Hong Kong, SAR
Hong Kong courts can grant an interim freezing order, known as a Mareva injunction, which restrains a party from disposing of or dissipating its assets pending final judgment. A Mareva injunction is a type of interim relief, but the requirements that claimants must satisfy in order to obtain one are slightly different from the requirements referred to in interim relief proceedings, as further explained below.
It is possible to apply for a Mareva inunction to freeze any valuable assets of the defendant such as money in bank accounts, real properties, or shares in companies. However, the Mareva injunction will only operate to restrain the defendant from diminishing the value of their assets to less than the amount (usually the amount claimed by the claimant) specified in the injunction order.
The initial application for a Mareva injunction can be made either to the Court of First Instance or the District Court and is usually heard on an ex parte basis. Like other types of interlocutory applications, if a party applies for a Mareva injunction before an action is commenced, the injunction applied for may be granted by the court with a condition requiring the party to issue a writ of summons immediately or as soon as reasonably practical.
Any orders given ex parte will generally operate only for a limited period of time until the matter can be brought to a hearing involving all parties (ie an inter partes hearing). The plaintiff will generally file and serve the inter partes summons as soon as practicable or in line with the timeline specified in the order granted by the court for the Mareva injunction. An applicant seeking a Mareva injunction on an ex parte basis must provide full and frank disclosure of all matters relevant to the case, and will normally be obliged to give an undertaking to pay compensation for any losses or damage suffered by the opposing party in the event that the applicant later fails to prove that they are entitled to such an injunction order.
To obtain a Mareva injunction, an applicant must show that:
- it has a good arguable case on a substantive claim (ie a higher threshold than an application for an interlocutory injunction to restrain the commission of any allegedly wrongful act) which has already been commenced or is about to be commenced against the other party;
- the other party has assets within the jurisdiction;
- there is a real risk that the counterparty will dissipate or dispose of its assets unless restrained by the court; and
- the balance of convenience lies in favour of granting the injunction.
The applicant will be required to give undertakings, ie an undertaking in damages to compensate the other party or a third party (ie bank) for any loss incurred as a result of the injunction if it is subsequently set aside or the applicant fails to demonstrate the necessity of the injunction. However, the applicant will not be required to give any security to the court as a condition. Once granted, the Mareva injunction will be enforceable immediately and all relevant parties with notice or knowledge of the said injunction must do whatever they reasonably can to preserve the assets covered.
If the claimant asserts a proprietary claim over an asset currently in the possession of the defendant, the claimant may also apply for what is known as a proprietary injunction to restrain the defendant from disposing of or taking any action to diminish the value of the asset in question until final judgment.
To obtain a proprietary injunction, the applicant must show that:
- there is a serious case to be tried as to whether the applicant is the rightful owner of the asset;
- something ought to be done for the security of the asset, and that monetary compensation given at trial would not be an adequate remedy for the applicant; and
- the balance of convenience lies in favour of granting an injunction.