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Bermuda Court of Appeal – US sanctions (still) defeat creditor

We have previously blogged about the Bermuda Supreme Court decision regarding Adria AG (Adria) and its unsuccessful efforts to claim bona vacantia property (ownerless property which by operation of law passes to the Crown) previously owned by N-ReN International Ltd, a company which was struck off the register of companies decades ago.

Adria wished to ensure that the ownerless property (the Property) vested in it so that it could progress its claims against a Sudanese company and the Sudanese government before the ICC. It had been prevented from advancing those ICC claims due to US sanctions against Sudan, which were only lifted in January 2017. As restoration was not an option due to the length of time that had elapsed, Adria sought to rely on section 240 of the Companies Act 1981 (the Act) as this statutory provision has no time limit. Adria failed at first instance, the Court finding that while it did have the power to vest the Property in Adria pursuant to section 240, it would only do so if Adria could establish a proprietary interest in the Property (which it failed to do).

On appeal, Adria initially maintained that the Court should have applied a “financial interest” or “interests of justice” test in determining whether to vest the Property in Adria and that the Court erred in applying a proprietary interest test. At the hearing, however, Adria all but abandoned those arguments – conceding that the proprietary interest test was the appropriate test but arguing that the Court below had failed to correctly apply that test to the facts at issue and that Adria’s proprietary interest could be ascertained by reference to the contractual scheme as a whole.

The Court of Appeal held that the Court was correct in rejecting the contention that Adria had a proprietary interest and, for the avoidance of doubt, rejected the alternative tests put forward (i.e. the financial interest and interests of justice tests). In the future, it is clear that any party wishing to rely on section 240 of the Act will need to adduce concrete evidence of a proprietary interest in order to succeed.

 

Rigs

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