A key ruling offers a greater opportunity for applicants for to secure a freezing injunctions or a Mareva injunction in support of foreign proceedings or judgments. The award-winning commercial lawyers at Bahamas law firm ParrisWhittaker are specialists in securing freezing injunctions on behalf of clients who require swift action to protect their interests.
What is a Mareva injunction?
A freezing order – formerly a Mareva injunction – is a temporary order of the court freezing assets to prevent an individual from disposing of them. The courts in the Bahamas have discretion to grant an injunction under s2(1) Supreme Court Act 1996 where it appears just and convenient to do so.
An important ruling from the Privy Council in the UK1 paves the way for a wider approach to the granting of freezing injunctions (the ruling has persuasive authority on the courts in The Bahamas).
What’s the background?
The key issue concerned the jurisdiction of the British Virgin Islands (BVI) courts to grant and serve out of the jurisdiction freezing orders in support of foreign proceedings. The ruling has a wider impact on service of proceedings in other jurisdictions, including the Bahamas.
In an earlier ruling, the BVI Court of Appeal held that the court had no power to grant a freezing order unless there were ancillary domestic proceedings claiming substantive relief (whether in the BVI itself or in another jurisdiction). However, the appeal judges noted the perceived undesirability of this “in modern day international commerce”.
The Privy Council ruled that there was no specific provision for a freestanding freezing injunction to be served out of the jurisdiction. However, it was permissible to grant a freezing injunction in support of a claim if it was being pursued against the individual who has secured a judgment in a foreign court.
The majority judgment of the Privy Council helpfully sets out a 3-stage summary of best practice in the granting of Mareva injunctions. In essence, the court can order an injunction against a party over whom the court has personal jurisdiction, where:
The applicant has been granted or has a good arguable case for being granted a judgment or order for the payment of a debt that is or will be enforceable through the courts;
The respondent holds assets against which such a judgment could be enforced; and
There is a real risk that without such an injunction, the respondent will deal with the assets other than in the ordinary course of business, thus impairing the availability or value of the assets and the judgment is left unsatisfied. The judgment did not have to be of the domestic court.
What does this mean?
The decision clarifies the power of the court to grant a freezing order in the BVI and other jurisdictions against a party in support of foreign proceedings and judgments.
To secure a Mareva injunction where a judgment has been secured or is imminent in another jurisdiction, contact the experienced freezing injunctions lawyers at ParrisWhittaker for expert advice and prompt action.
1Broad Idea International Limited v Convoy Collateral Ltd and Cho Kwai Chee [2021] UKPC 24
