The authors contend that had the arguments of the heirs in this case succeeded, a will would have been rendered ineffective in dealing with shares, leading to one of the parties being intestate regarding his British Virgin Islands estate. The impact, had the ruling not turned out differently, would have been "cataclysmic," the article says.

A recent appeal case has implications for private client advisors. In the following article, lawyers at Fladgate consider the following case: Sheikha Amena Ahmed HA Al-Thani and another (Appellants) v Sheikha Aisha Mohammed Ali Abdullah Al Thani and 2 others (Respondents) (Virgin Islands). The judgement date was 31 October, 2024. The writers are Simon Goldring, partner; Emily Williams, associate, and Rosalind Hetherington, senior associate.

The editors are pleased to share these views; the usual editorial disclaimers operate. Please treat these articles as a prompt for a conversation, and get in touch if you wish to share views. The editors can be emailed at tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

An eagerly anticipated appeal to the Judicial Committee of the Privy Council was heard in London on 25 June 2024 concerning the ruling family in Qatar. The judgment, handed down on 31 October 2024, will have come as a relief to high net worth individuals, private wealth practitioners and those dealing with international funds structuring. It confirmed that, despite the appellants’ best arguments, the BVI Business statute (1) does not render shares in BVI companies as immovable assets for succession purposes. 

The genesis of the dispute 
The appeal had made it all the way up to the Privy Council from the BVI Courts. The genesis of the dispute is 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. 

Pursuant to a will executed in 1990, certain family members and a business associate stand to inherit 20 per cent of the estate (the legatees). That was challenged by the late Sheikh Saud’s wife and children (who inherited the remaining 80 per cent of the estate, the heirs) 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 the legatees sought to overturn the grant of probate obtained there by the 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 as this issue had been determined in Qatar. 

In those proceedings, the heirs sought to argue the somewhat novel point that s. 245 of the BVI Business Companies Act 2014 rendered shares in BVI companies’ immovable assets for succession purposes. The consequence of that being that any will dealing with BVI situs immovable assets must comply with the BVI rules on will validity. This was completely contrary to decades of estate planning which had used BVI companies as a convenient asset holding structure which did not require a separate BVI compliant will.  

In this case, Sheikh Saud had made an oral will which, whilst valid and enforceable under Qatari law, did not comply with the BVI rules. Sheikh Saud’s BVI estate consisted mainly or wholly of shares in property and art holding companies. The consequences of the heirs’ arguments, if successful, would have been to render the Sheikh’s Qatari will ineffective to deal with the shares. The Sheikh would therefore have been intestate in respect of his BVI estate and the heirs’ (as his heirs under Sharia law) would have received the entirety of the BVI estate. 

If the heirs were correct, the consequences for the private client industry if the appeal had succeeded would have been 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 while 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. Many decades' worth of grants of probate would need to be considered afresh causing chaos and uncertainty for any estate which contained or contains BVI shares. Such shares could have been sold, given away or converted into new shares and all those transactions might then be called into question. In short, the consequences could be vast.

Thankfully, the Privy Council in no uncertain terms rejected the heirs’ submissions. The Judicial Committee determined that section 245 of the Act cannot have been intended to change longstanding rules of private international law. Lord Hodge delivered the opinion of the Board of the Privy Council. He found that to require owners of shares in a BVI company who are domiciled outside the BVI to make a separate will, valid under the law of the BVI, to transmit those shares on death, such that owners of shares could not rely on a testamentary instrument which was valid under the law of their domicile to do so, would “amount to a trap for the foreign investor.” 

The board humbly advised His Majesty to dismiss the appeal. The dismissal of the appeal is, unfortunately, not the end of the road for the dispute between the legatees and the heirs. The legatees must now go back to the court in the BVI to seek the relief originally sought many years ago – namely the revocation of the grant of probate obtained there by the heirs and the appointment of independent administrators to gather in the BVI estate.

However, the result of the appeal before the Judicial Committee of the Privy Council, from which there can be no further appeals by the heirs, does spell a very welcome end to the risk to the private client community.  

Footnote
1, section 245 of the BVI’s Business Companies Act 2004

The authors
Simon Goldring (below), partner at Fladgate, is a private client lawyer who litigates, with extensive experience spanning a range of contentious matters, notably onshore and offshore trusts disputes, and non-contentious estate planning solutions.
 

Emily Williams (below), associate at Fladgate, is a dispute resolution associate specialising in contentious trusts and probate litigation.

Rosalind Hetherington (below), associate at Fladgate, specialises in contentious trusts and probate matters with a focus on international disputes.