Withers has recently achieved a landmark success in securing a section 21M "freestanding" Mareva injunction to freeze RMB1.6 billion worth of assets in aid of ongoing proceedings in the People's Republic of China (PRC).
This decision represents a notable legal development, as the defendant does not hold any meaningful assets in Hong Kong — a traditional prerequisite for Mareva relief. Instead, the injunction was anchored on the defendant's enforcement of a RMB2 billion PRC judgment in Hong Kong, which the Court recognized as a chose in action and therefore an asset within the jurisdiction, amenable to be frozen.
Freestanding Mareva injunctions: A vital tool in cross-border disputes
A Mareva injunction is a powerful remedy designed to preserve a defendant's assets pending the resolution of legal proceedings. It restrains a defendant from disposing of or dealing with assets, ensuring that a favorable judgment can later be enforced.
In cross-border disputes, preserving assets located in multiple jurisdictions is often crucial. However, traditionally, under Hong Kong law, interim orders of a foreign court — such as Mareva injunctions — are not directly enforceable in Hong Kong, even if the targeted assets are situated there. To address this limitation, litigants have the option of applying directly to the Hong Kong courts for a separate Mareva injunction over the relevant assets in Hong Kong in support of foreign proceedings.
The introduction of section 21M of the High Court Ordinance (Cap. 4) following Hong Kong's Civil Justice Reforms in 2009 has significantly expanded the scope for obtaining such relief. This provision empowers the Hong Kong courts to grant freestanding Mareva injunctions in aid of foreign legal proceedings, even if the subject matter of those proceedings would not ordinarily fall within the jurisdiction of Hong Kong courts. Importantly, there is no requirement for the foreign proceedings to be tied to any substantive cause of action in Hong Kong.
This framework makes Hong Kong a particularly attractive jurisdiction for litigants seeking to preserve assets located here, even in cases where the underlying litigation is being conducted elsewhere. It also underscores the willingness of Hong Kong courts to complement and support foreign judicial processes, respecting the informed views and approach of the foreign courts overseeing the underlying dispute.
Misappropriation of Provincial Fund
Withers acted for a PRC state-owned enterprise that had entered into a strategic partnership with the defendant to establish a provincial fund. The fund was set up for the purpose of investing in infrastructure and high-tech production lines to promote economic development in Yangzhou City.
It was later discovered that the defendant (and its affiliates) had misappropriated the funds, breaching the partnership agreements. In February 2025, the client initiated legal proceedings in the PRC Court against the defendant and 22 associated parties, seeking to recover the misappropriated funds in the total amount of RMB1.6 billion.
The defendant, the parent company of a group formerly listed on the Shanghai Stock Exchange, was found to be on the brink of insolvency. This raised serious concerns that the defendant might dissipate its remaining assets overseas to frustrate a judgment from the PRC Court.
Taking action to safeguard assets
At the outset, the defendant appeared to hold no tangible assets in Hong Kong. However, investigation revealed that the defendant is in the process of enforcing a RMB2 billion PRC judgment (the "Judgment") against another party in Hong Kong under the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597). Further analysis identified that this particular judgment debtor holds significant shares in a Hong Kong-listed company, valued at over HK$4 billion.
Recognizing the potential for a Mareva injunction, Withers acted decisively and successfully obtained an injunction from the Hong Kong Court. The order restrained the defendant from disposing of or dealing with its Hong Kong assets, including any payments or proceeds arising from the enforcement of the Judgment, up to the value of RMB1.6 billion. To ensure protection of these assets, the injunction was served on the defendant's solicitors, requiring that any recovered funds remain preserved in their client account. This decisive action demonstrates the effectiveness of Hong Kong's legal tools in safeguarding assets at risk of dissipation and emphasizes the importance of acting swiftly in cross-border disputes.
Key takeaways for litigants
This case highlights several important considerations for litigants involved in cross-border disputes. One of the most significant takeaways is the Court's recognition of a chose in action as a form of property within the jurisdiction. This broadens the definition of assets that can be frozen under a Mareva injunction, making it a critical tool for litigants facing situations where traditional tangible assets are unavailable.
The case also underscores the importance of creative and strategic legal approaches in asset preservation. By leveraging the enforcement of a PRC judgment as a basis for relief, we demonstrated how unconventional legal avenues can yield effective outcomes for clients. Additionally, the decision reaffirms Hong Kong's status as a leading jurisdiction for cross-border dispute resolution, offering robust mechanisms to safeguard litigants' rights and interests in complex global disputes.
For litigants navigating multi-jurisdictional enforcement challenges, this case serves as a valuable precedent. It underscores the importance of acting swiftly to identify any potential basis for relief and leveraging Hong Kong's legal framework to preserve assets at risk of dissipation.
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