BVI Commercial Court provides helpful guidance on the function of ancillary claims in a complex dispute concerning Lunan Pharmaceutical Group Limited

• Walkers has secured a further victory for its client, Ms. Zhao Long, in a complex dispute regarding the ownership of shares in a significant PRC pharmaceutical company in a further judgment of the British Virgin Islands Commercial Court 
  
  
• The latest judgment in the proceedings provides helpful guidance on the circumstances in which an ancillary claim can be brought and the jurisdictional hurdles and evidential issues that may arise in pursuing an ancillary claim. 
  
  
• The case demonstrates the BVI Court’s ability to efficiently adjudicate complex commercial disputes tracing PRC assets and provides helpful guidance on how to adapt proceedings following asset dissipation by initiating an ancillary claim. 

• Ancillary claims must fall within the parameters for such claims set out in Part 18 of the Eastern Caribbean Supreme Court Civil Procedure Rules (the “EC CPR”) and are most commonly a counterclaim initiated by a defendant against another party to the proceedings. Where an ancillary claim does fall within the parameters of EC CPR Part 18, the Court can exercise its discretion to dismiss ancillary claims pursuant to EC CPR 18.10 in particular having regard to whether there is a close connection between the ancillary claim and the original claim.

• Where a claimant applies to amend its pleadings to add a fresh cause of action against a foreign defendant who only appears because of service out of the jurisdiction, the Court should consider whether the fresh cause of action passes through one of the gateways for service out of jurisdiction. In contrast, where a defendant (in this case an ancillary defendant) voluntarily submitted to the jurisdiction, by doing so they were submitting to the risk that another party might raise a counterclaim (including in the form of an ancillary claim).

• A prior judgment can be admitted as evidence and relied upon as regards its findings of fact in a subsequent claim (including an ancillary claim) in circumstances where the subsequent claim is between parties involved in the earlier proceedings and before the same judge that determined the prior judgment.

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