TORTOLA, BRITISH VIRGIN ISLANDS, 26 July 2018 —The BVI High Court handed down its much-anticipated decision in the case of Magnum Investment Trading Corporation & Niteroi Limited v. The AG of the Virgin Islands on Thursday, 19 July 2018. The case concerned the right to privacy and confidentiality of information for BVI companies that are the object of the exercise by the Attorney General of the Virgin Islands of his intrusive powers under the Criminal Justice (International Cooperation) Act. The case is the first of its kind to successfully challenge the exercise of the AG’s powers under the Act.
Magnum Investment Trading Corporation & Niteroi Limited, the claimant companies, were the object of a request made by the Investigative Committee of the Russian Federation for assistance from the Attorney General of the Virgin Islands (AG) to obtain evidence in aid of alleged criminal investigations in Russia. Pursuant to that request, the AG, in his exercise of powers under the Act, caused a search warrant to be issued by the Magistrate for the search of the companies’ registered agent’s premises and the seizure of the companies’ confidential records for transmission to Russia. While the documents obtained were in course of transmission through diplomatic channels, the claimants successfully applied for an interim injunction to abort their delivery to Russia while they sought judicial review of:
- the AG’s decision to apply for the search warrant;
- the Magistrate’s decision to issue the warrant; and
- the AG’s decision to transmit the documents to Russia once the search warrant was executed without considering representations which the claimants made to him that demonstrated cogent reasons for not complying with the request.
The claimants’ case, for which it provided comprehensive affidavit evidence, was that the request was issued for improper purposes and formed part of an unfair and unlawful campaign by Russian entities and authorities against them and against entities and persons connected with them. In particular, in recent years, entities connected with the claimants had been the subject of various corporate raiding attacks notoriously known in Russia as “reidversto.” Such corporate raiding attacks involve the corrupt exploitation of criminal, regulatory, and international mutual legal assistance regimes to bring pressure to bear on the objects of the raid as a means of achieving control of them. The claimants, in this case, held a substantial interest in one of Russia’s most successful mineral fertilizer production companies.
In a sixty-nine-page decision, the BVI High Court handed down judgment in favour of the claimants, quashing all three of the challenged decisions. As regards the decision of the AG to transmit the seized documents to Russia, the court rejected his contention that (i) the Criminal Justice (International Cooperation) Act contemplated an automatic transmission of the documents once obtained by him pursuant to the request; (ii) that he was accordingly entitled to ignore the claimants’ representations regarding the improper purpose of the request; and (iii) that he had no duty to investigate those representations before complying with the request.
In giving its reasons, the court held, among other things, that:
“The facts of this case reveal that not only did the Attorney General ignore the Claimants’ representations, he also failed to investigate fully the allegations and evidence produced by the Claimants which may present compelling reasons why a request should not be processed, and in doing so he failed to take into account relevant considerations.”
In the result, the AG was ordered by the court to reconsider his decision to transmit the documents to Russia, this time taking into account the representations of the claimants.
The case is a landmark victory for the fundamental right of a citizen—individual or corporate—to due process, and specifically, to the right to privacy and confidentiality of information.
The decision makes clear that contrary to the position thus far adopted by the AG in his role as the competent authority to handle international requests for information made pursuant to the Act, his function is not that of a mere “rubber stamp” but rather, consistent with the requirements of reasonableness and fairness, he must, in the words of the court, “act in a way…to satisfy himself as to the lawfulness of the request. Usually, the fact that the request comes from the central authority of the requesting country will of itself be sufficient and no further step need be taken. However, if credible or plausible doubts have been raised, the Attorney General will need to do more depending on the circumstances.”
“More” in this case meant taking into account the claimants’ representations.
The O’Neal Webster litigation team led by Paul Dennis, Q.C., together with UK-based counsel, Monica Carss-Frisk, Q.C., represented the successful claimants.
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O’Neal Webster holds a decidedly unique position among all British Virgin Islands law firms, being among the first to establish exclusively in the BVI. The firm serves local and international clientele in areas of corporate, finance, banking, business, investment funds, property, and trusts and estates, and is highly regarded for its expert handling of transactional, regulatory, and litigation matters.
