The English Courts come to the aid of successful claimants in arbitrations

Published: 1/5/2015

The freezing injunction (also known as the Mareva injunction) has been a central feature in English litigation for several decades now, along with its frequent companion: the order that a respondent disclose his assets, within and without the jurisdiction. These orders can be granted both in advance of a claim being commenced, during proceedings and after final judgment to discover and preserve a judgment debtor’s assets until execution can be levied on them.

The purpose of these orders is to prevent frustration of a judgment by the removal of assets from the jurisdiction or their concealment. 

These principles have been extended by the English courts into the arbitration arena. Thus, where an arbitration award has been converted into a judgment, the English courts have the power to order a freezing injunction and that the judgment debtor should disclose his assets within and outside the jurisdiction. The same has been held to apply even if an award has not been turned into a judgment: the English courts have the power to make the same orders in relation to an arbitration as they could have made if the arbitral reference in question had been a High Court action. The absence of a judgment, as distinct from an award, is seen to make no difference for it is the policy of the law that arbitration awards should be satisfied and executed. Moreover, the Courts have been willing to make freestanding disclosure orders which do not need to be tagged to an application for a freezing injunction. This can be particularly useful in cases where proof of fraudulent intent to dissipate assets is difficult to make out but information on the whereabouts and nature of a respondent’s assets is necessary to enable enforcement.

These principles were recently re-affirmed in Cruz City 1 Mauritius Holdings v Unitech Ltd and others [2013] EWHC 1323 (Comm). In this case, the respondent tried to argue that the presumption against extraterritoriality meant that the Court could not order disclosure post-judgment by a judgment/award debtor who was outside the jurisdiction. The Court confirmed that it had a freestanding power to order disclosure after judgment/award to render it effective in the sense of capable of enforcement and that the order was not one which was addressed to a non party outside of the jurisdiction of the Court but an order against defendants who were subject to the Court’s jurisdiction. In other words, even though the disclosure in reality would have to be given by officers who were outside the jurisdiction, that did not mean that the order was addressed to a party other than the respondents.

The case forms part of the predisposition on the part of the English Courts to support successful arbitration claimants. Where such claimants are not aware of the extent and nature of a respondent’s assets here or abroad or the manner in which they are held, they will have available the usual panoply of remedies available in litigation to secure this information in the knowledge that the English courts will strive to ensure that a successful party is not denied the fruits of his award. 

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