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BVI Limitation Periods for Foreign Law Claims

Given the reputation of the BVI as a premium offshore jurisdiction, its corporate structures have long been popular with individuals from across the globe.  That has, in turn, led to disputes before the BVI court with an international dimension. It is common for those disputes to involve claims that, under the BVI choice of law rules, are governed by the law of a foreign country. In those circumstances, a question that often arises is what limitation period or periods apply to those claims? Is the limitation period determined by the rules of the foreign country (the lex causae), or does the relevant BVI limitation period apply (on the basis that the BVI is lex fori)? Unfortunately, there does not appear, at present, to be a clear or straightforward answer to that question, as there do not appear to be any BVI or relevant offshore authorities that directly address the issue, and, as explained below, the English common law position has been replaced by statute and expressly departed from by the Courts in various well-known common law jurisdictions. Ultimately, our view is that the position adopted in those other jurisdictions (in particular Australia and Canada) ought now to be adopted in the BVI, but that would require the BVI Court to depart from a long line of old English authority, which is not something it is likely to do lightly.

The Position in England

Prior to the enactment of the Foreign Limitation Periods Act 1984 (“the 1984 Act”) and the implementation of the Rome I and II Regulations, the position in England was governed exclusively by the common law rules. Under those rules, an artificial distinction was drawn between two kinds of statute of limitation: (1) those which merely barred a remedy; and (2) those which extinguished a right. Statutes of the former kind were classified as “procedural”, and were said to bar merely the remedy; while the latter kind were classified as “substantive”, and were said to bar the right to bring the claim itself. If the foreign limitation period was regarded as “procedural” in nature, then the English limitation period would apply; but if the foreign limitation statute was classified as “substantive”, then that limitation period would be applied by the English court. In general, the English courts regarded foreign limitation statutes as procedural in nature, such that the English limitation period was treated as applying.

The common law rules were much criticised, even when they were in force in England and Wales. Among other things they were said to: (1) draw an unreal distinction between a “right” and a “remedy”; (2) potentially operate as a bar to a claim which would still be alive in the jurisdiction in which it arose, whilst also frustrating the aim of foreign limitation statutes by keeping otherwise stale claims alive; (4) encourage “forum shopping”; and (5) be neither simple nor convenient to apply.

In light of those criticisms, the Law Commission recommended that the old common law rules be swept aside by a new Act that would instead provide that as a general rule (subject to an exception based on public policy) the limitation period of the lex causae would apply, rather than the limitation period of the lex fori. That is precisely what happened by the enactment of the 1984 Act (although it is right to note that the 1984 Act did not purport to generally sweep away or alter the general classification and construction of procedural and substantive rights under English private international law).

 

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Richard G. Evans
Partner

British Virgin Islands   +1 284 852 1115


Matthew Brown
Associate

British Virgin Islands   +1 284 852 1121


Mark J. Forte
Partner, Head of BVI Litigation & Restructuring and Office

British Virgin Islands   +1 284 852 1113


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