Introduction To The Mareva Injunction Order

The Mareva Injunction originated from Lord Denning's statutory interpretation in Mareva Compania Naveria SA v. International Bulkcarriers SA [1980] 1 All ER 213. The Mareva Injunction is a court order which restrains the parties being sued (Defendants) to dissipate or dispose of their assets pending determination or disposal of a legal action brought by the parties suing (Plaintiff). In other words, the purpose of Mareva Injunction Order is to freeze the assets of the Defendant to protect the applicant's interest prior to trial.

In Malaysia, Mareva Injunction Order are governed under Order 29, Rule 1 of the Rules of Court 2012 ("ROC"). The Order enunciated certain requirements or prerequisites that the applicant must comply with before an order for the Mareva Injunction can be granted. Further, the application of Mareva Injunction Order may be made by a notice of application supported by an affidavit and where the case is one of urgency, may be made ex-parte (meaning one party to ask for the Court for an order without providing the other party(ies) the usual amount of notice or opportunity to write an opposition.

In order to succeed in a Mareva application, an Applicant must fulfill three (3) requirements which has been highlighted in the case of Creative Furnishing Sdn Bhd v Wong Koi [1989] 1 CLJ Rep 22 where the court held as follows:-

"In Aspatra Sdn. Bhd. & 21 Ors. v. Bank Bumiputra Malaysia Berhad & Anor.[1987] CLJ 50 (Rep) this Court by a majority had referred to the importance of the relief by way of Mareva Injunction for the purpose of preserving assets and preventing a defendant from dissipating his assets within jurisdiction before judgment. But the remedy is not of unlimited application. On the facts of the appeal before us, the respondent must satisfy the Court ... firstly, that he had a good arguable case; secondly, that the appellant had assets within jurisdiction, and thirdly, that there was a real risk of the assets being dissipated or removed before judgment in that there must be solid evidence to establish the risk."

The 3 Elements to grant a Mareva Injunction Order:

1. Good Arguable Case

A good arguable case in the context of a Mareva Injunction is one which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better chance of success. A good arguable case does not connote a case which is winning but as long as the plaintiff are able:

(i) to present a claim in a coherent and logical manner;

(ii) to present a reasonable and plausible narrative that could be believable in support of its claim; and;

(iii) to demonstrate that the cause of action is capable of relying on certain principles of law that could give rise to a potential claim with conceivable remedy(ies), these would suffice to satisfy the meaning of 'a good arguable case'¹.

2. Assets within jurisdiction

The Applicant must provide sufficient evidence to the Court that the Defendant has assets within the jurisdiction. The fundamental nature of the Mareva Injunction is to determine whether to freeze the Defendants assets to protect the Applicant's interests in legal proceedings. It is not for the Court during the Mareva Injunction stage to determine the outcome of the case.

3.There is a real risk of the assets being dissipated or removed before judgment

The Applicant must show and convince the court that there is a real risk or danger that the Defendant will dissipate or remove his assets. The Applicant should also submit that failing to obtain the Mareva Injunction would be detrimental to the Applicant because he is unable to recover monies or properties due upon judgment. We refer to the case of Alami Vegetable Oil Products Sdn Bhd v Mohammed Radwan Alami & Ors [2019] 1 LNS 1141 where the court held that:-

"[39] In determining whether there is a risk of dissipation, the Court may, among others, look at the probity and conduct of the Defendants. This has been enunciated by Jeffrey Tan J (as he then was) in the case of Jasa Keramat Sdn. Bhd. v. Monatech (Malaysia) Sdn Bhd [1999] 4 CLJ 30.

[40] The probity and conduct of the Defendants is eminently relevant. It behooves this Court to re-examine the facts of this case. In doing so, this Court is reminded by the acts of the Defendants in using funds of the Plaintiff in the manner it was done. The withdrawal of funds which were unsupported by documents made by the Defendants as earlier highlighted suggests that there is proof that the probity of the Defendants (by what has been demonstrated to date) is questionable.

[41] This Court cannot disagree with the contention of the Plaintiff that the Defendants cannot treat the monies in the Plaintiff's account as "their ATM machines". There must be proper records and justification before any sums of monies are taken out. This blatant action of the Defendants is reprehensible conduct and taints the probity of the Defendants....."

Conclusion

The Mareva Injunction is a useful application to freeze assets of parties in civil proceedings in order to prevent parties from disposing of their assets prior to trial and judgment from the Court. The Mareva Injunction serves as a useful tool for parties and Courts to further the interest of justice. In Seema Development Sdn Bhd v. Mah Kim Chye & Anor [1998] 1 CLJ 174, the Court stressed that the decision whether to grant a Mareva injunction should be exercised "cautiously and sparingly."

Cases referred

1. Mareva Compania Naveria SA v. International Bulkcarriers SA [1980] 1 All ER 213.

2. Creative Furnishing Sdn Bhd v Wong Koi [1989] 1 CLJ Rep 22

3. Alami Vegetable Oil Products Sdn Bhd v Mohammed Radwan Alami & Ors [2019] 1 LNS 1141

4. Seema Development Sdn Bhd v. Mah Kim Chye & Anor [1998] 1 CLJ 174

5. Pelorus Holding Sdn Bhd v Jaffa Roger Dawkins & Ors [2020] 1 LNS 1928

Footnote

1. Pelorus Holding Sdn Bhd v Jaffa Roger Dawkins & Ors [2020] 1 LNS 1928

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