A Cayman Candle on the Mareva Injunction 50th Birthday Cake
Two recent judgments in the Grand Court of the Cayman Islands show how freezing injunctions are still nimble going into their 50th year and continue to be a powerful and vital tool to preserve assets in the ever evolving commercial landscape of modern offshore litigation.
Introduction
Earlier this year, the legal world marked the 50th ‘birthday’ of the Mareva injunction – in modern parlance the freezing injunction – which was born of judicial creativity in 1975 to stop defendants from moving their assets abroad to frustrate enforcement of a potential judgment.[1]
Described by Lord Denning as “the greatest piece of judicial law reform in my time”[2] and historically by Donaldson LJ as one of the law’s “nuclear weapons”[3], the freezing injunction has stood the test of time, becoming “normalised” over these past 50 years “to an extent which would have surprised the lawyers attendant at their birth” and its scope expanded significantly.[4] The modern freezing injunction is a sophisticated instrument, capable, where appropriate, of reaching assets worldwide and even assets not in a defendant’s direct ownership that are held by third parties.
Two recent decisions of the Grand Court of the Cayman Islands readily demonstrate that the freezing injunction remains nimble going at fifty and shows no signs of thawing in the Caribbean sun.
Freezing Injunctions in the Cayman Islands
The Cayman Islands, as a leading offshore financial centre, readily followed the English courts and adopted Mareva injunction as a tool to prevent the removal of assets from the jurisdiction. The availability of this type of relief is well established, dating back to at least the early 1980s. The Cayman courts also showed themselves to be cognisant of the relevance of the particular circumstances of an offshore financial centre in this context. For example, as long ago as 1983, the then Chief Justice commented that:
“Where considerable sums of money are involved and the persons concerned have no strong ties to the Islands, or a company is involved which can easily fold or be stripped of its assets, the temptation to remove the assets from the jurisdiction to escape the effects of a judgment of this court must be great. That temptation gives rise to a risk. Risk may be inferred from circumstances here which might not give rise to the same inference in England. This is particularly so where a person is using this jurisdiction to conceal or harbour the proceeds of a fraud or other misfeasance.” [5]
The Cayman courts readily assimilated the English approach to the expanding scope of the freezing jurisdiction, for example, adopting the so-called ‘Chabra jurisdiction’ allowing the court to grant an injunction against third parties who are not directly involved but are believed to hold assets ultimately belonging to the defendant.[6]
As well as the freezing injunction being enthusiastically adopted by the Cayman courts over the past decades, the Cayman legislature has demonstrated its commitment to ensuring that international litigants have access to the necessary tools in Cayman to preserve assets. For example, in December 2014, the Grand Court Act was amended[7] by the introduction of a new section 11A which provided the Grand Court with the power to grant a so called ‘free standing’ interim freezing injunction in aid of foreign proceedings (i.e. where no substantive relief is sought in the Cayman Islands). This welcome development filled a previous lacuna the law and provided parties to ongoing litigation in foreign jurisdictions with the ability to preserve assets in the Cayman Islands where previously these would have been left at risk of dissipation.
The Modern Cayman Freezer in Action
Hangzhou v Zaichang – A Progressive Approach
In Hangzhou[8] Segal J granted a freezing injunction in proceedings brought in Cayman to enforce a foreign judgment prohibiting the disposal of valuable shares (c.US$6.5 million) in a Cayman incorporated company that is publicly traded and listed on the Nasdaq Capital Market.
Most significantly, in Hangzhou the Court had to grapple with complexities surrounding the nature of the foreign judgment at hand. The Plaintiff sought to enforce in the Cayman Islands a judgment of the Shanghai Financial Court which recorded a settlement reached between the parties via mediation – a so called “mediation judgment”. The Court explained that: “The nature and effect under PRC law and characterisation under Cayman law of the Shanghai Financial Court Judgment are relevant to an assessment of the merits of the Plaintiff’s claim for the purposes of both Applications.”.[9] The Court noted that in order to be enforceable at common law the judgment must meet certain requirements, those being in essence that (1) the judgment must be for a definitive sum of money[10] and ‘final and conclusive’ and (2) the foreign court must have been competent and had jurisdiction according to the rules which Cayman law applies in such cases.[11]
Segal J was satisfied that the Plaintiff had a good arguable case that the judgment met the common law requirements.
Of particular interest, is the way in which the Court reasoned that the judgment was ‘final and conclusive’. Here, the Court relied on the legal opinion from a PRC law firm that as a matter of PRC law the “mediation judgment” of the Shanghai Financial Court “…is treated as a court judgment which is binding on the parties once signed by them and the judge and enforceable as a court judgment or order…”.[12] Interestingly, the Court readily drew a parallel between the judgment and a ‘Tomlin order’, which is a familiar form of order recording a settlement between the parties adopted throughout the common law world. The Court took a pragmatic approach to the meaning of ‘final and conclusive’, finding that the fact that further steps were necessary in the PRC to commence enforcement action (an initial application for enforcement to the relevant People’s Court) did not prevent the judgment satisfying this criteria; finding instead that this “…should not be construed as a condition or limitation on the enforceability or finality of the Shanghai Financial Court Judgment but rather the means and procedural route by which the final judgment is to be enforced.”[13]
As well as the Court being seen to be taking a pragmatic pro-enforcement approach to the question of common law recognition, of further note was the fact that after noting that this was a domestic freezing injunction relating only to the Defendant’s assets in the jurisdiction, the Court of its own motion took steps to ensure that “…the injunction contained the usual protections for action taken by third parties abroad before court orders were obtained in the relevant jurisdiction declaring the injunction enforceable there”.[14]
Target Global v Liu Xun – A Lower Threshold
In Target Global[15] Doyle J granted a worldwide freezing injunction for US$35 million and a proprietary injunction where there were allegations of sophisticated cross-border fraud. The Plaintiffs had already obtained a wordwide freezing order in aid (and in anticipation) of substantive proceedings in Cayman.
Importantly, in relation to the first hurdle an applicant for a freezing injunction must overcome – demonstrating sufficient merits of their underlying claim – Doyle J considered and followed the relatively recent decision of the Court of Appeal of England and Wales in Dos Santos v Unitel SA [2024] EWCA Civ 1109.[16]
In Dos Santos the Court of Appeal clarified that the threshold test for the merits of the underlying action is the same for a freezing injunction as it is for other forms of interim injunction – i.e. whether there is a ‘serious issue to be tried’ – meaning that there is no longer a higher threshold applicable specifically to freezing injunctions.[17] The Court cited with approval the explanation of the test by Mustill J in Ninemia Maritime Corp (The Niedersachsen) where it was expressed as requiring the Court to be satisfied that the Plaintiff has a case which is “more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50 per cent chance of success”.[18]
The Court of Appeal in Dos Santos made clear that, going forward, in the context of freezing orders it would be preferable to use the expression ‘serious issue to be tried’ as opposed to ‘good arguable case’ to avoid any confusion with the test for service out of the jurisdiction where ‘good arguable case’ has a different meaning.[19] As the ‘serious issue to be tried’ threshold is generally understood to be a lower one than a ‘good arguable case’ (when read in the way it is applied in the context of jurisdictional gateways), this should mean that freezing orders may be more readily available in this jurisdiction.
Of further note, in finding a real risk of dissipation based in part of the creating by the Defendant of false documents, Doyle J emphasised the importance of truth, honesty and integrity in business, stating:
“I appreciate that some may argue that judges and lawyers live in a different world to the world inhabited by some people of business. Let me be clear. In the Grand Court, the rule of law, the truth, honesty and integrity still matter and they should also still matter in the world of business and investment. Parties should not be surprised if, even at the interlocutory stage, a judge’s eyebrows are raised or if frowns appear on a judge’s face when parties are involved with apparently false documentation.” [20]
Key Takeaways
Half a century on from the birth of the Mareva injunction in England, it is clear that its common law cousin in the Cayman Islands is thriving. The recent decisions in Hangzhou and Target Global underscore several key points:
- Pro-Enforcement Stance: Freezing injunctions remain a flexible and powerful tool in the Cayman litigator’s arsenal, with the Cayman courts repeatedly demonstrating that they will act where appropriate to help ensure that a hard fought eventual judgment does not become a pyrrhic victory. This pro-enforcement stance also leads the courts to lean in favour of supporting foreign judgments and adopting a pragmatic approach to the test for recognition.
- Modern and Aligned: The Cayman courts can be seen to be actively engaging with and adopting developments from other leading common law jurisdictions, thereby providing international litigants with certainty and clear routes to justice. Both Hangzhou (where the defendant’s assets were shares in a parent company of a crypto-related business) and Target Global (which involved cryptocurrency wallets) touch upon digital assets, a modern phenomenon which means the freezing injunction will need to continue to evolve to remain effective.
- Robust Against Fraud: The Cayman courts are willing to take a firm stance in cases of alleged fraud and dishonesty, drawing inferences where appropriate, including from commercial dishonest, to show a real risk of dissipation.
- Nuclear No More: noting that the Cayman courts have shown themselves to lean towards interpretations of the law which favour the availability of freezing injunctions, the observation of Popplewell LJ in Dos Santos that the labelling them as “nuclear weapons” was now inapt,[21] is as apposite in the Cayman Islands as it is in England and Wales.
[1] Mareva Company Naviera SA v International Bulk Carriers SA [1975] 2 Lloyd’s Rep 509, although see the judgment a month earlier in Nippon Yusen Kaisha v Karageorgis and Another [1975] 1 WLR 1093 which was technically the first ‘freezing injunction’ but did not end up lending its name to this form of relief
[2] Lord Denning, The Due Process of Law (1980) at 134
[3] Bank Mellat v Nikpour [1985] FSR 87 at 92
[4] See Foxton J, “The Big Freeze”: The Rise and Rise of the Mareva Injunction” (A Talk to Manchester Business and Property Courts Forum, 30 October 2024) at [46]
[5] Kilderkin Investments Limited v Player [1980-83] CILR 403 at 408
[6] For example, see Grupo Torras SA v Bank of Butterfield Intl (Cayman) Ltd [2000] CILR 452
[7] By the Grand Court (Amendment) Act 2014
[8] Hangzhou Lianchuang Yongjun Kechuang Equity Investment Partnership (Limited Partnership) v Zaichang Ye [2025] CIGC (FSD) 60
[9] At [27]
[10] Whilst the point didn’t arise in this case, at [29], the Court noted obiter that, different to the position in England, there is Cayman authority that even a foreign non-monetary judgment may be enforced under the common law jurisdiction
[11] At [28]
[12] At [32]
[13] At [35]
[14] At [55]-[56]
[15] Target Global Growth Fund II, SCSP-RAIF & Anor v Liu Xun [2025] CIGC (FSD) 45
[16] Which was considered by Alan Bercow in this previous piece: https://www.applebyglobal.com/publications/court-of-appeal-clarifies-the-merits-threshold-for-the-grant-of-freezing-injunctions/ and has been followed previously in Cayman, for example, in Productivity Media Inc. v Santor and Others (Unreported, FSD 360 of 2024 (NSJ), 18 December 2024, Segal J) at [28]-[31] and In the Matter of Lakeshore Biopharma Co. Ltd [2025] CIGC (FSD) 24 at [39]
[17] Per Popplewell LJ at [131]
[18] Per Flaux C at [96]
[19] Per Popplewell LJ at [131]
[20] At [67]
[21] Per Popplewell LJ at [128]
