The long-running dispute centred on the duties of non-executive directors of hedge funds. In the first instance decision, which was delivered in August 2011, the fund's liquidators obtained judgement against the former directors, who were ordered to pay damages of US$111 million, on the basis that they had acted with wilful neglect or default in the discharge of their duties. The appeal judgement, handed down on 12 February 2015 by the President of the Cayman Islands Court of Appeal Sir John Chadwick, held that the evidence given by the directors at trial provided no support for the first instance findings of wilful neglect or default, and overturned the trial judge's judgement with costs. The judgement, and subsequent appeal, serve as a reminder of the need for non-executive directors to always be mindful of their role and the responsibilities owed by them to a fund and the level of skill, care and diligence expected of them.
The Travers Smith team was led by disputes partner Andrew King. The team instructed Ben Valentin of Fountain Court Chambers to successfully overturn the initial ruling.
Travers Smith's partner Andrew King commented: "This is a very significant decision for our clients who have consistently maintained their position in this complex and long-running case. We are delighted with the decision of the Court of Appeal of the Cayman Islands. The judgement is vital to restore the industry's understanding of the duties of non-executive directors of hedge funds not only in the Cayman Islands but throughout the offshore legal world."
Travers Smith's head of listed Investment Funds, Aaron Stocks, commented "The judgement will come as a relief to many directors of offshore funds who had been concerned that a single mistake could expose them to bankruptcy. The appeal has restored the industry's expectations."