Velox Intl Invc v Peirano

• Jurisdiction: Cayman Islands
• Judge: (Edwards, Ag. J.)
• Judgment Date: 27 February 2003
• Court: Grand Court (Cayman Islands)
• Date: 27 February 2003

Grand Court

(Edwards, Ag. J.)

VELOX INTERNATIONAL INVESTMENTS

and

PEIRANO FACIO

TRADE AND COMMERCE BANK

and

J. PEIRANO and D. PEIRANO

A.J. Walters and L.A. Freeman for the plaintiffs;

G.F. Ritchie and M.A. Terziano for the defendants.

Case cited:

(1) Ferrarini S.p.A. v. Magnol Shipping Co. Inc. (The Sky One), [1988] 1 Lloyd”s Rep. 238, distinguished.

Legislation construed:

Grand Court Rules, O.2, r.1(3):

‘The Court shall not wholly set aside any proceedings or the writ or other originating process by which they were begun on the ground that the proceedings were required by any of these rules to be begun by an originating process other than the one employed.’

O.11, r.1(1): ‘Provided that the writ does not contain any claim mentioned in Order 75, rule 1(3) service of a writ out of the jurisdiction is permissible with the leave of the court if in the action begun by writ-

. . .

(d) the claim is brought to enforce, rescind, dissolve, annul or otherwise affect a contract, or to recover damages or obtain other relief in respect of the breach of a contract, being (in either case) a contract which-

(i) was made within the jurisdiction; or

. . .

(iii) is by its terms, or by implication, governed by the laws of the Islands …

. . .

(ff) the claim is brought against a person who is or was a director, officer or member of a company registered within the jurisdiction … which is governed by the laws of the Islands and the subject matter of the claim relates in any way to such company … or to the status, rights or duties of such director, officer [or] member … in relation thereto.’

O.11, r.5(2): The relevant terms of this paragraph are set out at para. 8.

O.12, r.8(1): The relevant terms of this paragraph are set out at para. 14.

Civil Procedure-service of process-service out of jurisdiction-service not invalid under Grand Court Rules, O.11, r.5(2) unless chosen form of service constitutes criminal offence in country where effected-no breach of r.5(2) merely because service invalid under foreign law

Civil Procedure-service of process-service out of jurisdiction-contract-for purposes of Grand Court Rules, O.11, r.1(1)(d), in absence of direct evidence of law governing bank loan, may infer from standard banking forms habitually used by Cayman-registered bank, that Cayman law governs loan contract

The plaintiff companies in liquidation brought proceedings to recover moneys owed to them by the defendants, who were directors and controlling shareholders.

The liquidators of the plaintiffs, Cayman-registered companies conducting, respectively, investment and banking business in Uruguay and Argentina, commenced proceedings against three members of the family with controlling interests in the group, to recover loans and other moneys owed to the companies. The Grand Court gave leave in the first and third causes to serve the respective defendants in person by notary public in Uruguay, and in the second cause, it gave leave for substituted service to be effected by service on the defendant”s Cayman attorneys. Mareva injunctions were granted in the first and second causes.

The defendants applied under the Grand Court Rules, O.11, r.5(2) and O.12, r.8(1), to set aside the personal service in the first and third causes, and under the court”s inherent jurisdiction for a declaration in respect of the second cause. They also sought a stay of the second and third causes on the ground of forum non conveniens.

They submitted that (a) the defendant in the first cause had not been personally served as required by the order because he was imprisoned without charge by the Uruguayan authorities; (b) service on the defendants in both the first and third causes had not been effected by a

notary qualified in Uruguay and had failed to comply with the law governing service of documents there; (c) service on those defendants had therefore not been effected in compliance with O.11, r.5(2) of the Grand Court Rules, which could not authorize any act that was illegal in the country of service; (d) the court lacked jurisdiction to hear the plaintiffs” claims in the second and third causes; in particular, the latter relied on a loan contract which the bank was unable to produce, between the bank, which conducted most of its business in Uruguay and Argentina, and the defendant resident in Uruguay; and (e) furthermore, the court should, under its inherent jurisdiction, stay the plaintiffs” claims in those causes, since the appropriate forum for each was Argentina or Uruguay; both defendants held most of their assets in Uruguay and one resided there.

The plaintiffs submitted in reply that (a) the defendant in the first cause had been served by leaving a copy of the writ at the offices of his legal practice, and he had, in any event, had notice of the proceedings; (b) private service on the defendants in Uruguay, whether or not adequate to meet the requirements of Uruguayan law, was not illegal there and consequently not in breach of O.11, r.5(2); (c) defective service could easily be cured by the court under O.2, r.1, particularly if, as in this case, the parties were clearly aware of the proceedings; (d) the court had jurisdiction to hear the claim in the second cause, since, for the purposes of O.11, r.1(1)(ff), the defendant was a director of a Cayman-registered bank; and the contract founding the claim in the third cause was governed by Cayman law; and (e) the proper forum for both those causes was the Cayman Islands.

Held, dismissing the...