The Year 2015 in Review: Important decisions of the Supreme Court in Civil Litigation Matters


i) The refusal to provide information on a trust constitutes no specific and concrete danger which would allow the requesting party to obtain a freezing order:

The PSC had to decide whether a freezing order which was originally granted by PCJ against a Liechtenstein trust company was lawful or not. The background of this litigation was an inheritance dispute among several family members. The plaintiff’s claim was based on the civil law concept of compulsory portion. The plaintiffs claimed that their compulsory portion had been infringed through dispositions clearly favouring another family member. The claim for payment of the compulsory portion was directed against a Liechtenstein trust company which acted as trustee of the trust. The plaintiffs filed a freezing order which was originally granted by the PCJ. PSC held that materially there was no claim against the defendant (the Liechtenstein trust company). Moreover (and this is the interesting part of the decision) it was stated that the refusal of information by the defendant does not constitute sufficient grounds to assume that the defendant is acting in a way which could be perceived as endangering the plaintiff’s claim. The degree of danger which has to be portrayed by the plaintiff to the court requires a specific behaviour by the defendant. Such behaviour must be seen as mala fide actions which seriously endanger the execution of the plaintiff’s claim. This was not the case and the originally granted freezing order was lifted.

ii) Negligence by defendant may give rise to reduction of a claim for damages against the plaintiff in case a originally granted freezing order finally turns out to be unjustified

LEC provides for a rule which grants a damage claim to the victorious defendant in a freezing order scenario in case it is finally ruled that the claim brought against the defendant is not justified and damage was caused to the defendant through the freezing order. Such claim is granted irrespective on whether the plaintiff acted negligently or not. In the specific case at hand, the former defendant of a lawsuit brought a claim for damages against the former plaintiff stating that damage was caused through the freezing order. The original plaintiff and later defendant objected to this claim that the former defendant and now plaintiff also caused a part of the damages since he did not file for a specific relief with the court when the original freezing order was granted. LEC provides for the possibility to prevent damage happening to frozen assets. Specifically, this rule allows the sale of specific assets in the case of depreciation. The defendant argued that depreciation of the assets could have been prevented by applying to the court for the above mentioned relief. Since this was not the case, the plaintiff was to blame for contributory negligence. Liechtenstein law knows the concept of contributory negligence which means that in case that the plaintiff is to blame for negligence, the claim (if granted) may be reduced to the extent the court awards contributory negligence (usually expressed in percent). In the specific case at hand, it is the first time that PSC held that that concept of contributory negligence is also applicable in the field of damage claims for unsuccessful freezing orders.

iii) Enforceability of an arbitration award under the New York convention

In this case PSC held that only an arbitration award which has been lifted without the possibility to appeal is not enforceable anymore. The enforceability depends on the fact whether the arbitration award is subject to an appeal to a state court in merito or to an arbitration panel of second instance. The mere fact that an arbitration award has been challenged before a state court does not constitute an impediment to recognition under the New York Convention. In the case at hand, the arbitration award emanated from a French arbitration panel. PSC held that in order to become enforceable in Liechtenstein, the submission of a French exequatur is not required. Such exequatur from the jurisdiction in which the arbitration award was rendered is not necessary under the New York convention in order to consider the arbitration award as final and enforceable.

iv) Right to information of beneficiaries of a Liechtenstein foundation for the time prior to their entitlement

Liechtenstein litigation practice has seen a rising number of disputes on information regarding the management and administration of foundations in the last years. Also, the rise of these cases being litigated in court presumably is to be seen in connection with more reticence on the side of trustees when being requested to provide information. So far, the prevailing case law on the question regarding the right to information prior to becoming a beneficiary was clear: A beneficiary had no right to information regarding facts which occurred prior to his/her appointment as beneficiary. With its decision of September 2015, PSC reversed the existing case law and came to the conclusion that a beneficiary whose rights vis-a-vis the foundation change from being a reversioner to being a beneficiary is entitled to request information comprising the time prior to his appointment. The reason therefore is that only such an interpretation of the law provides for sufficient control of the foundation’s management. The argument is mainly based on governance arguments.