A temporary injunction that freezes the assets of a party pending further order or final resulution by the Court, so named after the case which allowed the remedy (see references below).
Also known as a freezing or freeze injunction (see snow-covered car, pictured).
Often used to prevent a defendant from secreting assets out of the Court's jurisdiction as soon as the claim is served, to frustrate enforcement of the judgment.
Aimed usually at a specific defendant, and not attached to assets themselves. The named defendant is so restrained in regards to specified assets. The injunction is enforced by the contempt powers of a court.
The mareva injunctions are typically obtained without notice to the other side (ex parte) as to tip the defendant off would likely cause the prompt movement of the relevant assets before the Court could issue its injunction, thereby insulating the defendant from contempt.
In Aetna Financial Services Ltd. v. Feigelman, Canada's Supreme Court stated that:
"The gist of the Mareva action is the right to freeze exigible assets when found within the jurisdiction, wherever the defendant may reside, providing, of course, there is a cause between the plaintiff and the defendant which is justiciable in the courts of England. However, unless there is a genuine risk of disappearance of assets, either inside or outside the jurisdiction, the injunction will not issue."
The Ontario Court of Appeal, in a 1995 case, R v Consolidated Fastfrate Transport Inc., provided this comprehensive summary:
"A Mareva injunction is an exceptional form of interlocutory relief designed to freeze the assets of the defendant, in appropriate circumstances, pending determination of the plaintiff's claim. Execution, on the other hand, refers to the process by which a successful plaintiff may enforce a judgment. It encompasses those remedies available to a creditor after a court has declared that a sum of money is immediately due and owing by a debtor. A party obtaining a Mareva injunction is required to give an undertaking to pay damages in the event that any are suffered due to the defendant's inability to deal with the property. This is an irrelevant consideration insofar as an execution is concerned.
"A Mareva injunction is a discretionary equitable remedy. It will only be granted to a person "who has clean hands." It is on this basis that the requirement for full and frank disclosure rests....
"The granting of an injunction also involves weighing the balance of convenience to the parties. It will be issued in circumstances where the plaintiff demonstrates that he will suffer irreparable harm if the injunction is not issued. Fairness to both sides is a consideration. By contrast, an execution can be issued as of right once a judgment has been obtained against the defendant. If the plaintiff has a valid judgment, considerations such as fairness and the "clean hands" of the plaintiff are irrelevant.
"A Mareva injunction operates in personam. In other words, the injunction is directed toward the defendant in person and not to the defendant's assets.
"The granting of a Mareva injunction does not give the plaintiff property, nor does it give the plaintiff a lien on the defendant's property. It gives no priority to the potential creditor over other claimants before or after judgment, nor does it affect the laws relating to insolvency. The defendant is restrained from disposing of his assets in the sense that to do so will constitute contempt of court, but the injunction does not affect the defendant's power to dispose of his assets."
References and Further Reading:
- Mareva Compania Naviera SA v International Bulkcarriers SA (1975) 2 Lloyd's Rep. 509
- Aetna Financial Services Ltd. v. Feigelman 1985 1 SCR 2
- R v Consolidated Fastfrate Transport Inc. 40 CPC 3d 160
- Gaskell, Debattista and Swanson, Chorley and GIles' Shipping Law, 8th Edition, 1987, Pitman Publishing, London.