Preview
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
x
OASIS INVESTMENTS II MASTER FUND :
LTD. and LORELEI INC., derivatively on behalf
of nominal defendant FANG HOLDINGS : Index No. 652607/2023
LIMITED, : Justice Andrew Borrok
Plaintiffs, :
-against- :
VINCENT TIANQUAN MO, RICHARD JIANGONG :
DAI, ACE SMART INVESTMENTS LIMITED, NEXT AFFIRMATION OF RICHARD
DECADE INVESTMENTS LIMITED, MEDIA : MILLETT KC
PARTNER TECHNOLOGY LIMITED, and TRUE :
KNIGHT LIMITED,
Defendants. :
X
I, RICHARD MILLETT K.C., a Barrister and King’s Counsel practising at Essex Court
Chambers, 24 Lincoln’s Inn Fields, London WC2A 3EG, UK, affirm under the penalty of
perjury pursuant to CPLR 2106(b) as follows:
I. BACKGROUND AND QUALIFICATIONS
1. I was educated at Trinity Hall, Cambridge, where I gained a BA, Part 1 in
Classics and Part 1 and Part 2 in Law. I am a practising barrister in London, England in the
chambers known as Essex Court Chambers, where I am Co-Head of Chambers with Mr. Joe
Smouha K.C. My full curriculum vitae is exhibited hereto as Annex A.
2. I was called to the Bar by Lincoln’s Inn in July 1985, and have practised at the
English Chancery and Commercial Bars continuously ever since. Before I joined Essex Court
Chambers in 1990, I practised from 1986 in the Chambers of John Chadwick Q.C. (later Lord
Justice Chadwick) at Queen Elizabeth Building, Temple, London EC4, England.
3. In 2000, I was appointed by the UK Attorney-General to the Treasury Counsel
“A” Panel, a group of specialist barristers retained to advise and represent Her Majesty’s
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Government on legal matters. In 2003, I was appointed Queen’s Counsel.1 Following the death
of Her Majesty Queen Elizabeth II, my appointment is now described as being of King’s
Counsel.2
4. In 2010, I was appointed a Civil Recorder with a Chancery specialism, and I
have sat since then as a Deputy High Court Judge in London on Chancery and Property
Business. In April 2013, at the invitation of the Chancellor, I was appointed a Deputy High
Court Judge of the Chancery Division (now the Business and Property Court), and I have sat
in the High Court as a Deputy Judge periodically since that time.
5. My private practice covers a broad range of domestic and international
commercial litigation and arbitration work. I have been ranked by Chambers & Partners for
29 years and am ranked in the 2024 Chambers UK Bar Guide for Chancery: Commercial,
Inquests and Public Inquiries; Fraud: Civil; International Arbitration: General Commercial
& Insurance, Offshore, Commercial Dispute Resolution and Banking & Finance. I am
separately ranked in the Legal 500 guide for the London Bar for offshore, international
arbitration and commercial litigation. I have appeared in courts at every level in the English
legal system, including frequent appearances in the Court of Appeal and appearances in the
Supreme Court (formerly the House of Lords). I am a permanent member of the Bars of the
British Virgin Islands and of Anguilla and have been called pro hac vice to the Bars of the
Cayman Islands, Nevis, Bermuda, the Commonwealth of the Bahamas, the Isle of Man and the
Seychelles. I am a member of both the Chancery Bar Association and the Commercial Bar
Association (COMBAR) and I have sat on the main committee of the former and numerous
sub-committees of each.
1
The rank of (then) Queen’s Counsel, and now, on the passing of Her Majesty Queen Elizabeth II and
accession of His Majesty Charles III in September 2022, King’s Counsel, is a mark of professional excellence. It
is awarded, on application, for those of sufficient and recognised excellence in their field of law and advocacy to
be considered worthy of the ‘kitemark’.
2
By section 1(1) of the Demise of the Crown Act 1901.
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6. Among other publications, I am the co-author (with Geraldine Andrews K.C.)
of the Law of Guarantees (7th Edition, 2015). I am also the editor of Halsbury’s Laws of
England, 5th edition, Vol 20 (2004) on Guarantee and Indemnity.
7. The nature and complexity of the matters which routinely come to be decided
before the Courts in the Grand Court of the Cayman Islands, along with the relatively small
size of the local profession,3 means that the Grand Court has a long tradition of temporarily
admitting senior advocates from the London Bar to practice the law of the Cayman Islands for
the purpose of assisting with the preparation and presentation of individual cases. The Grand
Court has the power to allow the “limited admission” of attorneys to practice “for the purpose
of any specified suit or matter” pursuant to section 4(1) of the Legal Practitioners Act (2022
Revision).
8. The Grand Court's discretion to order limited admission is exercised in
accordance with prior decisions of that court and having regard to the non-binding but
nevertheless persuasive guidance note issued by the Chief Justice of the Grand Court in
Practice Direction No. 4 of 2012 (PD4). In general terms, it is usually the case that in order
to be successful, the applicant must show that they possess an unusually high level of expertise
which is not otherwise to be found among the local profession. This in turn has often meant
that it is only the King’s Counsel practising at the independent Bar of England and Wales (and,
less frequently, their equivalents found in certain other Commonwealth jurisdictions) whose
applications for limited admission are likely to be successful. As a result of this tradition of
limited admission, English King’s Counsel play an important role in supporting the
administration of justice in the Cayman Islands by offering their services before the Court on a
case by case basis, particularly on large or complex cases.
3
According to the Cayman Islands Judicial Administration website (https://www.judicial.ky/general-
public/licensed-attorneys) as at 30 November 2023 there are only 1,122 attorneys in total who are ordinarily
licenced to practice in the Cayman Islands in the current calendar year.
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9. I was first admitted to practice in the Grand Court on a pro hac vice as counsel
before the Grand Court of the Cayman Islands in June 1997, and I have since then been
admitted on that basis in more than ten cases in the courts of the Cayman Islands both at first
instance and in the Court of Appeal. I also advise regularly on matters of Cayman company,
insolvency and business law.
10. I have been retained on, and given deposition evidence on, matters of Cayman
company law in various jurisdictions, including in the courts of the Southern District of New
York.4
II. SCOPE OF MY INSTRUCTIONS
11. I have been asked by Quinn Emanuel Urquhart & Sullivan, LLP, counsel for the
Defendants, to express my opinion as an expert on the laws of the Cayman Islands in relation
to questions that I set out at paragraphs IV.19, IV.20 and IV.21.
12. I understand this Affirmation will be submitted in support of the Defendants’
Motions to Dismiss the Amended Complaint.
13. In the course of preparing this Affirmation, I have reviewed the following
documents:
(a) the Complaint filed in the above-captioned action (Dkt. 1); and
(b) the Amended Complaint filed in the above-captioned action (Dkt. 15);
14. I am instructed that for the purpose of this opinion I should assume the facts to
be those set out in the Amended Complaint filed in the above captioned matter.
4
In the case of In re Refco Inc Securities Litigation, Krys v Sugrue (Case No 07-MD-1902; Case No
08-CV-3065 (MD); Case No 08-CV-3086 (MD)), I was instructed by Williams & Connolly for various defendants
as an expert on Cayman law of fiduciary duty in the context of segregated portfolio companies. In the case of
Casita LP v Glaser (Appellate Case No 2019-0433), New York Supreme Court, I was instructed by Ropes & Gray
for the plaintiff as an expert on Cayman law of fiduciary duties and loss.
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15. The matters referred to below are within my knowledge, experience,
information and education. If sworn as a witness, I could and would testify competently to the
matters referred to below.
III. SOURCES OF CAYMAN ISLANDS LAW
16. The Cayman Islands is a British overseas territory with its own Constitution,
which provides for a legislative assembly, an executive and an independent judiciary, subject
to residual powers of the British sovereign. The Cayman Islands enacts its own statutes and
regulations. English statutes have no general application to the Cayman Islands unless
expressly extended to them.
17. The law of the Cayman Islands is principally comprised of specific legislation
passed by the Legislative Assembly of the Cayman Islands or its predecessors, and decisions
of the Courts of the Cayman Islands. However, it is ultimately based in general upon the
tradition of the English common law and equity, and further derived from certain English
statutes. Where there is no applicable Cayman Islands legislation and no applicable English or
United Kingdom legislation, the courts of the Cayman Islands generally adopt positions that
are consistent with English and Commonwealth common law and equity.
18. The judicial hierarchy in civil cases involving financial services begins with the
Grand Court of the Cayman Islands, which is a superior court of record with universal
jurisdiction to hear civil and criminal disputes. It has five divisions, of which the Financial
Services Division is both the largest and the only division relevant to the current issue. Judges
of the Grand Court will generally follow other decisions of the Grand Court unless they are
convinced that the earlier decision of the Grand Court is clearly wrong. 5 Appeals lie to the
Court of Appeal of the Cayman Islands, and subject to certain restrictions, there is a right of
5
Re Ascentra Holdings Inc (in official liquidation) (Unrep. 3 November 2022), at [74], David Doyle J,
citing Parker J in Re Padma Fund FSD Unrep. 8 October 2021 at [84]).
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further appeal to the Privy Council in London, England. Decision of the Privy Council (which
is the court of final appeal for British Overseas Territories such as the Cayman Islands and
certain other Commonwealth jurisdictions)6, on the common law and equity are binding on the
courts of the Cayman Islands. Decisions of the English courts on the common law and equity,
particularly of the Supreme Court (formerly the House of Lords) and the Court of Appeal, while
not strictly binding on the courts of the Cayman Islands, are considered persuasive authority
and are usually followed in practice.7 Important cases from the Cayman Islands courts are
published in the Cayman Islands Law Reports (CILR).
IV. THE QUESTIONS
19. I have been asked to express my opinion as an expert on the laws of the Cayman
Islands on the question of whether the causes of action listed in the Amended Complaint
correspond to recognised causes of action under the law of the Cayman Islands.
20. I have also been asked to express my opinion as an expert on the laws of the
Cayman Islands in answer to the question of whether, as a matter of Cayman law, the courts of
the Cayman Islands have jurisdiction over the causes of action described in the Amended
Complaint.
21. I have also been asked to express my opinion as an expert on the laws of the
Cayman Islands regarding whether the Cayman Islands have an interest in resolving the current
dispute.
22. I have prepared an accompanying Annex of materials of supporting statute or
case-law referred to herein, attached hereto as Annex B.
6
For example, the British Virgin Islands, Bermuda, the Isle of Man, Jersey and Guernsey.
7
For a comprehensive, albeit potentially controversial, review of the manner in which Cayman courts
will generally interpret and apply English and other authority, see In the matter of HQP Corporation Ltd (in
official liquidation) (FSD 190 of 2021 (DDJ), 7 July 2023, a case in which I appeared for a group of investors.
It is currently under a pending appeal.
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V. EXECUTIVE SUMMARY OF CONCLUSIONS
23. My conclusions are as follows:
(a) The Courts of the Cayman Islands do not recognise claims for “alter
ego.” While a legal concept broadly comparable to alter ego is known
to the law of the Cayman Islands, it does not constitute an independent
cause of action under Cayman Islands law.
(b) The Courts of the Cayman Islands do have jurisdiction over the
recognisable claims in the Amended Complaint as a matter of law.
(c) The Cayman Islands have an interest in resolving the issues raised by the
Amended Complaint.
VI. MY OPINIONS AS TO THE QUESTIONS
(1) The parties named in the Amended Complaint
24. Based on my review of the Amended Complaint,8 the parties named in the
Amended Complaint are the following individuals or entities:
(a) plaintiff Oasis Investments II Master Fund Limited;
(b) plaintiff Lorelei NCC Inc.;
(c) defendant Vincent Tianquan Mo (Mo);
(d) defendant ACE Smart Investment Limited (ACE);
(e) defendant Next Decade Investments Limited (NDIL);
(f) defendant Media Partner Technology Limited (MPTL);
(g) defendant Richard Jiangong Dai, (Dai);
(h) defendant True Knight Limited, (TKL); and
(i) nominal defendant Fang Holdings Limited (Fang).
8
Amended Complaint, paragraph 18-26.
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(2) Counts III and IV Do Not Correspond to Recognisable Causes of
Action Under the Law of the Cayman Islands
25. For the purposes of my opinion, the causes of action in the Amended Complaint
are referred to herein as Counts I, II, III, IV, V, and VI.
26. In my opinion, the causes of action described by the plaintiffs in Count I, Count
II, Count V and Count VI generally correspond to or resemble causes of action which may be
pursued under the substantive law of the Cayman Islands. I offer this opinion without saying
or intending to say anything by way of my opinion as to whether those causes of action, on the
facts pleaded, have been, could be or are capable of being made out or have merit under the
law of the Cayman Islands.
27. However, in my opinion, the causes of action described by the plaintiffs in Count
III and Count IV, concerning “alter ego”, do not constitute recognisable causes of action which
may be pursued under the law of the Cayman Islands. Count III and Count IV instead appear
to me to refer loosely to an established exception to the doctrine of independent corporate legal
personality, as confirmed as a matter of the law of England & Wales in Salomon v A Salomon
& Co Ltd [1896] UKHL 1, [1897] AC 22, and specifically refer to the circumstances in which
under common law the Court will “pierce the corporate veil” to impose liability for a
company’s acts on its controllers or owners. Although these concepts are not recognised as a
distinct cause of action under the laws of the Cayman Islands, in my opinion, the concepts
described in Count III and Count IV are generally recognisable as applicable legal concepts
under the law of the Cayman Islands. However, they could not be sustained as independent
legal claims, and there is no self-standing legal basis on which the Cayman Court could assume
jurisdiction over them. The circumstances in which the Cayman court will pierce the corporate
veil in order to treat the shareholder of a company as if he were the company itself are carefully
confined to circumstances in which a person was subject to an existing legal obligation or
liability or subject to an existing legal restriction which he deliberately evaded or whose
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enforcement he deliberately frustrated by interposing a company under his control (and only
then for the purposes of depriving the company or its controller of the advantage that they
would otherwise have obtained as a result of the company’s separate legal personality): see
Prest v Petrodel Resources Ltd [2013] UKSC 34, at [35], per Lord Sumption JSC.
28. Any suit brought in the Cayman Islands which asserted an entitlement to relief
by reference to a specific cause of action for “alter ego” would be dismissed as being a claim
unknown to the jurisdiction.
(3) The Courts of the Cayman Islands Can Exercise Jurisdiction Over the
Defendants Named in the Amended Complaint
29. The Grand Court of the Cayman Islands can exercise jurisdiction over the
plaintiffs’ allegations and the defendants named in the Amended Complaint, for the reasons set
out below.
30. The Grand Court of the Cayman Islands sitting in its Financial Services
Division, that being the division of the Court to which the plaintiffs’ claims would be assigned
as a matter of judicial administration, had they been commenced in the Cayman Islands, is the
superior court of record for the Cayman Islands and possessed of universal jurisdiction to hear
civil and criminal actions.9 It has jurisdiction to hear those causes of action named in the
Amended Complaint which generally correspond to or are indicative of recognisable causes of
action which may be prosecuted under the law of the Cayman Islands, being Count I, Count II,
Count V and Count VI.
31. Further, if (this being a matter that I do not accept) the “alter ego” claims
brought in Count III and Count IV are held to be causes of action known to the law of the
Cayman Islands, my conclusion as to the jurisdiction of the Grand Court of the Cayman Islands
set out in paragraph 30 above holds for these Counts as well. The jurisdiction of the Courts of
9
Constitution of the Cayman Islands, section 94(1), enacted as Schedule 2 to the Cayman Islands
Constitution Order 2009 (UKSI 1379 of 2009); Grand Court Act (2015 Revision), section 11(1).
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the Cayman Islands over a named defendant is generally founded on the determination of valid
service of an originating process either within the jurisdiction or following the grant of leave
to serve such process outside the jurisdiction. In each instance, the process by which service
on a defendant may be effected is described in the Grand Court Rules 1995 (Revised Edition)
(“GCR”), which is subordinate legislation made under section 19(3) of the Grand Court Act
(2015 Revision). The process by which service of an originating process may be effected in
the Cayman Islands is provided for in GCR Order 10. The process by which service of an
originating process may be effected outside the Cayman Islands, which is by leave of the Court,
is provided for in GCR Order 11.
32. In my opinion, therefore, the question of whether the Courts of the Cayman
Islands have jurisdiction over the defendants named in the Amended Complaint is resolved by
determining whether, and if so, on what terms an originating process filed in the Courts of the
Cayman Islands could be validly served on each of them.
33. As to the jurisdiction of the Courts of the Cayman Islands over nominal
defendant Fang, an exempted Cayman Islands company, an originating process may be served
on Fang pursuant to section 70 of the Companies Act (2023 Revision) by leaving a letter
addressed to Fang containing a copy of the originating process at the registered office of Fang,
which is located in the Cayman Islands10, and required by section 50(1) of that Act to be so
located. It is therefore uncontroversial that any writ filed by the plaintiffs in the Cayman Islands
containing the recognisable equivalent cause of action to Count I, Count II, Count V and Count
VI could be served on Fang, and it cannot be controversial that the Courts of the Cayman
Islands have jurisdiction over Fang.
34. While the Courts of the Cayman Islands do not have inherent extraterritorial
jurisdiction over the defendants named in the Amended Complaint which are not entities
10
Amended Complaint, paragraph 26.
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incorporated in the Cayman Islands, or individuals to be found in the Cayman Islands, such
entities and individuals may be served with the originating process if (a) they accept service of
the originating process voluntarily, or (b) the plaintiffs have applied for, and the Court has
granted, leave for service of the originating process to be effected overseas.
35. In this case, leave would likely be granted to serve the remaining defendants
overseas. The process by which such leave may be sought, and the terms on which it may be
granted are governed by GCR Order 11 and the decided cases which interpret the requirements
of this subordinate legislation.
36. On application for a grant of leave to serve the originating process on defendants
located outside the Cayman Islands, the plaintiffs must:11
(a) establish that the application is brought by reference to one of the
“gateways” for service of originating process out of the Cayman Islands
that are set out in GCR Order 11, rule 1(1) (this is subject matter
jurisdiction);
(b) establish that they have a good cause of action (this is a low-level merits
test which does not require the applicant to establish that the cause of
action will succeed at trial);
(c) identify the country where the defendants in question may be found; this
is a procedural question of where they can be served, whether personally
or at their registered office;
(d) specify the proposed method of service and show that it is in accordance
with the law of the country where it is proposed to be effected;
(e) establish that the Cayman Islands is the most appropriate forum for the
dispute.
11
Including by deposing to evidence on affidavit of the matters set out in GCR O.11, r.4
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37. The approach taken by the Cayman Court was reiterated in the judgment of the
Parker J in Raiffeisen International Bank AG v Scully Royalty Ltd & Ors FSD 162 of 2019 (12
March 2021).12 The question of whether the Cayman court has subject matter jurisdiction over
the defendants in respect of the causes of action against them, as a question of law, is answered
by the “gateway” question (issue (a) above). The merits test (issue (b) above) and the forum
question (issue (e) above) are matters of discretion. For the purposes of providing my opinions
on the specific issues in this affirmation, I have been asked to assume that the allegations in the
Amended Complaint are true such that the merits test (issue (b)) would be resolved favourably,
and therefore have not conducted any evaluation of this issue.
(4) The “gateways” set out in GCR Order 11, rule 1(1)
38. So far as subject matter jurisdiction is concerned, the plaintiff must satisfy the
court that there is a good arguable case that “the claim falls within one or more classes of
case[s] in which permission to serve out may be given”. Altimo Holdings and Investment Ltd
v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 per Lord Collins at §71.13 The decision in Altimo
(although not §71 expressly) was relied on by Parker J in Raiffeisen at footnotes 22, 29 and 33.
39. GCR O.11, r.1(1) contains a list of 14 “gateways” through which the causes of
action described in the plaintiffs’ originating process must “pass” before service outside the
Cayman Islands may be permissible on application with leave of the Court.
40. These 14 gateways generally describe features of the causes of action which are
recognised under Cayman Islands law which, if present, render them sufficiently closely
associated with the Cayman Islands such that the Court can exercise its discretion as a matter
of Cayman Islands law to allow a filed process to be served on a defendant extraterritorially.
12
An application for leave to appeal was dismissed by the Cayman Islands Court of Appeal following
full oral argument: CICA (Civil) Appeal No. 14 of 2021 (16 March 2022), Moses JA, with whom Morrison and
Birt JA agreed.
13
A decision of the Privy Council on appeal from the Manx courts. It is the leading English case on
the point.
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41. In my opinion, Count I, Count II, Count V and Count VI, as described in the
Amended Complaint, would, if brought in the Cayman Islands and the subject of an application
for leave to serve out of the jurisdiction, satisfy the “gateway” requirement. In my opinion, at
least the following jurisdiction gateways under GCR Order 11 rule 1 apply to those causes of
action:
(1) Provided that the writ does not contain any claim mentioned in Order 75, rule 1(3)14
service of a writ out of the jurisdiction is permissible with the leave of the Court if in
the action begun by the writ –
…
(c) the claim is brought against any person who has been or will be duly served within
or out of the jurisdiction and a person out of the jurisdiction is a necessary or proper
party thereto;
…
(ff) the claim is brought against a person who is or was a director, officer or member
of a company registered within the jurisdiction or who is or was a partner of a
partnership, whether general or limited, which is governed by the laws of the Islands
and the subject matter of the claim relates in any way to such company or partnership
or to the status, rights or duties of such director, officer, member or partner in relation
thereto;
…
42. It would be permissible under GCR O.11, r.1(1) to serve any writ filed by the
plaintiffs in the Cayman Islands containing the recognisable equivalent cause of action to Count
I on defendants Mo and Dai by reference to gateway (ff), because each is alleged to have been
a director of Fang, an exempt Cayman Islands Company, and a recognisable equivalent cause
14
That concerns admiralty actions and is not relevant in this case.
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of action under Cayman Islands law would concern the duties of Mo and Dai as directors of
Fang. That is because, quite simply, Mo and Dai both are/were directors/officers of Fang and
are sued in that capacity; and the subject matter of the claims against them relate to Fang and
their fiduciary duties owed to that company. Gateway (ff) is drafted in very broad terms and
there can be little dispute that the claims against Mo and Dai fall within it.
43. In addition, in my opinion, gateway (c) (the so-called necessary or proper party
gateway) would also provide a further basis on which a Cayman Court writ could be served on
defendants containing the recognisable equivalent cause of action to Count II; and on
defendants MPTL and NDIL for the recognisable equivalent of Count V and Count VI.
44. Where subparagraph (c) is relied on, the plaintiff must also show a real issue
which it is reasonable to ask the Court to try as against the ‘anchor defendant’ relied upon to
bring the foreign defendant into the jurisdiction: GCR Order 11 rule 4(1)(d). As above, by
reference to Counts II, V and VI, in which claims are made against the corporate defendants, it
is assumed that this merits threshold is satisfied here.
45. I note that this gateway has nothing to do with the law concerning the Court’s
determination as to what parties must be served before a suit can proceed. I say this in order
to distinguish the concept of a “necessary party” as it exists in Cayman Islands service law
from a concept of the same name (but a different substance) which I understand exists under
United States law.
46. This gateway was considered at first instance in the Raiffeisen case (that it was
satisfied appears to have been conceded on appeal: see Moses JA at §4(b)). Parker J said at §§
67-69:
“67. As is well known this gateway allows a party to be joined despite the fact
that there may be no territorial connection to the claim or other gateway
available and so the court exercises caution in relation to its use. It would be
wrong to grant permission under this gateway as a matter of course merely
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because not to do so would mean that more than one set of proceedings would
be required.
68. RBI needs to show that each of D6 and D3 are necessary or proper parties,
but its case is that it has a good arguable case as to both defendants being
necessary and proper parties.
69. A way of approaching the test is to ask, if D1, D5, D3 and D6 were all
domiciled in Cayman, would D3 and D6 be proper parties to that case? If there
was one investigation with a common thread and an alleged overarching
conspiracy, would they be proper parties?”
47. In the footnotes to these paragraphs, Parker J referred to Altimo, in which Lord
Collins analysed this gateway at §73 et seq. See in particular §87:
“Third, the question whether D2 is a proper party is answered by asking: “supposing
both parties had been within the jurisdiction would they both have been proper parties
to the action?”: Massey v Heynes & Co 21 QBD 330, 338, per Lord Esher MR. D2 will
be a proper party if the claims against D1 and D2 involve one investigation: Massey v
Heynes & Co, p338, per Lindley LJ; applied in Petroleo Brasiliero SA v Mellitus
Shipping Inc (The Baltic Flame) [2001] 1 Lloyd’s Rep 203, para 33 and in Carvill
America Inc v Camperdown UK Ltd [2005] 2 Lloyd’s Rep 457, para 48, where Clarke
LJ also used, or approved, in this connection the expressions “closely bound up” and
“a common thread”: at paras 46, 49.”
48. The causes of action in knowing receipt and dishonest assistance arising from a
breach of fiduciary duty are the recognisable equivalent causes of action to Count II, Count V
and Count VI and relate to the alleged breach of duty by defendants Mo and Fang as directors
of Fang.
49. As to these causes of action as they are known to the law of the Cayman Islands,
very briefly and by way of summary only, they are usually described as derived from the “two
limbs” of the decision in Barnes v Addy (1874) 9 Ch App 214, as follows:
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(a) the first limb, a cause of action in knowing receipt, arises where a third
party knowingly receives property in breach (that is, the receipt is in
breach) of trust or fiduciary duty; and
(b) the second limb, a cause of action in dishonest assistance, arises when a
defendant dishonestly assists a trustee to commit a breach of trust.
50. As I have opined, a writ alleging breach of duty is permissible with leave of the
Court to be served on Mo and Dai under Section (ff), meaning that claims are ones that can be
“duly served within or out of the jurisdiction” under subsection (c). Each of ACE, TKL, MPTL
and NDIL is a “necessary and proper party” to the claims brought against Mo and Dai. That is
because, applying the legal principles I have described above, the liability of ACE, TKL, MPTL
and NDIL is dependent on the same investigation required to be conducted in order to resolve
the claim for breach of fiduciary duty made against defendants Mo and Dai, and essential for
the proper determination of the issues joined in any action which includes Count I as well as
Count II, Count V and Count VI.
51. This reasoning is consistent with the reasoning of the Court of Appeal for the
Cayman Islands in Ahmad Hamad Algosaibi and Brothers Company v Saad Investments
Company Limited & Ors.15
52. Accordingly, the Courts of the Cayman Islands could exercise jurisdiction over
all of the defendants that have been named Plaintiffs’ suit.
(5) Procedural elements of the test which must be satisfied
53. In addition to matters concerning the grounds on which the application is made
(the applicable “gateway”) and the merits test, an application for leave to serve out of the
jurisdiction must address and satisfy the procedural and relatively uncontroversial issue of how
service will be effected if leave is granted.
15
[2010 (2) CILR 289] at [65] (Chadwick P, Forte and Mottley, JJ.A).
16
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54. As set out at paragraph (3)36(c) above, the applicant must be able to identify in
what place or country the defendant is or may be found, and in this regard the Court will only
order service out of the jurisdiction on a defendant at a proper place of service (and by a proper
mode) in accordance with the GCR. The rules on service of originating process are set out in
GCR Order 10 rule 1 and require personal service on an individual, and where the defendant is
a company not incorporated under the Cayman Companies Law (as the corporate defendants
are not, being BVI companies), by service on the chairperson or president of the company or
the secretary, treasurer or other similar officer (GCR Order 65 rule 3). The general rule is
personal service at the place where the defendant is to be found and effected by leaving the
document with the person to be served (GCR Order 65 rule 2).
55. As to paragraph (3)36(d) above, if service is not to be effected personally in
accordance with GCR Order 10 rule 1, then GCR Order 11 rule 4(1)(e) requires that the
claimant must identify, in its affidavit in support of the application for leave to serve out of the
jurisdiction, the method of service that is in accordance with the law of the place where service
is to be effected.
56. If it is impracticable to effect personal service on a defendant then the court can
order that substituted service can be effected by taking such steps as the court may direct to
bring the document to be served to the notice of the defendant (GCR Order 65 rule 4).
57. As to this, the law on substituted service is a well developed aspect of Cayman
law, and such applications are frequently employed, particularly in circumstances where the
state in which the defendant is to be found is not party to the Hague Convention of 15
November 1965 on the Service Abroad of Judicial and Extra-Judicial Documents in Civil or
Commercial Matters, or, as in the case of the People’s Republic of China, has derogated from
provisions of that convention regarding the manner in which service may be effected.
17
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58. In deciding an application brought for substituted service, the Cayman Court
will consider three questions:
(a) Is personal service (that is, service under GCR Order 10, rule 1)
“impracticable”?
(b) are the steps which are instead proposed to be taken to bring the
document to the notice of the defendant contrary to the general law of
the country in which they are to be taken, in the sense of being expressly
or impliedly prohibited? and
(c) are the steps proposed to be taken reasonably likely to bring the
document to the notice of the defendant?16
59. The key issue for the Court in terms of whether its discretion to order substituted
service should be exercised at all is the matter of “impracticability”. As to this, mere delay is
not sufficient,17 and something more than even lengthy delay will likely be required,18 so long
as the effect of that delay is not to imperil the administration of justice. 19 However, in every
case the evidence will ultimately show that either personal service, including as effected under
the Hague Convention, no matter how lengthy a process that may be, is either possible (or
practical) or not. If it is, then leave to serve out of the jurisdiction having been granted, service
will ultimately be effected. If it is not, then the evidence is ultimately likely to satisfy the Court
in respect of the first issue.
16
MaplesFS Limited v B&B Protector Services et al, Grand Court of the Cayman Islands, FSD 213 of
2021, unreported judgment dated 14 July 2022 (Doyle J) at [46], citing China Shanshui Cement Group Limited,
FSD 161 of 2018 (NSJ), unreptd.,27 January 2021 at [62].
17
In the Matter of Orient TM Parent Limited, Grand Court of the Cayman Islands, FSD 299 of 2021
(DJJ), unreported judgment dated 27 July 2022 (Doyle J).
18
Map
Preview
FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK x OASIS INVESTMENTS II MASTER FUND : LTD. and LORELEI INC., derivatively on behalf of nominal defendant FANG HOLDINGS : Index No. 652607/2023 LIMITED, : Justice Andrew Borrok Plaintiffs, : -against- : VINCENT TIANQUAN MO, RICHARD JIANGONG : DAI, ACE SMART INVESTMENTS LIMITED, NEXT AFFIRMATION OF RICHARD DECADE INVESTMENTS LIMITED, MEDIA : MILLETT KC PARTNER TECHNOLOGY LIMITED, and TRUE : KNIGHT LIMITED, Defendants. : X I, RICHARD MILLETT K.C., a Barrister and King’s Counsel practising at Essex Court Chambers, 24 Lincoln’s Inn Fields, London WC2A 3EG, UK, affirm under the penalty of perjury pursuant to CPLR 2106(b) as follows: I. BACKGROUND AND QUALIFICATIONS 1. I was educated at Trinity Hall, Cambridge, where I gained a BA, Part 1 in Classics and Part 1 and Part 2 in Law. I am a practising barrister in London, England in the chambers known as Essex Court Chambers, where I am Co-Head of Chambers with Mr. Joe Smouha K.C. My full curriculum vitae is exhibited hereto as Annex A. 2. I was called to the Bar by Lincoln’s Inn in July 1985, and have practised at the English Chancery and Commercial Bars continuously ever since. Before I joined Essex Court Chambers in 1990, I practised from 1986 in the Chambers of John Chadwick Q.C. (later Lord Justice Chadwick) at Queen Elizabeth Building, Temple, London EC4, England. 3. In 2000, I was appointed by the UK Attorney-General to the Treasury Counsel “A” Panel, a group of specialist barristers retained to advise and represent Her Majesty’s 1 1 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 Government on legal matters. In 2003, I was appointed Queen’s Counsel.1 Following the death of Her Majesty Queen Elizabeth II, my appointment is now described as being of King’s Counsel.2 4. In 2010, I was appointed a Civil Recorder with a Chancery specialism, and I have sat since then as a Deputy High Court Judge in London on Chancery and Property Business. In April 2013, at the invitation of the Chancellor, I was appointed a Deputy High Court Judge of the Chancery Division (now the Business and Property Court), and I have sat in the High Court as a Deputy Judge periodically since that time. 5. My private practice covers a broad range of domestic and international commercial litigation and arbitration work. I have been ranked by Chambers & Partners for 29 years and am ranked in the 2024 Chambers UK Bar Guide for Chancery: Commercial, Inquests and Public Inquiries; Fraud: Civil; International Arbitration: General Commercial & Insurance, Offshore, Commercial Dispute Resolution and Banking & Finance. I am separately ranked in the Legal 500 guide for the London Bar for offshore, international arbitration and commercial litigation. I have appeared in courts at every level in the English legal system, including frequent appearances in the Court of Appeal and appearances in the Supreme Court (formerly the House of Lords). I am a permanent member of the Bars of the British Virgin Islands and of Anguilla and have been called pro hac vice to the Bars of the Cayman Islands, Nevis, Bermuda, the Commonwealth of the Bahamas, the Isle of Man and the Seychelles. I am a member of both the Chancery Bar Association and the Commercial Bar Association (COMBAR) and I have sat on the main committee of the former and numerous sub-committees of each. 1 The rank of (then) Queen’s Counsel, and now, on the passing of Her Majesty Queen Elizabeth II and accession of His Majesty Charles III in September 2022, King’s Counsel, is a mark of professional excellence. It is awarded, on application, for those of sufficient and recognised excellence in their field of law and advocacy to be considered worthy of the ‘kitemark’. 2 By section 1(1) of the Demise of the Crown Act 1901. 2 2 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 6. Among other publications, I am the co-author (with Geraldine Andrews K.C.) of the Law of Guarantees (7th Edition, 2015). I am also the editor of Halsbury’s Laws of England, 5th edition, Vol 20 (2004) on Guarantee and Indemnity. 7. The nature and complexity of the matters which routinely come to be decided before the Courts in the Grand Court of the Cayman Islands, along with the relatively small size of the local profession,3 means that the Grand Court has a long tradition of temporarily admitting senior advocates from the London Bar to practice the law of the Cayman Islands for the purpose of assisting with the preparation and presentation of individual cases. The Grand Court has the power to allow the “limited admission” of attorneys to practice “for the purpose of any specified suit or matter” pursuant to section 4(1) of the Legal Practitioners Act (2022 Revision). 8. The Grand Court's discretion to order limited admission is exercised in accordance with prior decisions of that court and having regard to the non-binding but nevertheless persuasive guidance note issued by the Chief Justice of the Grand Court in Practice Direction No. 4 of 2012 (PD4). In general terms, it is usually the case that in order to be successful, the applicant must show that they possess an unusually high level of expertise which is not otherwise to be found among the local profession. This in turn has often meant that it is only the King’s Counsel practising at the independent Bar of England and Wales (and, less frequently, their equivalents found in certain other Commonwealth jurisdictions) whose applications for limited admission are likely to be successful. As a result of this tradition of limited admission, English King’s Counsel play an important role in supporting the administration of justice in the Cayman Islands by offering their services before the Court on a case by case basis, particularly on large or complex cases. 3 According to the Cayman Islands Judicial Administration website (https://www.judicial.ky/general- public/licensed-attorneys) as at 30 November 2023 there are only 1,122 attorneys in total who are ordinarily licenced to practice in the Cayman Islands in the current calendar year. 3 3 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 9. I was first admitted to practice in the Grand Court on a pro hac vice as counsel before the Grand Court of the Cayman Islands in June 1997, and I have since then been admitted on that basis in more than ten cases in the courts of the Cayman Islands both at first instance and in the Court of Appeal. I also advise regularly on matters of Cayman company, insolvency and business law. 10. I have been retained on, and given deposition evidence on, matters of Cayman company law in various jurisdictions, including in the courts of the Southern District of New York.4 II. SCOPE OF MY INSTRUCTIONS 11. I have been asked by Quinn Emanuel Urquhart & Sullivan, LLP, counsel for the Defendants, to express my opinion as an expert on the laws of the Cayman Islands in relation to questions that I set out at paragraphs IV.19, IV.20 and IV.21. 12. I understand this Affirmation will be submitted in support of the Defendants’ Motions to Dismiss the Amended Complaint. 13. In the course of preparing this Affirmation, I have reviewed the following documents: (a) the Complaint filed in the above-captioned action (Dkt. 1); and (b) the Amended Complaint filed in the above-captioned action (Dkt. 15); 14. I am instructed that for the purpose of this opinion I should assume the facts to be those set out in the Amended Complaint filed in the above captioned matter. 4 In the case of In re Refco Inc Securities Litigation, Krys v Sugrue (Case No 07-MD-1902; Case No 08-CV-3065 (MD); Case No 08-CV-3086 (MD)), I was instructed by Williams & Connolly for various defendants as an expert on Cayman law of fiduciary duty in the context of segregated portfolio companies. In the case of Casita LP v Glaser (Appellate Case No 2019-0433), New York Supreme Court, I was instructed by Ropes & Gray for the plaintiff as an expert on Cayman law of fiduciary duties and loss. 4 4 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 15. The matters referred to below are within my knowledge, experience, information and education. If sworn as a witness, I could and would testify competently to the matters referred to below. III. SOURCES OF CAYMAN ISLANDS LAW 16. The Cayman Islands is a British overseas territory with its own Constitution, which provides for a legislative assembly, an executive and an independent judiciary, subject to residual powers of the British sovereign. The Cayman Islands enacts its own statutes and regulations. English statutes have no general application to the Cayman Islands unless expressly extended to them. 17. The law of the Cayman Islands is principally comprised of specific legislation passed by the Legislative Assembly of the Cayman Islands or its predecessors, and decisions of the Courts of the Cayman Islands. However, it is ultimately based in general upon the tradition of the English common law and equity, and further derived from certain English statutes. Where there is no applicable Cayman Islands legislation and no applicable English or United Kingdom legislation, the courts of the Cayman Islands generally adopt positions that are consistent with English and Commonwealth common law and equity. 18. The judicial hierarchy in civil cases involving financial services begins with the Grand Court of the Cayman Islands, which is a superior court of record with universal jurisdiction to hear civil and criminal disputes. It has five divisions, of which the Financial Services Division is both the largest and the only division relevant to the current issue. Judges of the Grand Court will generally follow other decisions of the Grand Court unless they are convinced that the earlier decision of the Grand Court is clearly wrong. 5 Appeals lie to the Court of Appeal of the Cayman Islands, and subject to certain restrictions, there is a right of 5 Re Ascentra Holdings Inc (in official liquidation) (Unrep. 3 November 2022), at [74], David Doyle J, citing Parker J in Re Padma Fund FSD Unrep. 8 October 2021 at [84]). 5 5 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 further appeal to the Privy Council in London, England. Decision of the Privy Council (which is the court of final appeal for British Overseas Territories such as the Cayman Islands and certain other Commonwealth jurisdictions)6, on the common law and equity are binding on the courts of the Cayman Islands. Decisions of the English courts on the common law and equity, particularly of the Supreme Court (formerly the House of Lords) and the Court of Appeal, while not strictly binding on the courts of the Cayman Islands, are considered persuasive authority and are usually followed in practice.7 Important cases from the Cayman Islands courts are published in the Cayman Islands Law Reports (CILR). IV. THE QUESTIONS 19. I have been asked to express my opinion as an expert on the laws of the Cayman Islands on the question of whether the causes of action listed in the Amended Complaint correspond to recognised causes of action under the law of the Cayman Islands. 20. I have also been asked to express my opinion as an expert on the laws of the Cayman Islands in answer to the question of whether, as a matter of Cayman law, the courts of the Cayman Islands have jurisdiction over the causes of action described in the Amended Complaint. 21. I have also been asked to express my opinion as an expert on the laws of the Cayman Islands regarding whether the Cayman Islands have an interest in resolving the current dispute. 22. I have prepared an accompanying Annex of materials of supporting statute or case-law referred to herein, attached hereto as Annex B. 6 For example, the British Virgin Islands, Bermuda, the Isle of Man, Jersey and Guernsey. 7 For a comprehensive, albeit potentially controversial, review of the manner in which Cayman courts will generally interpret and apply English and other authority, see In the matter of HQP Corporation Ltd (in official liquidation) (FSD 190 of 2021 (DDJ), 7 July 2023, a case in which I appeared for a group of investors. It is currently under a pending appeal. 6 6 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 V. EXECUTIVE SUMMARY OF CONCLUSIONS 23. My conclusions are as follows: (a) The Courts of the Cayman Islands do not recognise claims for “alter ego.” While a legal concept broadly comparable to alter ego is known to the law of the Cayman Islands, it does not constitute an independent cause of action under Cayman Islands law. (b) The Courts of the Cayman Islands do have jurisdiction over the recognisable claims in the Amended Complaint as a matter of law. (c) The Cayman Islands have an interest in resolving the issues raised by the Amended Complaint. VI. MY OPINIONS AS TO THE QUESTIONS (1) The parties named in the Amended Complaint 24. Based on my review of the Amended Complaint,8 the parties named in the Amended Complaint are the following individuals or entities: (a) plaintiff Oasis Investments II Master Fund Limited; (b) plaintiff Lorelei NCC Inc.; (c) defendant Vincent Tianquan Mo (Mo); (d) defendant ACE Smart Investment Limited (ACE); (e) defendant Next Decade Investments Limited (NDIL); (f) defendant Media Partner Technology Limited (MPTL); (g) defendant Richard Jiangong Dai, (Dai); (h) defendant True Knight Limited, (TKL); and (i) nominal defendant Fang Holdings Limited (Fang). 8 Amended Complaint, paragraph 18-26. 7 7 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 (2) Counts III and IV Do Not Correspond to Recognisable Causes of Action Under the Law of the Cayman Islands 25. For the purposes of my opinion, the causes of action in the Amended Complaint are referred to herein as Counts I, II, III, IV, V, and VI. 26. In my opinion, the causes of action described by the plaintiffs in Count I, Count II, Count V and Count VI generally correspond to or resemble causes of action which may be pursued under the substantive law of the Cayman Islands. I offer this opinion without saying or intending to say anything by way of my opinion as to whether those causes of action, on the facts pleaded, have been, could be or are capable of being made out or have merit under the law of the Cayman Islands. 27. However, in my opinion, the causes of action described by the plaintiffs in Count III and Count IV, concerning “alter ego”, do not constitute recognisable causes of action which may be pursued under the law of the Cayman Islands. Count III and Count IV instead appear to me to refer loosely to an established exception to the doctrine of independent corporate legal personality, as confirmed as a matter of the law of England & Wales in Salomon v A Salomon & Co Ltd [1896] UKHL 1, [1897] AC 22, and specifically refer to the circumstances in which under common law the Court will “pierce the corporate veil” to impose liability for a company’s acts on its controllers or owners. Although these concepts are not recognised as a distinct cause of action under the laws of the Cayman Islands, in my opinion, the concepts described in Count III and Count IV are generally recognisable as applicable legal concepts under the law of the Cayman Islands. However, they could not be sustained as independent legal claims, and there is no self-standing legal basis on which the Cayman Court could assume jurisdiction over them. The circumstances in which the Cayman court will pierce the corporate veil in order to treat the shareholder of a company as if he were the company itself are carefully confined to circumstances in which a person was subject to an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evaded or whose 8 8 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 enforcement he deliberately frustrated by interposing a company under his control (and only then for the purposes of depriving the company or its controller of the advantage that they would otherwise have obtained as a result of the company’s separate legal personality): see Prest v Petrodel Resources Ltd [2013] UKSC 34, at [35], per Lord Sumption JSC. 28. Any suit brought in the Cayman Islands which asserted an entitlement to relief by reference to a specific cause of action for “alter ego” would be dismissed as being a claim unknown to the jurisdiction. (3) The Courts of the Cayman Islands Can Exercise Jurisdiction Over the Defendants Named in the Amended Complaint 29. The Grand Court of the Cayman Islands can exercise jurisdiction over the plaintiffs’ allegations and the defendants named in the Amended Complaint, for the reasons set out below. 30. The Grand Court of the Cayman Islands sitting in its Financial Services Division, that being the division of the Court to which the plaintiffs’ claims would be assigned as a matter of judicial administration, had they been commenced in the Cayman Islands, is the superior court of record for the Cayman Islands and possessed of universal jurisdiction to hear civil and criminal actions.9 It has jurisdiction to hear those causes of action named in the Amended Complaint which generally correspond to or are indicative of recognisable causes of action which may be prosecuted under the law of the Cayman Islands, being Count I, Count II, Count V and Count VI. 31. Further, if (this being a matter that I do not accept) the “alter ego” claims brought in Count III and Count IV are held to be causes of action known to the law of the Cayman Islands, my conclusion as to the jurisdiction of the Grand Court of the Cayman Islands set out in paragraph 30 above holds for these Counts as well. The jurisdiction of the Courts of 9 Constitution of the Cayman Islands, section 94(1), enacted as Schedule 2 to the Cayman Islands Constitution Order 2009 (UKSI 1379 of 2009); Grand Court Act (2015 Revision), section 11(1). 9 9 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 the Cayman Islands over a named defendant is generally founded on the determination of valid service of an originating process either within the jurisdiction or following the grant of leave to serve such process outside the jurisdiction. In each instance, the process by which service on a defendant may be effected is described in the Grand Court Rules 1995 (Revised Edition) (“GCR”), which is subordinate legislation made under section 19(3) of the Grand Court Act (2015 Revision). The process by which service of an originating process may be effected in the Cayman Islands is provided for in GCR Order 10. The process by which service of an originating process may be effected outside the Cayman Islands, which is by leave of the Court, is provided for in GCR Order 11. 32. In my opinion, therefore, the question of whether the Courts of the Cayman Islands have jurisdiction over the defendants named in the Amended Complaint is resolved by determining whether, and if so, on what terms an originating process filed in the Courts of the Cayman Islands could be validly served on each of them. 33. As to the jurisdiction of the Courts of the Cayman Islands over nominal defendant Fang, an exempted Cayman Islands company, an originating process may be served on Fang pursuant to section 70 of the Companies Act (2023 Revision) by leaving a letter addressed to Fang containing a copy of the originating process at the registered office of Fang, which is located in the Cayman Islands10, and required by section 50(1) of that Act to be so located. It is therefore uncontroversial that any writ filed by the plaintiffs in the Cayman Islands containing the recognisable equivalent cause of action to Count I, Count II, Count V and Count VI could be served on Fang, and it cannot be controversial that the Courts of the Cayman Islands have jurisdiction over Fang. 34. While the Courts of the Cayman Islands do not have inherent extraterritorial jurisdiction over the defendants named in the Amended Complaint which are not entities 10 Amended Complaint, paragraph 26. 10 10 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 incorporated in the Cayman Islands, or individuals to be found in the Cayman Islands, such entities and individuals may be served with the originating process if (a) they accept service of the originating process voluntarily, or (b) the plaintiffs have applied for, and the Court has granted, leave for service of the originating process to be effected overseas. 35. In this case, leave would likely be granted to serve the remaining defendants overseas. The process by which such leave may be sought, and the terms on which it may be granted are governed by GCR Order 11 and the decided cases which interpret the requirements of this subordinate legislation. 36. On application for a grant of leave to serve the originating process on defendants located outside the Cayman Islands, the plaintiffs must:11 (a) establish that the application is brought by reference to one of the “gateways” for service of originating process out of the Cayman Islands that are set out in GCR Order 11, rule 1(1) (this is subject matter jurisdiction); (b) establish that they have a good cause of action (this is a low-level merits test which does not require the applicant to establish that the cause of action will succeed at trial); (c) identify the country where the defendants in question may be found; this is a procedural question of where they can be served, whether personally or at their registered office; (d) specify the proposed method of service and show that it is in accordance with the law of the country where it is proposed to be effected; (e) establish that the Cayman Islands is the most appropriate forum for the dispute. 11 Including by deposing to evidence on affidavit of the matters set out in GCR O.11, r.4 11 11 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 37. The approach taken by the Cayman Court was reiterated in the judgment of the Parker J in Raiffeisen International Bank AG v Scully Royalty Ltd & Ors FSD 162 of 2019 (12 March 2021).12 The question of whether the Cayman court has subject matter jurisdiction over the defendants in respect of the causes of action against them, as a question of law, is answered by the “gateway” question (issue (a) above). The merits test (issue (b) above) and the forum question (issue (e) above) are matters of discretion. For the purposes of providing my opinions on the specific issues in this affirmation, I have been asked to assume that the allegations in the Amended Complaint are true such that the merits test (issue (b)) would be resolved favourably, and therefore have not conducted any evaluation of this issue. (4) The “gateways” set out in GCR Order 11, rule 1(1) 38. So far as subject matter jurisdiction is concerned, the plaintiff must satisfy the court that there is a good arguable case that “the claim falls within one or more classes of case[s] in which permission to serve out may be given”. Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 per Lord Collins at §71.13 The decision in Altimo (although not §71 expressly) was relied on by Parker J in Raiffeisen at footnotes 22, 29 and 33. 39. GCR O.11, r.1(1) contains a list of 14 “gateways” through which the causes of action described in the plaintiffs’ originating process must “pass” before service outside the Cayman Islands may be permissible on application with leave of the Court. 40. These 14 gateways generally describe features of the causes of action which are recognised under Cayman Islands law which, if present, render them sufficiently closely associated with the Cayman Islands such that the Court can exercise its discretion as a matter of Cayman Islands law to allow a filed process to be served on a defendant extraterritorially. 12 An application for leave to appeal was dismissed by the Cayman Islands Court of Appeal following full oral argument: CICA (Civil) Appeal No. 14 of 2021 (16 March 2022), Moses JA, with whom Morrison and Birt JA agreed. 13 A decision of the Privy Council on appeal from the Manx courts. It is the leading English case on the point. 12 12 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 41. In my opinion, Count I, Count II, Count V and Count VI, as described in the Amended Complaint, would, if brought in the Cayman Islands and the subject of an application for leave to serve out of the jurisdiction, satisfy the “gateway” requirement. In my opinion, at least the following jurisdiction gateways under GCR Order 11 rule 1 apply to those causes of action: (1) Provided that the writ does not contain any claim mentioned in Order 75, rule 1(3)14 service of a writ out of the jurisdiction is permissible with the leave of the Court if in the action begun by the writ – … (c) the claim is brought against any person who has been or will be duly served within or out of the jurisdiction and a person out of the jurisdiction is a necessary or proper party thereto; … (ff) the claim is brought against a person who is or was a director, officer or member of a company registered within the jurisdiction or who is or was a partner of a partnership, whether general or limited, which is governed by the laws of the Islands and the subject matter of the claim relates in any way to such company or partnership or to the status, rights or duties of such director, officer, member or partner in relation thereto; … 42. It would be permissible under GCR O.11, r.1(1) to serve any writ filed by the plaintiffs in the Cayman Islands containing the recognisable equivalent cause of action to Count I on defendants Mo and Dai by reference to gateway (ff), because each is alleged to have been a director of Fang, an exempt Cayman Islands Company, and a recognisable equivalent cause 14 That concerns admiralty actions and is not relevant in this case. 13 13 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 of action under Cayman Islands law would concern the duties of Mo and Dai as directors of Fang. That is because, quite simply, Mo and Dai both are/were directors/officers of Fang and are sued in that capacity; and the subject matter of the claims against them relate to Fang and their fiduciary duties owed to that company. Gateway (ff) is drafted in very broad terms and there can be little dispute that the claims against Mo and Dai fall within it. 43. In addition, in my opinion, gateway (c) (the so-called necessary or proper party gateway) would also provide a further basis on which a Cayman Court writ could be served on defendants containing the recognisable equivalent cause of action to Count II; and on defendants MPTL and NDIL for the recognisable equivalent of Count V and Count VI. 44. Where subparagraph (c) is relied on, the plaintiff must also show a real issue which it is reasonable to ask the Court to try as against the ‘anchor defendant’ relied upon to bring the foreign defendant into the jurisdiction: GCR Order 11 rule 4(1)(d). As above, by reference to Counts II, V and VI, in which claims are made against the corporate defendants, it is assumed that this merits threshold is satisfied here. 45. I note that this gateway has nothing to do with the law concerning the Court’s determination as to what parties must be served before a suit can proceed. I say this in order to distinguish the concept of a “necessary party” as it exists in Cayman Islands service law from a concept of the same name (but a different substance) which I understand exists under United States law. 46. This gateway was considered at first instance in the Raiffeisen case (that it was satisfied appears to have been conceded on appeal: see Moses JA at §4(b)). Parker J said at §§ 67-69: “67. As is well known this gateway allows a party to be joined despite the fact that there may be no territorial connection to the claim or other gateway available and so the court exercises caution in relation to its use. It would be wrong to grant permission under this gateway as a matter of course merely 14 14 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 because not to do so would mean that more than one set of proceedings would be required. 68. RBI needs to show that each of D6 and D3 are necessary or proper parties, but its case is that it has a good arguable case as to both defendants being necessary and proper parties. 69. A way of approaching the test is to ask, if D1, D5, D3 and D6 were all domiciled in Cayman, would D3 and D6 be proper parties to that case? If there was one investigation with a common thread and an alleged overarching conspiracy, would they be proper parties?” 47. In the footnotes to these paragraphs, Parker J referred to Altimo, in which Lord Collins analysed this gateway at §73 et seq. See in particular §87: “Third, the question whether D2 is a proper party is answered by asking: “supposing both parties had been within the jurisdiction would they both have been proper parties to the action?”: Massey v Heynes & Co 21 QBD 330, 338, per Lord Esher MR. D2 will be a proper party if the claims against D1 and D2 involve one investigation: Massey v Heynes & Co, p338, per Lindley LJ; applied in Petroleo Brasiliero SA v Mellitus Shipping Inc (The Baltic Flame) [2001] 1 Lloyd’s Rep 203, para 33 and in Carvill America Inc v Camperdown UK Ltd [2005] 2 Lloyd’s Rep 457, para 48, where Clarke LJ also used, or approved, in this connection the expressions “closely bound up” and “a common thread”: at paras 46, 49.” 48. The causes of action in knowing receipt and dishonest assistance arising from a breach of fiduciary duty are the recognisable equivalent causes of action to Count II, Count V and Count VI and relate to the alleged breach of duty by defendants Mo and Fang as directors of Fang. 49. As to these causes of action as they are known to the law of the Cayman Islands, very briefly and by way of summary only, they are usually described as derived from the “two limbs” of the decision in Barnes v Addy (1874) 9 Ch App 214, as follows: 15 15 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 (a) the first limb, a cause of action in knowing receipt, arises where a third party knowingly receives property in breach (that is, the receipt is in breach) of trust or fiduciary duty; and (b) the second limb, a cause of action in dishonest assistance, arises when a defendant dishonestly assists a trustee to commit a breach of trust. 50. As I have opined, a writ alleging breach of duty is permissible with leave of the Court to be served on Mo and Dai under Section (ff), meaning that claims are ones that can be “duly served within or out of the jurisdiction” under subsection (c). Each of ACE, TKL, MPTL and NDIL is a “necessary and proper party” to the claims brought against Mo and Dai. That is because, applying the legal principles I have described above, the liability of ACE, TKL, MPTL and NDIL is dependent on the same investigation required to be conducted in order to resolve the claim for breach of fiduciary duty made against defendants Mo and Dai, and essential for the proper determination of the issues joined in any action which includes Count I as well as Count II, Count V and Count VI. 51. This reasoning is consistent with the reasoning of the Court of Appeal for the Cayman Islands in Ahmad Hamad Algosaibi and Brothers Company v Saad Investments Company Limited & Ors.15 52. Accordingly, the Courts of the Cayman Islands could exercise jurisdiction over all of the defendants that have been named Plaintiffs’ suit. (5) Procedural elements of the test which must be satisfied 53. In addition to matters concerning the grounds on which the application is made (the applicable “gateway”) and the merits test, an application for leave to serve out of the jurisdiction must address and satisfy the procedural and relatively uncontroversial issue of how service will be effected if leave is granted. 15 [2010 (2) CILR 289] at [65] (Chadwick P, Forte and Mottley, JJ.A). 16 16 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 54. As set out at paragraph (3)36(c) above, the applicant must be able to identify in what place or country the defendant is or may be found, and in this regard the Court will only order service out of the jurisdiction on a defendant at a proper place of service (and by a proper mode) in accordance with the GCR. The rules on service of originating process are set out in GCR Order 10 rule 1 and require personal service on an individual, and where the defendant is a company not incorporated under the Cayman Companies Law (as the corporate defendants are not, being BVI companies), by service on the chairperson or president of the company or the secretary, treasurer or other similar officer (GCR Order 65 rule 3). The general rule is personal service at the place where the defendant is to be found and effected by leaving the document with the person to be served (GCR Order 65 rule 2). 55. As to paragraph (3)36(d) above, if service is not to be effected personally in accordance with GCR Order 10 rule 1, then GCR Order 11 rule 4(1)(e) requires that the claimant must identify, in its affidavit in support of the application for leave to serve out of the jurisdiction, the method of service that is in accordance with the law of the place where service is to be effected. 56. If it is impracticable to effect personal service on a defendant then the court can order that substituted service can be effected by taking such steps as the court may direct to bring the document to be served to the notice of the defendant (GCR Order 65 rule 4). 57. As to this, the law on substituted service is a well developed aspect of Cayman law, and such applications are frequently employed, particularly in circumstances where the state in which the defendant is to be found is not party to the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extra-Judicial Documents in Civil or Commercial Matters, or, as in the case of the People’s Republic of China, has derogated from provisions of that convention regarding the manner in which service may be effected. 17 17 of 23 FILED: NEW YORK COUNTY CLERK 12/01/2023 02:20 AM INDEX NO. 652607/2023 NYSCEF DOC. NO. 107 RECEIVED NYSCEF: 12/01/2023 58. In deciding an application brought for substituted service, the Cayman Court will consider three questions: (a) Is personal service (that is, service under GCR Order 10, rule 1) “impracticable”? (b) are the steps which are instead proposed to be taken to bring the document to the notice of the defendant contrary to the general law of the country in which they are to be taken, in the sense of being expressly or impliedly prohibited? and (c) are the steps proposed to be taken reasonably likely to bring the document to the notice of the defendant?16 59. The key issue for the Court in terms of whether its discretion to order substituted service should be exercised at all is the matter of “impracticability”. As to this, mere delay is not sufficient,17 and something more than even lengthy delay will likely be required,18 so long as the effect of that delay is not to imperil the administration of justice. 19 However, in every case the evidence will ultimately show that either personal service, including as effected under the Hague Convention, no matter how lengthy a process that may be, is either possible (or practical) or not. If it is, then leave to serve out of the jurisdiction having been granted, service will ultimately be effected. If it is not, then the evidence is ultimately likely to satisfy the Court in respect of the first issue. 16 MaplesFS Limited v B&B Protector Services et al, Grand Court of the Cayman Islands, FSD 213 of 2021, unreported judgment dated 14 July 2022 (Doyle J) at [46], citing China Shanshui Cement Group Limited, FSD 161 of 2018 (NSJ), unreptd.,27 January 2021 at [62]. 17 In the Matter of Orient TM Parent Limited, Grand Court of the Cayman Islands, FSD 299 of 2021 (DJJ), unreported judgment dated 27 July 2022 (Doyle J). 18 Map