Spoiler alert: we expect not…
An appeal has made it all the way up to the Privy Council from the BVI Courts regarding the ruling family in Qatar. Fladgate act for certain family members who stand to inherit 20% of the estate of the late Sheikh Saud Al Thani – a scion of the ruling family of Qatar who was renowned for his extensive and eclectic art collection and as the one-time owner of the world’s largest cut blue diamond, the Idol’s Eye. The Will under which our clients were due to inherit was challenged by the late Sheikh Saud’s wife and children in long running proceedings which also went to the highest appellate Court in Qatar before being decided in our clients’ favour in 2018.
The fight then moved to the BVI where our clients sought to overturn the grant of probate obtained there by Sheikh Saud’s heirs and appoint independent administrators to gather in the BVI estate. In an initial preliminary issue judgment, it was determined that the heirs were estopped from asserting that Sheikh Saud’s Qatari will was invalid or had been revoked. During the course of argument for that hearing, the appellants’ counsel raised a novel point and sought to claim that s. 245 of the BVI Business Companies Act 2014 rendered shares in BVI companies immovable assets for succession purposes.
The specific wording in question is: “For purposes of determining matters relating to title and jurisdiction but not for purposes of taxation, the situs of the ownership of shares, debt obligations or other securities of a company is in the Virgin Islands.” The appellants sought to extend the meaning of the words title and jurisdiction to include succession. If this was correct, shares in BVI companies would be immovables assets. The consequence of that being that any will dealing with BVI situs immovable assets must comply with the BVI rules. In this case, the deceased had made an oral will which did not comply with the BVI rules and his entire BVI estate consisted of shares in property and art holding companies. Our clients’ position was that, in accordance with the prevailing understanding of the industry, shares are moveable assets and therefore the will dealing with them need only comply with the rules applicable to the country in which the deceased was domiciled.
If the appellants are correct, the consequence for the private client industry as a whole if the appeal succeeds would be cataclysmic. For many years shares in companies in low tax jurisdictions such as the BVI have formed a mainstay in international succession planning. Assets can be placed into those companies and the shares easily transacted and dealt with in the course of administering an estate. The deceased need not go through the time and costs of preparing a BVI specific will simply to deal with the shares. If the effect of s. 245 is to render shares immovable assets, then many decades worth of grants of probate would need to be considered afresh. Think of the chaos it would cause if, all of a sudden, all grants of probate based on foreign wills were potentially invalid. Shares could have been dealt under such grants of probate and then later sold, given away or converted into new shares. All of those transactions might then be called into question. The consequences could be vast.
We stress could. The appellants arguments have been rejected at every stage and we are confident of success again when judgment is handed down shortly.
The parties attended a hearing for the Privy Council in June 2024 and judgment is expected shortly. A video of the hearing can be viewed here. The clients were represented before the Privy Council by Edward Cumming KC, instructed by Simon Goldring, partner, Rosalind Hetherington, senior associate, and Emilly Williams, associate, who are all members of the Private Wealth Disputes team.
