Singapore court clarifies conditions for granting post-judgment Mareva injunction

Out-Law News | 28 May 2021 | 11:35 am | 2 min. read

The Singapore Court of Appeal has confirmed for the first time the conditions required to grant a freezing injunction after a judgment has been made against the subject of the injunction. The clarification came in the recent case of JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd and others.

In its ruling, the court also clarified the conditions to be met before a party who has obtained a worldwide freezing order can be released from the undertakings made to the court, so they can start enforcement proceedings in other jurisdictions.

Dispute resolution expert Charlotte Wang of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said that the Singapore court addressed both topics for the first time in a reported judgment.

Investment management firm JTrust Asia Pte Ltd brought proceedings against a number of companies. While the proceedings were pending, worldwide freezing orders, also known as Mareva injunctions, were granted against three of the companies in order to prevent the dissipation of assets ahead of the conclusion of the case.

After the Singapore High Court found against JTrust Asia, JTrust Asia appealed and the Mareva injunctions were reinstated pending the appeal. The Court of Appeal overturned the High Court judgment, ruling in favour of JTrust. It also extended the reinstated injunctions.

JTrust went on to file an application for the reinstated injunctions to continue to be in effect, and asked to be released from undertakings it had provided when the injunctions were first granted. These undertakings included not starting proceedings against the companies in any other jurisdiction and using any information obtained as a result of an order of the Singapore court in any other jurisdiction; and not seeking to enforce the injunctions in any country other than Singapore, without the permission of the Singapore court.

The Court of Appeal said that in order to grant a post-judgment Mareva injunction, a court must be satisfied that: there was a real risk of the debtor dissipating its assets with the intention of depriving the creditor of satisfaction of the judgment debt; that the injunction must act as an aid to execution; and that it must be in the interests of justice to grant the injunction.

The court said the first requirement was well-established for all Mareva injunctions. The second requirement was also an obvious condition, it said, because the purpose of a post-judgment Mareva injunction can only be granted to assist the execution of the debt. The third condition was also well established, with courts having to analyse whether, in considering all the circumstances, it would be just to grant the injunction.

As the Court of Appeal considered that all three conditions were met in the JTrust Asia case, it ordered the injunctions to be extended.

Additionally, the court said the tests for modifying or removing the undertakings should be transposed from the test made in the context of discovery orders. This is because the purpose of such undertakings is also to protect a defendant by preventing the plaintiff from abusing the information obtained for ulterior purposes.

In the context of discovery orders, a party can be released from an undertaking if it demonstrates “cogent and persuasive” reasons for the release; and the release would not cause injustice to the person giving discovery.

The court said these requirements could be modified and transposed into the context of Mareva injunctions, so that a party wanting to be released from its undertakings must also demonstrate cogent and persuasive reasons for the release; and show that it would not cause injustice to the party subject to the injunction, or who had disclosed information following any court order.

On the facts, the court found that there was no cogent and persuasive reason to release the appellant from its undertakings in this case.

Wang said the case provided welcome clarity on Mareva injunction granted post-judgment: "It should come as no surprise that these conditions, which are well-established in all Mareva injunctions, apply equally to post-judgment Mareva injunctions."