Brenner, for appellant.
Jean-Marie L. Atamian, for respondents.
Paul Davis was an owner of ordinary shares in defendant
Scottish Re Group, Limited (Scottish Re), a Cayman Islands
company formerly engaged in the business of reinsurance. He
asserted both direct and derivative causes of action against
Scottish Re, its indirect wholly-owned operating subsidiary
Scottish Re (U.S.), Inc. (SRUS), certain members of the Board
of Directors of Scottish Re and SRUS, Massachusetts Mutual
Life Insurance Company (MassMutual) and the private equity
firm Cerberus Capital Management, L.P. (Cerberus), and
various entities affiliated with MassMutual and Cerberus.
Plaintiff alleged that MassMutual and Cerberus, through
certain of their affiliates, worked in concert with Scottish
Re directors that were beholden to them to implement a series
of transactions that enriched themselves, while causing harm
to minority shareholders like plaintiff and to Scottish Re.
The only claims relevant to this appeal, as limited by the
parties' briefs, are plaintiff's derivative claims.
Court dismissed the majority of plaintiff's complaint,
including his three derivative causes of action, on two
grounds. It held that, under Cayman Islands law, plaintiff
had not established standing because he did not seek leave of
court to commence a derivative action under Rule 12A of the
Rules of the Grand Court of the Cayman Islands. In the
alternative, Supreme Court held that plaintiff did not have
standing to bring his derivative claims under Cayman Islands
common law, which applies the test embodied in the 1843
English case, Foss v Harbottle (2 Hare 461 ).
Appellate Division modified, to allow plaintiff to replead
two claims not at issue here, and otherwise affirmed based on
plaintiff's noncompliance with Rule 12A, holding that the
rule applied because it was substantive, rather than
procedural . It did not reach the question of
whether plaintiff had standing under Foss v
Harbottle. The Appellate Division granted leave to
appeal and certified the following question: "Was the
order of this Court, which modified the order of Supreme
Court, properly made?"
dispositive issue in this appeal is whether Rule 12A,
contained in Order 15 of the Cayman Islands Grand Court Rules
1995 (Revised),  is a substantive rule and therefore
applies under our choice of law principles, barring plaintiff
from bringing his derivative action on behalf of Scottish Re.
We hold that Rule 12A is procedural, and therefore does not
apply where, as here, a plaintiff seeks to litigate his
derivative claims in New York. Accordingly, the order of the
Appellate Division, insofar as appealed from, should be
reversed, and the matter remitted for consideration of
whether plaintiff has standing under Cayman substantive law.
12A, which was introduced into the Cayman Islands
Court Rules in 1995, addresses shareholder derivative
actions, and states, in relevant part:
"(1) This rule applies to every action begun by writ by
one or more shareholders of a company where the cause of
action is vested in the company and relief is accordingly
sought on its behalf (referred to in this rule as a
(2) Where a defendant in a derivative action has given notice
of intention to defend, the plaintiff must apply to the Court
for leave to continue the action. 
(3) The application must be supported by an affidavit
verifying the facts on which the claim and the entitlement to
sue on behalf of the company are based.
* * *
(8) On the hearing of the application under paragraph (2),
the Court may -
(a) grant leave to continue the action, for such period and
upon such terms as the ...