In 1975, shipowners, Mareva Compania Naviera SA, brought a claim against charterers of their ship, International Bulkcarriers SA, for unpaid hire and damages for repudiation of a charterparty. Given the complexity of the matter, this claim took a while to pass through the process of the Courts, and concerns were raised by the claimants as to the security of the defendant’s funds, should the claim be successful and they require payment. An application was made by their legal representative to put a freezing order on the defendant’s assets, to ensure they could not be removed from the jurisdiction, and this application was, for the first time in the Courts, successful.
Thus was born the Mareva Freezing Injunction.
Since this time, this tool has become a rare and draconian, but nevertheless useful method of securing payment options where necessary.
Given that freezing a party’s assets does put significant limits on their rights and freedoms, Courts are reticent to use it lightly, and so they set out requirements that must be met before it can be applied. These include:
- Having a good arguable case;
- Being able to prove the existence of assets;
- Being able to prove that these assets are at risk of dissipation; and
- Being able to prove it is just and convenient to impose the injunction.
Even if the requirements are met, a Court still holds discretion to make the ultimate decision as to whether to impose the injunction. Should an injunction be imposed, a party is still often able to use their assets for things such as living and lifestyle costs, provided these are not too excessive.
Despite this, it remains an often crucial lifeline to claimants who may otherwise be at risk of being successful in their claim, but find themselves unable to enforce the judgment due to the dissipation of the defendant’s assets.
Should you or your company find yourselves in a position where the security of a case’s outcome and enforcement is uncertain, we are here to help – contact Martin Kaye Solicitors today, and see how we can assist you, law@martinkaye.co.uk or 01952 272222.