Re Ardent Harmony Fund Inc

Corporate insolvency – Cayman Islands – anti-suit injunctions – submission of proof – indemnity costs – service out of jurisdiction

Ardent Harmony Fund (“the Fund”) was a Cayman Islands exempted company operating as an open ended investment fund. The Fund was placed into creditors voluntary liquidation in Cayman and joint liquidators appointed.

International Tropical Timber Organisation (“ITTO”) is a Japanese member and the largest creditor of the Fund. Without notice to the joint liquidators, ITTO sought an order for receivership and appointment of a trustee in bankruptcy over the Fund in Barbados. Having learned of the Barbados proceedings, the joint liquidators advised ITTO’s lawyers of the fact that those proceedings would be futile as no assets or debtors had been identified in that jurisdiction.

ITTO continued to press the Barbados proceedings nonetheless and the joint liquidators applied, without notice, for an antisuit injunction restraining ITTO from continuing the Barbados proceedings. The Chief Justice granted the order, finding that the court had personal jurisdiction over ITTO by reason of it having submitted a proof in the Cayman liquidation. He concluded that the appointment of a trustee in bankruptcy in Barbados would interfere with the conduct of the Cayman liquidation and would be contrary to the ordinary principle of international law that only the jurisdiction of a person’s domicile can effect a universal succession to its assets. An order for substituted service on ITTO’s Barbados attorneys was granted, given the likely expense and difficulty of service in Japan, and indemnity costs were ordered against ITTO on the basis of ITTO’s unreasonable behaviour and lack of notice to the joint liquidators.

A useful re-statement of the law relating to the granting of antisuit injunctions and the jurisprudential considerations of comity and extra-territoriality which underlie it. The court acted decisively to protect the Cayman insolvency proceedings and to send a strong message that it will use the full range of its powers (including the imposition of indemnity costs and a willingness to make short work of issues around service out of the jurisdiction) to punish those seeking to undermine the process by means of unreasonable and improper conduct.