Mareva Injunction

A Mareva Injunction, also known as a freezing injunction, is a legal remedy granted by a court to freeze the assets of a defendant to prevent them from being dissipated or moved out of reach, pending the outcome of a legal action.
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What is a Mareva Injunction?

A Mareva Injunction, also known as a freezing injunction, is a type of court order designed to restrain a defendant from dissipating their assets in such a way that would prevent enforcement of a potential judgment. Named after the case “Mareva Compania Naviera SA v International Bulkcarriers SA” (1975), it is a powerful legal tool used primarily in civil litigation to ensure assets are available and preserved for satisfying a judgment.

Key Features

  • Scope: Applies to both domestic and international assets.
  • Purpose: To prevent the defendant from rendering themselves judgment-proof by transferring, hiding, or dissipating their assets.
  • Usage: Typically used in cases of fraud, breach of contract, or where there’s a risk of asset flight.

Examples

  1. Business Litigation:

    • A company sues a former executive for embezzlement. Fearing the executive might move assets offshore, the company secures a Mareva Injunction freezing the executive’s accounts until the case is resolved.

  2. Divorce Proceedings:

    • In a high-profile divorce, one spouse believes the other is hiding assets. The court grants a Mareva Injunction to freeze certain bank accounts and properties, ensuring fair asset division.

  3. International Fraud:

    • A global corporation alleges that a contractor is siphoning funds abroad. A Mareva Injunction is obtained to freeze the contractor’s international bank accounts and property holdings.

Frequently Asked Questions (FAQs)

Q: Can a Mareva Injunction be applied without notifying the defendant?
A: Yes, Mareva Injunctions can be applied ex parte (without notifying the defendant), especially if there is a risk that notifying them might lead to asset dissipation.

Q: How long does a Mareva Injunction last?
A: Typically, it lasts until the court decides otherwise, often pending the outcome of the main legal action.

Q: What are the requirements for obtaining a Mareva Injunction?
A: The applicant must show a good arguable case, a real risk of asset dissipation, and that it is just and convenient to grant the injunction.

Q: What assets can be frozen under a Mareva Injunction?
A: The injunction can apply to bank accounts, properties, stocks, shares, and other identifiable assets of the defendant.

Q: Can a Mareva Injunction be lifted or varied?
A: Yes, the defendant can apply to the court to have the injunction lifted or varied if they can prove the injunction is unfair or unnecessary.

  • Freezing Injunction: Another term for Mareva Injunction, used interchangeably to describe the same legal remedy.
  • Ex Parte Proceedings: Legal proceedings where one party has secured a court order without notifying the other party, often applicable in cases of urgent interim relief.
  • Asset Dissipation: The act of disposing, hiding, or transferring assets to make them unavailable for satisfying a judgment.
  • Legal Remedy: A means by which a court enforces a right or compensates for a violation of a right.

Online References

Suggested Books for Further Studies

  • “International Asset Tracing in Insolvency” by Christopher Grierson
  • “Mareva Injunctions and Anton Piller Orders” by Steven Gee QC
  • “Chitty on Contracts” by Hugh Beale (specifically the section on remedies and injunctions)

Accounting Basics: “Mareva Injunction” Fundamentals Quiz

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