In Sian Participation Corp. (In Liquidation) –v- Halimeda International Limited BVIHCMAP2021/0017 (“Sian”), the Eastern Caribbean Court of Appeal again had occasion to consider (amongst a number of other things) the interrelationship between an arbitration clause in a loan agreement and the Court’s jurisdiction to appoint liquidators to a company under the Insolvency Act 2003. The judgment, in which the Court of Appeal upheld the Order of Wallbank J appointing liquidators, serves as a useful reminder that a party wishing to invoke an arbitration clause as a basis for a stay of winding up proceedings against it, must act promptly in inviting the Court to refer the dispute to arbitration or risk losing the opportunity.
The creditor, Halimeda International Limited (the “Creditor”) applied for the winding up of Sian Participation Corp. (the “Company”), on the grounds of insolvency. The debt arose under a loan agreement made between the Creditor and the Company on 7th December 2012 (the “Loan Agreement”). The Loan Agreement contained an arbitration clause (the “Arbitration Clause”) which required any dispute arising from the Loan Agreement to be resolved through arbitration. The loan fell due for repayment by 31st December 2018 but the Company did not repay the debt. The Creditor filed its application on 29th September 2020. On 27th November 2020, the Company filed a Notice of Opposition denying that the debt was currently due and payable. That Notice of Opposition was amended on 19th and 23rd March 2021, but, as originally filed, made no reference to the Arbitration Clause or any reference to arbitration. On 30th January 2021, the company filed an application to strike out the winding up application. It was in this application that arbitration was first advanced as an issue. Neither party made a formal request to the Court that it refer the matter to arbitration.
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