¶ 2201
Overview
The subject of the chapter. A creditor who wants to reach property held in a Nevis structure must do more than prove its claim. Each of the three Nevis statutes examined in this treatise sets conditions that the creditor must satisfy before the court will hear it, and the best known of them is a bond. The Nevis International Exempt Trust Ordinance requires every creditor, before bringing any action or proceeding against trust property governed by the Ordinance, to deposit a bond of EC$270,000 from a financial institution in Nevis. Nevis International Exempt Trust Ordinance, Cap. 7.03(N), § 61 (rev. ed. 2017) ("NIETO"). The Nevis Limited Liability Company Ordinance requires a bond, in an amount set by the High Court, before a creditor brings an action to collect a judgment against a member, a company or its property governed by the charging-order provisions. Nevis Limited Liability Company Ordinance, Cap. 7.04(N), § 62 (rev. ed. 2020) ("NLLCO"). The Multiform Foundations Ordinance requires a bond of US$50,000 before a creditor petitions the court to dissolve a foundation. Multiform Foundations Ordinance, Cap. 7.08(N), § 83(1) (rev. ed. 2017) ("MFO"). This chapter examines the three bonds, the other statutory conditions that a creditor must satisfy before it may obtain any order, the general rules of the Eastern Caribbean Supreme Court on security for costs and the award of costs, and the constitutional questions the bonds raise.
Three bonds, three scopes. The three bonds are often described together as "the Nevis bond", and commentary on Nevis structures frequently gives one figure for all of them. The statutes differ in four respects that matter in practice. The trust bond is a fixed sum in Eastern Caribbean dollars; the company bond is fixed by the court in each case; the foundation bond is a fixed sum in United States dollars. The trust bond and the company bond are deposited with the Permanent Secretary in the Ministry of Finance; the foundation bond is deposited with the Minister. The trust bond precedes any action or proceeding against trust property; the company bond precedes only an action to collect a judgment within the charging-order regime; the foundation bond precedes only a creditor's petition to dissolve the foundation. And the trust bond is tied by section 50(3) of the trust Ordinance to a sworn statement without which the court may make no order at all. Each difference is examined below (see infra ¶¶ 2220, 2240).
Why the conditions matter. The conditions on suit do not change what a creditor must prove. They change what it costs to try, when the creditor must begin, and what the creditor can obtain before trial. A creditor who must post EC$270,000 through a Nevis bank before issuing a claim, swear to the dates on which its cause of action accrued and the property was settled, commence within two years of the settlement, and expect to pay the trustee's costs if it fails, faces a decision about whether to sue at all that a creditor in most jurisdictions does not face. Commentators on offshore planning have long treated the bond as one of the features that distinguish Nevis from other jurisdictions. See Lighthouse on Asset Protection, ¶¶ 2130.02, 2330.02. Its practical effect is felt mostly in decisions never to sue.
The state of the authorities. No reported decision of the High Court, the Eastern Caribbean Court of Appeal or the Privy Council construing section 61 of the trust Ordinance, section 62 of the LLC Ordinance or section 83 of the foundations Ordinance has been located, and no decision on a constitutional challenge to any of them. Proceedings concerning international trusts are heard in camera (NIETO § 63(2)), and few Nevis trust decisions are published (see supra ¶ 350.01). The analysis in this chapter therefore rests on the text of the statutes, the 2023 Civil Procedure Rules, the Constitution and general principle. Where the chapter offers a reading the courts have not tested, it says so.
Relation to other chapters. The fraudulent-disposition rules that a creditor must satisfy on the merits are examined in chapter 21 (see supra ch. 21). The refusal to recognize foreign judgments is examined in chapter 23 (see infra ch. 23), and the conduct of proceedings in the High Court, including freezing orders, in chapter 24 (see infra ch. 24). The charging-order procedure under the LLC Ordinance, including the bond's place in it, is examined in chapter 15 (see supra ¶ 1530), and the foundation's creditor provisions in chapters 18 and 20 (see supra ¶¶ 1870, 2030). The comparative American and offshore context is treated in Lighthouse on Asset Protection, chapters 21 to 24.
Plan of the chapter. Paragraph 2210 examines the purpose and legislative history of the bonds. Paragraph 2220 takes the trust bond element by element. Paragraph 2230 asks who must post it and which proceedings it governs, with a case discussion of SEC v. Brennan. Paragraph 2240 examines the company and foundation bonds and compares the three in Table 22-1. Paragraph 2250 sets out the other statutory conditions on suit. Paragraph 2260 examines security for costs under Part 24 of the Civil Procedure Rules and the award of costs. Paragraph 2270 considers the bonds against the Constitution's guarantee of a fair hearing. Paragraph 2280 compares the Cook Islands, Belize and the United States. Paragraph 2290 draws the practical lessons and closes with a checklist.