Growing the BVI litigation business in China depends on convincing Chinese shareholders of the need to sue, according to Ian Mann, head of Harneys’ offshore litigation and restructuring department in Hong Kong.
He spoke to a group of BVI lawyers at the International Arbitration Centre, filling them in on the history of the relationship between the BVI and China.
“We discovered that litigation was elastic and we discovered that we could use litigation as a means for growing the overall market of the BVI,” he said.
Beginning in the mid-1990s, investors took advantage of the Communist government privatising some industries to sink capital into China through the use of BVI Business Companies. However, soon after, the “honeymoon period,” as Mr. Mann called it, wore off.
That provided an ideal opportunity to sell Chinese shareholders on the benefit of suing for the right to exit a BVI Business Company. However, Mr. Mann said, they can only do this if they prove that they’ve been “unfairly or prejudicially treated.” That turned into a goldmine for BVI litigators.
Mr. Mann, after moving to Hong Kong in 2011, spent a year travelling around to small, lesser-known industrial cities in Asia, focused on making shareholders aware that they had the ability to sue. And he believes other BVI firms should do the same. There’s nothing like a little healthy competition, after all. More litigators means more opportunities.
“Hong Kong is a gateway to China,” he said. “And it’s high time we concentrated on China.”
He added that opportunities for BVI will abound as China enacts the Belt and Road initiative ,set on connecting China to Europe, which he called “the largest infrastructure project in human history.” He said it will likely require $1.5 trillion per year in foreign direct investment in China. “In terms of international money markets, it is only through BVI companies...that that funding deficit will be met,” he said. “This is where we need to be.”
Mr. Mann also discussed the credibility BVI was able to keep in Asia after Hurricane Irma, added that “the smartest thing we’ve ever done” was relocate the Commercial Court to St. Lucia after Hurricane Irma, ensuring that the suspension of business after the disaster was only seven days long. “[We] persuaded the world that the BVI court was still in business, and it was,” he said. “I can’t think of another jurisdiction in the world that could turn that over so quickly.” He credited the BVI’s “community spirit, the cooperation, the determination.”