Litigation against directors, officers and professional service providers, following the collapse of offshore funds and collective investment schemes such as Madoff and Weavering, continues to proceed in a variety of jurisdictions, both offshore and onshore.
The Cayman Islands Court of Appeal has still not delivered its long-awaited judgment on the appeal against the Grand Court judgment, whereby two non-executive directors were found personally liable, on 26 August 2011, for $111 million each. It remains to be seen whether any of the parties seek to complain about the delay in the event of a further appeal to the Privy Council, bearing in mind that the Privy Council has recently criticised a number of appellate courts in offshore jurisdictions such as Antigua and Barbuda, and Mauritius, for their delays in publishing judgments: see, for example, Antigua Power Company Ltd v The Attorney General of Antigua and Barbuda & Ors (Antigua and Barbuda)  UKPC 23 and General Construction Ltd v Chue Wing & Co Ltd & Anor (Mauritius)  UKPC 30.
In the meantime, the Weavering fund liquidators have asserted claims against the fund’s former auditors and administrators in both the Cayman Islands and Ireland, which have already been the subject of preliminary skirmishing on various procedural issues, such as limitation.
In Weavering Macro Fixed Income Fund Limited (in Official Liquidation) v Ernst & Young, 2 October 2013, for example, the Grand Court of the Cayman Islands handed down an unreported judgment considering the meaning and effect of various “standstill” agreements entered into between the fund’s liquidators and its former auditors, pending the conclusion of negotiations.
The agreements stated that the limitation period was suspended until a “long-stop date” and they provided that the parties were prevented from “issuing and dispatching and serving proceedings” until the long-stop date. The last standstill agreement specified the long-stop date as being 5pm on 30 November 2012. The liquidators issued proceedings on 30 November 2012 before 5pm, but did not serve them until 26 March 2013. The Cayman Grand Court had to determine whether this was a breach of the standstill agreement. Despite some inconsistency in the wording of the standstill agreement, the Court concluded that the standstill had not been breached, on a true interpretation of the agreement.
In the UK, the Serious Fraud Office’s prosecution of former Weavering fund director, Magnus Peterson, has been allowed to proceed to trial in October 2014. Mr. Justice Andrew Smith has recently rejected a defence application that the case should be stayed or dismissed on “abuse of process” grounds.
In Madoff Securities International Limited (In Liquidation) v Raven & others  EWHC 3147 (Comm), 18 October 2013, the High Court of England and Wales has recently dismissed the UK Madoff liquidators’ claims against the former directors and officers of the London business, concluding that they did not act in breach of their directors’ duties with respect to various payments made by the company. The judgment provides useful guidance for directors of both UK and offshore companies as to the nature and scope of their duties, and the circumstances in which they might properly delegate or defer to others on the board.
The judgment is also of interest for the judge’s assessment of the manner in which the liquidators pursued the claim: “aggressively and relentlessly over several years, on occasion with an unfair degree of hyperbole”, and “without forewarning”.
On 18 and 19 March 2014, the Privy Council heard the appeals and cross-appeals arising out of the clawback claims asserted by the Fairfield feeder funds’ liquidators against their former investors in the BVI courts, and judgment is awaited with interest, since the case is likely to provide considerable guidance as to the status of Net Asset Value certificates and the principles upon which restitutionary claims can be pursued on the basis of “mistake”.
The US Supreme Court is also due to consider the merits of the petition for certiorari brought by Irving Picard, Madoff’s US SIPA Trustee, against a US federal court ruling, both at first instance and through the 2nd Circuit Court of Appeal, which had concluded that the SIPA Trustee did not have standing to bring “aiding and abetting” claims on behalf of investors defrauded by Madoff against financial institutions such as JP Morgan Chase, HSBC Holdings plc, UniCredit SpA, and UBS AG. The Supreme Court has invited the US Solicitor General to submit a brief stating the US federal government’s position on the issue of the SIPA Trustee’s standing, to assist it to determine the petition for certiorari later in the year.