Singapore High Court Grants Mareva Injunction In Aid Of Foreign Proceedings

Introduction

A Mareva injunction is an invaluable tool for litigants seeking to prevent counterparties from disposing of their assets before any judgment can be awarded against them. With commercial disputes often being cross-border in nature, the international enforcement of Mareva injunctions is especially important.

Until now, the question of whether a Singapore Court has the power to grant a Mareva injunction when a dispute is being litigated in a foreign court has not been clearly answered. The recent decision by the High Court in China Medical Technologies v. Wu Xiaodong [2018] SGHC 178 has now clarified the question and the answer is a resounding “yes”.

Background Facts

The liquidators of China Medical Technologies, Inc (“CMT”) had commenced proceedings in Hong Kong against several of the company’s former officers for misappropriation of funds amounting to US$521.8 million. In particular, CMT alleged that its ex-CEO, Mr Wu Xiadong, had paid company funds into foreign accounts owned by him and his wife, Ms Bi Xiaoqiong. In November 2017, at around the time that the liquidators were preparing to serve the Hong Kong proceedings, the liquidators discovered that Ms Bi had attempted to sell a property jointly owned by her and Mr Wu in Singapore. Having obtained a worldwide Mareva injunction from the Hong Kong courts, the liquidators CMT then applied for Mareva injunction in Singapore to prevent dissipation of Mr Wu and Ms Bi’s assets in Singapore.

Decision of the High Court

Singapore has not enacted specific legislation conferring on courts the power to grant interlocutory injunction relief. However, the High Court held that it had the power to grant a Mareva injunction in aid of the Hong Kong proceedings under section 4(10) the Civil Law Act, which provides as follows:

“A Mandatory Order or an injunction may be granted or a receiver appointed by an interlocutory order of the court, either unconditionally or upon such terms and conditions as the court thinks just, in all cases in which it appears to the court to be just or convenient that such order should be made”.

The Judge in China Medical Technologies identified five prerequisites that must be satisfied before a Court will exercise its power to grant a Mareva injunction in aid of foreign proceedings under the Civil Law Act:

1.  the cause of action is justiciable in a Singapore Court;
2. the Singapore Court has in personam jurisdiction over the defendant against whom the Mareva injunction is sought;
3. the defendant has assets in Singapore that can be the subject of the Mareva injunction;
4. substantive proceedings have been brought in Singapore, but may be stayed pending determination of the foreign court proceedings; and
5. the foreign court’s judgment is capable of enforcement in Singapore.

The High Court’s decision keeps with the policy of promoting mutual assistance and reciprocity in the international arena. The Court’s power in this regard may be seen as part of the Singapore Court’s enforcement of foreign judgments, and also supplements the Court’s power to grant Mareva injunctions and other interim measures in support of foreign arbitrations under the International Arbitration Act.

Given Singapore’s growing prominence as a financial and business center, a number of foreign companies and individuals may have assets located in the jurisdiction. The decision allows a litigant, in the appropriate circumstances, to invoke the Singapore Court’s jurisdiction and obtain a Mareva injunction to preserve assets located in Singapore while the merits of the substantive claim are being pursued in foreign proceedings.

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