BVI court rules inheritance of BVI company shares is determined by foreign law

The judgment in the case of Sheikh Saoud Mohammed Al Thani, a member of the Qatari royal family who died in London in 2014, is of particular importance to contentious private wealth practitioners, says law firm Ogier. It affirms BVI law on res judicata and issue estoppel in cross-border succession proceedings, as well as clarifying the common law's role in determining the succession law for moveable and immovable property in the BVI.

The dispute concerned an oral will made by the Sheikh in Qatar in 1990 by which he left 20 per cent of his entire estate to his sister, niece and a close associate. The will was discovered only after his death, and was opposed in the Qatari courts by the Sheikh's widow and daughter. They lost, but during the proceedings they obtained ex parte letters of administration in the BVI for the Sheikh's estate without revealing the existence of the Qatari will.

The beneficiaries of the oral will then challenged these letters of administration in the BVI high court, which agreed with them that the Qatari courts' decision to admit the oral will meant it was valid as applied to movable property in the BVI. Moreover, this movable property included the Sheikh's shareholding in a BVI company, which was important because the succession and administration of a deceased foreigner's movable property located in the BVI is determined by the law of the foreign domicile; whereas succession of his immovable property located in the BVI is determined by BVI law.

The dispute over the 'movable' nature of the shares arose from certain provisions in s.245 of the BVI Business Companies Act (the Act), which states that situs of the ownership of shares is the BVI for the purposes of determining matters relating to title and jurisdiction. The Sheikh's wife argues that this meant that they are immovable property. However, the High Court decided this principle does not extend to other matters such as succession.

The Sheikh's wife and daughter appealed further to the Court of Appeal, which has now upheld the high court's judgment and dismissed their appeal. The consequence is that the deceased's widow and daughter are estopped from re-litigating the issues in the Qatar proceedings and BVI proceedings, as they are res judicata.

The Court of Appeal also confirmed the common-law principle regarding the appropriate law of succession for movable and immovable property in the jurisdiction and that registered shares in a BVI are movable property for succession purposes despite s.245 of the Act.

Sources

• Ogier