The Eastern Caribbean High Court has delivered an important ruling for offshore trust and structuring practitioners, confirming that where trust property consists of shares in a British Virgin Islands company, BVI law determines the validity of that trust — even where another jurisdiction has a closer connection to the parties and does not recognise the concept of a trust at all.
Background
The case, NMH & ATG v PWP & NKT BVIHC (COM) 2023/0064, arose from enforcement proceedings following an ICC arbitral award worth approximately USD 1.7 billion against the First Defendant. During those proceedings, the Claimants identified 436 shares in a BVI company registered in the name of the Second Defendant, whom they alleged held those shares on trust for the First Defendant.
The Second Defendant argued that even if such a trust existed, it could only arise by inference, and that its validity would fall to be determined under Iraqi law as the jurisdiction most closely connected to the parties — and that since Iraqi law does not recognise the concept of trusts, any alleged beneficial interest in the shares was invalid.
The Firewall Provisions
The central legal question was whether BVI’s statutory “firewall” overrides the ordinary conflict-of-laws analysis.
Under common law conflict of laws principles, the law governing a trust is that expressly or impliedly chosen by the settlor, or the law with which the trust is most closely connected — a position reflected in Articles 6 and 7 of the Hague Trusts Convention and, in the BVI, in the definition of the “proper law” of the trust in section 80 of the Trustee Act 1961.
However, section 83A of the Trustee Act 1961 — enacted in 2003 and amended in 2021 — sets out the BVI’s firewall provisions. In particular, sections 83A(7)–(8) and the First Schedule provide that where trust property consists of shares in a BVI company, the formal and essential validity of any disposition of those shares is governed by BVI law. Section 83A(13)(a) further provides that no BVI trust and no disposition to such a trust is void or defective merely because a foreign law does not recognise the concept of a trust.
The Decision
The Second Defendant contended that section 83A(8) only governs the validity of a disposition of property into a trust, leaving the validity of the trust itself to be determined by its proper law under section 80. The Court rejected this argument.
Justice Mithani held that while an orthodox private international law analysis might draw a distinction between the validity of a disposition and the validity of a trust, section 83A represents a statutory modification of those ordinary principles. The creation of the alleged equitable interest in the BVI shares constituted a “disposition” for the purposes of section 83A, and its validity therefore fell to be determined under BVI law. Foreign non-recognition of trusts cannot override the position established by BVI statute, making Iraqi law irrelevant to the question of validity. The Iraqi law defence was struck out accordingly.
The Court noted that BVI firewall legislation was designed with a view to achieving international acceptance and placing the BVI ahead of other jurisdictions in the conflict of laws sphere.
Why This Matters
The decision is a powerful reaffirmation of the legislative intent to anchor trusts holding shares in a BVI company to BVI law. It provides welcome clarity that where alleged trust property consists of BVI company shares, BVI law will determine whether the equitable interest was validly created — regardless of whether any other connected jurisdiction recognises trusts at all.
For practitioners, creditors, and trust advisers working with BVI structures involving cross-border enforcement, this ruling underscores the strength and predictability of the BVI’s firewall regime as a tool for protecting trust validity in complex, multi-jurisdictional disputes.
Full judgment: NMH and ATG v PWP and NKT [2026] ECSC J0305-1
Case note: NMH v PWP & ors — Blackstone Chambers
Legal update: Holding the Firewall: Court Confirms BVI Law Governs Trusts of BVI Company Shares — Mourant
This article is for informational purposes only and does not constitute legal advice. Readers should seek independent legal counsel for advice on their specific circumstances.
