An injunction was sought against a Panamanian ship-owning company to restrain it from disposing of a fund, consisting of insurance proceeds, in England. The claimant for the injunction was suing the company in a Cyprus court for damages and believed the company to have no other assets from which to meet the hoped-for damages award than the fund in England. No proprietary claim was, or could have been, made by the claimant to the fund.
Held: The Court could not grant interlocutory relief when the substantive proceedings were taking place abroad. English courts had no jurisdiction to grant a freezing injunction in a case in which there was no claim for substantive relief before the English courts.
Lord Diplock said: ‘A right to obtain an interlocutory judgment is not a cause of action. It cannot stand on its own. It is dependent upon there being a pre-existing cause of action against the defendant arising out of an invasion, actual or threatened by him, of a legal or equitable right of the plaintiff for the enforcement of which the defendant is amenable to the jurisdiction of the court. The right to obtain an interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action. It is granted to preserve the status quo pending the ascertainment of the court of the rights of the parties and the grant to the plaintiff of the relief to which his cause of action entitles him, which may or may not include a final injunction.’ and ”To come within the sub-rule the injunction sought in the action must be part of the substantive relief to which the plaintiff’s cause of action entitles him; and the thing that it is sought to restrain the foreign defendant from doing in England must amount to an invasion of some legal or equitable right belonging to the plaintiff in this country and enforceable here by a final judgment for an injunction.’ and
‘The general rule is that the jurisdiction of the English Court over persons is territorial. It is restricted to those upon whom its process can be served within the territorial limits of England and Wales. To this general rule there are some exceptions. These are now to be found in Order 11 of the Rules of the Supreme Court which have statutory force by nature of section 99 of the Supreme Court of Judicature (Consolidation) Act 1925. Order 11 permits the High Court to grant leave to a plaintiff to serve its process upon a person outside the territorial limits of England and Wales in those cases, but only in those cases, that are specified in sub-rules (a) to (o) of rule 1(1) or in rule 2 . .
In several of the cases specified in sub-rules (a) to (o) the jurisdiction exercisable over foreigners by the High Court is wider than that which is recognized in English law as being possessed by courts of foreign countries. These are ‘exorbitant’ jurisdictions which run counter to the normal rules of comity among civilized nations. For this reason it has long been held that where there is any room for doubt as to their meaning the provisions of the sub-rules are to be strictly construed in favour of the foreigners : The Hagen [1908] P.189, 201 per Farwell L.J. and it is in my view equally well settled now that it is not permissible in any action commenced by service of process on a person out of the jurisdiction to litigate any claim that does not fall within one or other of sub-rules (a) to (o).’
The purpose of a freezing order is ‘ . . to ensure that there will be a fund available within the jurisdiction to meet any judgment obtained by a Plaintiff in the High Court against a Defendant who does not reside within the jurisdiction and has no place of business here.’
As to the 1925 Act: ‘That sub-section, speaking as it does of interlocutory orders, presupposes the existence of an action, actual or potential, claiming substantive relief which the High Court has jurisdiction to grant and to which the interlocutory orders referred to are but ancillary. This factor has been present in all previous cases in which Mareva injunctions have been granted . . . it is not present in this.’
Judges:
Lord Diplock
Citations:
[1979] AC 210, [1979] 3 WLR 818, [1979] 3 All ER 803
Statutes:
Rules of the Supreme Court Order 11 Rule 1, Judicature Act 1925 45(1)
Jurisdiction:
England and Wales
Citing:
Cited – Mercantile Group (Europe) Ag v Aiyela and Others CA 4-Aug-1993
Interlocutory injunctions including Mareva procedures and orders are available to support the enforcement of a judgment. The purpose of such a jurisdiction is so that the court can ‘ensure the effective enforcement of its orders’. A court may still . .
Cited – Petromec Inc v Petroleo Brasiliero Sa Petrobras and Another ComC 16-Jun-2006
. .
Cited – C Inc Plc v L and Another QBD 4-May-2001
The plaintiff had obtained judgment against L, only then to find that she claimed that all only apparent assets were held by her on trust for or as agent for her husband who was overseas. The plaintiff therefore now set out to add him, and to claim . .
Cited – North London Railway Co v The Great Northern Railway Co CA 9-Jun-1883
The Judicature Act, 1873, s. 25, sub-S. 8, has given no power to the High Court to issue an injunction in a case in which no Court before that Act had power to give any remedy whatever.
Therefore the High Court has no jurisdiction to issue an . .
Cited by:
Cited – Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd and Others HL 17-Feb-1993
The court has the power to stay an action which pursued a remedy which was outside the terms of the arbitration agreement determining the dispute. The contract between the parties provided for disputes to be settled by arbitration in Belgium. The . .
Cited – South Carolina Insurance Co v Assurantie Maatschappij de Zeven Provincien NV HL 1987
There can be little basis for the grant of relief to a landowner providing protection from an action in nuisance if the landowner will not himself remedy the public nuisance. The House considered whether the circumstances gave the court power to . .
Cited – Fourie v Le Roux and Others ChD 30-Sep-2004
Interim asset freezing injunctions had been obtained on the application of a liquidator in South Africa. The defendant applied for their discharge.
Held: They should be discharged. No foreign proceedings had been specified for which they were . .
Cited – Marketmaker Beijing Co Ltd and others v CMC Group Plc and others QBD 8-Oct-2004
Interim injunctions had been obtained to prevent the defendants carrying out certain banking transactions.
Held: The remedy sought and the claim was extravagant and unlikely to succeed. The injunctions should be discharged. It was not at all . .
Cited – Schmidt v Wong CA 7-Dec-2005
The claimant began a personal injury claim against her landlord. She wanted a freezing order, but began her claim in the County court. When she became aware that the county court had no jurisdiction to grant such an order, he sought to have the . .
Cited – HM Revenue and Customs v Egleton and others ChD 19-Sep-2006
The claimants had applied for the winding up of a company for very substantial sums of VAT due to it. Anticipating that hearing, it now sought restraining orders against the director defendants, alleging that there had been a carousel or missing . .
Affirmed – Fourie v Le Roux and others HL 24-Jan-2007
The appellant, liquidator of two South African companies, had made a successful without notice application for an asset freezing order. He believed that the defendants had stripped the companies of substantial assets. The order was set aside for . .
Cited – Franses v Al Assad and others ChD 26-Oct-2007
The claimant had obtained a freezing order over the proceeds of sale of a property held by solicitors. The claimant was liquidator of a company, and an allegation of wrongful trading had been made against the sole director and defendant. The . .
Cited – Republic of Haiti v Duvalier CA 1989
The defendant had fled from Haiti with a large part of that country’s assets while in power. Proceedings were pending in France which gave no jurisdiction to grant a worldwide freezing or disclosure order. He had used a firm of English solicitors as . .
Cited – JSC BTA Bank v Ablyazov SC 21-Oct-2015
The court was asked as to the interpretation and application of the standard form freezing order. In the course of long-running litigation between JSC BTA Bank and Mr Ablyazov the Bank had obtained a number of judgments against the respondent . .
Not Followed – Mercedes Benz Ag v Leiduck PC 24-Jul-1995
Mareva relief is not available against a foreigner outside the UK in order to support a court action abroad. A Mareva injunction is not itself a substantive relief and so was not available to support foreign proceedings. A freezing order has to be . .
Lists of cited by and citing cases may be incomplete.
Arbitration, Litigation Practice
Updated: 25 February 2022; Ref: scu.184335
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