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
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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.
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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.
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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
### What is another term for a Mareva Injunction?
- [ ] Seizure order
- [ ] Attachment order
- [x] Freezing injunction
- [ ] Restriction order
> **Explanation:** The term "freezing injunction" is another name for a Mareva Injunction, reflecting its function to freeze assets.
### In which case was the Mareva Injunction named?
- [ ] Brown v Board of Education
- [x] Mareva Compania Naviera SA v International Bulkcarriers SA
- [ ] Roe v Wade
- [ ] Donoghue v Stevenson
> **Explanation:** The Mareva Injunction is named after the case "Mareva Compania Naviera SA v International Bulkcarriers SA" (1975).
### What must the applicant prove to obtain a Mareva Injunction?
- [x] A good arguable case and risk of asset dissipation
- [ ] That they will win the case
- [ ] The defendant has no defense
- [ ] All of the defendant's assets are illicit
> **Explanation:** The applicant must demonstrate a good arguable case, a real risk of asset dissipation, and that the injunction is just and convenient.
### What type of assets can a Mareva Injunction apply to?
- [ ] Only cash
- [ ] Only real estate
- [x] Any identifiable assets
- [ ] Only international assets
> **Explanation:** A Mareva Injunction can freeze any identifiable assets of the defendant, including cash, real estate, stocks, and other properties.
### Under what circumstances can a Mareva Injunction be granted ex parte?
- [x] When there is a risk of asset dissipation
- [ ] When the defendant is notified
- [ ] When both parties agree
- [ ] Any time the plaintiff requests
> **Explanation:** A Mareva Injunction can be granted ex parte without notifying the defendant, particularly if there is a risk that notification may lead to asset dissipation.
### How long does a typical Mareva Injunction last?
- [ ] One week
- [x] Until the court decides otherwise
- [ ] One year
- [ ] Indefinitely
> **Explanation:** A Mareva Injunction generally lasts until the court decides otherwise, often pending the outcome of the main legal action.
### What can a defendant do if they believe the Mareva Injunction is unfair?
- [ ] Ignore the injunction
- [ ] Accept the terms without objection
- [x] Apply to the court to have it lifted or varied
- [ ] Transfer assets covertly
> **Explanation:** The defendant can apply to the court to lift or vary the injunction if they can prove it is unfair or unnecessary.
### What kind of cases often utilize Mareva Injunctions?
- [ ] Small claims
- [x] Fraud, breach of contract, and risk of asset flight
- [ ] Traffic violations
- [ ] Property disputes over boundary lines
> **Explanation:** Mareva Injunctions are typically used in cases involving fraud, breach of contract, or where there is a risk that the defendant may move or hide assets.
### Why is it important to act quickly in obtaining a Mareva Injunction?
- [x] To prevent the defendant from moving or hiding assets
- [ ] So the court can schedule a quick trial
- [ ] To notify the defendant immediately
- [ ] To quantify the plaintiff's damages
> **Explanation:** Quick action is crucial to prevent the defendant from moving, hiding, or dispersing assets before the court can issue the injunction.
### What is the main goal of a Mareva Injunction?
- [ ] To compensate the plaintiff immediately
- [ ] To punish the defendant
- [x] To ensure the defendant's assets remain available for satisfying a potential judgment
- [ ] To force the defendant to settle out of court
> **Explanation:** The main goal of a Mareva Injunction is to preserve the defendant's assets to ensure they are available to satisfy a potential judgment in the main legal action.
Thank you for participating in this deep dive into Mareva Injunctions through our detailed explanation and engaging quiz. Keep expanding your legal and financial knowledge!
