Despite being considered 'settled law' for more than 135 years, the Cayman Islands has recently seen a renewed focus on the ability of companies to withhold privileged documents from their own shareholders
It has traditionally been accepted that a company cannot claim privilege against its shareholders due to a common or joint interest in the legal advice being received by the company, except in instances where documents have come into existence for the dominant purpose of litigation as against the shareholder seeking disclosure.
But recent decisions in the Cayman Islands, Bermuda and England have highlighted the diverging judicial approaches on this important issue and the impact that it has on shareholders' rights, as explained by Dispute Resolution partner Shaun Maloney and senior associate Dunzelle Daker.
58.com – the Cayman court affirms the shareholder rule
In the 2023 decision of 58.com (unreported, FSD 275/2020 (MRHCJ), 22 March 2023) (58.com), the Grand Court of the Cayman Islands was required to determine whether the subject company of appraisal proceedings was entitled to assert privilege over legal advice that it had received, in order to resist disclosure to dissenting shareholders.
The shareholders had relied on the long-established "shareholder rule" that a shareholder is considered to have a common or joint interest in legal advice relating to a company's administration, except where that advice has been obtained for the purpose of hostile litigation against the shareholder.
The Court found that 58.com could not withhold documents relevant to fair value from the dissenting shareholders, based on purported legal advice privilege and restricted the circumstances in which litigation privilege could be claimed by the company. In doing so, the Court affirmed the application of the shareholder rule in the Cayman Islands.
For a full analysis of the decision in 58.com, read: Privilege in Cayman Islands appraisals – the door opens for dissenting shareholders | Ogier
Jardine – the Bermudan court follows suit...
The 2024 case of Oasis Investments II Master Fund Ltd and Others v Jardine Strategic Holdings Limited [2024] CA (Bda) 7 Civ (Jardine) took a similar approach, with the Bermudan Court of Appeal upholding the Supreme Court of Bermuda's earlier decision to order disclosure against the subject company of a shareholder appraisal on similar grounds to those in 58.com.
The Court confirmed the existence of the shareholder rule in Bermudan appraisal litigation, finding that Jardine could not claim privilege against the dissenting shareholders, except where the documents were brought into existence when litigation between the company and its shareholders was in reasonable contemplation.
... but the Privy Council revisits the shareholder rule
On 6 March 2025, the Judicial Committee of the Privy Council heard an appeal from the Bermudan Court of Appeal's decision in Jardine.
Central to this appeal was the question of whether the current and former shareholders of Jardine enjoyed any joint interest privilege over legal advice obtained by the company and, if so, to what extent. The Privy Council was also asked to determine whether a company can assert privilege over its legal advice against a shareholder only where litigation privilege is established, or instead from the time that the interests of the company and shareholder became adverse.
The Privy Council's decision remains reserved at the time of writing.
Aabar – the English court turns its back on the shareholder rule
In contrast to the consistent approaches taken by the Cayman Islands and Bermudan courts, the English High Court renounced the shareholder rule in the November 2024 decision of Aabar Holdings S.á.r.l. v Glencore Plc [2024] EWHC 3046 (Comm) (Aabar). The English court described the rule as being "unjustifiable" and held that the principle that "should no longer be applied", despite it having been in existence for more than 135 years.
The Court found that the rule could not be justified on the basis of either a proprietary interest or joint interest privilege. It further held that joint interest privilege was not a standalone species of privilege that could have applied to the relationship between the company and its shareholders in any event.
Permission to appeal directly to the Supreme Court was refused and an appeal to the English Court of Appeal has now been listed for 26 January 2026. This appeal will provide an opportunity for the Court of Appeal to reinstate the shareholder rule in England, revive aspects of it under an alternative legal rationale or reinforce the High Court's position that the shareholder rule has no place in English law.
Where do company privilege and shareholders rights stand in 2025?
The Privy Council's judgment in Jardine is eagerly anticipated and, given the highly persuasive nature of Privy Council decisions in the common law world, it is likely that it will have a far-ranging impact in other jurisdictions, such as the Cayman Islands, that have traditionally applied the shareholder rule.
However, the possibility of the English court potentially taking a conflicting approach in the Aabar Holdings appeal could complicate matters.
Staying up to date with these developments will be key to navigating the fraught and dynamic interplay between company privilege and shareholder rights.
How can Ogier help?
Ogier's Dispute Resolution team are monitoring the evolving legal landscape closely and will continue to provide further updates on these latest challenges to the shareholder rule as they unfold. You can contact a member of the Cayman Islands team on +1 345 949 9876 or email cayman@ogier.com.
