Lawyers laud groundbreaking cross border decision
(CNS): A Cayman Islands based offshore law firm said that its client was granted the first ever free standing Mareva injunction recently. As a result of what Ogier’s Cayman Partner and Head of Litigation, Chris Russell, described as a trend towards modernization in cross border financial cases, assets of a defendant in a law suit have been frozen in this jurisdiction, despite the fact that the legal case is going on in a different country. Ogier, who were acting for the successful applicant, said to order a free standing Mareva injunction never before granted here was a ground breaking decision by the Grand Court.
Named after a 1975 case in the UK 'Mareva Compania Naviera S.A. v International Bulk Carriers S.A.', a Mareva injunction is a court order preventing the defendant in a law suit from transferring assets until the outcome of the law suit is decided to ensure that the defendant’s assets are not dissipated in order to avoid satisfying a judgment.
This decision means that the court has held that it has power to grant asset-freezing injunctions over Cayman based assets in support of foreign proceedings. The only relief claimed in the Cayman Islands Court is the asset-freezing injunction itself, and there is no other cause of action against the defendant within the jurisdiction of the Cayman Islands courts.
“This case follows a modernising trend, which is to be greatly welcomed, and is a significant contribution to cross-border co-operation and protection,” said Russell, who together with Rachael Reynolds, Managing Associate, and Will Jones, Associate, acted for the successful applicant for the injunction.
The lawyers revealed that a written judgment is expected shortly.
Category: Finance
Seems like we have a lot of lawyers or wanna-be lawyers posting on here so here are my three favorite lawyer jokes:
1. God decided to take the devil to court and settle their differences once and for all. When Satan heard this, he laughed and said, "And where do you think you're going to find a lawyer?
2. Santa Claus, the tooth fairy, an honest lawyer and an old drunk are walking down the street together when they simultaneously spot a hundred dollar bill. Who gets it? The old drunk, of course, the other three are mythological creatures.
3. When a person assists a criminal in breaking the law before the criminal gets arrested, we call him an accomplice. When a person assists a criminal in breaking the law after the criminal gets arrested, we call him a defense attorney.
ok.. here comes the thumbs down…
Looks to me like there are 25 lawyers reading about this, about half disagree with the other half about every aspect of it, and no one has bothered to put themselves in possession of a copy of the injunction. And you complain about the lack of initiative around here….
People want to get hold of copies of injunctions the world over. . .
The better headline would be "Lawyers do something that has been done before and issue over-enthusiastic press release prematurely".
As this was a decision by the Grand Court it is likely to be appealed against.. assuming the defendant cares to appeal it.
Although I agree that this decision follows the modernising trend it is unlikely that it will be the Court of the Cayman Islands which presents thhis modernisation… it could be easily modernised through legislation as it has been in the UK.
I think you are both right and wrong. The extension of the English Court's jurisdiction by statute similarly increased the Grand Court's jurisdiction since the Grand Court's jurisdiction is defined to be coterminous with the English jurisdiction.
But the point made below is spot on – the Grand Court Rules do not provide any jurisdictional basis for leave to serve a truly free-standing Mareva out of the jurisdiction – O.11 just does not allow it.
So either this was not real a free standing Mareva or the judge got the rules wrong. My money is on the first option.
Can the judge not say what is valid service himself? Certainly judges in the UK have that power…
What does this have to do with valid service? The question here is why a mareva injunction was granted withoutthere being a cause of action justiciable in the Cayman Islands which is(amongst others) a long standing pre-requisite to the grant of a Mareeva Injunction.
Judges in the UK just like the ones in Cayman are to a certain extent bound by the decisions of higher courts in their jurisdiction and should refrain from single handedly making decisions which go against all previous higher level decisions…
Service is a legal issue of an entirely different sort and has nothing to do with the issue at hand.
Right, I was pretty sure the objection someone raised to this being a free-standing Mareva injunction is that there is no provision for service of such a thing, so a judge would not order one ergo the judge probably hasn't and there is nothing to get excited about.
But perhaps I have misunderstood.
In any event, Mareva is spelled f-r-e-e-z-i-n-g.
If it's a UK-based freezer then it's spelt f-r-e-e-z-i-n-g, but in the rest of the commonwealth absent statutory intervention it's spelt M-a-r-e-v-a after the case that affirmed the COMMON LAW jurisdiction to grant such orders. I doubt that the GC rules have displaced Mareva jurisdiction in Cayman, but I'd love to hear from the experts… Dick?
To my dear friends in the North:
Strictly in Cayman the jursidiction would be statutory since the jursidiction in England is statutory and the Grand Court's statutory jurisdiction is prescribed by the scope of the High Court's jurisdiction. Easy innit?
But don't get me started on nomenclature. They are Marevas unless you are a pinko liberal do-gooder. The terminology changed in England in 1998 when the powers that be wanted to make the rules seem more accessible to non-technicians. As if one could start to make this field easier by a change of name. Sadly the name change made things worse.
Of course the change of name idea was brought in without any proper consideration of the fact that there are many categories of freezing order of which the Mareva properly so-called, free-standing or otherwise, is but a sub-category. So the practice has rerturned in the Chancery Division and, at times, in the Commercial Court to refer to a true Mareva as a Mareva injunction – this is the approach suggested in the leading practitioners' text on the subject. The advocates who want to be judges have to comply with the oversimplified hegemony and still call them freezing orders.
Now on the vexed question of free standing Mareva injunctions. Much ado about nothing really. They are a super narrow area of law. It is only relevant to an injunction sought against a party or purtative party to foreign litigation who has assets in Cayman where the claim will sound in money and is not a proprietary claim and the subject matter of the claim would not be justiciable in Cayman regardless of issues of forum non conveniens or contractual jurisdiction allocation. Or to put it more simply a non-fraudster who you are suing somewhere else who has money in a bank account in Cayman that you want to freeze.
The Grand Court has had statutory jurisdiction to grant such an order since 1982. However as Marevas are interlocutory and our service out rules expressly prohibit service out of interlocutory injunctions and was intended to bar a free-standing Mareva, it would take a strained construction of Order 11 to allow the injunction to be served out of the jurisdiction. one could strain the rules but it would be better to amend them after due consideration and debate.
Now here is the rub that no-one seems to raise. The bar on true free-standing Marevas may be a good thing for Cayman. Otherwise many asset protection arrangements which support our banking industry will be undermined especially for wealthy Americans who live in a jurisdiction which does not have the true equivalent of Mareva relief. Shortly put, if this new report is accurate, and I have my doubts about that, an individual sued for damages in the United States could now be subject an injunction to freeze his Cayman bank accounts pre-trial. Of course if in due course the case is lost in the US, Cayman will allow enforcement over that account.
So this is not about fraudsters – they are always quite easy to Mareva here. It is about other categories of civil claim which may well be less deserving of Court protection. The introduction of free-standing Mareva relief could result in significant assets moving from the Cayman Islands. I am aware of a couple of instances where the mere threat of the introduction of free-standing Marevas has lead to asset re-allocation.
So ultimately the headline of the article could be – "Case is decided in Court which could seriously harm the interest of Cayman banks."
Until next time funsters . . .
Thanks Dick, er… non-Dick. I knew I could count on you.
So here's this… I expect the Grand Court gets its jurisdiction (wholly or in part) from the Grand Court Law, and that Law says:
11. (1) The Court shall be a superior court of record and, in addition to any jurisdiction heretofore exercised by the Court or conferred by this or any other law for the time being in force in the Islands, shall possess and exercise, subject to this and any other law, the like jurisdiction within the Islands which is vested in or capable of being exercised in England by-
Jurisdiction vested in the Court
(a) Her Majesty’s High Court of Justice; and
(b) the Divisional Courts of that Court,
as constituted by the Supreme Court of Judicature (Consolidation) Act, 1925, and any Act of the Parliament of the United Kingdom amending or replacing that Act.
So if I have it right, the Supreme Court of Judicature (Consolidation) Act, 1925 was replaced lastly by the Senior Courts Act 1981, as modified by the Constitutional Reform Act 2005, as amended… leading to the proposition that if the High Court can do it (i.e. a final Mareva under s. 37 Supreme Court Act 1981, now the Senior Courts Act), so can the Grand Court of the Cayman Islands. I'll take your word on it that Cayman could do it since 1982 (with no hesitation whatsoever).
Anyway,from there we know that the rules in the UK can be revised by a judge per s.45 of the Constitutional Reform Act 2005, as to service or otherwise, so would this ability not accrue to the judges of the Grand Court of the Cayman Islands per s. 11 of the GCL, allowing them to "revise" R.11 on the fly? I always did wonder about that (and apologies if I've crossed my repeals and replacements – it's been a while).
All that said, it probably does impair the jurisdiction's ability to assist in legitimate (non-fraud) asset protection. Off to the court of appeal, I suppose.
Thanks non-Dick. You should come visit… I'll buy you a snowcone.
If it ain't justiciable in Cayman, why not get a worldwide Mareva Order from the court where it is justiciable, or from the UK if the home court doesn't have freezers, and then apply in Cayman to get it recognized? You're not serving out if the rocket launches from London…
… it's all horribly complicated.
This shows another interesting argument against the narrow categories of truly free standing Marevas.
If the home "launch" jurisdiction has sufficient personal connection to the defendant then a domestic worldwide Mareva would suffice to protect the Plaintiff if the jurisdiction has Mareva equivalence since a domestic worldwide can be enforced against the defendant through domestic enforcement.
If the home jurisdiction does not have Mareva equivalence and has determined that its Courts do not wish to exercise such relief, why should Cayman step in a provide aid in support of jurisdiction that does not want or approve of such injunctions?
On either approach there is no comity argument to support a real free-standing Mareva.
Unless you're trying to use the Mareva as an Attachment/Charging Order, disguised as a Mareva, by flapping it about in front of people not actually named in the Order, hoping the freeze accounts in a knee-jerk reaction…
You rock Non-Dick. You should get a job doing this. I expect you would be quite good at it.
Thank you. I might consider that as a career choice when they let me out.
Or, option 3: you're wrong.
I haven't seen the judgment yet, but if it is a truly free-standing Mareva (which, for the morons below, would definitely be a first in Cayman), then I assume the final relief sought would be the Mareva itself, which means the Court could grant leave under O.11, r.1(1)(b) (i.e. as it is not an interlocutory injunction).
Hopefully CNS will do a follow up article with more detail when the judgment is released
But an free standing Mareva is by definition an interlocutory injunction. Although there should be no doubt about that, it was expressly recognised by s.25 of the Civil Jurisdiction and Judgments Act 1982 which indirectly provides for the scope of the Grand Court's jurisdiction.
Congratulations to Chris, Rachael and Will, all of whom I've had the pleasure of working with from the other side of a file. I look forward to reading the written decision (if there is one), as this is a nice advance in Cayman law.
Sounds sensible and just to the reasonable man but it will be maliciously spun by the likes of the Guardian in the UK and whatshisname of Offshore Alert to show what a shady fly by night jurisdiction we are.
Let's wait and see what the judgment says before anyone gets excited (it is all relative). I doubt this is really a "free standing Mareva injunction" because we don't have rules to serve a truly free-standing Mareva out of the jurisdiction in Cayman. Rather it is probably an injunction which is practically operating as a freestanding Mareva but which is shoe horned into one of the many categories of Marevas which the Court has already granted. If that is right this is not news, it is publicity blurb.
This article is all about publicity. Mareva injunctions have been around for quite a while in Cayman. I vividly recall that in about 1983 some 400 injunctions were served on each Bank and Trust company in the Cayman Islands following litigation in Canada which was commenced by the Canadian Government.It concerned the whereabouts of $500m. I know as I was part of the team that was employed by Coopers and Lybrand to serve them. This was accomplished in one morning and the action ultimately led to a prominent banker going to jail.
Go back and read the part about it being "free standing", then go learn what that means, then consider how the UK legislated the existence of a free standing Mareva into being while Cayman did not, and compare how the Grand Court is using its inherent jurisdiction to keep Cayman as current as it can with the rest of the world (whilst Mac is off impersonating an insurance salesman in Canada) to that legislative act by the UK, and consider the benefit of having all the anti-fraud tools in Cayman that the rest of the world has or is creating, and THEN come back with a meaningful comment so as to contribute to the discussion.
I think that's the longest sentence I've ever written…