BRITISH VIRGIN ISLANDS: An Introduction to Dispute Resolution
Background
The British Virgin Islands (BVI) is a major international banking and financial centre. Financial services account for more than half of the territory’s income, with the result that it is well regulated by the independent Financial Services Commission (FSC) and enjoys a strong service infrastructure.
The FSC’s most recent Quarterly Statistical Bulletin showed that, in Q2 2024, 358,592 companies were incorporated under the BVI Business Companies Act, 2004, and 2,468 limited partnerships were set up under the Limited Partnership Act, 2017 (or its predecessor, the Limited Partnership Act, 1996, which continues to apply to limited partnerships formed prior to the 2017 LP Act that have not been re-registered).
The rate of incorporations of new companies increased by 11.76% versus Q1 2024 and by 51.93% compared with a year earlier. There was a 19.23% increase in the number of new Limited Partnerships (LPs) in Q2 2024 versus Q2 2023. These statistics reflect the BVI’s strengthening position as the jurisdiction of choice for globalised business structuring. While the FSC does not publish geographical data, a significant number of BVI business companies have connections with China, Hong Kong and Macau. BVI companies continue to appear on stock exchanges around the world, including the main US exchanges.
Legal framework
The law of the BVI is a combination of common law and statutes based heavily on English law, with the final court of appeal being the Judicial Committee of the Privy Council in London, resulting in a stable and user-friendly system of laws which is recognised for delivering clear, transparent, principled and predictable outcomes. The rule of law is applied impartially and openly in the BVI and in keeping with the jurisprudential norms of other common law jurisdictions such as the UK and the Commonwealth countries. As a result, BVI law is widely accepted in conducting international business across borders.
Given the large number of BVI companies that have been incorporated over the years, the statutory framework underpinning the BVI Business Companies Act, 2004 and other relevant legislation has been well-tested in the courts. The Commercial Court Division of the Eastern Caribbean Supreme Court of the BVI is well known for its sophistication, and the continuing development of the BVI Arbitration Centre adds a further option for the dispute resolution, giving international business lawyers and their clients in other jurisdictions confidence in the consistency and robustness of the BVI legal system.
Owing to the international nature of BVI companies’ operations and asset holdings, the BVI Commercial Court routinely hears highly complex matters at the cutting edge of cross-border litigation, insolvency and enforcement, where disputes typically involve hundreds of millions or billions of dollars at issue.
Key transactions and cases
Many complex and high-value transactions are possible with the varied use of BVI dedicated vehicles involving all major financial centres across all industry sectors. Inevitably, disputes do arise between contractual counterparties, companies and their creditors, and between shareholders themselves, particularly in cases concerning the protection of minority interests, and with respect to the conduct of directors. Even where substantive litigation is not pursued in the BVI, secondary proceedings involving injunctions, receiverships, enforcement and liquidation are commonplace.
Alongside a steady flow of such cases, matters currently before the BVI courts include major fintech and cryptocurrency disputes, including the high-profile liquidation of Three Arrows Capital Ltd, as well as a number of other crypto-focused liquidations and cases. The Russian invasion of Ukraine and the imposing of sanctions that followed have also given rise to a number of complicated, multi-party disputes, and notably proceedings between National Bank Trust PJSC v Mikail Osmanovich Shishkhanov & 34 Others, which involves claims in excess of USD2 billion.
Legislative and regulatory changes
The BVI continues to strengthen its financial services sector by aligning with international standards, including those set by the Financial Action Task Force (FATF). The BVI Business Companies (Amendment) Act, 2024 (the “Amendment Act”) and the related BVI Business Companies (Amendment) Regulations, 2024, which came into force on 2 January 2025, modifies the BVI Business Companies Act. The Amendment Act clarifies the information required to be maintained in a company’s register of members. Additionally, companies are now required to file their register of members with the BVI Registrar within 30 days of incorporation or continuation into the BVI. Existing BVI companies must file their register of members within six months of the Amendment Act entering into force. The register of members maintained by the BVI Registrar will only be available to domestic competent authorities and law enforcement agencies in the lawful discharge of their responsibilities, and will not be publicly accessible. The Amendment Act also adopts the commonly accepted definition of a “beneficial owner” (ie, ownership or control of 10% or more) and mandates that BVI companies collect, maintain, and keep updated records of beneficial ownership information. However, certain companies are exempt from this requirement.
Additionally, where a register of directors does not include information, includes inaccurate information, or there is an unreasonable delay in entering the required information, the Amendment Act provides that a member, director, or any person aggrieved by the omission of the relevant information may apply to the court for an order to rectify the register of directors.
The BVI Business Companies and Limited Partnerships (Beneficial Ownership) Regulations, 2024, also came into force on 2 January 2025, enhancing the statutory framework for filing beneficial ownership information for BVI companies and limited partnerships. Beneficial ownership information for all registered BVI companies and limited partnerships will now be filed with the BVI Registrar through the BVI Financial Services Commission (BVI FSC) VIRRGIN platform.
The BVI Business Companies (Financial Return) Order, 2023, introduced a requirement for every BVI company to file with its registered agent an annual financial return within nine months of either the company’s calendar year or, if the company’s financial year is not a calendar year, the company’s financial year. Certain companies are exempt from this filing.
The BVI also expanded the list of eligible countries under Part XIX of its Insolvency Act to which assistance can be rendered, marking a significant development in the jurisdiction’s insolvency framework. This expansion aims to enhance cross-border cooperation and streamline insolvency proceedings, reinforcing the BVI’s position as a leading offshore financial center.
Outlook
The global economic outlook for 2025 is expected to be solid, with inflation returning to benign levels and interests rates expected to continue downward. A new period of globalisation seems likely to benefit the BVI. However, the global business landscape continues to be forced to adapt to the ongoing impact of the Russian invasion of Ukraine, the continuation of long-simmering tensions between the US and China, the potential economic impact of threatened US tariffs, the unfolding climate crisis and the digital revolution, all of which creates sufficient uncertainly and instability that continued growth in litigation is to be anticipated.