How to survive a Mareva injunction
Updated: Apr 1, 2020
Mareva injunctions can destroy your business and associated businesses. But they are mostly worthless if an attempt is made to employ them against individuals. Here we explain what to do if you are the recipient of one.
Mareva injunctions are orders issued by common law courts (excluding the United States), on the instance of a private plaintiff and made on an ex parte basis (i.e. by surprise against you), freezing either your assets within the court's jurisdiction or, more frequently now, all your assets worldwide. An intelligent plaintiff will have hired private investigators to find out as much as they can about your assets, and then they will have served the order as many of your banks and other depositories as they have been able to find. The terms of the order will require you not to dispose of your assets up to a certain limit; and to reveal a full list of your assets within a short time period (typically seven days). These orders almost always arrive at inconvenient times, e.g. Friday evening 11pm. What do you do?
Of course the first thing you do is you contact your specialised international commercial litigation lawyers, and get ready for a legal bill of between US$100,000 and US$500,000. Do not use provincial or national law firms for this kind of work. Use the best international law firms based in the capital city of the country whose courts issued the order. But they must have substantial standing before the domestic courts in question. Do not use a US law firm's London office to resist a London court's Mareva injunction. You must use a law firm the Judge has heard of as being of the very highest repute. And you are going to pay.
Secondly, the odds are against you. The greater majority of successful Mareva injunctions are resolved either with an immediate settlement or with the Mareva injunction being continued at a so-called "return date" (a hearing a week or two after the original order at which the defendant has the opportunity to explain why the order should never have been made). You cannot continue business with an active Mareva injunction against you, as these orders are for all intents and purposes public once the return date has arisen, and whatever accusations of serious financial impropriety the plaintiff has made will become known to all. So the very first thing you need to do is to consider your settlement options. Grill your litigation lawyers carefully upon their optimistic views about the prospects of having the Mareva injunction overturned. Judges do not like overturning one-another's orders.
If you do decide to defend it, the preferable attitude, absent gross fraud (rare if the plaintiff is competently represented), is one of humility rather than aggression. There is probably clear evidence of serious wrongdoing on your part, or the Judge would never have granted the order. Apologising for some confusion, and explaining the true situation and how you intend to remedy matters, together with a plea that continuation of the order will ruin lives as you are forced to lay of staff and your commercial partners will become insolvent, is likely to get you a lot further than an indignant repudiation of the accusations of wrongdoing.
Providing a list of assets to the Court is burdensome, and many defendants perjure themselves when they do this. They miss out assets they think nobody knows about. Of course we would never recommend this. But if you decide not to follow our advice, then a great deal turns upon whether you or other officers of your business are physically in the jurisdiction of the Court. That is because while breach of Mareva injunctions are typically enforced with imprisonment, it is a civil form of imprisonment in respect of which the tools of international criminal law enforcement do not apply. In other words, there will be no INTERPOL warrant or arrest in a foreign country if you defy an English court's Mareva injunction. On the other hand, you may never be able to travel to England again once the Judge has issued a domestic arrest warrant against you.
Foreign banks may or may not freeze your account balances should they receive a copy of the Mareva injunction from foreign lawyers. It depends upon the bank and it depends upon the jurisdiction. Some international banks with substantial offices in London will freeze the account as a matter of course, and point to the fine print of the bank account agreement. Others will insist that any foreign Mareva injunction be registered as enforceable in their local courts before giving effect to it: something that typically proves extremely difficult, complex and slow, enabling an ill-intentioned debtor to empty his accounts before it ever happens. Unfortunately there is no way of telling in advance which banks respect foreign Mareva injunctions and which do not. Our contact details appear on this website.
If you are the recipient of a Mareva injunction, you need to face the fact very quickly that you will either need to pay your creditor a substantial proportion of the amount he claims; or you will need to restructure your global assets so as to ignore its reach: something we would never advise a client to do, it goes without saying.
Finally, it is often forgotten that if you anticipate a Mareva injunction, you can file an anticipatory brief before the Court explaining one should not be granted, if it is applied for. These vaccines are exceptionally effective; but nobody uses them. If patients are in this risk category, they need to consult their physicians before fatal symptoms emerge out of nowhere.