by Cheok Swin Meng (31 October 2021)

Asset Freezing to Secure a Potential Judgement

In a lawsuit, assets freezing is an application made by a party (usually the Plaintiff) to prevent Defendant(s) from dissipating their assets beyond the jurisdiction of a court to frustrate a potential judgment. Such court order itself is in the form of an injunction which is known as Mareva Injunction, named after the case of Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 ALL ER 213.

Nature of Mareva Injunction

Mareva injunction is draconian in nature. In applying for a Mareva Injunction from the Court, other than non-bona fide expenses, the burden is on the applicant to make financial arrangements for the defendant’s living and ordinary expenses and for payment of ordinary debts as they become due, at the time the applicant took out the Mareva Injunction. Also, the applicant should make provision for the Defendant to employ his funds to pay his legal costs or for reasonable expenses. In the case of Larut Consolidated Bhd & Anor v Khoo Ee Bee [1997] 5 CLJ 307, Justice RK Nathan held the following:

It cannot but be sound law that a failure to provide for living expenses and the payment of ordinary debts as they become due, in an order for a Mareva injunction, ought to be valid grounds to discharge that order. This must be so to obviate the obvious injustice occasioned to a defendant who, upon being served a Mareva injunction obtained ex parte, is barred from that point in time from expending any money of his own whatsoever in connection with what is merely necessary as living expenses in circumstances such as the present, where the Mareva injunction was said to attach to all of the defendants’ assets to a maximum sum of approximately RM54.2m. In fact, the provisions in respect of living expenses and legal costs are commonly found in Mareva injunction orders and this has been recently endorsed by a Practice Direction issued in England standardizing orders in relation to Anton Piller and Mareva injunctions; see Practice Direction [1994] 4 All ER 52 at p 60. It would not be inappropriate for similar Practice Directions with necessary modifications to be implemented in Malaysia. The soundness of a provision for the defendant to employ funds in relation to his legal costs in defending the suit has also been acknowledged in Derby v Weldon (Nos 3 & 4) where Lord Donaldson MR said at p 76:
… it is not its [a Mareva injunction’s] purpose … to impede him in any way in defending himself against the claim

Jurisdiction of the Court

In Aspatra Sdn Bhd & 21 Ors v Bank Bumiputra Malaysia Bhd & Anor [1988] 1 MLJ 97, the Supreme Court ruled that paragraph 6 of the Schedule to the Courts of Judicature Act 1964, read with Order 29 Rules of Court 2012 and section 50 of the Specific Relief Act, are wide enough to confer jurisdiction on the High Court to provide an injunction in the manner of the Mareva Injunction. Further, following amendments made to the Subordinate Courts Act 1948 (SCA 1948), the amendments also empower the Sessions Court to grant injunctions under s.65(5) SCA 1948.

Requirements to be Satisfied

The conditions for the applicant to satisfy before the Court would grant a Mareva injunction are as follows:

a) The applicant has a good arguable case which on evidence as a whole, the applicant will able to succeed at trial;
b) There are assets within the Court’s jurisdiction; and
c) There is risk of dissipation of assets where the applicant must show this by some solid evidence.

Over the years, there have been many instances where the Court has granted worldwide Mareva Injunction to freeze the assets of the Defendants located abroad [Metrowangsa Asset Management Sdn Bhd & Anor v Ahmad B HJ Hassan & Ors [2005] 1 MLJ 654].

The application for Mareva Injunction is usually made without notice to the defendant to prevent the defendant from removing their assets before the freezing order is granted. Under the circumstances, an ex parte interim injunction is then sought under Order 29 rule 1(2) of the Rules of Court 2012 where the applicant will to provide the following:

a) The facts giving rise to the claim;
b) The facts giving rise to the application for interim injunction;
c) The facts relied on to justify the application ex parte, including details of any notice given to the other party or, if notice has not been given, the reason for not giving notice;
d) Any answer by the other party (or which he is likely to assert) to claim or application;
e) Any facts which may lead the Court not to grant the application ex parte or at all;
f) Any similar application made to another Judge, and the order made on that application; and
g) The precise relief sought

The applicant is almost always required to give an undertaking as to damages before the Court would grant a Mareva Injunction. The purpose of the undertaking is that, in the event of the injunction being discharged, the applicant will have to compensate the defendant for loss or damages which the court is of the opinion, was caused as a result of the injunction.

It is worth noting that the ex parte Mareva Injunction granted will automatically lapse after 21 days. Before the expiry of the ex parte Mareva Injunction, the applicant is required to return to court to justify the continuance of the injunction with notice to the opposing party, so as to allow the latter a chance to oppose the injunction on its merits.


In appropriate circumstances, Mareva injunction allows the Plaintiff to secure the fruits of the litigation instead of obtaining a mere paper judgment in a successful trial. Nevertheless, it is a double-edged sword where the applicant will be liable for any damages which the defendant may have sustained if application for Mareva Injunction is improperly obtained. 

Note: This article does not constitute and should not be relied on or treated as legal advice on or with respect to any particular case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.

Related Posts