Journal of Civil Rights and Economic Development Volume 19 Issue 3 Volume 19, Summer 2005, Issue 3 Article 5 Three if by Equity: Mareva Orders & the New British Invasion Jeffrey L. Wilson Follow this and additional works at: https://scholarship.law.stjohns.edu/jcred This Note is brought to you for free and open access by the Journals at St. John's Law Scholarship Repository. It has been accepted for inclusion in Journal of Civil Rights and Economic Development by an authorized editor of St. John's Law Scholarship Repository. For more information, please contact [email protected]. THREE IF BY EQUITY: MAREVA ORDERS & THE NEW BRITISH INVASION JEFFREY L. WILSON* If you live in New York City for any decent amount of time, you are bound to hear stories about things being stolen. Watches, purses, cars, wallets, cargo trucks, you name it. Chances are, if it has value, someone in this town has thought about stealing it. That's no slight, mind you, on New York City's Finest. It's just a fact of life produced by the confluence of eight million people in a single place. Frankly, these stories tend to go in one ear and out the other unless you happen to be the unfortunate one from whom the item is stolen. Another product of big city living. Even against that backdrop, one would think that making off with a $40 million hotel might make the newspapers. After all, just exactly how does one steal a hotel? Does insurance cover that? Wouldn't there be a lot of witnesses? All of these are reasonable questions. It happened in the summer of 2003, to the Gorham Hotel on 55th Street and Sixth Avenue, just north of Times Square in Manhattan. Not a word of it made the mainstream press. For those of us with a subscription to the NEW YORK STATE LAW DIGEST, however, the larcenous behavior did not go unnoticed.1 The perpetrators did not use a gun. They did not have to. They had access to a weapon of a different kind: a Mareva order. Called a "nuclear weapon of the law," 2 the Mareva order has a " J.D. Candidate, St. John's University School of Law, June 2005; B.B.A Finance & Business Economics, cum laude, University of Notre Dame, May 1994. The author would like to extend sincere and profound thanks to Professor Ettie Ward for her invaluable guidance and assistance with this Note. Of course, nothing worth doing is worth doing without thanking my family and friends. 1 Court of Appeals Reviews Circumstancesin Which New York Will Recognize Foreign Country Judgment Not Based on JurisdictionalPrinciples Identical to New York's Own, N.Y. ST. L. DIG., No. 523 (New York State Bar Association 2003). 2 See Grupo Mexicano de Desarrollo v. Alliance Bond Fund, 527 U.S. 308, 332 (1999) (stating court does not have authority to supersede law by creating "nuclear weapon of the law"); Kern Alexander, The Mareva Injunction and Anton Piller Order: The Nuclear 673 674 ST JOHN'S JOURNAL OFLEGAL COMMENTARY [Vol. 19:3 short but turbulent history, little-known but lethal and catching on fast.3 Developed in 19754 by an English judge with a career as celebrated and criticized as any in the twentieth century,5 the Mareva order (also called a Mareva "injunction") will come to be viewed by defendants unlucky enough to be subjected to one with all of the regard with which civil libertarians greeted the USA PATRIOT Act6 or organized crime dons welcomed the RICO Act.7 Weapons of English Commercial Litigation, 11 FLA. J. INT'L L. 487, 488 (1997) (describing Mareva injunction as one of two nuclear weapons of law); see also Carlos Fabano, Maximizing Plaintiff Protection in the World of Asset Freezing and Bypassing the Due Process Requirement of Notice: The Mareva Injunction as an Alternative to the American Legal Remedies, 9 ILSA J. INT'L & COMP. L. 131, 137 (2002) (defining Mareva injunction as creditor's nuclear weapon). 3 See Grupo, 527 U.S. at 332 (recognizing the atomic appellation); see also Tim Taylor, Worldwide Marevas in the Real Wide World, 86 L. Soc'Y GAZETrE 22 (1989) (describing Mareva injunction, with Anton Piller order, as "one of the law's two 'nuclear' weapons"). But see Richard Aird, The Scottish Arrestment and the English Freezing Order, INT'L AND CoMP. LAw QUART., 51.1(155) (2002) (citing Lord Denning's own appraisal of device as "the greatest piece of judicial law reform in my time"). 4 See Nippon Yusen Kaisha v. Karageorgis, [1975] 1 W.L.R. 1093, 1093 (Eng. C.A.) (creating Mareva injunction); Mareva Compania Naviera v. Int'l Bulkcarriers S.A. (The Mareva), [1980] 1 All E.R. 213, 213 (Eng. C.A.) (holding in 1975: "if it appears that the debt is due and there is a danger that the debtor may dispose of his assets so as to defeat it before judgment, the Court has jurisdiction in proper case to grant interlocutory judgment so as to prevent him disposing of those assets); see also Rhonda Wasserman, Equity Renewed: PreliminaryInjunctions to Secure PotentialMoney Judgments, 67 WASH. L. REV. 257, 338 (1992) (stating that in 1975 the Court of Appeal revolutionized English practice). 5 See In Every Sense a People's Judge - Obituary: Lord Denning, FIN. TIMES (London), Mar. 6, 1999, at 7 (citing Denning's efforts to improve equality of women in press, individual freedoms, and consumer protection); Simon Tegel, Maverick "People's Judge" Lord Denning is Mourned, BIRMINGHAM POST Mar. 6, 1999, at 6 (describing Denning as "one of the most courteous and controversial judges of the century, [inspiring] public affection for being more interested in justice than in the legal niceties"); John Torode, Denning, Defender of Justice and Liberty; Former Master of the Rolls Dies at 100, DAILY MAIL (London) March 6, 1999, at 39 (citing one of Denning's favorite quotes: "be you never so high, you are not above the law."). 6 Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Pub. L. No. 107-56, 115 Stat. 272. The ACLU, clearly not a proponent of the legislation, states on its webpage: Just 45 days after the September 11 attacks, with virtually no debate, Congress passed the USA PATRIOT Act. Many parts of this sweeping legislation take away checks on law enforcement and threaten the very rights and freedoms that we are struggling to protect. For example, without a warrant and without probable cause, the FBI now has the power to access your most private medical records, your library records, and your student records... and can prevent anyone from telling you it was done. American Civil Liberties Union, "USA PATRIOT Act," available at http://www.aclu.org! SafeandFree/SafeandFree.cfm? ID=12126&c=207 (last visited Mar. 19, 2005). Whether the ACLU's assessment of threat posed by the USA PATRIOT Act is accurate is, of course, a matter of conjecture and much debate. 7 Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1969 (2000) (enacted by Congress to create new avenues of prosecution for organized criminal activity). 2005] MAREVA ORDERS A Mareva "injunction" is, technically, an interlocutory judgment8 which freezes the assets of a defendant to ensure that a plaintiffs final judgment will not go unsatisfied.9 Though founded in equity,10 the procedure for obtaining a Mareva injunction is now based in statute, and is, under the statute, called a "freezing injunction."ll In the usual case, a creditor- 8 See Mareva Compania Naviera, [1980] 1 All E.R. at 213. Lord Denning stated: In my opinion [the power to protect a party's legal or equitable right] applies to a creditor who has a right to be paid the debt owing to him, even before he has established his right by getting judgment for it. If it appears that the debt is due and owing - and there is a danger that the debtor may dispose of his assets so as to defeat it before judgment - the Court has jurisdiction in a proper case to grant an interlocutoryjudgment so as to prevent him disposing of those assets. Id. at 213 (emphasis added). There is considerable confusion, even in countries that have adopted the procedure, as to exactly how to classify it. It is not technically an "injunction" in the classical sense, as its recent genesis attests. The High Court of Australia has recognized that the Mareva should not be considered part of the law of injunctions, calling them instead "asset preservation orders." Cardile v. LED Builders Pty Ltd. [1999] 198 C.L.R. 380, 393 (Austl.). The leading professor of remedies law in Australia, however, differs with the High Court's classification, stating, "Not only is [the Mareva's] historical development associated with the law of injunctions, but they are an essential (and controversial) part of the armour of prejudgment enforcement of remedies, a topic which is itself entwined, in a very practical way, with the law of secondary rights." Michael Tilbury, Remedy Discussion Forum: Teaching Remedies in Australia, 39 BRANDEIS L.J. 587, 590 (2001). Another prominent professor of remedies in Australia agrees. Bruce Kercher, Remedy Discussion Forum: Legal History and the Study of Remedies, 39 BRANDEIS L.J. 619, 627 (2001). For the purposes of this Note, the term Mareva "order" is preferred, though there may inevitably be reference to Mareva "injunctions," as well - where so noted, the references should be considered synonymous. 9 See Mareva Compania Naviera, [1980] 1 All E.R.