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MAREVA INJUNCTIONS

Equitable Remedies

Definition:

Qua timet (because your fear) order that is prohibitive in nature

A freezing order made in personam although it may operate in rem

Temporarily freezes assets required to satisfy future court judgements

Prevents the disposal of the assets before the trial, but does not allow P to

have control over the frozen assets

Usually use in commercial matters, thus discovery is important

Tracing may also be done to find out what are and where the assets of the

defendant is located

History of MI

Used in international trade/use of flags of convenience

Order named after Mareva case but was granted in Nippon

Used in maritime law it puts commercial opponent under pressure

because it freezes assets

More necessary today because of upgraded ways to move money

Cases:

Mareva Case: Court granted exparte MI because of none payment of

a ship charter (monies were said to be in NY, however there London

bank account had money-jurisdiction is important)

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Nippon’s Case: Court froze assets in a London bank after time

charters defaulted on payment

3rd Chandris Shipping v Unimarine: principle of the MI

Claimant proceeds by stealth so as not to premept the action of the

defendant

Def would find his accounts blocked, thus freezing order is a

powerful weapon in the hands of a reckless claimant

Conditions of the grant:

a. Court must have jurisdiction of the underlying dispute (The Siskina:

ship owned by Panama, insured in England, charter voyage to Italy, sunk

in Cyprus, bills governed by Italy: no legal/equitable right in England,

no pre-existing COA in England, so no MI (it was the only relief sought

so cannot allow service ex juris)

b. Guidelines laid down in American Cyanamid (p202)

1. Serious question to be tried (not to resolve conflict)

2. Is damage adequate (would the defendant be able to pay)

3. applicant’s undertaking

4. Balance of convenience3

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Guidelines not statutory and merely provides a flexible manner in

which the court may apply its discretion

Purpose: enable the court to ensure that justice is done between the

parties

c. An undertaking as to damage:

P must give undertaking when seeking an injunction as a requirement

(Blue Town v Higgs)

Undertaking is done by way of an affidavit contain security/bond

MI will not be refused as a result of Ps impecuniosity or inadequacy

(Allen v Jambo Holdings)

d. Full and frank disclosure; should have affidavit disclosing all material

information pertaining to the matter in the knowledge (what is known or

what should have been known along with undertaking) (Assios: no FFD,

no MI; Brinks v Elcombe: court exercised discretion and continued matter

even though there were no FFD. Prerogative of the court to continue or

start a new)

Circumstances where jurisdiction of the court involved:

MI may be ordered where: 4

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a. There is an arguable case: (Rasu Maritima: no need for Mi to be

confined to the stronger case enough for a summary judgement but

should show and arguable case; Niedersachsen: meaning of arguable

case being more than barely capable...but not necessarily one that the

judge believe has more than a 50% chance)

b. There is a real risk of assets being removed from the jurisdiction:

Rahaman v Abhu Taha: being aboard not sufficient, MI not to provide

security for claim because P has no control of the frozen assets))

c. Risk of dissipation of the assets: Bare assertion that the defendant will

not honour the award is not sufficient. MI not security for claim – Third

Chandris Shipping v Unimarine)

Subject matter of the MI

MI covers: money, bank account, land, M/V, jewellery and other assets,

applies to any one who holds assets for the defendant (subject the same

rigours of the MI)

Court considers the value of the assets (Rasu v Maritima: Value of the

scrap metal was nominal and so exercised discretion to grant MI, p209)

a. Assets within jurisdiction (Allen v Jambo Holdings: personal injury

claim and defendants were prevented from removing assets from the

jurisdiction.

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b. Assets outside of the jurisdiction

Court limits injunction within jurisdiction because:

It is sufficient sanction to ensure compliance (Ashtiane v Kashi:

MI assets should be limited to those within the jurisdiction of the

court p211)

Failure to comply would bar the defendant from defending the action

Court should not make orders within the exclusive jurisdictions of

other countries

Exception when the court would issue a worldwide MI:

Defendant is amenable to the court’s jurisdiction over asset outside

the jurisdiction (in instances where there is fraud)

Assets within jurisdiction is insufficient to satisfy the claim

Foreign assets belonging to the defendant that runs the risk of

disposal

Defendant will not be oppressed by a multiplicity of proceedings

Derby & Co v Weldon: defendant did not disclose all assets, P

claim conspiracy to defraud, MI granted, not limited to assets

within court jurisdiction6

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Action in Personam: Operation in Rem

Personam

MI prohibits defendant from removing the assets (attaches to

defendant)

It gives no property rights over the assets

No priority to creditors

No attachment to defendants assets, beyond the claim

Rem

Operates in rem because it attaches to any effects of the defendant

(money/goods) within the jurisdiction of the court

Every person with knowledge of the order must obey it (non-

compliance = contempt)

MI not a security for claims (secure the process so that the assets

cannot be disposed so as to frustrate judgement)

Ownership of assets and 3rd party rights:

A) NO MI if it interferes substantially with 3rd parties (Galaxia

Maritima: P making demurrage claims that would affect innocent 3rd

party, No MI)

3rd party who aids and abets is guilty

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Granting of injunctions court considers:

Innocent 3rd party freedom of action must be protected – no

activity on bank/assets, everything should be freezed

Expenses of 3rd party in complying with injunction should be

returned by the claimant

notice must be served on 3rd party so they know what they can

/cannot do;

not able to ID bank account P pays for a search

Quantum: notice must contain the amount the defendant owes

(Galaxia maritima: P making claims on charter belonging to

innocent 3rd party)

No lien, but creditors can set off even of defendants assets is

reduced below maximum (Oceania Case: provisions must be

within the order to allow the banks to set off, in respect of

facilities given to the defendant before the order

B) only assets of te defendant can be included in MI

3rd party affected can apply for variation

Dispute of ownership of assets:8

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Assets belonging to 3rd party must not be treated as though it

belong to the defendant.

Assertion of assets belonging to 3rd party, court must enquire

Court has discretion to further enquiry to be tried (SCF Finance Co

v Masri: court has power to do whatever is convenient....where

assets is alleged to be own by someone other than the defendant

Position of the Defendant

MI allowing defendenat to use a portion of the assets for living/legal

expenses up to stated amount inclusive of making payments to himself

(PCW (underwriting agencies) v Dixon)

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