The Anglo-American Perspective on Freezing Injunctions, CIVIL JUSTICE QUARTERLY, vol. 29, issue 3,...

The Anglo-American Perspective on Freezing Injunctions

By

Masayuki Tamaruya

Reprinted from Civil Justice Quarterly

Issue 3, 2010

Sweet & Maxwell 100 Avenue Road

Swiss Cottage London

NW3 3PF (Law Publishers)

The Anglo-American Perspective onFreezing InjunctionsMasayuki Tamaruya*

Associate professor, Rikkyo University (Japan); Visiting scholar tothe Faculty of Law, Cambridge University and toMagdalene College(2008-09)

Attachment orders; Comparative law; Extraterritoriality; Freezing injunctions;United States

Freezing injunctions are pre-trial orders to restrain a defendant from dealing withhis assets so as to forestall his attempt to frustrate the potential money judgmentagainst him. They were formerly called Mareva injunctions after one of the twolandmark cases by the Court of Appeal in 1975 that marked their birth in England.1

Since then, their scope has been expanded through cases and statute. They are nowincorporated in the Civil Procedure Rules (CPR).2

Freezing injunctions have been adopted in most common law jurisdictions asan effective civil remedy to combat attempts by recalcitrant debtors or fraudstersto frustrate potential money judgments by use of ever faster methods of fundtransfer. The United States, however, provided a conspicuous exception. InGrupoMexicano de Desarrollo SA v Alliance Bond Fund Inc, the US Supreme Court bya 5:4 judgment declared that the US District Court does not have the equitablejurisdiction to grant such form of injunctive relief.3 The State of NewYork followedsuit.4

Why has the English court been able to develop this extraordinary remedy? Andwhy has the American court been unable to adopt the remedy that has become sopopular amongmany common law countries? This article will adopt a comparativeapproach to answer these questions. Freezing injunctions will also be comparedwith their American counterparts: pre-judgment attachments. This is an attemptto analyse how different social and historical backgrounds can shape developmentof legal doctrines.

* I would like to thank Mr Neil Andrews for the generous comments and suggestions. Any errors are, of course,the responsibility of the author. This work was supported by Grant-in-And for Scientific Research (no.21730010) ofJapan Society for the Promotion of Science (JSPS).

1Nippon Yusen Kaisha v Karageorgis [1975] 1 W.L.R. 1093; [1975] 2 Lloyd’s Rep. 137 CA (Civ Div);MarevaCompania Naviera SA v International Bulkcarriers SA [1980] 1 All E.R. 213; [1975] 2 Lloyd’s Rep. 509 CA (CivDiv).

2CPR r 25.1(f); PD(25) 6.1–6.2 and annexe.3Grupo Mexicano de Desarrollo SA v Alliance Bond Fund Inc 527 US 308 (1999).4Credit Agricole Indosuez v Rossiyskiy Kredit Bank 729 NE 2d 683 NY CA (2000). See also, US Bank Natl Assn

v Angeion Corp 615 NW 2d 425 Minnesota CA (2000).

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A draconian procedure and safeguards

Different approaches to similar concernsFamously called one of the law’s two “nuclear” weapons,5 freezing injunctionshave potentially draconian aspects.6 The claimant seeking freezing injunctionnormally proceeds ex parte, without giving the defendant the initial opportunityto present his case. The defendant, taken by surprise, might find himself unableto secure funding to keep the business running, or might suffer irreparable damageto his reputation. The procedure could be used oppressively by creditors to putundue pressure on debtors. Freezing orders could also implicate those who are notparties to the litigation.To deal with these concerns, the English court has adopted various procedural

safeguards. The claimant must make proper inquiries before applying ex parte forfreezing injunction. When making the application, he must act in good faith anddisclose all relevant matters to the court.7 Typically, freezing orders includeprovisions for the respondent’s reasonable living expenses and legal advice fees.The claimants are deemed to give a cross-undertaking to indemnify the respondentagainst any loss caused if the order turns out to have been wrongly granted. TheEnglish court has developed provisos to be included in freezing orders so as notto unduly affect non-parties.8 These safeguards are incorporated into the standardorders,9 which are intended to clarify in plain English the respective obligationsowed by each party.10

The American reaction was, by contrast, outright rejection. Writing for themajority in Grupo Mexicano, Scalia J. gave three reasons for rejecting a remedyequivalent to the EnglishMareva injunctions. First, the US Federal Court’s equityjurisdiction was confined to the English Chancery practice at the time of theAmerican Independence and no further innovation was to be expected.11 Secondly,it had long been settled that a general creditor cannot interfere with the debtor’sdisposal of property before establishing his claim on the merit by obtaining ajudgment.12 And lastly, whatever the benefit of the proposed remedy, suchsubstantial extension of practice must be left for the Congress to formulate.13

5Bank Mellat v Nikpour [1982] Com. L.R. 158; [1985] F.S.R. 87 at 92 (Donaldson L.J.).6 For English views, e.g. Third Chandris Corp v Unimarine SA [1979] Q.B. 645 at 653 (Mustill J.); [1979] 3

W.L.R. 122 CA (Civ Div); A.A.S. Zuckerman, “Interlocutory Remedies and Quest of Procedural Fairness” (1993)56 M.L.R. 325; for American views, e.g. Grupo Mexicano 527 US 308 (1999) at 330–32; R. Wasserman, “EquityRenewed: Preliminary Injunctions to Secure Potential Money Judgments” (1992) 67 Wash. L. Rev. 257, 319–24.

7Bank Mellat v Nikpour [1982] Com. L.R. 158; [1985] F.S.R. 87 at 89.8Babanaft International Co SA v Bassatne [1990] Ch. 13; [1989] 2 W.L.R. 232; Baltic Shipping Co v Translink

Shipping Ltd [1995] 1 Lloyd’s Rep. 673; Bank of China v NBM LLC [2001] EWCA Civ 1933; [2002] 1 All E.R.717.

9They are now found in the annexe to CPR Pt 25 PD.10 S. Gee, Commercial Injunctions, 5th edn (London: Sweet & Maxwell, 2004), para.3.015.11Grupo Mexicano 527 US 308 (1999) at 318–19.12Grupo Mexicano 527 US 308 (1999) at 319–20; see also, Credit Agricole Indosuez 729 NE 2d 683 NY CA

(2000) at 685.13Grupo Mexicano 527 US 308 (1999) at 329; Credit Agricole Indosuez 29 NE 2d 683 NY CA (2000) at 689.

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Difference with any significance?It should be noted that the difference in England and the United States is not assignificant as appears—at least in the domestic context. In most American statesthe court has the power to order pre-judgment attachments, which involve seizureof the defendant’s property so as to prevent the defendant from using it during thependency of a money action. In addition, if the plaintiff has equitable claims orinvokes equitable remedies, the court can issue preliminary injunctions to restrainthe defendant from transferring relevant assets.14 Thus, in many fact situations, theGrupo Mexicano restriction could be bypassed by including an equitable claim orremedy along with legal claims. 15 State fraudulent conveyance statutes providefor provisional remedies that prevent the debtors from further disposing of theirproperty. Some federal statutes grant federal courts the authority to issue injunctiverelief that are similar to the English freezing injunctions. The bankruptcy courthas, for example, expansive injunctive powers to enjoin activities that could impedethe reorganisation process.16

Despite the US Supreme Court’s concern for the domestic implications, thereare significant differences in the international context. Pre-judgment attachmentsare not available for properties located outside the court’s territorial jurisdiction.Thus in the United States, general creditors must identify the whereabouts of allthe attachable assets and pursue attachment proceedings in each state where suchassets are located.Grupo Mexicano itself involved aMexican debtor whose assetswere located in Mexico. For this reason it was conceded by all parties that NewYork’s attachment statute were unavailable.17

Even within the international context, however, the American courts have notbeen entirely adverse to the English freezing injunctions. In CIBC Mellon TrustCo vMora Hotel Corp, NewYork’s highest court was willing to enforce an Englishmoney judgment issued against the defendants upon their failure to comply withthe English freezing injunctions and accompanying disclosure orders.18 In dismissingthe argument that the English court’s procedures are not “compatible with therequirements of due process of law”,19 the court stated that, “the overall fairnessof England’s legal system … is beyond dispute”.20 Meanwhile, whether theAmerican court will enforce foreign freezing injunctions,21 or even permanentinjunctions, is unclear.22 In any event, the court under the common law traditionhas not enforced foreign injunctions or non-final judgments, which is also theEnglish position today unless the relevant foreign judgment falls under the BrusselsRegime.23

14United States ex rel. Rahman v Oncology Associates PC 198 F.3d 489, 492 (4th Cir. 1999),Deckert v IndependenceShares Corp 311 US 282 (1940).

15R.J. Silverman and J.T. Kirshner, “Mareva Orders: Fact or Fiction in the United States?” (2002) 21(9) AmericanBankruptcy Institute Journal 24, 24. See Newby v Enron Corp 188 F.Supp 2d 684 (SD Tex 2002).

16 11 USC s.105(a).17Alliance Bond Fund v Grupo Mexicano de Desarrollo SA 143 F.3d 688, 693 (2d Cir. 1998).18CIBC Mellon Trust Co v Mora Hotel Corp 100 NY2d 215 (2003).19New York Civil Practice Law and Rules (NY CPLR) s.5304(a)(1).20CIBC Mellon Trust 100 NY2d 215 (2003) at 222.21 J. Greenblatt and A.B. Spencer, “ObtainingMareva-type provisional relief in NewYork state and federal courts”

in Gee, Commercial Injunctions, 2004, para. A1.021, fn.7.22G.B. Born and P.B. Rutledge, International Civil Litigation in United States Courts, 4th edn (New York:

Aspen/Kluwer, 2007), p.1206. It is suggested that monitoring the compliance of the injunction or deciding whetherto modify or lift it would take up judicial resources.

23 J. Hill, International Commercial Disputes in English Courts, 3rd edn (Oxford: Hart Pub., 2005), paras 12.1–2.

352 Civil Justice Quarterly


The English court may issue freezing injunctions to support proceedings inforeign countries including the United States.24 In fact, American trial judges aresometimes quite sanguine about their proceedings being supported by Englishfreezing injunctions. In Eastern Trading Co v Refco, Judge Conlon, for the USDistrict Court for the Northern District of Illinois, dismissed the plaintiff’sapplication to enjoin the defendant from proceeding in England to obtainMarevarelief to secure the satisfaction of its counterclaim. She held that such an ancillaryproceeding does not constitute a parallel litigation to be enjoined in Americanlaw.25 The reaction from the judge who presided in the English proceeding wasmore nuanced. In his judgment discharging the freezing injunction previouslygranted, Rix J. stated that:

“it is clear that the learned Judge was not expressing or intending to express,in my judgment, an informed view as to the appropriateness of the applicationbeing made in a foreign country rather than in her own Court.”26

In his view, which was approved by the Court of Appeal, there were doubts aboutthe risk of asset dissipation. The case was not a typical Mareva case where thedefendant is accused of participating in fraud or dishonesty or making use ofsuspicious financial arrangement. The relevant customer agreement contained ajurisdictional clause that put both the merits and all proceedings for interim reliefin the hands of the Illinois Court. Thus, the court possessing a merely ancillaryjurisdiction had to proceed with caution and sensitivity to the proceedings in theforeign court possessed with the substantive claim.English judges’ relative sensitivity to the extraterritorial implication of freezing

relief finds its parallel in the review of the Grupo Mexicano case by Lord Collins,who was then a practicing solicitor.27 He pointed out that both the majority andminority opinions inGrupoMexicano ignored the comity implication, even thoughthe relief was sought against a foreign defendant whose whole assets were locatedoutside the court’s jurisdiction. He further suggested that the English court mightnot have granted relief in like circumstances, given that the defendant was makinga bona fide effort to restructure its debt and to deal with other claims in the countrywhere its business was centred.28

Powers of judges and patterns of civil procedure reformIt may be inferred from the previous section that the striking difference betweenEngland and the United States lies not so much in the availability of remedy itselfas in the approach to administering the procedure. This section identifies suchcontrasting aspects and places them in wider contexts. This will reveal theunderlying values or assumptions that define the procedural innovation in therespective countries.

24Civil Jurisdiction and Judgments Act 1982 s.25; Civil Jurisdiction and Judgments Act 1982 (Interim Relief)Order 1997 (SI 1997/302). English freezing injunction is not available unless the defendant or the dispute has asufficiently strong link with England:Mobil Cerro Negor Ltd v Petroleos De Venesuela SA [2008] EWHC 532;[2008] 1 Lloyd’s Rep. 684 (Comm.).

25Eastern Trading Co v Refco Inc No. 97 C 6815 (ND Ill., December 22, 1997), as quoted in Refco Inc v EasternTrading Co [1999] 1 Lloyd’s Rep. 159 CA (Civ Div) (Rix J.).

26Refco Inc v Eastern Trading Co [1999] 1 Lloyd’s Rep. 159 CA (Civ Div) (Rix J.).27L. Collins, “United States Supreme Court Rejects Mareva Jurisdiction” (1999) 115 L.Q.R. 601.28Collins, “United States Supreme Court Rejects Mareva Jurisdiction” (1999) 115 L.Q.R. 601, 604.



Injunctions in the historical contextThe major task that the English court faced in the formative era of Marevainjunctions was to establish the jurisdictional foundation by distinguishing the latenineteenth century cases that were said to deny the court’s ability to issue suchremedies.29 Once it was accomplished, the judges were able to develop thejurisdiction as if to draw the design on a clean slate. By contrast, the Americanjudges had to operate on a more contentious background. The American court hadbeen asked to issue injunctions in socially controversial cases since the latenineteenth century. This is reflected in the cases cited in Grupo Mexicano, suchas antitrust cases, which involved splitting up monopolist corporations,30 and civilrights cases, in which the court took control of the whole school or school districtto de-segregate the white-only schools.31

Having experienced fewer such controversies, the English court since the latenineteenth century had nurtured a wide range of powers to regulate its ownprocedure. Some of those powers did not have basis on any statute or rule of law.Among themwas the inherent jurisdiction, which was said to be derived from “thevery nature of the court as a superior court of law”.32 This was the basis of PracticeDirections, through which procedural improvements includingMareva injunctionswere brought about.33Mareva injunctions were based on the statutory power togrant an injunction when it appears “just and convenient”,34 but they representeda drastic departure from the previous self-restraint. Once such departure wassanctioned by Lord Denning in 1975, there were only limited external checks thatwould constrain the course of innovation.The House of Lords did impose restraint on Lord Denning’s ambitions of reform.

In The Siskina v Distos Compania Naviera,35 where Lord Hailsham accused himof usurping the legislative power,36 the House of Lords held thatMareva injunctionscannot be issued unless there is a pre-existing cause of action which falls withinthe jurisdiction of the English court. This proposition continued to cast a shadow

29North London Railway Co v Great Northern Railway Co (1882-83) L.R. 11 Q.B.D. 30; Lister v Stubbs (1890)L.R. 45 Ch. D. 1.

30United States v American Tel & Tel Co 552 F. Supp. 131 (DC 1982), affirmed sub nom.Maryland v UnitedStates 460 US 1001 (1983) (cited in Grupo Mexicano 527 US 308 (1999) at 337 (Ginsburg J., dissenting)).

31Brown v Board of Education 347 US 483 (1954) (cited in Grupo Mexicano 527 US 308 (1999) at 337 (GinsburgJ., dissenting); University of Texas v Camenisch 451 US 390 (1981) (cited in Grupo Mexicano 527 US 308 (1999)at 316 (Scalia J), and at 334 (Ginsburg J., dissenting)).

32 J.I.H. Jacob, “The Inherent Jurisdiction of the Court” (1970) C.L.P. 23, reprinted in J.I.H. Jacob, The Reform ofCivil Procedural Law (Sweet & Maxwell, 1982), p.224.

33Practice Direction (Mareva Injunctions and Anton Piller Orders) [1994] 1 W.L.R. 1233; Practice Direction(HC: Mareva Injunctions and Anton Piller Orders: Forms) [1996] 1 W.L.R. 1552. Today, the practice directionshave a statutory basis: Civil Procedure Act 1997 s.5(1).

34 Supreme Court of Judicature (Consolidation) Act 1925 s.45(1).35Owners of Cargo Lately Laden on Board the Siskina v Distos Compania Naviera SA (The Siskina) [1979] A.C.

210; [1977] 3 W.L.R. 818 HL.36 The Siskina [1979] A.C. 210 at 262.



on the Mareva jurisprudence for almost two decades.37 Nevertheless, successivechallenges were waged against The Siskina principle,38 and whatever was perceivedas its unfortunate legacy was largely removed by legislation.39

In the United States, since the late nineteenth century, the extent to which thefederal courts could legitimately exercise its equitable jurisdiction has been hotlydebated between enthusiastic supporters and detractors.40 This broad issue was thefocus of the US Supreme Court’s decision in Grupo Mexicano. The heat of thedebate was such that both the majority and the dissent quickly distinguished awaythe cases involving analogous facts of preliminary injunctions. Scalia J. thenasserted that in the federal system “the flexibility [of equity] is confined withinthe broad boundaries of traditional equitable relief”.41 Dissenting on behalf of thefour liberal justices, Ginsburg J. countered this by criticising his “unjustifiablystatic conception of equity jurisdiction”.42 The commentators were quick to pointout that Grupo Mexicano was just one of a series of recent cases where Scalia J.and other conservative justices were pursuing the grand aims of constricting theequitable powers of the federal courts.43

For Americans, Grupo Mexicano was essentially a case involving an “ordinarycreditor-debtor problem”44 that was conflated with a controversy over the federalcourts’ remedial power. This was not an attractive area for the Congress tointervene. It has yet to legislate on the matter, despite the call from commentatorsand the suggestion from Scalia J. himself to do so.45

Specialised courtFreezing injunctions in England were developed through the accumulation of casesin the Commercial Court. This specialised court is held in high esteem in Englandfor its role in elucidating both substantive and procedural law.46 A markedlydifferent view of such specialised courts can be observed in the United States.In England,Mareva injunctions were popular among practitioners immediately

after Lord Denning approved them for the first time, and even before the case wasreported. They were constantly issued by the Commercial Court judges, who liaise

37Veracruz Transportation v VC Shipping Co Inc (The Veracruz 1) [1992] 1 Lloyd’s Rep. 353 CA;Mercedes BenzAG v Leiduck [1996] 1 A.C. 284; [1995] 3 W.L.R. 718 PC HK.

38L. Collins, “The Legacy of The Siskina” (1992) 108 L.Q.R. 175 (criticising The Veracruz I [1992] 1 Lloyd’sRep. 353); Q’s Estate, Re [1999] 1 Lloyd’s Rep. 931 at 938–39 (Comm) (Rix J.) (distinguishing The Veracruz I); L.Collins, “The Siskina Again: An Opportunity Missed” (1996) 112 L.Q.R. 8 (criticisingMercedes Benz AG v Leiduck[1996] 1 A.C. 284; [1995] 3 W.L.R. 718 PC).

39Senior Courts Act 1981 s.37; Civil Jurisdiction and Judgments Act 1982 s.25; Civil Jurisdiction and JudgmentsAct 1982 (Interim Relief) Order 1997 (SI 1997/302); CPR r.25.1(f).In Fourie v Le Roux [2007] UKHL 1; [2007] 1 W.L.R. 320, the House of Lords reiterated that the nature of the

underlying cause of action must be clarified before the issue of freezing injunctions so as to provide protection forthe respondent. Nevertheless, it was obvious that much has changed since the days when The Siskina [1979] A.C.210 was decided.

40For supporters in the context of the civil rights cases, see, e.g. A. Chayes, “The Role of the Judge in Public LawLitigation” (1976) 89 Harv. L. Rev. 1281; for detractors, e.g. R.F. Nagel, “Separation of Powers and the Scope ofFederal Equitable Remedies” (1978) 30 Stan. L. Rev. 661.

41Grupo Mexicano 527 US 308 (1999) at 322.42Grupo Mexicano 527 US 308 (1999) at 336 (Ginsburg J., dissenting).43S.B. Burbank, “The Bitter with the Sweet: Tradition, History and Limitation on Federal Judicial Power—ACase

Study” (2000) 75 Notre Dame L. Rev. 1291, 1307–09; J. Resnik, “Constricting Remedies: The Rehnquist Judiciary,Congress, and Federal Power” (2003) 78 Indiana L.J. 223, 231–32.

44Resnik, “Constricting Remedies” (2003) 78 Indiana L.J. 223, 226.45Grupo Mexicano 527 US 308 (1999) at 333; E.K. Cheung, “Congressmen, the Ball is in Your Court: Grupo

Mexicano de Desarrolo v. Alliance Bond Fund” (2000) 26 J. Legislation 147.46R. Cranston, “Complex litigation: the Commercial Court” (2007) 26 C.J.Q. 190, 194.



closely with the barristers who practise before them and the solicitors who instructthem.47 Freezing injunctions were nurtured in this close-knit specialist communitythat is sensitive to the needs of the commercial community.48 When the matter ofprinciples arose, the Court of Appeal ruled on the issue and sometimes set outguidelines, but the Commercial Court judges’ exercise of discretion was mostlyrespected.49

The Commercial Court judges and the advocates before them during theformative era of Mareva relief continued to shape the expanding jurisdiction.50

They knew well that the availability of the robust freezing injunctions affected theinternational reputation of the Commercial Court and the flow of internationallegal business to London.51 The freezing relief was developed with an eye toequivalent practices in other jurisdictions. Today, freezing injunctions not onlyequal with French saisie conservatoir or American attachments in material respectsbut go far beyond them in terms of the territorial extension.52 The English disclosureorders that developed alongside them are perhaps even more effective than themain injunctions in countering international fraud.53

The Commercial Court judges’ experience is no less valuable in the daily disposalof applications for freezing injunctions. Ascertaining whether there is the risk ofasset dissipation by the defendant is a fact-intensive exercise. This key requirementmust be analysed with reference to numerous facts including the nature of therelevant assets, the nature and financial standing of the defendant’s business, thedefendant company’s country of registration, and the connection between thedefendant and other suspicious companies.54 In Third Chandris Corp v UnimarineSA, Lawton L.J. said that the Commercial Court judges,

“have special experience of commercial cases and they can be expected toidentify likely debt dodgers as well, probably better than, most businessmen.”55

In the United States, the specialised courts have had a rather troubled history. In1910, the Commerce Court was established to hear appeals from the InterstateCommerce Commission, a federal railroad regulation agency. Immediately after

47Lord Denning, The Due Process of Law (London: Butterworths, 1980), pp.135–47.48The Commercial Court Users’ Committee provides a direct link between the court and its commercial users: A.

Colman, The Practice and Procedure of the Commercial Court, 5th edn (London: Informa, 2000), Ch.2. See Admiraltyand Commercial Court Guide, 8th edn (2009), A3.

49 See, e.g. Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH (The Neithersachsen) [1983] 1 W.L.R.1412 at 1419; [1984] 1 All E.R. 398 CA;Dadourian Group Int Inc v Simms [2006] EWCA Civ 399; [2006] 1 W.L.R.2499 at [1]–[2].

50 Just to note two among the prominent figures: Donaldson J.—the first instance judge in both Nippon Yusen[1975] 1 W.L.R. 1093; [1975] 2 Lloyd’s Rep. 137; andMareva [1975] 2 Lloyd’s Rep. 509—bestowed the title“nuclear weapon” toMareva injunctions and Anton Piller orders, and authored as Master of the Rolls the key speechextending the extraterritorial reach of freezing injunctions in Derby & Co Ltd v Weldon (Nos 3 & 4) [1990] Ch. 65;[1989] 2W.L.R. 412. Mr Rix, who appeared for the plaintiff inMareva [1975] 2 Lloyd’s Rep. 509 and Siskina [1979]A.C. 210, later authored the convincing first instance judgment in Refco [1999] 1 Lloyd’s Rep. 159 and distinguishedVeracruz I [1992] 1 Lloyd’s Rep. 353 in Q’s Estate, Re [1999] 1 Lloyd’s Rep. 931.

51See, e.g. A. Lenon, “Mareva Injunctions in Support of Foreign Proceedings” (1997) 147 N.L.J. 1234; Negociosdel Mar SA v Doric Shipping Corp SA (The Assios) [1979] 1 Lloyd’s Rep. 331 at 334 CA (Lord Denning M.R.); L.Collins, “The Legacy of The Siskina” (1992) 108 L.Q.R. 175, 176.

52L. Collins, “The Territorial Reach of Mareva Injunctions” (1989) 105 L.Q.R. 266, 299; B. Hess, “Study onmakingmore efficient the enforcement of judicial decisions within the EuropeanUnion”, available at http://ec.europa.eu/civiljustice/publications/docs/enforcement_judicial_decisions_180204_en.pdf [Accessed April 26, 2010].

53Bankers Trust Co v Shapira [1980] 1 W.L.R. 1274. See C. McLachlan, “The jurisdictional limits of disclosureorders in transnational fraud litigation” (1998) 47 I.C.L.Q. 3, 30.

54Gee, Commercial Injunctions, 2004, para.12.039.55 Third Chandris [1979] Q.B. 645 at 672. This confidence, however, “may be exaggerated”: A.A.S. Zuckerman,

Civil Procedure: Principles of Practice (Sweet & Maxwell, 2006), para.9.155, fn.26.



establishment, however, the court was mired in a political controversy. Heavilycriticised for its apparent bias in favour of the railroad interest, the court wasabolished only three years later.56

The Court of Appeals for the Federal Circuit is a specialised court with appellatejurisdiction over cases involving patent and trademark and other specific categoriesof cases involving the federal government. It has survived the doubt about its biastoward patent protection.57 However, establishing a similar specialised court at thetrial level has never been a realistic reform agenda. This is so even though someempirical research has cast doubt on trial judges’ ability to handle patent cases.58

The Federal Circuit must defer to the fact finding by the judge or the jury of theregional general trial courts.59

The State of Delaware has specialised Chancery courts at the trial level. DelawareChancery judges are known for their expertise in business matters, and the courthas developed a reputation for sophistication in corporate law. Delaware is one ofthe only three states that retain Chancery courts as distinct from the courts ofcommon law that sit with the jury. Delaware is also one of the 12 states wherejudges are appointed on their merits rather than by election. These features ensurethat the court is insulated from excessive political or popular influence, but theyalso make Delaware rather anomalous among the American states that insist onjudges’ political accountability.60

Thus in the United States, there is persistent scepticism against the specialisedcourts. According to this view, specialised judges are overly sympathetic to thepolicies furthered by the law that they administer and are susceptible to captureby the bar that regularly practices before them.61Nowonder, the plaintiff-creditor’splea in Grupo Mexicano for adoptingMareva so as to maintain the United Statesas an attractive centre for financial transaction was quickly brushed aside by themajority of the US Supreme Court.62

Vanishing trials and managerial judgesIn England, the right to jury trial has been abolished by statute and case law exceptin certain areas.63 In the area of commercial law, where freezing injunctions aremost frequently sought, the jury has been virtually eliminated. It would beinconceivable for English lawyers to consider why the jury should be relevant inthis context. In the United States, the right to jury trial is enshrined in federal andstate constitutions. Writing for the court in Grupo Mexicano, Scalia J. appealedto this venerable right:

56G.E. Dix, “The Death of the Commerce Court: A Study in Institutional Weakness” (1964) 8 Am. J. Legal Hist.238; F. Frankfurter and J.M. Landis, The Business of the Supreme Court (New York: Macmillan, 1927), pp.153–74.

57R.C. Dreyfuss, “The Federal Circuit: A Case Study in Specialized Courts” (1989) 64 N.Y.U. L. Rev. 1, 21–23.58K.A. Moore, “Are District Court Judges Equipped to Resolve Patent Cases?” (2001) 15 Harv. J.L. & Tech. 1.59Warner-Jenkinson Co v Hilton Davis Chem Co 520 US 17 (1997) at 38–39.60 J.E. Fisch, “The Peculiar Role of the Delaware Courts in the Competition for Corporate Charters” (2000) 68 U.

Cincinnati L. Rev. 1061, 1094.61R.C. Dreyfuss, “Forums of the Future: The Role of Specialized Courts in Resolving Business Disputes” (1995)

61 Brooklyn L. Rev. 1, 24–25; R.A. Posner, The Federal Courts: Challenge and Reform (Cambridge, Massachusetts:Harvard UP, 1996), pp.153–57.

62Grupo Mexicano 527 US 308 (1999) at 330.63Ward v James [1966] 1 Q.B. 273; [1965] 2 W.L.R. 455 CA; Supreme Court Act 1981 s.69.



“The requirement that the creditor obtain a prior judgment is a fundamentalprotection in debtor-creditor law—rendered all the more important in ourfederal system by the debtor’s right to a jury trial on the legal claim.”64

He then went on to warn that unbounded equity jurisdiction could, “place the wholerights and property of the community under the arbitrary will of the Judge”.65

It has long been recognised both in England and the United States that mostcivil cases settle and few cases actually reach trial.66 As the trial declined, thepre-trial stage gained prominence and attracted increasing attention. The need tocope with court congestions and delay encouraged this trend.In 1990s England, the Commercial Court and other specialised courts led the

way to promoting ADR, encouraging settlement and strengthening the trial judge’scase-management role.67 These practices were accepted by Lord Woolf in hisAccess to Justice inquiry, and were expanded in the resulting Civil Procedure Rules1998.Individualised case-management confers significant discretionary powers on

trial judges. Concerns maywell be raised that such power be exercised capriciously,inconsistently or unpredictably. However, the statutes and rules of court in Englandhave traditionally conferred wide discretion in the area of civil procedure, and ithas been suggested that the apparent discretion “is quickly confined between banksof practice and authority”.68 It was against this background that Lord Woolf saidin Biguzzi v Rank Leisure Plc,69 “judges have to be trusted to exercise the widediscretions which they have fairly and justly in all the circumstances”. The academicassessment post-CPR has been that the case management appears to be workingeffectively, or even that it should be pursued more vigorously.70

In the United States, from which Lord Woolf drew inspiration for expansion ofADR and case management,71 things have been more tumultuous. The vanishingtrial was lamented72 and a prominent law professor wrote a famous article againstsettlement.73 Managerial judges were also greeted with scepticism.74 Trial judges’managerial power was passionately debated not only among legal professionalsbut also among legislators. Practical concerns were raised that the power could beexercised to the detriment of plaintiffs who fight against corporations andgovernment bodies.75 Even though the trend was irreversible, the commentators

64Grupo Mexicano 527 US 308 (1999) at 330.65Grupo Mexicano 527 US 308 (1999) at 332.66 See, e.g. C. Glasser and S. Roberts, “Dispute Resolution, Civil Justice and its Alternatives” (1993) 56 M.L.R.

277 (England); M. Galanter, “The Vanishing Trial: An Examination of Trials and Related Matters in Federal andState Courts” (2004) 1 J. Empirical Legal Studies 459 (the United States).

67Practice Direction (QBD: Comm Ct: Revised Practice) [1990] 1 W.L.R. 481; Practice Direction (QBD: CommCt: Practice Guide) [1994] 1 W.L.R. 1270; Practice Direction (Ch D: Procedure and Case Management) [1995] 1W.L.R. 785; Practice Statement (Comm Ct: Alternative Dispute Resolution) [1994] 1 W.L.R. 14; Practice Statement(Commercial Cases: Alternative Dispute Resolution) (No.2) [1996] 1W.L.R. 1024. These experiments were extendedto the High Court: Practice Note (HC: Civil Litigation: Case Management) [1995] 1 W.L.R. 508.

68T. Bingham, The Business of Judging (Oxford University Press, 2000), pp.42–43.69Biguzzi v Rank Leisure Plc [1999] 1 W.L.R. 1926 at 1934 CA.70N. Andrews, English Civil Procedure: Fundamentals of the New Civil Justice System (Oxford University Press,

2003), para.13.41; A.A.S. Zuckerman, “Civil Litigation: A Public Service for the Enforcement of Civil Rights” (2007)26 C.J.Q. 1, 8.

71Lord Woolf, Access to Justice: Interim Report (1995), Ch.5, para.25; annexe 2.72Galanter, “The Vanishing Trial” (2004) 1 J. Empirical Legal Studies 459.73O.M. Fiss, “Against Settlement” (1984) 93 Yale L.J. 1073.74 J. Resnik, “Managerial Judges” (1982) 96 Harv. L. Rev. 374; J. Resnik, “Trial as Error, Jurisdiction as Injury:

Transforming the Meaning of Article III” (2000) 113 Harv. L. Rev. 925.75C. Tobias, “Public Law Litigation and the Federal Rules of Civil Procedure” (1989) 74 Cornell L. Rev. 270.



continued to warn against the decline of transparency in the legal process. In suchculture of secrecy, it was contended, those who possess stronger bargaining powerwould inevitably prevail, and the resulting distributive effect would work in favourof large corporations.76

Domestic response to international problemsIn England, freezing injunctions developed through case law, independently ofthe pre-existing law of judgment enforcement. As the extraterritorial reach of theorders expanded, both the court and Parliament avoided constraining them by rigidjurisdictional rules.77 The American attachment is one of the statutory pre-judgmentremedies that have existed since the colonial period. Since the 1970s, they havebecome increasingly subject to the constitutional scrutiny by the US SupremeCourt.Since the formative period, English freezing injunctions have been deployed in

international settings to counter the global operation of debt-evaders andfraudsters.78 The extraterritorial jurisdiction of freezing injunctions was extendedpragmatically in accordance with the fairness and necessity of the case.In a series of cases decided in 1988, the Court of Appeal authorised worldwide

freezing orders, which restrain the defendant from dealing with his assets whethersuch assets are located within the jurisdiction or not.79 In Babanaft InternationalCo SA v Bassatne, Kerr L.J. said:

“some situations, which are nowadays by no means uncommon, cry out—asa matter of justice to plaintiffs—for disclosure orders and Mareva-typeinjunctions covering foreign assets of defendants even before judgment.”80

In Republic of Haiti v Duvalier,81 for example, the only link between England andthe case was the presence of defendant’s solicitors in England. The case wascommented as having gone to “the very edge of what is permissible”. Nevertheless,the exercise of the jurisdiction was justified because the defendant had manifestedintention to defraud the plaintiff, the solicitor could be treated as agents of thedefendants, and the relevant information was located in England.82 The extensiveextra-jurisdictional effect of the freezing injunctions and the accompanyingdiscovery orders has made the English court a popular forum of choice forinternational litigants.Turning to the domestic context, the Mareva relief was extended to English

defendants in 1979,83 and became available to restrain the defendant from dissipatinghis assets within the jurisdiction in 1982.84 However, freezing injunctions are not

76Galanter, “The Vanishing Trial” (2004) 1 J. Empirical Legal Studies 459, 522–31.77 For a critical view, A. Johnson, “Interim Injunction and International Jurisdiction” (2008) 27 C.J.Q. 433.78 I.S. Goldrein (ed.), Commercial Litigation: Pre-emptive Remedies (London: Sweet & Maxwell, 2009),

para.A2-003.79Haiti v Duvalier [1990] 1 Q.B. 202; [1989] 2 W.L.R. 261; Derby & Co Ltd v Weldon (Nos 3 & 4) [1990] Ch.

65; [1989] 2 W.L.R. 412; Babanaft International Co SA v Bassatne [1990] Ch. 13; [1989] 2 W.L.R. 232.80Babanaft International Co SA v Bassatne [1990] Ch. 13 at 33; [1989] 2 W.L.R. 232.81Haiti v Duvalier [1990] 1 Q.B. 202; [1989] 2 W.L.R. 261 CA (Civ Div).82Collins, “The Territorial Reach of Mareva Injunctions” (1989) 105 L.Q.R. 266, 281.83 Third Chandris [1979] Q.B. 645.84CBS United Kingdom Ltd v Lambert [1983] Ch. 37; [1982] 3 W.L.R. 746 CA (Civ Div).



readily available for claims of a modest sum.85 Although the High Court has thejurisdiction to issue freezing orders with regard to typical county court matters,such orders are strongly discouraged.86

In most American states, pre-judgment attachments provide remedies similarto the English freezing injunctions. The history of pre-judgment attachments,however, has been a process of domesticating the jurisdictional tool derived fromEngland.87

Foreign attachments, as adopted by the New England colonists from the customsof London, were a jurisdictional tool to attach debtor’s property in the hands of athird party so as to compel the defendant’s appearance to the court. They wereoriginally restricted to cases against absent or absconding debtors but later weremade available generally against debtor-defendants by colonial statutes. Commonattachment, another form of pre-judgment attachment with its roots in commonlaw, enabled the plaintiffs to attach tangible property in the defendant’s ownpossession so as to compel defendant’s appearance to the court. However, thismeasure was transformed by colonial statutes into a method of assuring thesatisfaction of the plaintiff’s judgment. Under such statutes, the goods attachedremain seized for a certain period after judgment in favour of plaintiff so that hecan execute upon them to satisfy the judgment.Thus, by the time of the American independence, these early forms of

pre-judgment attachment procedures had transformed themselves from a sharpjurisdictional tool to a rather heavy-handedmeans of debt collection that are broadlyavailable to ordinary creditors.88However, creditors’ easy access to such measureshad to be counter-balanced with additional protection for the debtors. In a seriesof cases since the late 1960s, the US Supreme Court placed state pre-judgmentremedies under constitutional scrutiny to ensure sufficient due-process protectionfor debtor-defendants.One strand of cases required state courts exercising the attachment jurisdiction

to ensure that the forum has a minimum contact with the defendant and theunderlying cause of action. In the leading case of Shaffer v Heitner,89 the USSupremeCourt held that a Delaware statute authorising sequestration of defendant’sproperty within the state to found the court’s jurisdiction (characterised as theequity counterpart of the process of foreign attachment in suits at law) violatedthe due-process clause of the Fourteenth Amendment of the US Constitution. Itwas held that the need to prevent a wrongdoer from removing his assets beyondthe reach of an in personam suit was not in itself a sufficient justification forrecognising the jurisdiction unless the property is the subject matter of the litigationor in some way related to the underlying cause of action.

85 Sions v Ruscoe-Price Unreported November 30, 1988 CA (Civ Div). This was a case before Woolf L.J. whichresulted in denying an application for a freezing injunction for a claim involving £2,000.

86 Schmidt v Wong [2005] EWCA Civ 1506; [2006] 1 W.L.R. 561.87R.W. Millar, Civil Procedure of the Trial Court in Historical Perspective (New York: National Conference of

Judicial Councils, 1952), pp.481–97; Wasserman, “Equity Renewed: Preliminary Injunctions to Secure PotentialMoney Judgments” (1992) 67 Wash. L. Rev. 257, 274–75.

88Wasserman, “Equity Renewed” (1992) 67 Wash. L. Rev. 257, 275.89 Shaffer v Heitner 433 US 186 (1977).



Another strand of cases broadened the constitutional protection to the debtordefendant by affording notice and opportunity to be heard before pre-judgmentremedies are granted against him.90 In Connecticut v Doehr,91 for example, the USSupreme Court held that the Connecticut pre-judgment attachment statute violatedthe defendant’s due-process right because it allowed ex parte hearing based merelyon the fact that the defendant owned real property in the state, without requiringthe plaintiff to show any exigent circumstances.Ironically, these developments took place just when Mareva injunctions were

solidifying their foundation and extending their extra-jurisdictional reach. In Rasuv Perusahaan (“Pertamina”),92 Lord Denning quoted at length from Ownbey vMorgan,93 a US Supreme Court decision upholding the constitutionality of theDelaware foreign attachment statute. He did so to indicate that the relief soughtwas authorised in the United States and that its origin could be traced back to theEnglish practices. However, in Shaffer v Heitner, decided in the same year, theUS Supreme Court suggested that its due-process jurisprudence had alreadydeparted from the Ownbey decision.94

Democratic forms of civil procedure reformThe conspicuous pattern of the English procedural reforms is that the initiativesof the leading members of the judiciary are followed by legislative endorsementand public support. By contrast, the recent American procedural reforms havebeen subject to extensive legislative and public debate.In England, Parliament has often followed the judicial initiative of procedural

innovations.95 The expansion of Mareva jurisdiction led by the specialised courtshas been approved by a series of legislation. At the same time, the statues leftmuch discretion in the hands of the court.96 Similarly, the specialised court’sinnovative effort in the area of case management and encouragement of alternativedispute resolutions was influential on Lord Woolf’s Access to Justice reform. Thelegislation and the CPR not only incorporated such practice, but still left thespecialised courts with flexibility to develop the practice even further.97

TheWoolf reforms achieved what the sole dissentientMichael Zander describedas,

90 Sniadach v Family Finance Corp 395 US 337 (1969); Fuentes v Shevin 407 US 67 (1972);Mitchell v WT GrantCo 416 US 600 (1974); North Georgia Finishing Co v Di-Chem Inc 419 US 601 (1975); Connecticut v Doehr 501US 1 (1991). See D.G. Baird, T. Eisenberg, T.H. Jackson (eds),Commercial &Debtor-Creditor Law (2004), para.29.02.

91Connecticut v Doehr 501 US 1 (1991).92Rasu Maritima SA v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (“Pertamina”) [1978] Q.B.

644 at 658; [1977] 3 W.L.R. 518. See also Denning, The Due Process of Law, 1980, p.138.93Ownbey v Morgan 256 US 94 (1921).94 Shaffer US 186 (1977) at 194 fn.10.95N. Andrews, “Development in English Civil Procedure: How far can the English courts reform their own

procedure?” (1997) 2 Zeitschrift für Zivilprozeß International 3.96Supreme Court Act 1981 s.37(1) (the court may grant an injunction “in all cases in which it appears to the court

to be just and convenient to do so”); Civil Jurisdiction and Judgments Act 1982 s.25(2) (the court may refuse to grantan interim relief, “if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section …makes it inexpedient for the court to grant it”).

97The CPR apply generally to the courts in England (CPR r.58.3) but the Admiralty and Commercial Court Guideprovides for a markedly different procedural regime: Colman, The Practice and Procedure of the Commercial Court,2000, p.27.



“almost universal support including that of the senior judiciary, the BarCouncil and the Law Society as well as both the lay and the legal press.”98

To some extent, such a wide consensus may be attributed to the broadly sharedinterest in promoting the international reputation of the court in London. Manyreformers of court procedures have referred to the need to maintain the judiciary’scontribution to attracting international litigants and to the commercial life ofLondon and England.99

All this has made it possible for the English procedure to evolve informally.Practice Directions, which now have a legislative foundation, can be amended bythe Rule Committeewithout formal legislation by Parliament.100 Informal proceduralrules can be adjusted relatively easily when particular problems arise. With a viewto such flexible changes in the future, the English reformers have been willing toembark on procedural innovation even though the empirical basis is admittedlylimited.101

In the United States, commentators have complained for decades about thepoliticisation of the civil procedure reform. Just as in Grupo Mexicano, the USSupreme Court justices have been split between the liberals and the conservativeseven on procedural issues.102 Since the 1970s, the Congress has intervened in theprocedural reform on a number of occasions. The reform proposed by the AdvisoryCommittee of the Federal Judicial Conferencewas often disrupted, andwas replacedby a series of legislative modification.103

With the expansion of legislative role came the call for greater publicparticipation and growing emphasis on the empirical basis for justifying proceduralreform.104 In the Civil Justice Reform Act of 1990,105 for example, the Congressrequired each US District Court to implement a local program to reduce expenseand delay in civil litigation. The Act also called for a large scale empirical study.However, this was, according to a long-time federal court administrator, a venerableresearch project mired in political hyperbole, destined to generate “a goodly dollopof hype and exaggeration”.106 For him, Lord Woolf’s leadership was to becongratulated for achieving in a few years what it took the United States almost awhole century to achieve.107

98M. Zander, “The Government’s Plan on Civil Justice” (1998) 61 C.J.Q. 208, 208.99Lord Woolf, Access to Justice: Final Report (1996), Overview, para.5; Lord Falconer, Doing Law Differently

(Department of Constitutional Affairs, April 2006), p.1; The Report and Recommendations of the Commercial CourtLong Trials Working Party (December 2007), para.28.

100Civil Procedure Act 1997 s.5. For a critical view, J.A. Jolowicz, “Practice Directions and the Civil ProcedureRules” (2000) 59 C.L.J. 53, 61.

101Lord Woolf, Access to Justice: Interim Report (1995), Ch.5, para.25; J. Peysner, “Focus Groups and AnalogueVignettes: Modelling and Piloting in Civil Procedural Reform” (1999) 18 C.J.Q. 113.

102Resnik, “Constricting Remedies” (2003) 78 Indiana L.J. 223, 224.103 For an early example, Federal Rules of Evidence Act of January 2, 1975 Pub.L.93–595; for a recent example,

Class Action Fairness Act of 2005 28 USC ss.1332(d), 1453, 1711–1715.104R.G. Bone, “The Process of Making Process: Court Rulemaking, Democratic Legitimacy, and Procedural

Efficacy” (1999) 87 Georgia L.J. 887; T.E. Willging, “Past and Potential Uses of Empirical Research in Civil RuleMaking” (2002) 77 Notre Dame L. Rev. 1121.

105 28 USC ss.471–482.106 S. Flanders, “Case Management: Failure in America? Success in England and Wales?” (1998) 17 C.J.Q. 308,

309.107 Flanders, “Case Management” (1998) 17 C.J.Q. 308, 318.



The fact that the American reform has stalled in Washington DC does not meanthat no reform is possible. Reform initiatives often originate from local districtcourts or state courts and develop in an incremental fashion. An Americancommentator captured such a pattern in the context of case management:

“The innovation came at the local level; judges in San Francisco, Chicago,New York and other places thought up and tried out new ways of handlinglitigation. Satisfied that these were superior, they then embarked on a courseof gentle persuasion to get other judges to do the same. Only well into thedevelopment did national rules begin to address case management issues.”108

After Gropo Mexicano, it has been suggested that the battlefield shifts to theindividual states.109 Though no significant legislative change has been observed atthe time of writing, the lower courts of diverse American localities haveexperimented with innovative use of pre-existing jurisdiction.110

Overall contrastFrom the comparative analysis thus far, several underlying themes can be identified.First, the procedural reform in England has focused on specific needs that havearisen in civil practice. Particularly remarkable is the sensitivity to the needs arisingfrom cross-border litigation. On the other hand, the American approach is to ensurethat the civil justice is open and available to a wide range of the public.Correspondingly, emphasis has been placed on the protection of those adverselyaffected by court orders. Secondly, the English trial judges, especially those sittingfor the specialised court, are trusted in their daily administration of procedurallaw. The American trial judges are perceived as possessing powers that could havesignificant societal impact, and the concentration of such powers has been viewedwith caution.Thirdly, in England, the few core members of the judiciary and the bar keep a

firm grip on the reform of civil procedure. In the United States, procedural reformsare driven by diverse participants from various localities. People from differentbranches of the government, varied professions and occupations, and many kindsof interest groups vie for their influence. Fourthly, the procedures are regulatedinformally in England, while both the civil procedure rules and their reform processhave been formalised in the United States. And lastly, the politics does not appearto play a significant role in England. The American procedure is overtly politicalnot only in the sense that the politicians are actively involved but also in the sensethat the debates on procedures concern the distribution of power among differentdecision-makers or different groups of people in the society.

108R.L. Marcus, “‘Déjà Vu All Over Again’? An American Reaction to the Woolf Report” in A.A.S. Zuckermanand R. Cranston (eds), Reform of Civil Procedure: Essays on "Access to Justice" (Oxford, 1995), p.240.

109 J.L. Wilson, “Three if by Equity: Mareva Orders & the New British Invasion” (2005) 19 St. John’s Journal ofLegal Commentary 673, 726. Under Federal Rules of Civil Procedure r.64(a), the Federal District Court can orderpre-judgment attachment available under the local state law.

110 See, e.g.MS Distributing Co v Web Records Inc No.00 C1436, 2003 U.S. Dist. LEXIS 9092 District Court forthe Northern District of Illinois (May 29, 2003) (preliminary injunction prohibiting the defendants from withdrawingfrom an out-of-state bank account).



Making sense of the differenceThe contrasting approaches identified above have affectedmany aspects of freezinginjunctions in England and pre-judgment attachment in the United States. Theunderstanding of such contrast will assist in explaining where the US SupremeCourt parted from the English lead and why English commentators found it sodifficult to understand the departure.

Freezing injunctions and pre-judgment attachment compared

Nature and objectives111

Freezing injunctions in England are orders in personam to restrain the defendantfrom dissipating his assets. They cannot be ordered for the purpose of providingsecurity.112 Applications for freezing injunctions where there is no danger of assetdissipation are regarded as an abuse.113

The American pre-judgment attachments are in rem remedies that seize thedefendant’s property to secure the payment of eventual money judgment.Attachment orders confer on the plaintiff security interests in the property and heobtains priority over subsequent creditors in satisfying his debt. The originalpurpose of obtaining jurisdiction has lost its significance as it became increasinglyeasy for plaintiffs to utilise far-reaching long-arm statutes to establish a personaljurisdiction. The emphasis of the attachment remedy has shifted to providingordinary creditors with measures to secure a fund fromwhich a potential judgmentcan be satisfied.114

Procedural requirementsIn England, the claimant must clear high procedural threshold, which correspondsto the relief’s extensive effect. The remedy is available only for those whose claimsinvolve sufficiently high stakes. The hearings are almost invariably held ex parte,where the claimant and his representatives must disclose all the material facts tothe court. The claimant must show that he has a good arguable case on the meritsof the underlying cause of action and that the refusal of aMareva injunction wouldinvolve a real risk of asset dissipation by the defendant. The relief cannot be grantedfor the purpose of interfering with ordinary business transactions.115

111For earlier analysis, J.J. McEvoy and J.M. Dine, “AreMareva injunctions becoming attachment orders?” (1989)8 C.J.Q. 236.

112Derby & Co Ltd v Weldon (Nos 3 and 4) [1990] Ch. 65 at 76; [1989] 2 W.L.R. 412 CA (Civ Div); NinemiaMaritime Corp (The Neithersachsen) [1983] 1 W.L.R. 1412 at 1422.

113 Z Ltd v A-Z [1982] Q.B. 558 at 585; [1982] 2 W.L.R. 288 CA (Civ Div) (Kerr L.J.).114T. Eisenberg (ed.), Debtor-Creditor Law, (New Jersey: Matthew Bender, periodically updated electronic

resource), para.30.13(d), (e).115 Iraqi Ministry of Defense v Arcepey Shipping Co SA [1981] Q.B. 65; [1980] 2 W.L.R. 488 CA (Civ Div); Gee,

Commercial Injunctions, 2004, p.352.



In the United States, the formal requirement of minimum jurisdictional amountis either non-existent or very low.116 Many state attachment statutes provide forinter partes, as well as ex parte hearing.117 In order to proceed ex parte, the plaintiffmust show some exigent circumstances.118 The plaintiff is generally required toshow the likelihood of success on the underlying cause of action. Additionalstatutory grounds for attachment in some states are largely analogous to therequirements for the English freezing injunction. In New York, for example, theplaintiff is required to show that:

“the defendant, with the intent to defraud his creditors or frustrate theenforcement of a judgment that might be rendered in the plaintiff’s favour,has assigned, disposed of, encumbered or secreted property, or removed fromthe state or is about to do any of these acts.”119

However, in other states, notably in California, the requirements are easier tosatisfy, where once the plaintiff establishes the claim on which to recover, he neednot show the defendant’s avoidance efforts.120

Extra-territorial reachThe inability of English freezing injunctions to confer security interests on theclaimant is more than compensated by the extensive extraterritorial effect of thein personam remedy.121 Statute has removed the formal restraints imposed by theHouse of Lords in The Siskina, allowing the court to exercise extra-territorialjurisdiction in a pragmatic fashion. Concerns for the impact on non-parties andforeign jurisdiction are now dealt with by a series of judicially mandatedundertakings and the flexible guidelines set forth by the Court of Appeal.122

TheAmerican attachment orders operate in rem and can affect only the propertylocated within the jurisdiction. Many state statutes retain the original feature ofjurisdictional device, as where the plaintiff can attach the defendant’s property onthe ground that the defendant is not available within the jurisdiction or cannot beserved,123 or a plaintiff proceeding against a non-resident defendant is allowedbroader scope of attachment.124 However, the US Supreme Court’s due-processjurisprudence has placed formal constraints on this feature. State courts exercisingthe attachment jurisdiction are now required to have sufficient connection withthe defendant and the underlying cause of action, as well as the property to beattached.

116e.g. California Code of Civil Procedure (Cal CCP) s.483.010(a) (US $500); 735 Illinois Compiled Statute (ILCS)5/4-101 (US $20); Delaware Code ss.3506, 3507 (US $50). It is non-existent in Connecticut.

117Cal CCP ss.484.040(a) (notice), 485.010 (ex parte hearing), 486.010 (temporary protective order); ConnecticutGeneral Statutes (Conn Gen Stat) ss.52–278d(a)(the defendant’s right to be heard), 52-278e(a) (without hearing);New York Civil Practice Law and Rules (NY CPLR) ss.6210 (on notice), 6211 (without notice).

118Connecticut v Doehr 501 US 1 (1991) at 17.119NY CPLR s.6201. For similar provisions, 735 ILCS 5/4-101.120Cal CCP ss.484.020(a), 484.090. See also Maine Rules of Civil Procedure r.4A(c); Northeast Investment Co v

Leisure Living Communities Inc351 A.2d 845 (Maine 1976). This has been criticised as losing sight of an attachmentlaw: Eisenberg (ed.), Debtor-Creditor Law, 2004, para.30.13(3).

121Goldrein, Commercial Litigation, 2009, para.G3-014.122Dadourian [2006] EWCA Civ 399; [2006] 1 W.L.R. 2499 at [25] et seq.123 e.g. 735 ILCS 5/4-101(1); NY CPLR s.6201(1).124 e.g. Cal CPP s.492.010.



The judge’s discretionIn England, the trial judge’s discretion has had the dual function of administratingthe daily operation of freezing relief and developing the governing principles. Inexercising discretion, the trial judge takes into account a complex set of factors,ranging from the hardship suffered by the defendant and the impact on the thirdparties, to the comity implications of the worldwide order.125 Therefore freezingorders can normally be granted only by puisne judges in the High Court.126

In the United States, some state statutes provide that the court “shall” issueattachment orders when the statutory requirements are satisfied,127 though otherstates use discretionary language.128 Even in the states where the discretionarynature is recognised, judges, apprehensive of the harsh nature of the remedy, haveinsisted on strict compliance with the statutory requirements.129 In many states theissue of a writ of attachment used to be the act of the court clerk, although followingthe US Supreme Court’s due-process jurisprudence, the involvement of judicialofficers is invariably required today.130

Statutory and constitutional constraintIn England, the statutes provide the court’s jurisdictional basis for issuing freezinginjunctions. Nevertheless, they have generally approved of judicial innovation andleft the actual operation to the trial judge’s discretion. The European Court ofJustice, however, has emerged as an institution that exercises an external checkupon the English procedure.131

In the United States, pre-judgement attachments have developed through statelegislation. Attachment orders must satisfy specific requirements proscribed bystate statutes, which are, in turn, subject to the Constitutional constraints. Manystates have amended their attachment statutes to comply with the US SupremeCourt’s evolving due-process jurisprudence.

Grupo Mexicano decipheredThe US Supreme Court’s Grupo Mexicano decision perplexed some Englishcommentators.132 The understanding of the contrasting approach will illuminatethe underlying force that drove the debate among the US Supreme Court justices,which will in turn explain why English observers found it so difficult to understand.

125Crédit Suisse Fides Trust SA v Cuoghi [1998] Q.B. 818 at 829; [1997] 3 W.L.R. 871 CA (Civ Div) (MillettL.J.).

126CPR PD 25 para.1.1.127 e.g. Cal CCP s.484.090(b); 735 ILCS 5/4-104.128 e.g. NY CPLR s.6211. See Eisenberg (ed.), Debtor-Creditor Law, 2004, para.30.01(2)(b)(i) (stating that the

attachment is a discretionary remedy).129 e.g. Kornblum v Kornblum 34 AD3d 748, 749 NY Appellate Division, 2d Department 2006.130 See North Georgia Finishing 419 US 601 (1975) at 606; Fuentes 407 US 67 (1972) at 75; Sniadach 395 US

337 (1969) at 338–39. See also Millar, Civil Procedure of the Trial Court in Historical Perspective, 1952, p.491;Eisenberg (ed.), Debtor-Creditor Law, 2004, para.30.02(2). Connecticut v Doehr 501 US 1 (1991)

131 See Denilauler v SNC Couchet Freres [1980] E.C.R. 1553; [1981] 1 C.M.L.R. 62;Mietz v Intership YachtingSneek BV [1999] E.C.R. I-2277; Van Uden Maritime BV (t/a Van Uden Africa Line) v Kommanditgesellschaft inFirma Deco-Line [1999] Q.B. 1225; [1998] E.C.R. I-7091 (requiring “a real connecting link between the subjectmatter of the measures sought and the territorial jurisdiction of the contracting state of the court before which thosemeasures are sought”).

132L. Collins, “United States Supreme Court Rejects Mareva Jurisdiction” (1999) 115 L.Q.R. 601; D. Capper,“The Need for Mareva Injunctions Reconsidered” (2005) 73 Fordham L. Rev. 2161.



Safeguards and domestic implicationsFor English commentators, the justices in Grupo Mexicano appeared to neglectthe layers of procedural protection that the English judge had developed.Passages from the opinions reveal that the justices had understood the Mareva

injunction according to the general principles governing ordinary preliminaryinjunctions.133 Such understanding, however, caused the justices to overlook theEnglish Mareva injunction’s sharp focus on prevention of asset dissipation. Thefactual basis of the Grupo Mexicano case was that the plaintiff would not be ableto collect the debt if the defendant disbursed its assets to pay out other creditors.However, this does not of itself mean that the asset is being dissipated in the contextof English Mareva relief. An English judge could characterise it as “a bona-fideeffort to restructure its debt”.134Under such circumstances, the English court wouldhave declined to grant freezing relief. Thus, US SupremeCourt could have disposedof the case without deciding on the general issue of whether freezing relief shouldbe available.Nevertheless, the predominant issue in Grupo Mexicano was the remedy’s

potential social impact, and not the consideration of procedural technicalities. Thedecision of Scalia J. warned of the proposed remedy’s potential to alter the powerbalance among debtors and creditors.135 Much less attention was paid to theparticular circumstances affecting the debtor and creditor in the instant case.

International dimensionsLord Collins noted that comity implication was neglected inGrupoMexicano. Forhim, the court should have been cautious in entertaining the application, given thatthe case involved a foreign debtor, and its business were centred and whole assetslocated outside the United States.136 While the English freezing jurisdiction haspragmatically evolved with an eye to the international practices, the US SupremeCourt’s due-process jurisprudence focused on placing formal constraints on thestate court’s expansive exercise of jurisdiction. It may well be that the Englishpragmatism did not translate easily to the American court’s formal approach tothe procedural protection of the debtor-defendants.Ultimately, the justices in Grupo Mexicano debated on a domestic procedural

controversy. American commentators saw behind Scalia J.’s restrictive approachhis motive to curb the judicial activism since the latter half of the 20th century.Likewise, Ginsburg J. and other dissenting justices have been supportive of theliberal reform led by the federal judiciary.

133Grupo Mexicano 527 US 308 (1999) at 312 (Scalia J.), 340 (Ginsburg J., dissenting). This was the prevailingapproach in the lower court decisions and academic writings: Alliance Bond Fund 143 F.3d 688, 693 (2d Cir. 1998)at 696–97; Wasserman, “Equity Renewed” (1992) 67 Wash. L. Rev. 257, 286.

134Collins, “United States Supreme Court Rejects Mareva Jurisdiction” (1999) 115 L.Q.R. 601, 604.135Grupo Mexicano 527 US 308 (1999) at 331.136Collins, “United States Supreme Court Rejects Mareva Jurisdiction” (1999) 115 L.Q.R. 601, 604.



The contemporary relevance of obsolete materialsThe US Supreme Court justices have been chided for relying on obsoletematerials.137 As the justices shifted their attention away from the internationalcontext, the latest English decisions dealing with worldwide Mareva injunctionswere no longer relevant.The proposition that the federal equity jurisdiction is bound by the English

Chancery practice in 1789 is sufficient to surprise foreign observers. The pointwhere the justices disagreed was whether the federal court is bound by the specificpractices and the remedies of that time, or only by the broad equitable principlesthat allow a degree of flexibility. In fact, this analytical framework forms the basisof the contemporary debate over equitable power of the federal judiciary. Theopinion of Scalia J. also quoted from a book published in 1835–36 by Joseph Story(US Supreme Court Justice (1811–45)):

“If … a Court of Equity in England did possess the unbounded jurisdiction,… it would be … the most formidable instrument of arbitrary power thatcould well be devised.”138

This passage not only represents Scalia J.’s antagonism to judicial activism butalso reflect the persistent fear that many contemporary Americans share againstthe discretionary power concentrated on the judges. In other words, these apparentlyobsolete materials reflected sentiments that still retain contemporary relevance inAmerica.

Looking towards the futureThis article has attempted to explain how the underlying culture or values haveshaped the course of procedural innovation. The focused specialist approach inEngland has been more conducive to devising and developing the freezing reliefthan the political approach in the United States. The American emphasis on thepeople’s access to power and check upon the powerful also affected the nature ofpre-judgment attachments and the attitude towards English freezing injunctions.This article is not, however, intended to draw any conclusion as to which

approach is superior to the other. The contrasting approaches represent the dilemmathat any democratic forms of civil procedure reform must face in the globalisedworld. On the one hand, civil procedure must serve the people. But, on the otherhand, it must be sufficiently focused to respond to the shifting needs of the day.England and the United States have placed different degrees of emphasis on theseconflicting imperatives.This article is not to suggest that this contrast is absolute, either. Though the

difference is likely to remain for the time being, nobody knows for how long. TheEnglish judiciary has been increasingly drawn into social and political controversies,not least by the introduction of the Human Rights Act 1998. Political pressuresare mounting in England to bring about transparency and representation in the

137Collins, “United States Supreme Court Rejects Mareva Jurisdiction” (1999) 115 L.Q.R. 601, 604; Capper, “TheNeed for Mareva Injunctions Reconsidered” (2005) 73 Fordham L. Rev. 2161, 2172.

138Grupo Mexicano 527 US 308 (1999) at 332, quoting from J. Story, Commentaries on Equity Jurisprudence(1835–36), s.19, at 21.



judiciary. On the other side of the Atlantic, some states have since 1990s begunto adopt particularised court procedures for commercial and corporate matters.139

Predicting how the gap will play out in the future is, however, beyond this article’sscope.

139A.T. Nees, “Making a Case for Business Courts: A Survey of and Proposed Framework to Evaluate BusinessCourts” (2007) 24 Georgia State University L. Rev. 477, 503.



The Anglo-American Perspective on Freezing Injunctions, CIVIL JUSTICE QUARTERLY, vol. 29, issue 3,...

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