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Cayman Islands Court of Appeal – Receivers ‘sell’ away into the sunset!

From Harneys

In a recent decision of the Grand Court of the Cayman Islands in Sellten Polska SP. Z.O.O. v JSC Mezhdunarodniy Promyshlenniy Bank, the Honourable Justice Mangatal approved an application by the joint receivers of DB Marine, to sell a yacht known as DB9 for $US6 million.

Sellten Polska SP. Z.O.O. (the “Appellant”) appealed the decision but did not seek leave to appeal. The Appellant submitted that there was evidence of its ownership of the yacht by reason of a sale agreement. It sought an urgent stay of the order for sale. The Appellant did not inform the joint receivers (the “Respondents”) of its application for a stay. A stay was imposed, ex-parte, pending a hearing. The Respondents filed a notice, submitting that the Appellant needed leave to appeal the Learned Judge’s order.

While this case was listed in the Court of Appeal simply to consider the question of the stay, the Court of Appeal thought it appropriate to consider whether leave to appeal was needed and, if so, whether it should have been granted and, if so, whether a stay should have been imposed.

The Court of Appeal held the alleged transaction by which the Appellant acquired the shares in DM Marine was in breach of an English Worldwide Freezing Order, and was merely a device to frustrate the sale of a substantial asset.

The Court of Appeal concluded that leave to appeal was needed by virtue of section 6(f) of the Court of Appeal Law since no appeal lies from an interlocutory judgment without leave (exceptions irrelevant to this case), and also by the Court of Appeal Rules 12(1), (3) and (4). Leave to appeal was refused and no question of a stay therefore arose. The Court of Appeal was also critical of the fact it was invited to impose a stay without the respondents being informed of the application, and, in particular, without the potential difficulties of leave being raised.

For more information contact VICKY LORD, WILLIAM PEAKE or JAMES NOBLE.

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