In a recent decision by the Grand Court of the Cayman Islands in Nord Anglia, Justice Kawaley refused to grant an application for the issue of a Letter of Request to the High Court of the Hong Kong Special Administrative Region. The case raises the issue as to what extent subpoenas may be issued locally against Cayman Islands affiliates of foreign companies, in order to avoid having to act against the foreign company directly in a foreign court.
The application was made for the purposes of obtaining documents said to be relevant to assertions made in a third party affidavit on behalf of the Company that the sell side of the transaction was incentivised to negotiate the highest possible price. The Court accepted the applicants’ submissions that in order for a Letter of Request to be issued the following conditions must be satisfied:
- The documents sought must be described with sufficient particularity;
- The request must be for evidence, which can itself be used in the proceedings, and cannot amount to a “fishing expedition”;
- The documents sought must be directly material to the matters in issue in the proceedings for which they are sought; and
- The Court must be shown that there is good reason to believe that the documents actually exist and are likely to be in the possession of the witness.
In addition, the Court noted that GCR Order 39 rules 1-2 required the documents sought to be “necessary”. Of the 10 heads of documents sought by the applicants, Justice Kawaley found that three did satisfy the conditions to the Court’s exercise of its discretion. Notwithstanding the threshold being satisfied, however, the Court declined to issue the Letter of Request on the grounds that (1) the evidence was potentially available through subpoenas issued against related Cayman-domiciled third party entities, (2) it was improbable that the Company would pursue that specific aspect of its case while refusing to provide the disclosure sought, and (3) the Court had general powers over a witness who was to give evidence at trial which would provide more appropriate and proportionate relief. This judgment is one of many rulings (see here and here) in this s238 case in which the trial is scheduled to begin in December 2019.