Mareva Injunctions in Support of the Enforcement of Arbitral Awards 14 October 2016

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1 Mareva Injunctions in Support of the Enforcement of Arbitral Awards 14 October 2016 Margaret Clare Ryan

2 Mareva Injunctions: Overview Equitable injunction that prevents, for a limited time, specific assets from being dissipated or removed from the jurisdiction. Can be sought at any stage of the proceedings. General requirements for obtaining Mareva injunction: in personam jurisdiction; a good arguable case on the merits; assets in the jurisdiction (for WFO, assets outside the jurisdiction); real risk of dissipation or removal before award is satisfied; undertaking in damages; and if ex parte application: full, frank and fair disclosure of all material facts. Information obtained through ancillary disclosure order can facilitate attachment proceedings where assets are located. 2

3 Mareva Injunctions: Overview General Limitations of Mareva Injunctions Operate in personam do not create security rights in the defendant's asset(s). Limited sanctions for failure to comply. Not automatically binding on third parties holding assets abroad. Additional hurdles for obtaining Mareva injunction against State defendants. 3

4 Mareva Injunctions in Support of Pending Arbitration ICC Arbitration Rules

5 Mareva Injunctions in Support of Pending Arbitration Fry et al., The Secretariat's Guide to ICC Arbitration (Paris: ICC, 2012) 5

6 Mareva Injunctions in Support of Pending Arbitration Carlevaris and Feris, Running in the ICC Emergency Arbitrator Rules: The First Ten Cases (Paris: ICC, 2014) 6

7 Mareva Injunctions in Support of Pending Arbitration Gerald Metals S.A. v Timins & Ors [2016] EWHC 2327 (Comm) GM (Swiss company) applies for appointment of emergency arbitrator to obtain order preventing trustee of Timins (Romanian-Australian investor) from disposing of trust assets. LCIA rejects application after Trustee gives undertaking not to dispose of assets other than for full market value and at arm s length, with seven days notice of any transaction over 225,000. Commercial Court rejects GM s application for WFO under Section 44 of UK Arbitration Act 1996, holding that relief would be available where: Application is too urgent to be dealt with by emergency arbitrator; or Arbitral tribunal constituted in normal way lacks power to grant relief sought. 7

8 Post-Award Mareva Injunctions: Selected Canadian Case Law Sociedade-de-Formento Industrial v Pakistan Steel Mills June 2010: SFI (India) obtains CDN 8.7 million award against PSM (Pakistani State entity) from ICC tribunal in London. May 2011: SFI obtains ex parte Mareva injunction from BC Supreme Court. December 2011: BC Supreme Court recognizes and enforces the ICC award. July 2013: BC Supreme Court overturns order granting Mareva injunction, holding that SFI had failed to discharge its duty to make full, frank and fair disclosure of all material facts. 8

9 Post-Award Mareva Injunctions: Selected Canadian Case Law Sociedade-de-Formento Industrial v Pakistan Steel Mills, 2013 BCSC 1304, per Madame Justice Ross: 9

10 Post-Award Mareva Injunctions: Selected Canadian Case Law Sociedade-de-Formento Industrial v Pakistan Steel Mills, 2014 BCCA 205, per Madam Justice Garson 10

11 Post-Award Mareva Injunctions: Selected Canadian Case Law Stans Energy v Kyrgyz Republic June 2014: MCCI renders US$ 188 million award in favour of Stans Energy. Kyrgyz Republic commences actions to set aside award before the Economic Court of the CIS and Moscow State Court. September 2014: Economic Court of CIS holds that MCCI lacked jurisdiction over the dispute. Federal State Court orders Moscow State Court to decide the set aside application de novo. October 2014: Stans Energy obtains ex parte Mareva injunction from Ontario court. A decision to extend the injunction is appealed by the Kyrgyz Republic. May 2015: Moscow State Court sets aside MCCI award. June 2015: Ontario Divisional Court lifts Mareva injunction. 11

12 Post-Award Mareva Injunctions: Selected Canadian Case Law Stans Energy v Kyrgyz Republic, 2015 ONSC 3236, per H. Sachs J.: 12

13 Post-Award Worldwide Freezing Orders: Selected English Case Law U&M Mining Zambia Ltd v Konkola Copper Mines Plc U&M applies to continue WFO granted against KCM to prevent dissipation of assets pending KCM s satisfaction of three LCIA awards. KCM argues that it was not just and convenient for English Court to grant WFO: KCM s assets are located in Zambia; the parties agreed that the largest award would be enforced in Zambia; KCM was amenable to the in personam jurisdiction of the Zambian courts; and there was no evidence that the legal remedies available to U&M in Zambia were inadequate. 13

14 Post-Award Worldwide Freezing Orders: Selected English Case Law U&M Mining Zambia Ltd v Konkola Copper Mines Plc [2014] EWHC 3250 (Comm), per Mr. Justice Teare: 14

15 Post-Award Worldwide Freezing Orders: Selected English Case Law U&M Mining Zambia Ltd v Konkola Copper Mines Plc [2014] EWHC 3250 (Comm), per Mr. Justice Teare: 15

16 Post-Award Worldwide Freezing Orders: Selected English Case Law Cruz City 1 Mauritius Holdings v Unitech Limited and others [2014] EWHC 3704 (Comm) LCIA tribunal renders award against Unitech, an Indian parent of a group of companies incorporated in a variety of jurisdictions. Cruz City obtains WFO and disclosure order against Unitech, and an order appointing receivers over Unitech s shareholding in four subsidiary companies. Cruz City seeks WFO against Unitech's subsidiaries incorporated outside of England and Wales. Court holds that Cruz City had not satisfied any of the jurisdictional gateways for service of a claim form outside of the jurisdiction. 16

17 Post-Award Worldwide Freezing Orders: Selected English Case Law Cruz City 1 Mauritius Holdings v Unitech Limited and others [2014] EWHC 3704 (Comm), per Males J: 17

18 Post-Award Worldwide Freezing Orders: Selected English Case Law Cruz City 1 Mauritius Holdings v Unitech Limited and others [2014] EWHC 3704 (Comm), per Males J: 18