Lloyd's Maritime and Commercial Law Quarterly
THE IMPLICATIONS OF THIRD PARTIES HOLDING ASSETS SUBJECT TO A MAREVA INJUNCTION
Peter Devonshire*
The efficacy of a Mareva injunction is often dependent upon restraining not only assets within the defendant’s personal control, but also property in the hands of third parties. The status of a third party in relation to the principal action raises some fundamental questions as to the juridical basis of injunctive relief. This article will discuss some persistent and vexing issues relating to the court’s jurisdiction to restrain third parties and its implications in terms of enforcement. Three principal areas will be addressed. First, jurisdictional considerations in granting Mareva relief where the assets or relevant parties are located abroad. Secondly, the conditions under which a party may be joined to the proceedings and directly restrained as a co-defendant. The classification of a party’s status will be considered both as a jurisdictional issue and as a fact-based determination. Thirdly, attention will focus on the obligations arising under a Mareva injunction and how these obligations are qualified by a party’s relationship to the substantive proceedings. The corresponding right to compensation for losses sustained in complying with the order will then be briefly considered.
Jurisdictional considerations
Mareva relief was originally confined to assets within the jurisdiction,1 but in three decisions in 1988 the Court of Appeal ruled that the English court could grant a Mareva injunction in relation to assets abroad.2 In the process it was necessary to define the effect of such an order on third parties who controlled the defendant’s property. The central question was whether they were bound to comply with the injunction and the consequences, if any, of failing to do so. While countenancing the expansion of Mareva injunctions to assets abroad, it was recognized that there were limitations on the extraterritorial effect of such orders on third parties. This brought into play the essential principle that jurisdiction is asserted not against the property itself, but pursuant to the
* Lecturer in Law, The University of Auckland. I am most grateful to Steven Gee, Q.C., for his helpful comments on an earlier draft of this article.
1. Ashtiani v. Kashi [1987] Q.B. 888.
2. Babanaft International Co. S. A. v. Bassatne [1990] Ch. 13; Republic of Haiti v. Duvalier [1990] Q.B. 202; Derby & Co. Ltd v. Weldon [1990] Ch. 48 and Derby & Co. Ltd v. Weldon (Nos. 3 and 4) [1990] Ch. 65. For discussion, see L. Collins, “The Territorial Reach of Mareva Injunctions” (1989) 105 L.Q.R. 262; A. Malek and C. Lewis, “Worldwide Mareva Injunctions: The Position of International Banks [1990] LMCLQ 88; A. Rogers, “The Extra-territorial Reach of the Mareva Injunction” [1991] LMCLQ 231.
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