Loshini Ramarmuty traces the origins of the Mareva injunction.
 
INTRODUCTION
 
“We are told that an injunction of this kind has never been granted before. It has never been the practice of the English courts to seize the assets of a defendant in advance of judgment, or to restrain the disposal of them … It seems to me that the time has come when we should revise our practice.”
 
With this bold statement, Lord Denning MR, with the concurrence of Roskill LJ and Ormrod LJ, introduced the modern-day freezing injunction, which has come to be known as the “Mareva injunction”, into the English legal system.
 
THE MAREVA CASE
 
The Mareva injunction derived its name from the case of Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213 (CA) (“the Mareva”).
 
The plaintiffs were the owners of a vessel, the Mareva. They let it to the defendant charterers for a trip out to the Far East and back. The vessel was to be put at the disposal of the charterers at Rotterdam. Hire was payable half-monthly in advance at the rate of US$3,850 a day from the time of delivery.
 
The defendants sub-chartered the vessel to the President of India. Under that voyage charter the vessel was loaded at Bordeaux with a cargo of fertiliser consigned to India. The Indian High Commission, in accordance with its obligations under the voyage charter, paid 90% of the freight amounting to £174,000 to a bank in London to the credit of the charterers. The charterers paid the plaintiffs the first two instalments of the half-monthly hire out of those moneys but failed to pay the third instalment.
 
It was evident from the exchange of telexes that the charterers were not in a position to pay. They said they were unable to fulfil any of their obligations under the charter and had no alternative but to cease trading.
 
The plaintiffs treated the defendants’ conduct as a repudiation of the charter. They issued a writ and applied for service out of the jurisdiction. The plaintiffs believed that there was grave danger that the moneys in the defendants’ bank account in London would be dissipated and accordingly, applied for an ex-parte injunction to restrain the disposal of those moneys. The High Court granted an interlocutory injunction for a limited period of time which they refused to extend. The plaintiffs appealed.
 
The Court of Appeal was satisfied that there was a danger that the defendants may dispose of their assets which would result in the shipowners not getting their charter hire. Lord Denning MR stated:
 
“There is money in a bank in London which stands in the name of these charterers. The charterers have control of it. They may at any time dispose of it or remove it out of this country. If they do so, the shipowners may never get their charter hire … In the face of this danger, I think this court ought to grant an injunction to restrain the charterers from disposing of these moneys now in the bank in London until the trial or the judgment in this action.”
 
The grant of the injunction by the Court of Appeal in the Mareva in effect prevented the defendants from removing their assets out of the Court’s jurisdiction before the trial and thereby preserved those assets for the benefit of the plaintiffs in the event that they succeeded in their claim against the defendants.
 
According to the learned judge, the jurisdiction of the English courts to grant a Mareva injunction is found in Section 45 of the English Supreme Court of Judicature (Consolidation) Act 1925 which inter alia permits the High Court to grant an injunction by an interlocutory order in all cases in which it appears to the court to be just or convenient to do so. This power has been preserved in Section 37(1) of the English Senior Courts Act 1981 (previously called the Supreme Court Act 1981).
 
THE ORIGINS OF THE FREEZING INJUNCTION
 
Although the issue of a pre-trial injunction to restrain a defendant from disposing of his assets pending trial was viewed as a novel development in English law, a remedy of this nature has long existed in some civil law jurisdictions in Europe, such as in France, where an injunction of this nature is known as saisie conservatoire.
 
In his historical and comparative survey of the development of the procedure for the seizure of assets before judgment in Rasu Maritima SA v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina) and Government of Indonesia (as interveners) 1978 QB 644, Lord Denning MR highlighted that the seizure of a defendant’s assets before judgment was not a new procedure in England as a process of “foreign attachment” had existed in market towns like London, Bristol, Exeter and Lancaster since the eighteenth century. According to the learned Master of the Rolls, this process enabled a plaintiff to attach the assets of a defendant which are located within the jurisdiction of the court if the defendant is outside the jurisdiction when legal proceedings are commenced against him.
 
THE PREQUEL
 
What may have been lost in the mists of time is the fact that although the freezing injunction in modern times has come to be described as a “Mareva” injunction, the Mareva itself was not the first case where such an order was granted.
 
The decision in the Mareva was preceded by about one month by Nippon Yusen v Karageorgis and another [1975] 1 WLR 1093 where the Court of Appeal (comprising Lord Denning MR, Browne LJ and Lane LJ) reversed the decision of the High Court and granted an injunction in favour of a Japanese shipowner to restrain two Greek charterers from removing funds in a bank account in London pending trial. In fact, the statement quoted in the introduction to this article was made by Lord Denning MR in Nippon Yusen.
 
THE REQUIREMENTS
 
Over time, the Courts in England had laid down and refined the requirements that have to be fulfilled in order for a Mareva injunction to be granted. These requirements are discussed below.
 
Good Arguable Case
 
The plaintiff must satisfy the Court that he has a “good arguable case”. In Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG; The Nidersachsen [1984] 1 All ER 398, Mustill J explained that a “good arguable case” is “one which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success.”
 
Real Risk of Dissipation
 
The plaintiff must provide evidence to show that there is a real risk that the defendant would dissipate his assets with the intention of frustrating the enforcement of a prospective judgment. The test for the risk of dissipation is an objective one and is an assessment of whether the judgment may be rendered worthless.
 
Just and Convenient
 
The plaintiff must also satisfy the Court that it is ‘just and convenient’ to grant the injunction. The main consideration that underpins this requirement is for the Court to be satisfied that the likely effect of granting the injunction is to promote justice and not otherwise. In Pressurefast Ltd v Hall and Brushett Ltd (Court of Appeal (Civ Div) Transcript No. 336 of 1993 (March 9, 1993)), Leggatt LJ stated as follows:
 
“In my judgment, whether or not Mrs Justice Ebsworth paid sufficient regard to the hardship which the continuance of the Mareva injunction would wreak upon the defendants, it is plain from affidavits subsequently sworn that its effect has exerted considerable hardship on the defendants, going beyond merely preventing them from disposing of their assets so as to defeat the plaintiffs' claim. The interference with their lives and businesses, so long as the injunction was imposed, in my judgment went beyond what was appropriate for the legitimate protection of the plaintiffs.”
 
From the above discussion, it is clear that the Court will consider the totality of the circumstances surrounding the case before proceeding to grant a Mareva injunction.
 
EXTENDING THE LIMITS
 
Two common features of the early cases on Mareva injunctions are that they involved shipping disputes and defendants who were located outside England.
 
The use of the Mareva injunction was soon extended beyond the realm of shipping disputes to other areas of commercial disputes. For example, such injunctions were granted in relation to a fatal accident case in Ruth Allen v Jamba (Nigeria) Airways (unreported) and a bank’s claim against a defaulting borrower in Chartered Bank v Daklouche [1980] 1 All ER 205.
 
One of the early cases that involved a defendant who was domiciled in England was Barclay-Johnson v Yuill [1980] 3 All ER 190. In this case, the defendant submitted that the court should not grant a Mareva injunction against an English national domiciled in England as its jurisdiction to grant such an injunction was restricted to preventing foreign nationals from removing assets out of the jurisdiction.
 
The defendant’s argument was rejected by the Court. According to Megarry V-C, the essence of the Court’s jurisdiction is the existence of a real risk that a defendant would remove his assets from the jurisdiction. As such, the learned judge held that there was no reason why the Court’s jurisdiction should be confined to foreign defendants and that the grant of a Mareva injunction was not barred merely because the defendant was not a foreigner or a foreign-based person.
 
However, the learned judge acknowledged that the defendant’s nationality, domicile and place of residence could be material in determining whether there was a real risk of the assets being removed from the jurisdiction.
 
Any doubt as to the jurisdiction of the English Courts to grant a Mareva injunction against defendants who are domiciled, resident or present within the jurisdiction has since been laid to rest as the jurisdiction to do so is now expressly provided for in Section 37(3) of the English Senior Courts Act 1981.
 
THE MALAYSIAN POSITION
 
The first case in Malaysia to recognise the jurisdiction of the courts to grant a Mareva injunction is Zainal Abidin bin Haji Abdul Rahman v Century Hotel Sdn Bhd [1982] 1 MLJ 260, a decision of the Federal Court.
 
Based on a liberal interpretation of the expressions “cause” or “matter” in Section 3 of the Malaysian Courts of Judicature Act 1964, Raja Azlan Shah CJ (as His Highness then was) held that the High Court in Malaysia has the jurisdiction to grant a Mareva injunction under Paragraph 6 of the Schedule to the Courts of Judicature Act 1964 which confers various powers on the High Court including:
 
"Power to provide for the interim preservation of property the subject-matter of any cause or matter by sale or by injunction or the appointment of a receiver or the registration of a caveat or a lis pendens or in any other manner whatsoever."
 
Thereafter, the Malaysian Courts have in appropriate circumstances granted Mareva injunctions. Among the cases where such injunctions were granted are S & F International Limited v Trans-Con Engineering Sdn Bhd [1985] 1 MLJ 62, Bank Bumiputra Malaysia Bhd & Anor v Lorrain Osman & Ors [1985] 2 MLJ 236, Salcon Engineering Sdn Bhd v PRM Energy Systems (M) Sdn Bhd [1993] 3 MLJ 64 and Puteh Aman Power Sdn Bhd v Bittersweet Estates (Sabah) Sdn Bhd [2012] MLJU 834.
 
CONCLUSION
 
The Mareva injunction is a powerful and useful tool. It has been described by Donaldson LJ in Bank Mellat v Nikpour [1985] FSR 87 as “one of the law’s two nuclear weapons”, the other being the Anton Piller Order.
 
In appropriate circumstances, the Mareva injunction can be used to ensure that a plaintiff is not left with a worthless judgment. However, as a Mareva injunction can have severe repercussions on the person against whom it is made, the role of the courts in scrupulously ensuring that the prerequisites are satisfied before granting a Mareva injunction cannot be overstated.