IS MAREVA INJUNCTION GIVEN IN REM OR IN PERSONAM

‘’You cannot get an injunction to restrain a man who is alleged to be a debtor from parting with his
property’’ Cotton LJ in Lister v [Link]’sland 11,133,1979

The above statement later came to be done away in several cases in the Court of Appeal such as in
International Co SA V Bassatne and Another,Republic of Haiti v Duvulier and Derby and Co v Weldon
when a mareva injunction were granted restraining defendants from disposing off assets held in any part
of the world.

The injunction is made in personam but operates in rem without creating rights in [Link] operates so as
to attach any effects of the defendant,whether money or good to be found within the jurisdiction of the
[Link] enables the seizure of assets so as to preserve them for the benefit of the creditor but not to
give a charge in favour of any particular creditor.-Wilna Faul,FR Malan,[Link].

Mareva is designed to protect property and interests of 3rd [Link] a property can be attached during
pendency of a case it may suffer irrerarable lossessuch as lacking in maintenance.

On March 19,1981 the VLCC BEARIVAGE struck an irving owned monobuoy on the outskirts of
[Link] Harbout and there was commence of a tort [Link],a company related to Irving
brought the action and the BEARIVAGE was arrested and security in amount of 5m$ was obtained later
after assessment of the damage there was required an extra 24 m$ and the BEARIVAGE had
left .BEAUMONT owned by the same company as BEARIVAGE arrived and a mareva injunction was given
for it not to leave the jurisdiction until the 24m$ was obtained.

Mareva injunction operates to freeze certain assets of a defendant-Holdworth L. [Link] operates in

We can define Mareva injunction as order preventing the defendant from disposing the property in
which the property of the defendant is freezed.

THE 5 TESTS OF MAREVA INJUNCTION

1 One must show real risk of the assets being removed from the jurisdiction or otherwise disposed

2 It is given on balance of convenience

3 Defendant appears to have assets in the jurisdiction.

4 Court has jurisdiction

5 There should be good arguable case In Beta Health Care International Limited v Grace Mumbi
Githaiga”a good arguable case in the context of a freezing order is one which is more than barely capable
of serious argument but not one which the judge considers would have better than 50% chances of
success.

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BETA HEALTH CARE INTERNATIONAL LIMITED V GRACE
MUMBI GITHAIGA & 2 OTHERS(2016)
22. The court had occasion to consider the scope of Order 39 of the Civil Procedure Act in the case of
BGM HCCC NO 5 OF 2013 KANDUYI HOLDINGS LIMITED v BALM KENYA FOUNDATION & ANOTHER [2013]
eKLRwhere it held as follows; ‘’...Our Order 39 Rules 5 and 6 could be said and is a statutory codification
of an interlocutory relief known as Mareva Injunction or freezing order in the UK....Accordingly, Order 39
Rules 5 and 6 of the CPR should operate within known dimensions of law drawing from the above case
[MarevaCompaniaNavierra SA v International Bulkcarriers SA [1975] 2 Lloyd dis Rep 509] and other
judicial precedents on the subject. Order 39 rule 5 and 6 of the CPR is not to be used to: 1) to pressure a
defendant; or 2) as a type of asset stripping (forfeiture); or 3) as a conferment of some proprietary rights
on the plaintiff upon the assets of the Defendant. The purposes of any order that should be issued under
Order 39 Rules 5 and 6 of the CPR is to prevent the Defendants or would be judgment-debtor from
dissipating his assets as to have the effect of obstructing or delaying the execution of any decree that
may be passed against him’

27. A freezing order is not an interim injunction and the threshold to be attained for it to be issued is also
distinct from those attending a temporary injunction set out in in the Giella –vs- Cassman Brown case. A
freezing order is an order of the court which is usually issued in personam restraining or enjoining a
person from dissipating an asset directly or indirectly.

28. It is ordinarily issued ex parte for it is intended to serve a useful purpose of preservation of assets.
See the opinion of Lord Denning in the case of Mareva Campania Naviera SA vs. International
Bulkcarriers SA [1980] 1 All E.R. 213. The basis for freezing order is the inherent jurisdiction of the court.
The same may be issued alone or with other injunctive orders or orders calling for security for
satisfaction of an existing or a judgment which may be issued by the court in the case.

29. However, a freezing order is not to be used to pressure a defendant or as a type of asset stripping
(forfeiture) or as a conferment of some proprietary rights on the plaintiff upon the assets of the
Defendant. The purposes of any order that should be issued under Order 39 Rules 5 of the civil
Procedure act is to prevent the Defendants or would be judgment-debtor from dissipating his assets as
to have the effect of obstructing or delaying the execution of any decree that may be passed against him
See the case of International Air Transport Association & another v Akarim Agencies Company Limited &
2 others [2014] eKLR. What then is the threshold for the grant of freezing order"

30. In GOODE ON COMMERCIAL LAW, 4th Edition at Page 1287 to be as follows; “The grant of a freezing
injunction is governed by principles quite distinct from those laid down for ordinary interim
injunctions....Before granting a freezing injunction the court will usually require to be satisfied that;
(a)The claimant has ‘a good arguable case’ based on a pre-existing cause of action; (b)The claim is one
over which the court has jurisdiction; (c)The defendant appears to have assets within the jurisdiction;
(d)There is a real risk that those assets will be removed from the jurisdiction or otherwise dissipated if
the injunction is not granted; and (e)There is a balance of convenience in favour of granting the
injunction; (f)The Court can also order disclosure of documents or the administration of requests for
further [Link] - Page 5/8 Beta Healthcare International Limited v Grace Mumbi
Githaiga & 2 others [2016] eKLR information to assist the claimant in ascertaining the location of the
defendant’s assets”

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 31. A “good arguable case in the context of a freezing order is one which is more than barely capable of
serious argument, but not necessarily one which the judge considers would have a better than 50 per
cent chance of success. this was the holding in the case of AFRICAN BANKING CORPORATION LIMITED –
VS- NETSATAR LIMITED & 6 OTHERS NAIROBI MILIMANI HCC NO. 299 OF 2009 (UR). Bearing these
principles in mind, I shall turn to the facts of this case.

32. It is clear that there was an agreement between the parties herein. The Plaintiff supplied goods and
expected to be paid a sum of Kshs. 52,640,990.48/= which the 1st and 3rd Defendant concede, have
failed to do. The thrust of the Defendants’ defence is that the amount claimed is incorrect and it is only
through a reconciliation that the true indebtedness of the Defendants can be determined.

33. At this stage, I need only state that the evidence on record establishes an arguable case based on
allegations of breach of contract of payment of the goods delivered to the 1stand 3rd Defendant by the
Plaintiff. Does this state of affairs however give the Plaintiff impetus to request for an injunctive order
prohibiting the defendants from dealing with the shares, equity, property and or bank accounts from the
jurisdiction of this court" In the case of Mareva Campania Naviera SA vs. International Bulkcarriers SA
( supra) Lord Denning stated as follows; “A mandamus or an injunction may be granted or a receiver
appointed by an interlocutory Order of the Court in all cases in which it shall appear to the Court to be
just or convenient …” Lord Denning held at page 215: " In my opinion that principle applies to a creditor
who has a right to be paid the debt owing to him, even before he has established his right by getting
judgment for it. If it appears that the debt is due and owing, and there is a danger that the debtor may
dispose of his assets so as to defeat it before judgment, the court has jurisdiction in a proper case to
grant an interlocutory judgment so as to prevent him disposing of those assets ." (emphasis added)

34. Subsequently Lord Denning MR in applications by a Plaintiff for a Mareva injunction against a
Defendant within the jurisdiction of the court set out some guidelines for the Plaintiff to satisfy before a
Mareva injunction can be granted. This was in the case of Third Chandris Shipping Corporation and
others v Unimarine SA The Pythia, The Angelic Wings, The Genie [1979] 2 All ER 972, per Lord Denning
M.R. at 984 – 985 ; “The guidelines - In endeavouring to set out some guidelines, I have had recourse to
the practice of many other countries which have been put before us. They have been most helpful.
These are the points which those who apply for it should bear in mind. (i) The Plaintiff should make full
and frank disclosure of all matters in his knowledge which are material for the judge to know... (ii) The
Plaintiff should give particulars of his claim against the Defendant, stating the ground of his claim and the
amount thereof, and fairly stating the points made against it by the Defendant. (iii) The Plaintiff should
give some grounds for believing that the Defendants have assets here. ... The existence of a bank
account in England is enough, whether it is in overdraft or not. (iv) The Plaintiff should give some
grounds for believing that there is a risk of the assets being removed before the judgment or award is
satisfied.” [Link] - Page 6/8 Beta Healthcare International Limited v Grace Mumbi
Githaiga & 2 others [2016] eKLR

35. Bearing the above in mind, I have looked at the evidence on record at this particular stage. In this
case the Plaintiff has not made a full and frank disclosure of all matters within its knowledge which are
material for the judge to know. Secondly there are no material disclosures on the any source of
information to reach the conclusion that the first 1st Defendant was planning to wind up the business
operations of the 3rd Defendant.

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36. The mere fact that the an entity known as Levnel Enterprises was incorporated into a company
known as the 3rd Defendant does not lead to this inference of fact. Further there is absolutely no
evidence anywhere about whether the 1stRespondent is about to liquidate the assets of the 3rd
Defendant and divest them to other entities.

37. Further, the Plaintiff has not given this court the grounds for believing that there is a risk of the
assets of the defendants being removed from the court’s jurisdiction before judgment or award in this
suit. The issuance of a series of bad cheques in itself, does not aid the Plaintiff’s case for the grant of a
mareva injunction. In the premises the Applicant does not satisfy the basic requirements for the grant of
a Mareva injunction and therefore the application for the grant of a Mareva injunction is disallowed. The
prayer for a temporary injunction is also rejected on the same grounds.