TORTOLA, BRITISH VIRGIN ISLANDS, May 5, 2021 – The O’Neal Webster legal team of Paul Dennis, QC and Nadine Whyte Laing successfully defended the Eastern Caribbean Central Bank against claims in excess of US $200m in total, brought by the depositors of two Anguillian “offshore” banks, National Bank of Anguilla (Private Banking and Trust) Limited and Caribbean Commercial Investment Bank Limited. The claims arose out of the Central Bank’s intervention into the affairs of the parent banks of these entities – the National Bank of Anguilla Limited and the Caribbean Commercial Bank of (Anguilla) Limited, respectively – exercising emergency regulatory powers conferred by the Eastern Caribbean Central Bank Agreement, aimed at preserving the financial stability of Anguilla’s banking sector and that of the wider Eastern Caribbean sub-region.

Through a conservatorship process, the central bank took control of the distressed parent banks’ affairs in August 2013 and by extension, the subsidiaries, pursuant to management agreements between each parent and subsidiary. The multi-million dollar claims for alleged breach of fiduciary duty, breach of trust, negligence, and knowing assistance were brought between June 2016 and August 2019. The claimants alleged that the central bank and the conservators appointed by it engaged in wrongful conduct regarding how they treated the claimants’ deposits in the offshore banks during the implementation of a resolution plan designed to avert the collapse of the affected banks and with them, the entire Anguilla banking sector.

Acting for the conservators and the central bank, O’Neal Webster successfully applied to the  Anguilla High Court to strike out the claims on the grounds that (a) the conservators and the Central Bank did not and could not, have acted in breach of trust as no trust relationship existed between the depositors and the offshore banks, given that the relationship was purely contractual and one of debtor and creditor only; (b) the conservators, whether as directors or de facto directors, owed no fiduciary duty to the depositors since the duty to consider the interest of creditors when (as in this case) a  company was insolvent or at real risk of insolvency, was a duty owed to the company itself (in this case, the offshore banks) and not to the company’s creditors (in this case the depositors); and (c) since the depositors were mere creditors of the offshore banks, there was no assumption of control by the conservators over property belonging to the depositors so as to give rise to a duty of care on the part of the conservators to those depositors in how they handled  the  deposits.

The depositors appealed against the decision of the High Court, arguing that the court wrongly exercised its discretion in striking out their claims.

In a judgment delivered on April 30, 2021, the Eastern Caribbean Court of Appeal dismissed the depositors’ appeal and affirmed the decision of the court below to strike out the claims, holding, as submitted by the O’Neal Webster legal team, that:

  • the relationship between banker and customer is ordinarily purely one of debtor and creditor. Accordingly, the monies deposited by the appellants with the offshore banks merely gave rise to a debt as between the depositors and those banks and not to a right or interest over any property held by the banks. The claims for breach of fiduciary duty and breach of trust predicated on the notion that the deposits constituted property of the appellants were therefore unsustainable;
  • by logical extension, since the deposits once made, ceased to be the property of the appellants, there could be no viable claim against the central bank and the conservators, as pleaded, for knowingly assisting the Government of Anguilla with depriving the appellants of their property allegedly held by the banks in the form of those deposits; and
  • for the same reason, the appellants’ pleaded case on the issue of negligence failed: their monies, once deposited with the banks, ceased to be their property and so claims predicated on the notion that the conservators owed them a duty of care with respect to how they handled those deposits, were also unsustainable. The deposits simply gave rise to a chose in action, namely, the right of the appellants to payment by the offshore banks, on demand, of the amounts which had been credited or ought to have been credited to their respective accounts.

The successful O’Neal Webster team was assisted by the local Anguillian law practice of Libran Chambers, headed by Miss Navine Fleming.

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