Aside from forging a fame as a centre of excellence for worldwide arbitration, the BVI has come to the fore by means of the institution of trusts for asset safety and succession planning
Author: Simon Gray, Head of Business Development and Marketing, BVI Finance
April 28, 2020
We stay in a really global society the place cross-border trade is the norm and most forward-thinking corporations search to develop their enterprise internationally. According to the World Trade Organisation, global merchandise exports elevated by an element of 250 between 1948 and 2016 (see Fig 1), with latest advances in know-how accelerating progress and creating what’s fondly known as the ‘global village’.
But whereas globalisation has fuelled worldwide enterprise progress, the dimension and complexity of some transactions imply that it isn’t at all times simple to get offers over the line. In reality, third-party intervention may be required to discover a mutually agreeable answer for all concerned. International arbitration is the accepted mechanism for dispute decision on business agreements, enabling corporations to keep away from nationwide courts in favour of a impartial, predetermined decision-maker. International arbitration permits these concerned to determine prematurely how issues will likely be addressed in the occasion of a dispute arising. Details together with the selection of arbitral organisation, location, language used, quantity and choice of arbitrators, prevailing legislation, and procedures to be adopted can all be resolved preemptively.
The most contentious problem is usually the location of arbitration proceedings, with unbiased venues sought out to keep away from any potential bias or battle of curiosity. In the not-too-distant previous, only a few jurisdictions had the essential infrastructure to accommodate worldwide arbitration, with exercise historically centred in North America and Western Europe. Today, although, worldwide finance centres are gaining recognition as nerve centres for the decision of business disputes.
While globalisation has fuelled worldwide enterprise progress, the dimension and complexity of some transactions imply that it isn’t at all times simple to get offers over the line
The legislation of the land
The British Virgin Islands’ (BVI’s) arbitration laws dates again to the introduction of its Arbitration Ordinance in 1976. As the BVI continued to develop as a serious arbitration hub, the have to modernise its laws grew to become obvious, leading to the institution of a brand new Arbitration Act in 2013. The present statute is one of the most progressive globally and its adaptability, which permits events to tailor it to their wants, makes it universally interesting to worldwide attorneys.
The fruits of a number of different developments led to the launch of the BVI’s International Arbitration Centre in November 2016, making it the first jurisdiction in the Caribbean to have established each an arbitral establishment and a devoted centre, in addition to to boast laws modelled after the UN Commission on International Trade Law.
While all of these elements make a compelling case for selecting the BVI as a vacation spot for worldwide arbitration, what distinguishes it from its friends is the flexibility of its statutes. This consists of the capability to decide in or out of sure provisions, reminiscent of whether or not a court docket has jurisdiction to contemplate an enchantment in opposition to an award, problem in opposition to an award on the grounds of severe irregularity or decide a degree of legislation arising in the arbitration.
The BVI additionally permits these concerned in an arbitration settlement to decide on a governing legislation that’s distinct from the seat of arbitration, recognising that the listening to venue, relevant guidelines and courts by which purposes could also be introduced are a variety of issues which will relate to separate jurisdictions. This flexibility may be notably helpful when implementing arbitral awards, lowering the time and complexity concerned for all.
What’s extra, different jurisdictions may be chosen as the seat of arbitration – permitting a third-party jurisdiction for use as the governing legislation of the contract – however the arbitration itself needs to be heard in the BVI to make sure impartiality. This possibility supplies a impartial venue and an skilled business court docket to help with interim issues in assist of the arbitration, whereas additionally guaranteeing any award may be shortly and simply enforced in the jurisdiction in query.
Trust the course of
Aside from forging a fame as a centre of excellence for worldwide arbitration, the BVI has come to the fore by means of the institution of trusts for asset safety and succession planning functions. Having a authorized system rooted in English widespread legislation additionally reassures people about the integrity and effectiveness of its procedures, together with the quite a few improvements which might be distinctive to the BVI.
Chief amongst them is the Virgin Islands Special Trusts Act (VISTA), which was established in 2003 and generally is a helpful instrument in helpful succession planning. VISTA permits the enterprise proprietor to put the firm’s shares right into a belief construction, thereby making a mechanism for the orderly succession of possession of the enterprise following the proprietor’s loss of life or incapacity. Crucially, it supplies this construction with out putting the day-to-day administration of the firm in the palms of a trustee, who might not have the particular data and expertise to run it.
As such, the administrators of the enterprise proceed to make key choices referring to the firm, whereas the BVI trustee holds the shares of the firm in belief. What’s extra, VISTA may be revoked – a function that usually offers the particular person settling the belief a measure of consolation. The settlor can be capable of set out ‘permitted grounds of grievance’ and ‘workplace of director guidelines’, which decide how and beneath what circumstances the trustee can intervene in the firm’s affairs and request info from the administrators concerning the administration and monetary state of affairs of the underlying firm’s property.
A dependable companion
BVI trusts are recognised internationally for serving to high-net-worth households and entrepreneurs defend their property, guard in opposition to political uncertainty, keep privateness and guarantee the continuity and orderly succession of their enterprise and monetary pursuits from one new release to the subsequent. In the occasion of a dispute, the specialist BVI Commercial Court is properly geared up to deal with belief issues, whereas the Court of Appeal of the Eastern Caribbean Supreme Court is readily available to assist if essential. Parties even have final recourse to the Privy Council of the UK if a last enchantment is required.
The BVI belief sector is extremely subtle, with a big quantity of skilled, technically expert skilled corporations and belief practitioners working inside the company, authorized, tax and accounting fields. There are a complete host of extra advantages that underpin the recognition of BVI trusts too, together with the reality they’re versatile, cost-effective and can be utilized for each charitable and non-charitable functions. Other key highlights embrace the confidentiality and privateness of the belief’s settlor and beneficiaries, and the multi-generation length of trusts, which protects property from collectors and compelled heirship. As such, BVI trusts are helpful for succession functions, as they keep away from the related prices of the probate course of, present tax and financial neutrality, and scale back publicity to extra levies.
Individuals can select from a number of belief constructions depending on their particular circumstances, from discretionary trusts – which offer most flexibility and provides the trustee broad scope in phrases of the distribution of earnings and capital to beneficiaries – by means of to fixed-interest funds that restrict the management of the trustee. Accumulation and upkeep trusts are additionally helpful if settlors intend to protect property and accrue worth in the belief capital for beneficiaries, reminiscent of youngsters or grandchildren. The belief capital and/or the earnings will usually be used over time to make sure the training and upkeep of beneficiaries as much as a specified age.
Core to the BVI’s success throughout each worldwide arbitration and the provision of trusts is its capability to always adapt to adjustments in the global monetary companies business. It has developed and applied the highest worldwide requirements to keep up the nation’s standing as a top-tier hub, creating versatile automobiles that may function in several international locations and providing helpful ancillary companies at an affordable price. Standing nonetheless isn’t an possibility in at this time’s fast-paced monetary companies business; as a digital innovator deploying cutting-edge know-how, the BVI ensures its shoppers have the newest options to fulfill their wants.
The future of global trade is unsure, however whereas the route of worldwide monetary flows will undoubtedly alter and evolve with time, the quantity of such transactions is unlikely to lower. International finance centres like the BVI assist mitigate the ambiguity and potential dangers concerned in partaking in global trade, providing a impartial, unbiased platform that permits organisations to confidently develop and nurture their companies throughout borders.