Double Check Your Privilege – Practical Advice To Companies And Directors In The Cayman Islands

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The concept of legal professional privilege (“LPP”) has long been of crucial importance to legal professionals and their clients. The law of privilege is constantly evolving and has been the subject of many judgments and rulings in the Cayman Islands and across the common law world. A recent decision of the High Court of England and Wales – In the Matter of Curve OS Group Ltd [2026] EWHC 2024 (Ch.) – is likely to have implications for directors of a company who are appointed by particular investors and also for the company to which they have been appointed.

The practical takeaway is that an investor-appointed director who receives privileged material should not share it without explicit and direct authority. Even where there are formal agreements in place (i.e. a shareholders’ agreement) which allow the sharing of information, those rights should not be considered, as a matter of course, to include the disclosure of material which is privileged in the hands of the company.

The decision is not binding on the Courts of the Cayman Islands but is likely to be persuasive in future considerations of privilege and / or waiver of privilege as regards investor-appointed directors.

In an ex tempore judgment of the High Court, the Court held that privilege over certain documents had been waived where the solicitors of Curve OS Group Ltd (the “Company”) sent privileged documents to the shareholders’ solicitors. In the proceedings, the shareholder, a venture capital fund, (the “Petitioners”) was petitioning to wind up the Company on grounds of unfair prejudice under section 994 of the Companies Act. An application was brought by the Company against the Petitioners relating to material in the possession of the Petitioners which the Company contended was protected by LPP. The documents in question were presumed by the Court to be privileged for the purpose of determining the application, but the Court chose not to embark upon an examination of the documents.

The Petitioners were entitled to appoint an “investor director” to the Company’s board of directors (the “Investor Director”). The Investor Director therefore wore two hats during the period of his appointment: (i) he owed directors’ duties to the Company; and (ii) he owed duties to the Petitioners. In particular, as is the norm, the Investor Director owed a duty to the Company to act in its best interests and to avoid conflicts of interest. A number of allegedly privileged documents (i) had been provided by the Company to the Petitioners and (ii) had been provided by the Company to the Investor Director (the “Class 2 Documents”).

The Court’s decision

The Court held that privilege had been waived in respect of the Class 1 Documents but not in respect of the Class 2 Documents. The Court noted that following the decision of the Judicial Committee of the Privy Council in Jardine v Oasis [2025] UKPC 34,¹ it was clear that a company is entitled to assert privilege against its shareholders, subject to waiver. To the extent that privileged material was disclosed to the Investor Director, including in his capacity as the Investor Director, he received that material as an agent of the Company and had a duty to protect privilege belonging to the Company in the absence of a clear authority to waive the privilege.

In its preliminary remarks, the Court addressed some legal propositions regarding privilege and its loss. The Court went on to highlight the importance of LPP, which is more than an ordinary rule of evidence but rather a “fundamental condition upon which the administration of justice as a whole rests”, and referred to previous descriptions in the House of Lords and UK Supreme Court as a “fundamental human right”, long established in the common law. The central policy consideration as regards LPP is that it is a necessary corollary of the right of any person to obtain skilled advice about the law. Such advice cannot be effectively obtained unless the client is able to put all of the facts in front of their legal adviser, without fear that it will be disclosed afterwards and used to their prejudice – if a communication or document qualifies for LPP, the privilege is absolute. In a corporate context, the privilege is that of the company not the shareholder. As a result of Jardine, the Shareholder Rule is contrary to the basic principles of company law, including the doctrine of separate legal personality and the rule that a company owns its own assets and does not merely hold them on trust for its shareholders.

In respect of waiver, the Court held that where there is said to have been a waiver, the party’s meaning must be ascertained objectively by reference to the words used or their conduct – subjective readings are not to be taken into account. As a matter of law, privilege may be waived for a limited purpose without LPP being waived generally, i.e. limited waiver. In the circumstances of this particular case, the subscription and shareholders’ agreement contained various terms entitling the Petitioners to information, including an entitlement to receive monthly management accounts, budget and cashflow forecasts and financial statements. The subscription and shareholders’ agreement also provided a mechanism by which the Petitioners could obtain information reasonably required for certain purposes. However, it was silent on privileged information. The Court observed that the information entitlements set out in the agreement excluded any right to be provided with LPP material, rather than created such an entitlement. The Court concluded ultimately that the LPP material came to the Investor Director in his capacity as a director of the Company and not as an agent of the Petitioners and absent “explicit and direct authority” from the Company, he was not free to disclose it.

Practical implications for Cayman companies and directors

• Where parties intend that information sharing rights, such as those contained in a shareholders’ agreement or a subscription agreement, will include privileged material, they should make it clear in the agreement by express language.

• In the absence of “explicit and direct authority” from a company to an investor director, an investor director will owe a duty to the company to protect its privilege and should not share such privileged information with the investor.

• It is possible to waive privilege for a limited purpose only, so that the recipient of the privileged material is not entitled to use it for other purposes. The limited purpose must, however, be clear to the recipient.

The Dillon Eustace Commercial Litigation and Dispute Resolution team in the Cayman Islands has extensive experience in advising on matters relating to privilege in the context of contentious board and shareholder disputes.

The content of this article is intended to provide a general guide on the subject matter. If you are in need of specialist advice, please contact a member of the Dillon Eustace team below.

Footnote

1. The effect of the decision in Jardine is that the long-standing “Shareholder Rule”, whereby a company cannot assert privilege against its shareholders, has been abolished. In addition, the Privy Council gave a Willers v Joyce direction abrogating the Shareholder Rule for the purpose of litigation in England and Wales. A copy of the judgment of the Privy Council in Jardine is available here. The Shareholder Rule has also been disavowed in the English case of Aabar Holdings SARL v Glencore plc [2024] EWHC 3046 (Comm) – leave to appeal has been granted.