Mareva Relief Cannot Stand Alone: Further Judicial Reflections upon the Siskina

Doctrine
Author(s): N. H. Andrews
Source: The Cambridge Law Journal , Mar., 1996, Vol. 55, No. 1 (Mar., 1996), pp. 12-14
Published by: Cambridge University Press on behalf of Editorial Committee of the
Cambridge Law Journal

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12 The Cambridge Law Journal [1996]

MAREVA RELIEF CANNOT STAND ALONE: FURTHER JUDICIAL REFLECTIONS

UPON THE S1SKINA DOCTRINE

The appellant (hereafter "MB") in Mercedes Benz A.G v.

[1995] 3 W.L.R. 718 was engaged in litigation in both Mona
Hong Kong to recover $20 million which it had lent to
Monaco company owned by a German, Leiduck. The lat
guaranteed IRSAM's repayment of this sum. After both borr
guarantor defaulted on their obligations, MB began procee
Monaco to recover the money. MB discovered that Leiduck h
in IRS, a Hong Kong company, and decided to seek Mareva
Hong Kong against both Leiduck and IRS. After its succ
parte application for this order, MB abandoned proceeding
IRS. This left Leiduck as the sole defendant in the Hon
litigation. For Hong Kong purposes, he was indubitably non-
since he was in police custody in Monaco.
The Hong Kong Court of Appeal upheld a lower court's d
of the Mareva order against Leiduck. On further appeal to t
Council, MB contended (i) that the original application for
relief had not been a complete nullity; (ii) that the Hong Ko
governing leave to make service outside the jurisdiction (wh
substantially parallel to the English rules contained in R.S.C
r. 1) confer jurisdiction to authorise proceedings against a non-r
defendant, even if the sole relief sought is a Mareva injunc
that the court has power, even outside certain statutory c
(section 25 of the Civil Jurisdiction and Judgments Act 1
section 12(6)(f) and (h) ofthe Arbitration Act 1950), to gran
"free-standing" Mareva injunction. This last argument runs
counter to the House of Lords' decision in The Siskina [197
210.
Lord Mustill, giving the majority's advice, decided poin
Leiduck's favour. The original application for Mareva relief
so ineptly framed that it was incurably defective (Lord
dissented on this point: see p. 74 1h). Although this first po
sufficient to decide the appeal, the majority went on to conside
(ii), but stopped short of point (iii). On (ii) Lord Mustill co
that the Hong Kong equivalent to R.S.C. Ord. 11, r. 1(1)(b)
authorise service outside the jurisdiction in the case of an ap
for a free-standing Mareva injunction. The relevant phras
injunction is sought ordering the defendant to do or refr
doing anything within the jurisdiction". Lord Mustill admit
this provision is literally wide enough to cover such an app
but he held that this would be contrary to the "spirit" of t
Mareva relief is barely twenty years old (still, he thought, a "n

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 C.L.J. Case and Comment 13

but the rule just set out has st

1883. The draftsman of the 1965 version of this rule could not have
intended it to cover "free-standing" Mareva relief. Consideration of
possible reform should be left to the relevant Rule Committee.
Lord Nicholls dissented, taking point (iii) ahead of point (ii). That
in turn led him to consider the merits of The Siskina doctrine. He
could discern none.
In The Siskina, Lord Diplock restricted the scope for the award of
an injunction, of whatever species, to situations where the defendant
has invaded, or threatens to invade, the plaintiffs common law or
equitable rights. To obtain an injunction, therefore, the plaintiff must
identify a "pre-existing cause of action" upon which the English courts
have power to enter judgment (or at least would have had such power,
but for an arbitration agreement: see the House's decision in the
Channel Tunnel case [1993] A.C 334).
Lord Nicholls noted that five leading judges in various cases have
offered dicta doubting this doctrine, most recently Lords Browne-
Wilkinson, Goff and Keith in the Channel Tunnel case. Leading
eommentators, Dr. L.A. Collins, (1993) 109 L.Q.R. 342 and (1996)
112 L.Q.R. 8, and Steven Gee Q.C, (1995) S.J. 1076, have also
criticised the Siskina decision.
His Lordship also argued that the Mareva injunction is now a fact of
legal life. At the time of The Siskina it was a recent innovation. Lord
Hailsham L.C in that case was not sure that the remedy was soundly
based, although these were merely sceptical dicta. However, section 37(3)
ofthe Supreme Court Act 1981 has removed all such doubts. In Lord
Nicholls' view, the dominant consideration is the need to counter the
notorious craftiness of potential judgment debtors who are international
players. This factor justifies loosening the ties of The Siskina and
recognising a jurisdiction to grant free-standing Mareva relief.
Lord Nicholls noted that if the Siskina decision were to be toppled,
the Court of Appeal's unpopular decision in The Veracruz [1992] 1
Lloyd's Rep. 353 would also fall. There the court reluctantly applied
the Siskina decision and held that there is no power to grant a Mareva
injunction in anticipation ofa cause of action's accrual (for Australian
divergence on this point, see S. Gee, Mareva Injunctions and Anton
Piller Relief, 3rd edn., pp. 141, 163).
He then proceeded to consider point (ii), the service issue, which
he also decided in MB's favour. He rested his decision on the literal
terms ofthe Hong Kong equivalent to R.S.C. Ord. 11, r. l(l)(b) (set
out above).
It is submitted that many parts of Lord Nicholls' dissent are
attractive and he has set the agenda for a possible reconsideration by
the House of The Siskina. Unfortunately, the House might consider

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 14 The Cambridge Law Journal [1996]

that its hands are now tied by section 25(3) ofthe

and Judgments Act 1982. This authorises the exte
Council of the scope of that section, which presen
grant of ancillary interim relief only with respect to
by the Brussels or Lugano Convention. No such Or
yet been made. Although section 25(3) shows tha
not approve the jurisdictional limitation imposed b
same provision might be taken to be the exclusive me
the jurisdictional aspects of that decision. If this
Nieholls will have dissented in vain.

N.H. Andrews

C.I.F. CONTRACT—COMMERCIAL ARBITRATION—ACCEPTANCE OF

ANTICIPATORY BREACH

Norelf agreed to sell Vitol a specified cargo of propane

per tonne, to be shipped from Houston on the Santa Cl
was on C.I.F. terms, with delivery to the ship between 1
1991. On 8 March Vitol sent Norelf a telex asserting (cor
the Santa Clara would not finish loading until the follow
claiming on that ground to repudiate the contract. Neith
communicated further on the matter; on 15 March Nor
cargo to another buyer, at the much reduced price of S
tonne. The next time the parties communicated was in A
Norelf demanded some $USlm in damages as profit lo
Vitol's refusal to take the propane. Many issues were ra
the arbitrator, who eventually held that Vitol had com
anticipatory breach, which had been accepted by Norelf
accordingly were entitled to the damages they claimed. This
upheld by Phillips J. ([1994] 1 W.L.R. 1390) but has now b
by the Court of Appeal, who held that Norelf had not ac
breach, which was accordingly of no legal effect (Vitol S
Ltd, [1995] 3 W.L.R. 549).
It is not entirely clear from the law report, either on a f
or on subsequent readings, why this point was regarded
One might have thought that either the lateness was a g
for rejecting the cargo, or it was not, and that whether t
effective anticipatory breach would only affect the pre
which Vitol broke the contract, and that only by a few days
usually of little importance. No doubt there is an answer to
but it does not appear in the law report.
And the reason for this is clear enough. The poli
Arbitration Act 1979 in limiting the grounds for appeal, and

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