Civil Procedure II: Ekin Kasim Ragu

MAREVA INJUNCTION
NATURE, ORIGIN AND DEVELOPMENT 1) The courts in the exercise of its discretion have the power to restrainst the defendant from removing any assets from the jurisdiction of the court pending the disposal of the suit.

assets in order to defeat an action brought against him.

5) In Third Chandris Shipping Corporation & Ors v

Unimarine SA Lord Denning gave certain guidelines in the granting of a Mareva Injunction

6) In the Malaysia case of S & F International Limited v 2) The effect of a mareva injunction is generally to

Tans- Con Engineering Sdn Bhd

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freeze the assets of the defendant pending the conclusion of the suit.
3) The Mareva Injunction found its origin in the case of

Nippon Yusen Kaisha v Karageorgis and derives its name from the case of Mareva Compania Niviera AS v International Bulkcarriers SA

Abdoolcader FJ said that a Mareva injunction is a species of interlocutory which restrains a defendant by himself or by his agents or servants or otherwise from removing from the jurisdiction or disposing of or dealing with them of his assets that will or may be necessary to meet a plaintiffs pending claim.

4) The Mareva Injunction originated in the case of

Mareva Compania Niviera AS v International Bulkcarriers SA Where an injunction was granted to restrain defendant from disposing or concealing his

JURISDICTION TO GRANT A MAREVA INJUNCTION IN MALAYSIA In Zainal Abidin v Century Hotel Sdn Bhd, the Federal Court held that
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Civil Procedure II: Ekin Kasim Ragu

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That paragraph 6 of the Schedule to the Courts of Judicature Act 1964 gave the High Court jurisdiction to grant a Mareva injunction.

i.

There is a good arguable case : Rasu Maritima SA v Perusahaan etc Negara

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PROCEDURE FOR APPLICATION 1) Orwell Steel Ltd v Asphalt and Tar Mac (UK) Ltd Plaintiff can apply for a Mareva injunction before an action has been commenced or after a full trial
ii.

It was held that the case need not be a strong case as to warrant a summary judgment (under Order 14) or even a strong prima facie case. It is sufficient to show on the evidence available that there is a fair chance that plaintiff will obtain judgment against defendant. Ultimately it is the courts discretion to decide

2) Order 29 Rule 1(2)

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Plaintiff applies by ex-parte summons supported by an affidavit before a judge in chambers

Besides a good arguable case, Lord Denning in Third Chandris Shipping Corporation & Ors v Unimarine SA, set out certain guidelines before a Mareva injunction will be granted:

a) Plaintiff must make a full and frank disclosure of all matters b) Plaintiff must specifically give the reasons for and the amount of his claim and also possible arguments defendant may make against its granting REQUIREMENTS c) Plaintiff must show that defendant has assets within the jurisdiction
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Civil Procedure II: Ekin Kasim Ragu d) Plaintiff must give grounds for believing that there is a risk of defendant disposing of his assets and e) Plaintiff must give an undertaking as to damages. a) Plaintiff must show a good arguable case b) Plaintiff must give evidence that defendant has assets within the jurisdiction and c) Plaintiff must show that there is a risk that defendant may dispose of his assets before judgment.

iii.

Plaintiff has a duty to make a full and frank disclosure: Creative Furnishing Sdn Bhd v Wong Koi

v.

Discovery in aid:

The Supreme Court emphasised that Plaintiff must make a full and frank disclosure of all material facts. There must be no misleading or suppresion of the material facts Failure to do so will be fatal.

The court has a discretionary power to make an order for discovery in a Mareva injunction to help it to decide whether to grant the Mareva injunction (Bank Bumiputera v Lorrain Osman)

iv.

In Bank Bumiputera v Lorrain Osman, the court granted a Mareva injunction to restrain defendant from transferring his assets out of the jurusdiction and said inter alia that the requirements for a Mareva injunction are: RISK OF DEFENDANT DISPOSING OF HIS ASSETS
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Civil Procedure II: Ekin Kasim Ragu There must be a real risk that defendant will or may remove their assets from the jurisdiction or dispose of them within the jurisdiction so as to render them unavailable or untraceable (Bank Bumiputera v Lorrain Osman) (S & F International Limited v Trans- Con Engineering Sdn Bhd) (Ace King Pte Ltd v Circus America Ltd) MAREVA INJUNCTION AGAINST LOCAL DEFENDANT
i. The Mareva injunction is available against a local

defendant: (Bank Bumiputera v Lorrain Osman) (Barclay Johnson v Yuill)

ii. In the case of BBMB v Lorrain Osman, it was held that

LIVING EXPENSES AND DEBTS The order must make provisions for living expenses and payment of ordinary debt by defendant: i. The court may make a blanket order where usually about 70 % is for Mareva Injunction and 30% for living expenses and ordinary debts according to defendants living expenses

In respect of seventy-five of the companies, the defendant is the alter ego of the companies and if the corporate veil is lifted, it would then be found that the assets of the companies are the assets of the defendant. The injunction would therefore, apply to the shares of the defendant in the companies. But where it is shown that the defendant only owns a certain percentage of the shares in the companies and where it is clear that he does not fully own the companies nor is he fully control of them, it is not proper to lift the corporate veil of the companies. The Mareva injunction can, however, be enforced in respect of these companies in so far as the defendants shares are concerned.
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ii. In Larut Consolidated Bhd v Khoo Ee Bee, the High

Court held that: - Mareva injunction must not be oppresive and must provide for defendants living expenses and legal costs

Civil Procedure II: Ekin Kasim Ragu PLAINTIFF OBTAINS NO PRIORITY Where defendant becomes bankrupt or winds up, the secured creditor has priority. If plaintiff is an unsecured creditor, then the first in time has priority PROTECTION OF RIGHTS OF THIRD PARTIES The court will take into account the interests of third parties who have rights as secured creditors (ex: banks) and exclude those properties in granting the Mareva injunction FOREIGN ASSETS
1) If defendants assets are within jurisdiction, then it is

The court had jurisdiction in an appropriate case to grant a pre-judgment mareva injunction over a defendants foreign assets, notwithstanding that he had no assets within the jurisdiction. If such an order was necessary to prevent the defendant from taking action to frustrate subsequent orders of the court. However, where there were sufficient assets within jurisdiction the injunction should be confined to those assets

3) In Roseel NV v Oriental Commercial & Shipping Ltd

easy but problems may arise when the assets are in foreign land

The court of Appeal held that a Mareva injunction to prevent foreign assets from being dissipated is an unusual measure and should rarely be granted.

2) However, in Derby v Weldon, the court held that it has

jurisdiction to grant a Mareva injunction even if the assets are in foreign land. But there is no cases in Malaysia.

WORLDWIDE INJUNCTION It has been proposed in Derby v Weldon and Credit Suisse Fides Trust SA v Coughi that Mareva injunctions should have worldwide effect.
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Civil Procedure II: Ekin Kasim Ragu DISSOLUTION OF MAREVA INJUNCTION In Motor Sports International Ltd & Ors v Delcont (M) Sdn Bhd, the court said that it may discharge a Mareva injunction if there is a suppresion of material facts. If living expenses have not been taken into account, the court may vary the order.
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Thus, the imposition of the condition offends the principles governing the grant of a Mareva injunction.

It was decided that a Mareva injunction must be valid from the date it was granted. If such an injunction was oppresive by its terms at the date of its grant, any subsequent variation will reduce or remove the oppression only in the future. The defect contained in the injunction at the time it was granted, cannot be removed by subsequent variation.

CONCLUSION A Mareva injunction is not intended to give a plaintiff priority over the defendants asset. It is not supposed to put the plaintiff in the position of a secured creditor