HONG KONG SAR, CHINA Law and Practice Contributed by: George Lamplough, Vanessa Cheng and Curtis Pak, Holman Fenwick Willan
1.7 Prevention of Defendants Dissipating or Secreting Assets Mareva Injunctions (Sometimes Known as Freezing Orders) Mareva injunctions restrain defendants from disposing of their assets with the intention of frustrating a judgment later made against them. Mareva injunctions operate in personam. Mareva injunction applications are usually made ex parte – that is, without notice to the defend - ant. When an application for a Mareva injunction is made ex parte, the plaintiff is obliged to make full and frank disclosure to the court. Shortly after the court grants a Mareva injunction, the defendant will have an opportunity to challenge and set aside the order. An applicant can apply for a Mareva injunction at any time before or during the litigation process, so long as the court is satisfied that: • there is a good arguable case on a substan - tive claim against the defendant; • the defendant has assets within Hong Kong; • the balance of convenience is in favour of granting the injunction; and • there is a real risk of dissipation or secretion of assets. Defendants who refuse or fail to comply with the terms of a Mareva injunction, may be liable for contempt of court and ordered to pay a fine or sent to prison. Proprietary Injunction If the victim wants to preserve specific assets or money over which they claim ownership, then they should seek a proprietary injunction. The threshold for obtaining a proprietary injunction is lower than obtaining a Mareva injunction as the plaintiff only has to show that there is a serious
apply for garnishee orders against the defend - ant’s bank. 1.6 Rules of Pre-Action Conduct Damage Control: Preservation of Assets As soon as fraud is discovered, victims should act quickly to stop the funds from being dis - sipated. Victims should follow these general guidelines: • tell the bank – immediately inform the bank and ask the bank to reverse the transfer(s); • tell the police – file a report with the Hong Kong Police and a Suspicious Transaction Report with the Joint Financial Intelligence Unit (JFIU); • consider obtaining interim injunctive relief; and/or • consider obtaining disclosure orders, particu - larly Norwich Pharmacal orders. Victims can apply for injunctive relief to freeze property over which the victim has a proprietary claim and restrict alleged wrongdoers from deal - ing with their assets. Injunctions can be granted in respect of assets within Hong Kong or world - wide and can restrain wrongdoers from remov - ing or disposing of assets. Pre-Action Disclosure Pre-action disclosure against third parties (such as Norwich Pharmacal orders) can be sought to obtain information about potential defendants. Pre-action disclosure is also available against potential defendants. Such orders can assist an applicant who is aware of the identity of potential suspects but does not have sufficient details to advance a claim.
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