Privy Council confirms that shares in BVI companies remain movables: Al-Thani & anr v Al Thani & ors [2024] UKPC 35

Al-Thani & anr v Al Thani & ors [2024] UKPC 35

In an important recent decision, the Privy Council has confirmed that, at common law, shares are movables, such that they fall to be transmitted, upon the death of a shareholder, in accordance with the law of the deceased’s place of domicile.

This is the position in respect of shares in companies incorporated in the British Virgin Islands, and is unaffected by section 245 of the BVI Business Companies Act 2014 (the “Act”), which states:

“For purposes of determining matters relating to title and jurisdiction but not for purposes of taxation, the situs of the ownership of shares, debt obligations or other securities of a company is in the Virgin Islands.”

The appeal – on which Stephen Moverley Smith KC and Edward Cumming KC appeared against each other before the Board of the Judicial Committee of the Privy Council in late June 2024 –  arose from a dispute over the estate of the late Sheikh Saud Al Thani, a scion of the ruling family of Qatar who was renowned for his extensive and eclectic art collection and as the one-time owner of the world’s largest cut blue diamond, the Idol’s Eye.

Sheikh Saud Al Thani died in 2014.  On his death he was domiciled in Qatar and held shares in one or more BVI companies with substantial assets.

This was significant because an entry in a Sharia Court register in Qatar, signed by a judge and issued by the registry on 11 June 1990, recorded the Deceased’s oral wishes as to the disposition of his worldwide estate. Such an entry is treated as a valid will under Qatari law.  By that will, he bequeathed 20% of his estate to the Respondents.

The Appellants before the Privy Council challenged this will in Qatar, but in 2018 the Qatari Court of Appeal overturned a finding at first instance that the will had been rescinded, holding that the will was valid under the law of Qatar.

In the meantime, the Appellants had obtained letters of administration of Sheikh Saud Al Thani’s BVI estate on 7 October 2015 for reasons that the appellants propose to address in due course.

Once the Qatari court of appeal had upheld the validity of the will, the Respondents before the Privy Council began proceedings in the BVI for the revocation of the letters of administration, and a grant of probate of the will in respect of movables comprising Sheikh Saud Al Thani’s estate in the BVI, including shares in BVI companies.

The Appellants opposed this on the basis that any such shares were not movables – and instead immovables – by reason of section 245 of the Act, such that they could only be transmitted by a will that was valid under the domestic law of the BVI (and, in particular, that complied with the Wills Act 1872).

Lord Hodge, who delivered the opinion of the Board of the Privy Council, reviewed the words used by the legislature, the historical context to, and purpose of, section 245 of the Act – by reference to what he described as the “succinct and powerful” submissions of Edward Cumming KC –before concluding that section 245 of the Act cannot have been intended to change longstanding rules of private international law in the way contended.

In particular, Lord Hodge found that to require owners of shares in a BVI company who are domiciled outside the BVI to make a separate will, valid under the law of the BVI, to transmit those shares on death, such that such owners of shares could not rely on a testamentary instrument which was valid under the law of their domicile to do so, would “amount to a trap for the foreign investor”.

The Board therefore humbly advised His Majesty to dismiss the appeal.

The upshot of this is that a foreign will that is found to be valid under the law of the deceased’s domicile will be valid and enforceable in the BVI for the purposes of succession of the deceased’s movable property in the BVI, including registered shares in a BVI company, regardless of whether it was made orally or otherwise in a way that would render it invalid if it were made under BVI law.

 

A copy of the full judgment can be found here.

A video of the hearing can be viewed here.

 

Edward Cumming KC acted for the successful respondents, instructed by Simon Goldring, partner, Rosalind Hetherington, senior associate, and Emilly Williams, associate at Fladgate and Jeremy Snead at Ogier.

Stephen Moverley Smith KC acted for the appellants, instructed by Charlotte Fraser, Farrer & Co and  Eleanor Morgan and Sophie Christodoulou​​​​, Mourant Ozannes.

Bajul Shah acted for the appellants at first instance and in the Court of Appeal.