11) New Zealand Loan & Mercantile Agency Co. v. Morrison, [1898] A.C. 349, referred to.

(12) Reilly, In re, [1942] I.R. 416, followed.

(13) Wallace Bros. & Co. Ltd. v. Commr. of Income Tax, Bombay City & Bombay Suburban DistrictUNK(1948), L.R. 75 I.A. 86, referred to.

Legislation construed:

Bankruptcy Law (1997 Revision) (Laws of the Cayman Islands, 1964, cap. 7, revised 1997), s.2: The relevant terms of this section are set out at para. 6.

s.3(1): The relevant terms of this sub-section are set out at para. 6.

s.9(1): ‘Any person aggrieved by any order of a Judge of the Court in respect of a matter of fact or law, may appeal to the Court of Appeal . . .’

(2): ‘The judgment of the Court of Appeal upon appeal is final, subject only to the right of appeal to Her Majesty in Council.’

s.156: The relevant terms of this section are set out at para. 5.

Act for the Government of the Cayman Islands 1863 (26 & 27 Vict., c.31), s.2: The relevant terms of this section are set out at para. 10.

Bankruptcy Act 1869 (32 & 33 Vict., c.71), s.74: The relevant terms of this section are set out at para. 7.

Bankruptcy Act 1914 (5 & 6 Geo. V, c.59), s.122: The relevant terms of this section are set out at para. 29.

Cayman Islands (Constitution) Order 1972 (S.I. 1972/1101), s.57(1): The relevant terms of this sub-section are set out at para. 27.

Colonial Laws Validity Act 1865 (28 & 29 Vict., c.63), s.2:

‘Any colonial law which is or shall be in any respect repugnant to the provisions of any Act of Parliament extending to the colony to which such law may relate . . . shall, to the extent of such repugnancy, but not otherwise, be and remain absolutely void and inoperative.’

Bankruptcy and Insolvency-assistance to foreign court-enforcement of foreign bankruptcy order-Bahamian Supreme Court is ‘court in bankruptcy’ for purposes of Grand Court”s recognition and enforcement of appointment of trustee in bankruptcy under Bankruptcy Law (1997 Revision), s.156 in relation to Cayman assets

Bankruptcy and Insolvency-assistance to foreign court-enforcement of foreign bankruptcy order-inherent jurisdiction to recognize and enforce appointment of foreign trustee in bankruptcy as matter of comity if bankrupt subject to foreign court”s jurisdiction and foreign court willing to reciprocate-may grant foreign trustee in bankruptcy powers under Cayman law to deal with Cayman assets

The Supreme Court of The Bahamas requested the Grand Court”s recognition of its appointment of a 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 adjudged Sheikh Fahad Mohammed Al Sabah bankrupt on the basis of judgment against him in the English High Court ordering that he repay the funds he had obtained by fraud from GT. The trustee in bankruptcy moved the Bahamian court to request an order for recognition and enforcement of his appointment to assist in the recovery of assets held by Cayman trusts of which the bankrupt was the settlor and primary beneficiary. The application was made under s.156 of the Cayman Bankruptcy Law, 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 that court. He also applied in his own right to the Grand Court for the same order to be made under the inherent jurisdiction of the court.

He submitted that (a) although ss. 2 and 3(1) of the Law designated the Grand Court as the only court in bankruptcy, s.156 in fact referred to all British courts in bankruptcy wherever they might be (including the Bahamian court), since (i) the Grand Court and the Bahamian court had each been enabled, as British courts with bankruptcy jurisdiction, to exercise on request the same jurisdiction as the other, under s.74 of the English Bankruptcy Act 1869 (as re-enacted in s.122 of the Bankruptcy

Act 1914); (ii) s.156 contained identical provisions to s.64 of the Jamaican Bankruptcy Law 1871, which had formerly applied to the Cayman Islands by virtue of the Cayman Islands Act 1863 and which had been enacted in awareness of the provisions of s.74; (iii) in the Cayman context (unlike Jamaica), where the Grand Court alone exercised jurisdiction in bankruptcy, the reference in s.156 to co-operation between all courts of bankruptcy could only contemplate assistance to overseas courts; alternatively, (iv) s.122 of the 1914 Act, as the successor to the 1869 Act, continued to apply here, as the Insolvency Acts by which it had been repealed in the United Kingdom did not apply to the Cayman Islands, and the Cayman Constitution preserved the application of legislation previously in force in the Islands; (b) the jurisdiction to be exercised by the Grand Court was its own jurisdiction rather than that of the Bahamian court, so as to vest the trustee with the powers in relation to the Cayman assets permitted by Cayman law; and (c) the Grand Court also had inherent jurisdiction to recognize and enforce the appointment of a foreign trustee in bankruptcy.

Held, making the orders requested:

(1) The Bahamian court was to be regarded, for the purposes of s.156 of the Bankruptcy Law (1997 Revision), as one of the courts in bankruptcy which the Grand Court was required to assist and at the request of which it could exercise its bankruptcy jurisdiction in relation to the Cayman assets. The legislative history of the Law made it clear that such was the legislature”s intention. The English Bankruptcy Act 1869 had enabled all British courts, including those of The Bahamas and Jamaica to assist each other in the same way. Since the English Parliament had, in 1863, conferred on Jamaica the power to legislate for the Cayman Islands, the Bankruptcy Law of 1871, s.64, which was identical to the modern s.156, had applied here until the local legislature was established, and ultimately passed the local Bankruptcy Law in 1964. The 1871 Act had been passed in awareness of the import of the English legislation and was to be construed, in the context of the Cayman Islands, where only one court in bankruptcy existed (the Grand Court), as referring to all British courts in bankruptcy. The Act would otherwise have been void for repugnancy to an...