Freezing the Frozen? Having both Mareva and AMLA “Freezing Orders” in Securities Commission v Lee Kee Sien, Albert & Ors [2009] 8 CLJ 70, HC

I.  INTRODUCTION

It is not uncommon for monies sought to be frozen in a civil suit to be the subject matter of police investigations, especially where money laundering, terrorism, or scammers are involved.  If so, such monies may be subject to a “freezing order” under Section 44 of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) (the “AMLA Freezing Order”).

Now, is it okay to apply for a Mareva injunction when an AMLA Freezing Order is already in place?  Securities Commission v Lee Kee Sien, Albert & Ors [2009] 8 CLJ 70 (the “SC Case”) answers this question.

For more information on Mareva injunctions, please check out my articles here: https://whatlawlah.wordpress.com/2021/09/10/mareva-injunctions-101-part-1/ and here: https://whatlawlah.wordpress.com/2021/09/22/mareva-injunctions-101-part-2/.   

II. WHAT HAPPENED?

Briefly, this is what happened in the SC Case.  The Plaintiff alleges that the 3^rd Defendant was involved in a scam called “Swisscash”, which solicited investments from the public funds via the internet.  The masterminds were the 1^st Defendant and the 2^nd Defendant, who together with the 3^rd Defendant and the other defendants invited investments when no such legitimate fund existed.  A raid from the Securities Commission upon the 3^rd Defendant’s office and residence showed that the ‘investment funds’ were transferred into the 3^rd Defendant’s account.  The Plaintiff then applied for an inter-partes Mareva injunction against the 3^rd Defendant from, among others, removing, disposing, and dealing with assets to the tune of US$83 million, as well as a series of disclosures.

The 3^rd Defendant opposed this injunction application on several grounds, among which he said that the accounts held under his name was subject to an AMLA Freezing Order.  He further says that, therefore, there is no serious risk of dissipation of assets (a requirement to obtain a Mareva injunction), and that a Mareva injunction is redundant. 

III. HOW DID THE COURT DECIDE?

The Court (per Nallini Pathmanathan JC, as her Ladyship then was) found that there is an arguable case made out by the Plaintiff. 

The Court further explained that there are further accounts under the 3^rd Defendant’s name that was discovered recently and that not all the accounts have been discovered.  Therefore, it is possible that further accounts in his name may be found from time to time pending the disposal of the trial.  As such, a Mareva injunction would preclude these funds from being dissipated pending the trial.  (I observe that this point is important, given that some scams may involve a complex labyrinth of numerous bank accounts, nominees, and related persons that can only fully be uncovered after an extended time.  Therefore, a Mareva injunction that aims to freeze these assets is a practical safeguard.)

Further, the Court explained that AMLA Freezing Orders have a definite life span and require renewal from time to time.  There is a possibility that some orders may not be renewed inadvertently.  A Mareva injunction then serves to safeguard against this possibility until the trial is over. 

The Court then ordered a Mareva injunction against the 3^rd Defendant. 

IV. CONCLUSION

It is okay to apply for a Mareva injunction even though there are AMLA Freezing Orders in place.  It is always better to be safe than sorry.