The granting of worldwide Mareva injunction against Hin Leong Trading, Lim Oon Kuin and his family members
 
The liquidators of failed oil trader Hin Leong Trading (“HLT”) have scored a significant win in their bid to recoup money from its founder, Lim Oon Kuin (“OK Lim”), and his family members.
 
The Singapore High Court on 21 May 2021 granted a worldwide Mareva injunction to freeze as much as US$3.5 billion of assets worldwide, including properties in Singapore and Australia, shares, insurance policies and club memberships, belonging to the founding family of collapsed oil trader HLT. It has been reported that the amount frozen under this injunction may be the largest in the city-state’s history.
 
OK Lim who was once an icon in Singapore's oil community, was also earlier charged with over 20 counts of forgery-related offences.¹

What is worldwide Mareva injunction?

Typically, a Mareva injunction or a freezing order is granted to restrain a defendant from dealing with his assets within the jurisdiction in which the injunction is granted. The injunction is to prevent the defendant from dissipating his assets before judgment is obtained. In more recent developments, post-judgment injunctions have also been issued by the courts.

In an increasingly borderless world where the assets of a defendant are located abroad, the courts have in exceptional circumstances, granted injunctions to restrain defendants from dealing with their assets located anywhere in the world.  An injunction of this nature is commonly known as a worldwide Mareva injunction or a worldwide freezing order, and is an increasingly useful tool in cross border disputes.

In considering whether or not to grant a worldwide Mareva injunction, the court will apply the usual principles applicable to a domestic Mareva which include:

Can a Malaysian Court grant a worldwide Mareva injunction?

The Malaysian courts are no strangers to worldwide Mareva injunctions. The earliest reported decision of a Malaysian court issuing such an injunction dates back to 2005 in the case of Metrowangsa Asset Management Sdn Bhd & Anor v Ahmad b Hj Hassan & Ors [2005] 1 MLJ 654. In this case, the High Court granted an injunction to the plaintiffs to restrain several defendants from dealing with their assets, both within and outside Malaysia, on the premise that the defendants had allegedly embezzled approximately RM125 million belonging to the plaintiffs’ clients.

Since then, there have been a number of cases where Malaysian Court has granted worldwide Mareva injunction, some of which are discussed in our article, Injunctions Sans Frontieres, which can be accessed here.

This article serves as an update to our previous article on the Malaysian position.

The Malaysian position : An update

Discussed below are some of the cases where applications for worldwide Mareva injunctions have been considered by the Malaysian Courts.
 

In this case, the Appellants appealed against the variations ordered by the High Court to be made to a worldwide Mareva injunction which restrained some of the Respondents ("the Mareva defendants") from dissipating their assets pending trial of the civil suit in the High Court.

The issue before the Court of Appeal was whether, in light of the factual background and the relevant established judicial principles governing variations to Mareva injunctions, the exercise of discretion by the High Court in ordering the variations was fair, equitable and correct.

The Court of Appeal held that the High Court has occasioned no appealable error in varying the  Mareva order. The Court of Appeal also held that the variations ordered by the High Court are essentially to permit the Mareva defendants to pay their legitimate and bona fide debts, recurring bills, monies for current and future contracts, living expenses, instalment payments for a house in London, statutory EPF deductions, remission of proceeds of sale of shares, legal fees for defending actions in courts and miscellaneous transactions. A Mareva injunction, being an equitable remedy, is not intended to be used as an instrument of oppression. The Court concluded that it is plain that the variations ordered by the High Court serve the purpose of permitting the Mareva defendants to discharge their legitimate and bona fide obligations which are completely consistent with the aforesaid established judicial principles.

The plaintiff in this case obtained a consent order against the defendant for a sum of RM11,760,000.00. When the defendant defaulted in complying with the terms of the consent order, the plaintiff applied for post-judgment orders in the nature of a worldwide Mareva injunction in aid of execution.

Varghese George Varughese JC in allowing the plaintiff’s application held that for post-judgment Mareva orders, it is trite that an applicant, need not show a good arguable case since they had already secured a judgment in its favour. What had to be established was that there was a real risk of dissipation of the defendant's (judgment debtor's) assets or that such assets were likely to be removed to avoid or deny execution being levied to recover the judgment sum. The learned Judicial Commissioner also held that the plaintiff had in his Affidavit in Support adverted to facts that clearly evidenced the propensity on the part of the defendant to frustrate the plaintiff from recovering the judgment debt.

The petitioner wife applied by way of summons in chambers, inter alia, for an order to restrain the respondent husband from transferring or disposing of matrimonial assets, within and outside the jurisdiction, pending disposal of the Petition for Judicial Separation. The application was made under, amongst others, section 102 of the Law Reform (Marriage and Divorce) Act 1976.

Yeoh Wee Siam J dismissed the application on grounds that the petitioner wife has used the wrong mode of commencing the proceedings as the relevant rules required the application to be made by a notice of application and not summons in chambers.

Significantly, Her Ladyship also held that there was no evidence that respondent husband has dissipated or disposed of the matrimonial assets nor was there a real risk of that happening with the object of reducing the respondent husband’s means to pay maintenance or to deprive the petitioner wife of her rights in up to 50% of the matrimonial assets.

This case involves a claim by the plaintiff that the defendants had wrongfully disbursed the plaintiff’s funds by unauthorized withdrawals to various parties and had, without authorisation, sold the plaintiff’s shares in a company which was a subsidiary of the third defendant whereby the plaintiff was the 80% shareholder, and first defendant was the holder of the remaining 20% shareholding. The plaintiff filed a claim against the Defendants for, inter alia, damages and restitution of RM317,000.00 as against the first and second defendants and of RM5,331,800.00 as against all the defendants. 

The Plaintiff also applied for an ex-parte worldwide Mareva injunction against the first and second defendants to restrain them from dealing with their assets in so far as the value of the assets exceed RM5,648,800.00 and against the third defendant in so far as the value if the assets exceed RM5,331,800.00.

In allowing the worldwide Mareva injunction, Ahmad Fairoz Zainal Abidin JC held that the plaintiff has a good and arguable case and that the balance of convenience lies in the plaintiff’s favour. The judge also held that the defendants have assets elsewhere in the world and there is a real risk of dissipation of the assets outside of jurisdiction.
 

More recently, on 30 October 2019, Mudajaya Corp Bhd successfully obtained a worldwide Mareva injunction up to the value of RM49.31 million and ancillary orders prohibiting its former employee and three other individuals from dissipating their assets. The order also prohibits any third party from knowingly assisting or permitting a breach of the order until the disposal of the full trial.²

Finally, in this recent Court of Appeal case³, the appellant, the Customs and Tax Administration of the Kingdom of Denmark, filed a civil suit against 40 respondents, comprising individuals and entities, to recover approximately RM 1 billion allegedly obtained by fraud perpetrated by the respondents.
 
In this appeal, the appellant appealed against the decision of the High Court in inter alia dismissing the appellant’s inter partes application for a worldwide Mareva injunction against the respondents. The Court of Appeal allowed the appellant’s appeal and granted the injunction, after considering the following factors:

Conclusion

With the aid of a worldwide Mareva injunction, a plaintiff can, in appropriate circumstances, restrain a defendant from dissipating its assets within and outside the jurisdiction, and thereby mitigate the risk of ending-up with a mere paper judgment.

Article by Leong Wai Hong (Partner) and Witter Yee (Senior Associate) of the Dispute Resolution Practice of Skrine.
 

---