Legal proceedings by or against an Exempted Limited Partnership in the Cayman Islands: the debate about the correct party
针对开曼群岛豁免有限合伙企业提起的诉讼：围绕正确诉讼当事人的辩论
This article considers two Cayman court decisions on claims brought by limited partners in respect of an exempted limited partnership (‘ELP’) and the court’s interpretation of provisions in the Exempted Limited Partnership Act (2021 Revision) (the ‘ELPA’).
本文深入思考了开曼群岛法院对有限合伙人就豁免有限合伙企业（以下简称“ELP”）提出的索赔作出的两项判决，以及法院对《豁免有限合伙企业法》（2021 年修订版）（以下简称“ELPA”）中的条款的解释。
Kuwait Ports Authority & Ors v. Port Link GP Ltd & Ors (CICA (Civil) Appeal Nos. 002 & 003 of 2022, 20 January 2023) was the first decision by the Cayman Islands Court of Appeal considering section 33(3) of the ELPA on derivative claims brought by a limited partner on behalf of an ELP.
Re Formation Group (Cayman) Fund I, L.P. (FSD 366 of 2021 (IKJ), 21 April 2022)) was the latest decision in a series of conflicting decisions of The Grand Court of the Cayman Islands (the ‘Grand Court’) on whether a winding up petition could be presented against an ELP.
Introduction
ELPs are a popular structure adopted for use as a closed-ended investment vehicle. An ELP is a partnership that is registered under the ELPA. In contrast to a company, an ELP has no separate legal personality and exists only as its constituent partners. This means that the general partner of an ELP holds its rights and property of every description, including choses in action, on trust for each of the partners.
At the heart of these two recent Cayman decisions is the question of interpretation of section 33 of the ELPA, which concerns legal proceedings by or against an ELP. Section 33(1) of the ELPA provides that: ‘Subject to subsection (3), legal proceedings by or against an exempted limited partnership may be instituted by or against any one or more of the general partners only, and a limited partner shall not be a party to or named in the proceedings.’
The exception under section 33(3) then states that ‘A limited partner may bring an action on behalf of an exempted limited partnership if any one or more of the general partners with authority to do so have, without cause, failed or refused to institute proceedings.’
Kuwait Ports Authority & Ors v. Port Link GP Ltd & Ors
Background
The ELP in question is The Port Fund L.P., which has one general partner and eleven limited partners. Two of the limited partners commenced these proceedings, alleging wrongful misappropriation of the ELP’s assets held on trust by the general partner. The plaintiffs (i.e. the two limited partners) pleaded (i) individual direct claims against the defendants for losses each of them has suffered as a limited partner (the ‘Direct Claims’); and (ii) derivative claims against the general partner and the other defendants on behalf of the ELP (the ‘Derivative Claims’). The defendants applied to strike-out the claims.
The direct claims
The Court of Appeal of the Cayman Islands (‘CICA’) refused to strike-out the Direct Claims. CICA confirmed that Sections 33(1) and (3) of the ELPA apply only to derivative claims and have no application to direct claims brought by a limited partner in respect of its own right of action against the general partner and others.
The CICA further held that it is not appropriate to require that a direct claim by a limited partner against the general partner must always be initially brought by way of a claim for partnership accounts. It is not necessary to protect the positions of the creditors and of the other limited partners by requiring this. As for the direct claims against the other defendants, the CICA was of the view that the two limited partners have the requisite standing.
The derivative claims
The CICA’s judgment is instructive in its construction of section 33(3) of the ELPA against the background of the law on derivative claims. Some of the principles highlighted by the CICA are:
- A limited partner is not required to seek leave from the court to bring derivative proceedings under section 33(3), and is free to commence such proceedings without leave.
- However, in accordance with section 33(3) a limited partner may only bring a derivative claim if the general partner has refused or failed to do so without cause.
- The court’s task is to decide, on the basis of the material before it, whether the likelihood of the general partner having failed or refused to institute proceedings without cause is sufficient to lead the court to conclude that a derivative action should be permitted in the interests of justice. In reaching this evaluative conclusion, the court will have regard, inter alia, to the strength of the evidence that the general partner has failed or refused to institute proceedings without cause, the strength of the underlying claim which is sought to be brought and the likelihood and nature of any injustice if the derivative claim is not permitted.
- Even where the requirements of section 33(3) are met, the court has a discretion whether to permit a derivative claim to continue. One of the factors which is likely to be relevant in exercising that discretion is whether the plaintiff has an alternative remedy.
Applying these principles, the CICA struck-out the limited partners’ derivative claims against the general partner. The first basis for this decision was that on the first instance judge’s finding the ELP has suffered no loss or damage. There was no appeal against the judge’s finding that the partnership had no form or joint right or claim against the general partner. When the ELP does not have a claim of its own to bring, the limited partners cannot be permitted to bring a claim derivatively and there can be no failure by the general partner to bring such a claim without cause.
The CICA’s second reason for strike-out was as a matter of discretion. As the limited partners had an adequate alternative remedy in the form of a direct claim against the general partner, there was simply no need for a derivative action.
As for the derivative claims against the other defendants, the CICA held that by reason of conflict of interest, the general partner was under an inhibition which would amount to a special circumstance justifying the limited partners’ ability to bring a derivative claim. This inhibition also means that the failure by the general partner to bring proceedings against the other defendants was without cause for the purposes of section 33(3). Accordingly, the limited partners were allowed to pursue the derivative claims against the other defendants.
Re Formation Group (Cayman) Fund I, L.P.
Background
These proceedings concerned a winding up petition presented by six limited partners against an ELP on just and equitable grounds. The general partner applied to strike-out the petition on the basis that it was presented against the ELP rather than against the general partner.
The key question before the Grand Court was whether winding up proceedings can validly be brought against an ELP in its own name as opposed to against the general partner.
In an earlier decision of the Grand Court in 2021, Re Padma Fund LP (FSD 201 of 2021 (RPJ), 8 October 2021), Parker J held that the Grand Court had no jurisdiction under the Companies Act to wind up an ELP on a creditor’s petition. Such a decision resulted in some uncertainty as to the proper process for bringing proceedings against an ELP. In the present case, Kawaley J however took a contrary view which was consistent with his earlier decision in Re XIO Diamond LP (FSD 256 of 2019 (IKJ), 30 April 2020).
Decision
Kawaley J. embarked on a process of statutory interpretation of section 33(1) of the ELPA and other relevant provisions in the same statute relating to winding up under the Companies Act. In particular:
- Reference was also made to section 36 of the ELPA, which deals with the application of Part V of the Companies Act (2021 Revision) and the Companies Winding Up Rules, 2018 to the winding up of an ELP.
- Section 36(3) provides that an ELP may be wound up under Part V of the Companies Act and the Companies Winding Up Rules on the same grounds as would be available to a contributory in relation to a company. References in Part V to a ‘company’ apply to an ELP and references to a ‘contributory’ apply to a limited partner. By necessary implication, a limited partner may petition to wind up an ELP.
- Section 33(1) does not impose a mandatory requirement that all proceedings against an ELP must be brought against the general partner of an ELP.
The strike-out application was accordingly dismissed.
Conclusion
In light of the unique nature and status of an ELP, it is not surprising that there are heated debates around a limited partner’s standing to commence proceedings and the question of whether the ELP could be named as a respondent in its own name. The above decisions have provided useful guidance on the interpretation of section 33 of the ELPA and helped to shed some light on these issues. However, this is unlikely to be the end of the debates.
In particular, the question of whether an ELP could be sued in its own name remains controversial. Strictly speaking, Re Padma is still authority on the appropriate route for a creditor to petition and the conflicting views of the judges in Re Padma and Re Formation Group are yet to be resolved by an appellate court.
It is anticipated that jurisprudence concerning disputes involving ELP will continue to develop and provide more clarity to parties pursuing their claims.
This article first appeared in Volume 20, Issue 3 of International Corporate Rescue and is reprinted with the permission of Chase Cambria Publishing.
提要
“Kuwait Ports Authority & Ors 诉 Port Link GP Ltd & Ors（开曼群岛上诉法院 (CICA)（民事）上诉编号：2022 年第 002 号和第 003 号，2023 年 1 月 20 日）”是开曼群岛上诉法院在考虑 ELPA 第 33(3) 条后，对有限合伙人代表 ELP 提出派生索赔作出的首个判决。
“Re Formation Group (Cayman) Fund I, L.P.（案件编号：FSD 2021 年第 366 号 (IKJ)，2022 年 4 月 21 日)”是开曼群岛大法院（以下简称“大法院”）对是否可以针对 ELP 提出清算呈请作出的一系列互相冲突的判决中的最新判决。
引言
ELP 是一种盛行的结构，通常用作封闭式投资工具。ELP 是指根据 ELPA 注册成立的合伙企业。与公司相比，ELP 不具备独立法人资格，仅作为其组成合伙人存在。这意味着 ELP 的普通合伙人以信托形式为合伙人持有其各种权利和财产，包括据法权产。
开曼群岛最近这两项判决的核心是 ELPA 第 33 条的解释问题，该条款涉及由ELP 提起或针对 ELP 提起的法律诉讼。ELPA 第 33(1) 条规定：“在符合第 (3) 款规定的前提下，由或针对豁免有限合伙企业提起的法律诉讼只能由或针对任何一名或多名普通合伙人提起，而有限合伙人不得作为该法律诉讼的一方当事人或在该法律诉讼中被指名。”
第 33(3) 条规定的例外情况是，“如果任何一名或多名普通合伙人有权提起诉讼，但无故未能或拒绝提起诉讼，则有限合伙人可以代表豁免有限合伙企业提起诉讼。”
Kuwait Ports Authority & Ors 诉 Port Link GP Ltd & Ors
背景
本案的相关 ELP 是 Port Fund L.P.，该合伙企业有一名普通合伙人和十一名有限合伙人。其中两名有限合伙人启动诉讼，指控被告非法挪用普通合伙人以信托形式持有的 ELP 资产。原告（即两名有限合伙人）(i) 就各自作为有限合伙人所遭受的损失针对多位被告提出个人直接索赔（以下简称“直接索赔”）；以及 (ii) 代表 ELP 针对普通合伙人和其他被告提出派生索赔（以下简称“派生索赔”）。被告申请剔除索赔。
直接索赔
开曼群岛上诉法院（以下简称“CICA”）拒绝剔除直接索赔。CICA 确认，ELPA 第 33(1) 和 (3) 条仅适用于派生索赔，而不适用于有限合伙人就其自己的诉讼权针对普通合伙人和其他被告提出的直接索赔。
CICA 进一步认为，要求有限合伙人必须通过代表合伙账户的方式来针对普通合伙人提出直接索赔是不合理的，没有必要通过作此要求来保护债权人和其他有限合伙人的地位。就针对其他被告提出的直接索赔而言，CICA 认为，这两名有限合伙人具有提起诉讼的必要地位。
派生索赔
在与派生索赔相关的法律背景下，CICA 的判决对 ELPA 第 33(3) 条的解释具有指导意义。CICA 强调了一些原则：
·有限合伙人无需征得法院许可即可根据第 33(3) 条提起派生法律诉讼，无需许可的即可启动此类法律诉讼。
·但根据第 33(3) 条的规定，仅当普通合伙人无故拒绝或未能提出派生索赔时，有限合伙人才能提出派生索赔。
·法院的任务是依据向其提交的材料，决定普通合伙人无故未能或拒绝提起诉讼的可能性是否足以促使法院认定应当允许派生诉讼来保障司法公正。在推断这一评估性结论的过程中，法院将特别考虑普通合伙人无故未能或拒绝提起诉讼的证据的证明力、请求提起的基本索赔的力度，以及如果不允许提出派生索赔，出现任何不公正的可能性及其性质。
·即使满足了第 33(3) 条的要求，法院也可以自由裁决是否允许继续提出派生索赔。在行使该自由裁量权的过程中，一个可能相关的因素是，原告是否有替代救济。
根据这些原则，CICA 剔除了有限合伙人针对普通合伙人提出的派生索赔。作出这一判决的第一个依据是，一审法官认定，ELP 并未遭受任何损失或损害。法官认定合伙企业不具备针对普通合伙人提出索赔的形式或共有权利，而该判决未被上诉。如果 ELP 没有自己可以提出的索赔，有限合伙人不得提出派生索赔，普通合伙人不得无故不提出此类索赔。
CICA 驳回的第二个理由是法院行使其自由裁量权的决定。因有限合伙人有充分的替代救济，可以直接针对普通合伙人提出索赔，因此根本没有必要提起派生诉讼。
而就针对其他被告提出的派生索赔而言，CICA 认为，在普通合伙人因利益冲突的问题而受到抑制的特殊情况下，有限合伙人可以提出派生索赔。该等抑制也意味着，就第 33(3) 条而言，普通合伙人系无故未能针对其他被告提起诉讼。因此，有限合伙人有权针对其他被告提出派生索赔。
Re Formation Group (Cayman) Fund I, L.P.
背景
这些诉讼涉及六名有限合伙人基于公正、公平为理由针对一家 ELP 提出的清算呈请。普通合伙人向法院申请剔除该清算呈请，理由是该呈请系针对 ELP 提出，而非针对普通合伙人。
需要大法院解决的关键问题是，是否可以指名针对 ELP 合法提起清算诉讼程序，而非针对普通合伙人。
在大法院 2021 年早些时候的一项判决中，即“Re Padma Fund LP（案件编号：FSD 2021 年第 201 号 (RPJ)，2021 年 10 月 8 日)”，Parker J 认为，根据《公司法》，大法院没有司法管辖权来根据债权人的呈请针对 ELP 进行清算。该判决导致对 ELP 提起诉讼的适用程序产生不确定性。但在本案中，Kawaley J 持相反观点，这与他早些时候在“Re XIO Diamond LP（案件编号：FSD 2019 年第 256 号 (IKJ)，2020 年 4 月 30 日)”一案中作出的判决一致。
判决
Kawaley J. 对 ELPA 第 33(1) 条和该成文法中与《公司法》规定的清算相关的其他相关条款进行了成文法解释。特别是：
·还提到了 ELPA 第 36 条，该条规定了《公司法》（2021 年修订版）第 V 部分和《2018 年公司清算规则》对清算 ELP 的适用情况。
·第 36(3) 条规定，可以根据《公司法》第 V 部分和《公司清算规则》，用以与公司的分担人可用的相同的理由对 ELP 进行清算。第 V 部分提及的“公司”适用于 ELP，提及的“分担人”适用于有限合伙人。其必然含意是，有限合伙人可以呈请针对 ELP 进行清算。
·第 33(1) 条并未强制要求针对 ELP 提起的所有诉讼必须针对 ELP 的普通合伙人提起。
因此大法院驳回了剔除申请。
结语
鉴于 ELP 的独特性质和地位，围绕有限合伙人启动诉讼的权利，以及是否可以指名将 ELP 作为被告的问题存在激烈的辩论并不奇怪。上述判决为解释 ELPA 第 33 条提供了实用指导，并有助于理解这些问题。但这也不可能意味着辩论结束。
特别是，是否可以指名起诉 ELP 的问题仍然存在争议。严格来说，Re Padma 案仍然是有关债权人提出请求之适当途径的权威，而 Re Padma 案和 Re Formation Group 案当中相互冲突的法官观点还有待上诉法院来裁决。
可以预料到，有关 ELP 争议的判例将继续发展，为提出索赔的各方当事人带来更多明确性。
本文首次发表在《International Corporate Rescue》第 20 卷第 3 期，经 Chase Cambria Publishing 许可后转载。
