This claim was part of a wider dispute between the claimants – a Russian bankruptcy trustee and a Russian bank – and the bankrupt individual, the former bank president. The bank claims that the bankrupt perpetuated a massive fraud against it. The trustee is seeking to recover property of the bankrupt in England, where he is now domiciled.

This decision concerned permission for the trustee to serve out of the jurisdiction the proceedings in which she claimed beneficial interest in the shares in the defendant BVI company (CGL). To succeed she needed to establish a serious issue to be tried in relation to the trust claim. For conflict of law purposes, a trust claim is located in the same place as that of the trust property.

Following a related UK Supreme Court decision which confirmed that the common law recognition of the trustee’s appointment was limited to movable property (eg shares) of the bankrupt located in England, the trustee had to show that the claimed trust property – the shares in CGL – were sited in England.

The English Court considered section 245 of the BVI Business Companies Act, Revised Edition 2020, which provides that for purposes of determining matters relating to title and jurisdiction, the situs of the ownership of shares of a company is in the BVI. The Court, however, found that section 245 was not determinative for the purposes of English law, as it is a simplifying rule of BVI domestic law.

Instead, the Court concluded that the English conflicts of law rule for determining the location of shares in a foreign company, including a BVI one, is that shares are situated in the country where they can be effectively dealt with as between the owner and the company. If the shares may be transferred only by registration on a particular register, they will be regarded as situate at the place where the register is kept; if they are transferrable on more than one register, they will be situate in the place of the register on which they would be dealt with in the ordinary course of affairs by the registered owner for the time being.

The trustee submitted that GGL’s articles of association entitled CGL to maintain a share register outside of the BVI and there was sufficient evidence of connections between CGL and England to raise at least a serious issue that there was a share register in England.

However, without any evidence to support the trustee’s position, the Court found the default position under CGL’s constitutional documents is that the original register is kept at the offices of CGL’s registered agent in the BVI and therefore the shares in CGL are situated in the BVI. Accordingly, the trustee could not pursue the trust claim in the English courts in reliance on recognition of her foreign appointment: she had no authority or standing in the English courts to claim foreign movable property.

While Harneys does not advise on English law, the Kireeva  decision highlights the complications that come with recognition of foreign appointments, conflicts of laws and the extraterritoriality of domestic provisions, and will be helpful guidance on how foreign courts will approach issues regarding the situs of shares in BVI companies.