Thought Leaders 4 FIRE
Mareva at 50
MAREVA AT 50 DEFINITION OF “ASSETS”
Authored by: Andrew Ayres KC (Barrister) - Twenty Essex & Andrew Barns-Graham (Barrister) - 3 Hare Court
This year marks the golden anniversary of Lord Denning’s seminal decision on freezing injunctions in Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213. (The case was reported in 1980, but the hearing took place on 23 June 1975.) To mark the occasion, Andrew Ayres KC of Twenty Essex and Andrew Barns-Graham of 3 Hare Court have published this series of articles, in which they explore the boundaries of freezing injunctions and provide their tactical and drafting recommendations. This is the sixth article in the series.
because they only affect those assets which are strictly identified by the terms of the order. In this article, we address two issues: (a) the definition of “assets” and how it has evolved over time, and (b) the interaction of the evolving definition of “assets” with the development of the court’s Chabra jurisdiction to grant freezing injunctions against third party respondents.
Introduction Freezing injunctions are designed to preserve assets from illegitimate dissipation by the defendant, so that they remain available for execution if the claimant ultimately succeeds at trial. Freezing injunctions are accordingly circumscribed, first in that they are always directed towards a specific person,1 and, like most court orders, they act only in personam; and secondly
The Evolving Definition of “Assets” The term “assets” has its ordinary, natural meaning. It includes physical assets, intangible assets, and choses in action (including monies credited to a bank account and rights under loan and receivables contracts).
In many cases during the 1980s and 1990s, the focus of injuncted assets was on ownership by the defendant, whether legal or beneficial. After all, one could not expect to enforce against assets not owned by the defendant. But a focus on legal or beneficial ownership quickly became understood as inadequate for the job, partly because they are Anglocentric, common law concepts in a world of transnational litigation, and partly because they are restricted to the concept of ownership. This did not deal properly with the way in which some people, including fraudsters, handle the assets of which they are able to make use. Defendants can hold and control assets without necessarily falling within the strict concepts of legal or beneficial ownership, for example as beneficiaries under a discretionary trust or a host of other elaborate “structures”. So, wording was often added by thoughtful applicants to deal with the concept of control or the ability to give instructions for the transfer of assets – in other words, ownership in all but name, albeit falling short of the strict concept of ownership in English law.
1 The ability to seek to commit third parties for contempt for assisting the respondent to commit breaches of a freezing injunction exists, but the focus of any order is obviously the person to whom it is directed.
1