The Immovables Rule: Yash Bheeroo obtains strike out of US$33 million BVI insolvency claim
The BVI Court has handed down judgment in Despins v K Legacy & Anor, striking out claims brought by a US Chapter 11 trustee seeking relief under the BVI Insolvency Act 2003 in respect of English immovable property.
Background
The Claimant had been appointed as bankruptcy trustee of a debtor’s estate by the US Bankruptcy Court. The Second Defendant is the debtor’s son. His case was that he was the beneficial owner of all the shares in the First Defendant (a BVI company) and of the leasehold interest in two London apartments (the ‘London Property’). The Claimant contended that both the shares and the London Property were in fact beneficially owned by the debtor, and he sought wide-ranging orders under Part XIX of the BVI Insolvency Act 2003 in relation to the London Property.
The Defendants applied to strike out those claims on the basis that they violated the ‘Immovables Rule’, the private international law principle that the country in which immovable property is situated has exclusive jurisdiction to determine questions of rights and interests in that property.
The Judgment
The Court agreed and struck out the Claimant’s claims in their entirety, granting related relief. In doing so, it provided a detailed and authoritative analysis of the Immovables Rule. It is understood that this is the first case in the BVI to consider the Immovables Rule.
The Court confirmed that the rule “is not an obsolete relic” and that, when applying it, the Court “looks to the substance of the issue it is asked to decide, not merely to the label attached to the cause of action.” It further held that the rule goes to jurisdiction and justiciability, not merely to the choice of law, and applies wherever a claim depends upon rights to or interests in foreign immovable property, whether or not title is formally in dispute.
The Court carefully considered potential exceptions to the rule. It acknowledged that a court may exercise in personam jurisdiction over foreign land disputes in certain circumstances, but held that this exception is “narrow” and “is not a device by which the court can circumvent the rule simply because the defendant is before the court.” The Court also rejected the argument that Part XIX of the BVI Insolvency Act 2003, which enables the Court to assist foreign insolvency representatives, abrogated the Immovables Rule so as to permit adjudication of rights in foreign immovable property. It further held that, because the rule concerns subject-matter jurisdiction, it cannot be waived or lost by acquiescence.
On the facts, the Court rejected the Claimant’s argument that questions of beneficial ownership of the London Property were merely incidental to his claims. It also rejected his reliance on the in personam exception, finding that, as a foreign insolvency representative, he was “a stranger to any alleged trust or equity affecting the London Property.”
The Court also considered the practical consequences of proceeding with the claim as pleaded. It observed that the English courts were unlikely to recognise any judgment the BVI Court might give, noting: “It is one thing for a court to proceed in a case where effective and coherent relief can be expected to follow. It is quite another for a court to adjudicate upon rights in foreign land in circumstances where the courts of the situs are unlikely to recognise the result.”
The judgment reinforces and is consistent with English law authority on the Immovables Rule in the insolvency context, including Kireeva v Bedzhamov [2025] A.C. 812, Beograd Innovation Ltd v Somovidis [2024] EWHC 1182 (Ch) and Almeqham v Al-Sanae & Ors [2025] EWHC 322 (Ch).
The Court’s judgment is available here.
Yash Bheeroo, instructed by Ogier, acted for the successful Defendants in the BVI.
Yash Bheeroo and Ryan Ferro, instructed by Trowers & Hamlins LLP, also act for the Defendants in ongoing proceedings in England.
