A Creditor’s Guide To Ex Parte Mareva Injunctions In Malaysia
- Rule & Co Editorial Team
- 22 hours ago
- 5 min read
When facing a debtor likely to transfer assets out of the court’s reach, an ex parte Mareva injunction can be an invaluable tool to secure assets (usually) before starting civil proceedings.
Specifically, if granted ex-parte, a Mareva injunction freezes debtor’s assets without notice for up to 21 days (with further extensions possible), ensuring they will be available to satisfy the judgement in the event of a successful suit.
For creditors in Malaysia dealing with trigger-happy debtors, our guide provides an overview of freezing orders, including:
its legal basis
application requirements
undertaking as to damages
procedural steps, and
our firm’s practical observations
Alternatively, skip the reading and get in touch for a free recovery assessment.
Otherwise, let’s begin.
Legal basis
Though statutes forming the legal basis for Mareva injunctions refer to it only in substance as an interim injunction order, the key part is they allow High Courts to grant it under Form 53.
Our guide focuses on its most practical legal pillar: Order 29 of the Rules of Court 2012, which sets out steps to obtain this injunction without notifying the debtor and before filing a civil suit (referred to below as the Originating Process).
In addition, three key cases shape how courts generally apply Mareva injunctions:
Case | Principle Established |
The three-pronged test for granting | |
It can cover funds not yet received | |
The High Court can grant worldwide Mareva injunctions |
We’ve linked to the cases for a reason, but finish reading our guide first!
Requirements
To apply for an ex parte Mareva injunction, creditors must fulfil two things:
pass the three-pronged test (required of any Mareva injunction)
show immediate action is needed to prevent asset dissipation before the hearing (specific to ex parte applications)
Three-pronged test
For any Mareva injunction to be granted, the creditor must demonstrate three conditions:
a good arguable case
the debtor has assets within the jurisdiction, and
a real risk of the debtor dissipating (disposing of) their assets
The first two are relatively easy to meet, but the third can pose a challenge.
A good arguable case
As the term suggests, ‘good and arguable’ just means valid grounds for a claim, and whatever constitutes proof of debt will generally suffice.
Assets within jurisdiction
Assets can broadly include anything that can be seized or garnished to satisfy a judgement debt, and as was established in Metrowangsa v Anor, if a debtor has significant offshore assets, the courts may issue a worldwide Mareva injunction (enforcing it is another matter).
Real risk of asset dissipation
In Homa Engineering (M) Sdn Bhd v Chew Kok Choon, the court asked if ‘a sensible commercial man could infer a danger that payment would not be forthcoming if assets are dissipated’ to establish if this condition was met.
In simpler terms, besides being able to hide assets, a debtor’s actions must show willingness to. In Aspatra v Bank Bumiputra, for instance, several factors established both, including:
the defendant’s full control over companies and assets
evidence of fraud or dishonesty
indications that assets were being moved or concealed, and
attempts to hide behind corporate structures
As no two cases are identical, we work with clients to gather the facts and assess if there is enough evidence to convince the court.
Justifying urgency
It’s a big deal to freeze someone’s assets without telling them, and so ex parte applications must include a supporting affidavit disclosing:
facts giving rise to the claim
facts justifying the injunction
justification for ex parte nature
the opposing party's potential objections
facts arguing against granting the injunction
similar applications made to other courts, and
the precise relief sought
After considering all the above, the courts must be convinced that immediate action is needed to prevent asset disposal before the hearing.
Undertaking as to damages
A standard requirement for interim orders like a Mareva injunction is for the applicant to give an undertaking as to damages, a formal promise to compensate the defendant for any losses caused by the injunction if it is later set aside or found to have been wrongly granted.
As freezing a person’s assets is a drastic step, courts enforce this undertaking very seriously, and it should serve as a warning to creditors that this remedy should only be sought if justified.
Procedure
Once we have determined all requirements for an ex parte freezing order are met, the process generally consists of three main stages.
Filing documents and obtaining an injunction
Implementing immediate asset preservation
Attending an inter-parte hearing
Step 1: Filing documents and obtaining ex parte injunction
At this stage, we draft and file the following documents with the High Court:
ex parte application for an interim injunction
supporting affidavit, and
originating process
If successful, the court will issue an injunction restraining the defendant from dealing with specified assets, and fix an inter parte hearing within 14 days during which the debtor will have the opportunity to respond to the application.
Until then, the injunction is in full effect, and we proceed to the next stage.
Step 2: Enforcing the injunction
The effectiveness of the Mareva injunction relies on implementation, and at this stage we take two steps as quickly as possible:
immediate service on relevant third parties (like banks) holding the debtor’s assets, and
service on the debtor themselves within seven days
For land, we will need to obtain a prohibitory order and register it at the Land Office or Registry of Titles. Lastly, for securities and stock we obtain a charging order nisi and serve the relevant company or Accountant General
Step 3: Attending an inter-parte hearing
Fourteen days from the initial granting of the Mareva injunction, the Court reviews the order with both parties present and decides whether to continue, vary, or discharge the injunction.
Our goal here is to convince the court to maintain the injunction for its maximum duration of 21 days, giving us the most amount of time to pursue the original civil suit.
What if the debtor defies a Mareva injunction?
Defying an interim injunction is a serious contempt of court, and creditors may pursue committal proceedings where the debtor is fined or even imprisoned for a fixed period.
In the case above, nearly RM100 million in investments had allegedly been dissipated by the defendants after the Mareva injunction had been granted, as their company had ‘close to zero’ funds in its accounts without a reasonable explanation.
Our final thoughts
The main challenge in an ex parte Mareva injunction is proving the debtor is likely to dissipate assets without urgent intervention. It may be tempting to shape the narrative to achieve this, but anything less than full transparency in the affidavit risks the order being set aside.
Combined with the need for applicants to provide an undertaking as to damages, a Mareva injunction is not a remedy to be sought lightly as consequences can be dire for both parties.
That’s it from us, and we wish you smooth sailing on your debt recovery journey 🙂
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