TerraLex Cross-Border Guide to Guide to Tracing Assets Around the World

A number of tools exist in the law of the Cayman Islands that may assist when seeking to trace assets and the courts of the Cayman Islands have powers to grant interim relief in support of foreign judicial and arbitral proceedings.

Ownership of real property in the Cayman Islands can be identified through the Lands Registry which is publicly searchable. The register of ships registered in the Cayman Islands is also publicly searchable. The register of aircraft, however, is confidential. Information regarding beneficial interests in companies and trusts is not publicly available though information as to the identity of any current director of a company incorporated in the Cayman Islands is available through a search.

As against third parties

Norwich Pharmacal and Bankers Trust orders can be obtained against third parties to identify and preserve assets and the ultimate beneficial owners, to find and preserve evidence and to identify wrongdoers. For example, Norwich Pharmacal relief may be sought against registered agents of companies to obtain information enabling assets to be traced.

As against the wrongdoer

A party is not generally obliged to identify his assets prior to the entry of judgment. However, where a freezing injunction is granted, it is typically accompanied by an order requiring the respondent to identify his assets. Additionally, where the ownership of an asset is an issue in a court proceeding, a party will have an obligation to give discovery of documents relating to that issue.

Yes, freezing orders may be granted in appropriate cases (see further below).

Receivership orders may also be granted in appropriate cases to enable assets to be preserved and where assets are held in the name of a company, it may be possible to apply for the appointment of provisional liquidators to prevent dissipation of the company's assets.

Further, Order 29 rule 2 of the Grand Court Rules permits the Court to make an order, on the application of a party to proceedings, for the detention, custody or preservation of any property which is the subject of those proceedings.

In order to obtain a freezing (or Mareva) order the Plaintiff must demonstrate a good arguable case against the Respondent and a real risk that the Respondent will dissipate its assets so that they will be unavailable to satisfy any judgment obtained. The court must also be satisfied that it is just and convenient to grant the injunction.

The freezing order may be obtained in respect of assets that would be available to satisfy a judgment obtained against the Respondent and includes assets that the Respondent has power to deal with as if they were its own assets. Accordingly, assets nominally owned by third parties may be covered by the freezing order if the Respondent has power to deal with them.

The Plaintiff must ordinarily give a cross-undertaking to pay any loss and damage the Respondent may incur if the Court subsequently finds the order should not have been made. In some cases the cross-undertaking must be secured by some form of financial surety. The Plaintiff may also be required to pay the costs of, and any losses suffered by, any third party resulting from the order.

Any asset within or outside the jurisdiction of the Court may be subject to a freezing order as long as the asset is one which the Respondent owns (legally or beneficially) or which they have power to deal with as if it were the Respondent's own asset.

A search (or Anton Piller) order obliges the Defendant to permit the Plaintiff to carry out a search of any premises under the control of the Defendant within the Cayman Islands. The order does not allow the Plaintiff to force entry, but if the Defendant refuses to permit entry he is guilty of contempt. The Plaintiff must show a strong prima facie case against the Defendant and must also show that the damage from the Defendant's misconduct is very serious, that there is convincing evidence that the Defendant possesses incriminating evidence (whether documentary or otherwise) and that there is a real possibility that the Defendant may destroy such material before the discovery process in the proceedings.

Freezing injunctions and search orders may be obtained in support of proceedings in other jurisdictions.

A foreign freezing injunction would not be enforceable as such, because it is not a final and conclusive order for the payment of a specific sum of money.

However, an application could be made in the Cayman courts seeking a freezing order in respect of any assets in the Cayman Islands in support of the foreign proceedings and the injunction granted by the foreign court.