The Mareva injunction, also known as a freezing order, is a valuable and often-used weapon in a plaintiff’s legal armoury. Correctly deployed, it prevents a defendant from frustrating the litigation process as it restrains the dissipation of the defendant’s assets. Since 2009, following the implementation of the Civil Justice Reforms in Hong Kong, a foreign plaintiff is able to obtain a free-standing Mareva injunction in Hong Kong in aid of foreign proceedings as a result of the introduction of section 21M of the High Court Ordinance (Cap. 4) (“section 21M”).
Section 21M, the Hong Kong equivalent to section 25 of the English Civil Jurisdiction and Judgments Act 1982, was considered by the Court of Final Appeal (“CFA”) for the first time in a recent judgment delivered by Lord Phillips NPJ on 14 November 2016 in Compania Sud Americana De Vapores S.A v Hin-Pro International Logistics Limited (FACV 1 of 2016) (the “Judgment”). At its core, the issue before the CFA was whether it would be contrary to judicial comity to grant an ancillary Mareva in Hong Kong in support of English proceedings, in circumstances where to do so would involve an indirect intervention in a jurisdictional conflict between the English and the PRC Courts.
The parties to the dispute were a Chilean shipping corporation (“CSAV”) and a Hong Kong freight forwarding company (“Hin-Pro”). Hin-Pro had commenced proceedings against CSAV in various courts in the PRC under bills of lading that contained exclusive English jurisdiction clauses. Although CSAV successfully obtained an anti-suit injunction from the English Commercial Court restraining Hin-Pro from suing CSAV in any other jurisdiction, Hin-Pro chose to ignore the injunction. CSAV commenced a second action in the English Commercial Court in relation to Hin-Pro’s further breaches of contract and obtained a worldwide freezing order. At issue was whether CSAV could obtain an ancillary freezing order in Hong Kong pursuant to section 21M in respect of Hin-Pro’s assets in Hong Kong. The Court of Appeal (Hon Lam VP, Barma JA and Poon J), upholding a decision of the judge below (Wilson Chan J), declined to grant the relief on the basis that to do so would be contrary to judicial comity as it would involve the Hong Kong court intervening in a conflict between the English courts and the courts of the PRC.
The CFA allowed CSAV’s appeal. In the Judgment, Lord Phillips NPJ clarified the two-staged approach to an application for relief under section 21M: