MAKERERE UNIVERSITY

SCHOOL OF LAW

NAME; TUMUHAISE FERDINAND

REG NO; 14/U/1228
STUDENT NO; 214000863
COURSE UNIT; EQUITY AND TRUSTS
COURSE CODE; L2108
LECTURER ; MS PHILDA MAIGA

QUESTION

“It is important to note that the Mareva injunction even if related to a specified asset, operates in
personam. It is not a form of pre-trial attachment. It does not effect seizure of the asset. It merely
prevents the defendant personally from removing or transferring the asset. It gives no
proprietary right in the asset nor priority over creditors.” Discuss with reference to decided
cases.

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MAREVA INJUNCTION

'Mareva injunction' is an interlocutory injunction which restrains a debtor or the debtor's agents, servants
or otherwise from removing assets from the jurisdiction or disposing of or dealing with those assets so as
to frustrate a creditor seeking to recover from the debtor.
The Mareva injunction is a legal procedure initially devised by the English courts. It gained its name from
one of the initial cases in which such an injunction was granted by Lord Denning in 1975;

Mareva Campania Naviera SA v International Bulk Carriers SA [1980] 1 All ER 213, the shipowners
who owned the vessel Mareva. They let it to the defendants („the charterers‟) on a time charter for a trip
out to the Far East and back.. Hire was payable half monthly in advance and the rate was $US3,850 a day
from the time of delivery. The vessel was duly delivered to the charterers on 12 May 1975. The charterers
sub-chartered it. They let it on a voyage charter to the President of India. Freight was payable under that
voyage charter. Under that voyage charter the vessel was loaded at Bordeaux on 29 May 1975 with a
cargo of fertiliser consigned to India. The Indian High Commission, in accordance with the obligations
under the voyage charter, paid 90% of the freight. But paid it to a bank in London to the credit of the
charterers. The total sum which the Indian High Commission paid into the bank was £174,000. Out of
that the charterers paid to the shipowners, the plaintiffs, the first two installments of the half monthly hire.
They paid those installments by credit transferred to the shipowners. The third was due on 12 June 1975,
but the charterers failed to pay it. They said they were not able to fulfill any part of their obligations under
the charter, and they had no alternative but to stop trading. They issued a writ on 20 June. They claimed
the unpaid hire, which comes to $US30,800, and damages for the repudiation. They also believed that
there was a grave danger that the moneys in the bank in London would disappear. So they applied for an
injunction to restrain the disposal of those moneys which were in the bank.

HELD; Lord Denning held that “If it appears that the debt is due and owing to a creditor, and there is a
danger that the debtor may dispose of his assets so as to defeat it before judgment, the court has
jurisdiction in a proper case to grant an interlocutory judgment so as to prevent him disposing of those
assets. The injunction was granted. In its ruling court refused to follow Lister & Co v Stubbs(1890) 45 Ch
D I where it had been held that the court had no jurisdiction to protect a creditor before he gets
judgement.

However, a similar injunction had been granted a month earlier before the decision in the above case in
Nippon Yusen Kaisha v Karageorgis[1975] 3 All ER 282. In this case the plaintiff company had chartered
a ship to the defendants. A large sum was now claimed for hire but the chaterers could not be found.
There was evidence of funds at a bank in London. An ex-parte application to grant an injunction
restraining the charterers from disposing of or removing from the jurisdiction any of the assets within the
jurisdiction was granted on appeal.

Purpose

The major purpose of a Mareva injunction is to prevent especially foreign parties from causing assets to
be removed from the jurisdiction in order to avoid the risk of having to satisfy any judgment which may
be entered against them in the pending proceedings in a particular country. In Rasu Maritime SA v
Pertamina (1977) ALL ER 324 Lord Denning suggested that the purpose of a Mareva injunction might be
to bring pressure to bear on the defendant to provide security for the plaintiff‟s claim. Lord Diplock in the
Siskina case (1977)3 ALL ER 803 said, “The purpose of this injunction is to ensure that there will be a
fund available within the jurisdiction to meet any judgement obtained by the plaintiff against the
defendant.”

In Aetna Financial Services Ltd v Feigelman (1985) 1 SCR 2 the Supreme Court of Canada reiterated, “
The gist of the Mareva action is the right to freeze exigible assets when found within the jurisdiction
wherever the defendant may reside providing ofcourse, there is a cause between the plaintiff and the
defendant which is justiciable in the courts of England. However unless there is a genuine risk of
disappearance of assets, either inside or outside the jurisdiction, the injunction will not issue.”

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In Estabissement Esefka v Central Bank of Nigeria Lord Denning stated, “ The Mareva injunction is only
to be granted where there is danger of the money being taken out of the jurisdiction so that if the plaintiffs
succeeded they are not likely to get their money.

A Mareva injunction may be granted either before or after judgment has been obtained, and even in
support of a costs order prior to taxation of costs. To this end, it represents a limited exception to the
general rule that a plaintiff must obtain his judgment and then enforce it. A Mareva injunction is a court
order. Consequently, willful breaches are punishable as a contempt of Court with appropriate penalties

Scope of application
In the early stages of its development, a Mareva injunction was used to restrain foreign defendants in
actions for recovery of debts from removing assets from the jurisdiction of the Court. Nowadays, the
defendant need not be foreign or foreign-based. The mode of dealing with assets is not limited to
removing them from the jurisdiction.

The Mareva injuction has been extended to cover both commercial actions and actions for personal
injuries. In Allen and others v Jambo Holdings ltd and others (1980) 2 ALL ER 502, The plaintiffs were
the widow, children and executors of a man who was killed when he was hit by the propeller of the light
aircraft he was about to board. The aircraft was owned by a Nigerian company and at the time of the
accident was in England for servicing. The plaintiffs anticipated making a fatal accident claim against
both the pilot and the Nigerian company as his employers. The Nigerian company had no other assets in
England and when it was discovered
that the aircraft was about to return to Nigeria the plaintiffs issued a writ and immediately sought and
were granted a Mareva injunction preventing the aircraft from being removed out of the jurisdiction. The
issue was whether a Mareva injunction could be granted in a personal injury action or was confined to
commercial actions? Held –There was no difference in principle between commercial actions and actions
for personal injuries or other causes of action in regard to the issue of a Mareva injunction and on the
facts of the case the injunction ought to be continued until the Nigerian company provided satisfactory
security to ensure that any award of damages against them would be met. Injunction was granted.

Also the Mareva injunction has been granted against foreign defendants with no assets in the jurisdiction.
But in granting the Mareva injunction covering worldwide assets the court imposes strict safe guards.
In Derby & Co Ltd and others v Weldon and others (1989) 1 ALL ER 1002. In 1981 the plaintiff group
purchased CML, which continued to be managed by the first and second defendants. While under their
management CML offered very extensive credit to a Far Eastern commodity dealer which in 1984
became insolvent owing over £35m to CML. The plaintiff group recovered less than £1 1/2m in the
insolvency and brought an action against the defendants alleging breach of contract, conspiracy and
fraudulent breach of fiduciary duty. The plaintiffs applied for and were granted a Mareva injunction
restricting defendants from dealing with their assets worldwide until judgment in the action. The issue
was whether Mareva Injunction should be granted against a foreign defendant with no asset within the
jurisdiction?
Held – (1) The court had jurisdiction in an appropriate case to grant a pre-judgment Mareva injunction
over a defendant‟s 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 the jurisdiction the injunction should be confined to
those assets. The court accordingly had jurisdiction to grant a worldwide Mareva injunction the
defendants
(2) Furthermore, when granting a Mareva injunction against a foreign defendant who had no assets within
the jurisdiction the court should protect the position of third parties outside the jurisdiction who were
indirectly affected by the order by including a proviso that, in so far as the order purported to have extra-
territorial effect, no person, whether natural or juridical, should be affected by it or concerned with its
terms until it was declared enforceable or recognised or enforced by an appropriate foreign court.

The Mareva is limited when it comes to matrimonial proceedings. In Ghoth v Ghoth (1992) 2 ALL ER
920 The husband and the wife both lived in Spain but the husband claimed to be domiciled in Saudi
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Arabia and the wife in England. The wife petitioned for divorce on the basis of her domicile in England
Pending the determination of the case the court ordered the husband to pay interim maintenance of £500
per month to the wife and granted a Mareva injunction covering all the husband‟s assets worldwide,
except for assets required to meet his usual living expenses and legal expenses arising from the
proceedings The husband‟s assets consisted of jewellery in England, $US200,000 in a New York bank
account and lesser funds in other countries as well as property abroad. He had attempted to withdraw his
money from the New York account but his bankers had resisted his instructions because it would have put
them in breach of the English injunction as they had a British office and that stance had been upheld by
the American court.

Held – The court would not in any foreseeable circumstances grant either party in matrimonial
proceedings a Mareva injunction over all the assets of the other party, and in matrimonial proceedings it
was unlikely that a petitioner would ever get the whole of the respondent‟s fortune. In matrimonial
proceedings a Mareva injunction, if granted, should be limited to the amount which realistically, taking
everything in the petitioner‟s favour, is the maximum amount which could possibly be achieved in
English divorce proceeding. That Whenever the court is contemplating making a worldwide Mareva
injunction, it should consider inserting protective provisions in the injunction in the interests of third
parties, because prima facie third parties who take action which assists in breaching an injunction are
themselves guilty of contempt of court

Requirements/ guidelines for a Mareva Injunction.

In
Third Chandris Shipping Corp. v Unimarine S.A . (1979) Q.B. 645 The plaintiffs who were the respective
owners of the three ships had substantial claims against the defendant who had shuttered their vessels.
They obtained three separate Mareva injunctions restraining the defendant from removing assets
including monies in his bank account. It was held that since there were assets within the jurisdiction and
there was a real risk that the defendant would spend or dispose of his assets before trial, the defendant‟s
application to discharge the injunction could not be accepted. Lord Denning stated the following as the
guide lines that courts must adhere to in there consideration of application for Mareva injunction:

(i) the plaintiff should make full and frank disclosure of all matters in his knowledge which are material
for the judge to know;
(ii) the plaintiff should give particulars of his claim against the defendant stating the ground of his claim
and the amount thereof, and fairly stating the points made against it by the defendant;
(iii) the plaintiff should give some grounds for believing that the defendant has assets in the jurisdiction;
(iv) the plaintiff should give some grounds for believing that there is a risk of the assets being removed
before the judgment or award is satisfied; the mere fact that the defendant is abroad is not by itself
sufficient;
(v) the plaintiff must give an undertaking in damages, which in a suitable case should be supported by a
bond or security, and the injunction should only be granted on it being given or on an undertaking that it
is to be given
For the latter it has been qualified leading to another requirement that must be met before granting for
Mareva injunction: that it must be just and convenient in all circumstances of the case to grant the Mareva
injunction. This was stated by Lord denning in In Allen v Jambo holdings co (1980) 2 All ER 502
already discussed above. He stated that the issue of a Mareva injunction to was not to be determined
solely by a plaintiff‟s financial standing. In each case the issue of an injunction depended on the balance
of justice and convenience, and on the facts of the case the injunction ought to be continued until the
Nigerian company provided satisfactory security to ensure that any award of damages against them would
be met.
In Rasu Maritime SA v Pertamina (1977) ALL ER 324 it was held that the granting of relief should not be
confined to cases strong enough for a judgement but the plaintiffs need only show a “good arguable
cause”

Limitations on the effectiveness of the Mareva injunction

The Mareva injunction operates in personam. The remedy operates against the individual concerned and
not against the actual property. In Derby and co ltd v Weldon (supra) it was held that since a Mareva
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injunction operated in personam, the court had jurisdiction to appoint a receiver of foreign assets in
support of a Mareva Injunction.

The Mareva injunction is not a pre-trial attachment.

The Mareva Injunction does not create additional rights nor transfer property rights to the plaintiff. The
injunction is not intended to give the plaintiff security in advance of judgment but merely to prevent the
defendant from defeating the plaintiff's chances of recovery by dissipating or secreting away assets.
Accordingly, it does not elevate the plaintiff to the status of a secured creditor.
In Cretanor Maritime Co ltd v Irish Marine Management Ltd (1978) 3 ALL ER 164 By a summons
dated 24 November 1977 the receiver of the respondent company, Irish Marine Management Ltd („the
charterers‟), applied for the discharge of an injunction granted by Mocatta J on 9 April 1976 restraining
the charterers by themselves, their servants or agents from removing or disposing out of the jurisdiction
any assets up to the sum of US $700,000 or the sterling equivalent until 14 days after the publication of
the award in any arbitration between the claimants, Cretanor Maritime Co Ltd („the owners‟) and the
charterers or further order. On 2 December Donaldson J in the Commercial Court ordered that the
injunction be discharged and that a fund of £70,494 within the jurisdiction belonging to the charterers, be
released to the charterers at the expiration of 21 days order. The owners appealed seeking an order that
the injunction be restored.
HELD;Buckley LJ “Indeed it is, I think, manifest that a Mareva injunction cannot operate as an
attachment. „Attachment‟ must, I apprehend, mean a seizure of assets under some writ or like command
or order of a competent authority, normally with a view to their being either realised to meet an
established claim or held as a pledge or security for the discharge of some claim, either already
established or yet to be established. An attachment must fasten on particular assets. They need not, I
think, be particularised in the writ or order under which the attachment is effected, but the attachment of a
particular asset cannot take place unless and until it has in some manner fastened on that asset. A Mareva
injunction, however, even if it relates only to a particularized asset, is relief in personam. It does not effect
a seizure of any asset. It merely restrains the owner from dealing with the asset in certain ways. The asset
might be said to have been in a sense arrested, but only in a loose sense. All that the injunction achieves is
in truth to prohibit the owner from doing certain things in relation to the asset. It is consequently, in my
judgment, not strictly accurate to refer to a Mareva injunction as a pre-trial attachment.”

It was further held that it is not the case that any rights in the nature of a lien arise when a Mareva
injunction is made. Under such an injunction the plaintiff has no rights against the assets. He may later
acquire such rights if he obtains judgment and can thereafter successfully levy execution on them, but
until that event his only rights are against the defendant personally.

A Mareva Injunction does not effect seizure of the defendants assets.

Generally, the Courts would not place a total freeze on all of the defendant's assets and will normally
permit the defendant to use a specified amount for reasonable living/business expenses and other proper
purposes. A defendant can apply for variation of the injunction to enable him or her use the assets for
other purpose.

In Derby and co v Weldon (supra) it was held that it is not the purpose of a Mareva Injunction to prevent
a defendant carrying on business in the ordinary way or if an individual, living his life normally pending
the determination of the dispute nor to impede him in any way in defending himself against the claim.

In AJ Bekhor and Co Ltd v Bilton (1981) 2 ALL ER 565 the defendant made an application for
variation of the injunction to permit him to meet financial obligations within the jurisdiction out of assets
within the jurisdiction which were subject of a Mareva injunction.
Ackner LJ held that the Mareva Injunction provides a limited exemption to the general rule that the court
will not normally grant an injunction to restrain a defendant from parting with his assets so that they may
be preserved in case the plaintiff‟s claim succeeds. The plaintiff like other creditors of the defendant must
obtain his judgement and then enforce it. He cannot prevent the defendant from disposing of his assets
pendent lite merely because he fears that by the time he obtain judgement in his favor the defendant will
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have no assets against which the judgement can be enforced. It is not a form of pre-trial attachment but a
relief in personam which prohibits certain acts in relation to the assets in question. That, though, the
Maleva plaintiff is in a privileged position, this privilege should not be carried too far.

This led to a principle that the Mareva Injunction does not give the plaintiff priority over creditors. In AJ
Bekhor’s case (supra) it was emphasized that the courts must be vigilant to ensure that the Mareva
defendant is not treated as a judgement debtor. In Derby v Weldon(supra) it was held that the purpose of
the injunction is not to place the plaintiff in the position of a secured creditor. Also in Cretanor’s case
(supra) it was further held that the injunction did not confer on the plaintiffs any right in the fund
analogous to a lien and they did not have priority over the debenture holder‟s rights arising on the
receiver‟s appointment. Under such an injunction the plaintiff has no rights against the assets. He may
later acquire such rights if he obtains judgment and can thereafter successfully levy execution on them,
but until that event his only rights are against the defendant personally.

In Iraqi Ministry of Defence and others v Arcedpey Shipping Co (1980) 1 ALL ER 481
On 9 June 1977 Jupp J granted the plaintiffs, Iraqi Ministry of Defence, Iraqi Stores Co, Middle East
Traders, Renco, Abu Dhabi Furnitures and Ministry of Water and Electricity, an injunction restraining the
defendants, Arcepey Shipping Co SA, the owners of the vessel Angel Bell, by their agents of servants or
otherwise, from dealing with their assets within the jurisdiction and from removing any of those assets out
of the jurisdiction. On 21 June 1977 Kerr J ordered the injunction to continue. On 22 October 1979 the
interveners, Gillespie Brothers & Co Ltd, applied to intervene in the action between the plaintiffs and the
defendants seeking an order varying the injunction to enable the defendants to repay a loan made by the
interveners to the defendants and secured by certain mortgages and assignments of insurance policies on
the Angel Bell. Robert

Goff J held that although the whole point of the Mareva jurisdiction was to enable the plaintiff to proceed
by stealth so as to pre-empt any action by the defendant to remove his assets from the jurisdiction
(whether by his own act or by a transfer to a collaborator within the jurisdiction), and to achieve that
result a Mareva injunction was necessarily in a wide form, it did not follow that, having granted such an
injunction, the court should not thereafter permit a qualification to it to allow a transfer of assets by the
defendant if the money was required for a purpose which did not conflict with the policy underlying the
Mareva jurisdiction. The effect of the plaintiffs‟ contention that payment would be a breach of the
injunction was to seek for themselves a priority, in the event of the defendants‟ insolvency, to which they
were not entitled in English law. The purpose of the Mareva jurisdiction was not in any way to improve
the position of claimants in an insolvency but to prevent the injustice of a foreign defendant removing his
assets from the jurisdiction when they might otherwise have been available to satisfy a judgment; a
Mareva injunction was not a form of pretrial attachment but a relief in personam which prohibited certain
acts in relation to the assets in question. Robert Goff went further to say “ I find it difficult to see why if a
plaintiff has not yet proceeded to judgement against a defendant but is simply a claimant for an
unliquidated sum, the defendant should not be free to use his assets to pay his debts.”

Conclusion.
From the above discussion it is therefore right to say that the Mareva injunction even if it relates to a
specified asset, for example in Allen v Jambo where it was granted in relation to an aircraft, operates in
personam. It is not a form of pre-trial attachment. It does not effect seizure of the asset. It merely prevents
the defendant from removing or transferring the asset. It gives no proprietary right in the asset nor priority
over creditors. The plaintiff gains rights in the property after the the judgement has been determined and
can there have priority over creditors. As was rightly asserted in Cretanor’s case, under such an
injunction the plaintiff has no rights against the assets. He may later acquire such rights if he obtains
judgment and can thereafter successfully levy execution on them, but until that event his only rights are
against the defendant personally.

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