Lloyd's Maritime and Commercial Law Quarterly
WORLDWIDE MAREVA INJUNCTIONS: THE POSITION OF INTERNATIONAL BANKS
Ali Malek* and Caroline Lewis*
Introduction
It is modern practice to grant a Mareva injunction only against a party or parties to the action in support of which the injunction is sought. However, by applying for and granting such drastic relief, the plaintiff and the court indicate their scepticism that an order binding only on the conscience of the defendant will ensure that the assets in question are not disposed of or dissipated. It is essential to enlist the cooperation of third parties, notably banks who may hold or deal with the assets to be preserved. This article will examine the effect on banks of the recent widening of the Mareva jurisdiction to encompass assets abroad. It will be suggested that the courts have left the position of banks carrying on business in different jurisdictions in an uncertain and unacceptable state.
Position of third parties
When a third party has knowledge of a Mareva injunction, he must do what he reasonably can to preserve the assets affected. If he knowingly assists in any way in their disposal or in prohibited dealing with them, he will be in contempt of court1 and punishable as such, for having obstructed the course of justice.2 As Nicholls, L.J., recognized in Babanaft International Co. S.A. v. Bassatne,3 this principle is one of the strengths of a Mareva order. It follows as a general principle that, where a bank has notice of a Mareva injunction against a customer, its normal duty to act in accordance with the terms of its mandate is abrogated to the extent that it must not follow instructions which would be a breach of the injunction.
Courts have always been concerned to prevent any prejudice to third parties indirectly affected by a Mareva injunction. Two safeguards are important in this respect. First, the plaintiff undertakes to recoup a third party who is put to reasonable expense in complying with the order and to indemnify him insofar as the order exposes him to liability. Considerable burdens are placed on banks notified of such an injunction: investigations must be made and appropriate instructions issued to branches. This undertaking as to costs and liability would most probably be implied in any event, but it is customary to give it expressly. Secondly, the courts observe the general principle of the importance of certainty as to what a third party is required to do by notice of a Mareva injunction:
* Barrister.
1. Z Ltd. v. A-Z and AA-LL [1982] Q.B. 558, 572, per Lord Denning, M.R.
2. R. v. Gray [1900] 2 Q.B. 36, 40; A crow Ltd. v. Rex Chainbelt Inc. [1971] 1 W.L.R. 1676, 1682.
3. [1989] 2 W.L.R. 232, 257.
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