[1986] 2 All ER 970

In an action by the plaintiffs against the defendant for recovery of money allegedly owed to them under the terms of a compromise agreement, the plaintiffs obtained ex parte a Mareva injunction restraining the defendant from removing from the jurisdiction or otherwise disposing of his assets and also an order for discovery requiring the defendant to disclose the nature and whereabouts of his assets both within and outside the jurisdiction. A writ was issued the same day. Pursuant to the order the defendant swore affidavits disclosing that his only substantial asset within the jurisdiction was a leasehold property and further disclosing that he had bank accounts in Guernsey, Belgium and Luxembourg. The plaintiffs applied for and obtained in the courts of those three jurisdictions orders freezing the defendant's bank accounts. On an application by the defendant, and subject to his undertaking not to dispose of the leasehold property without advance notice to the plaintiffs, the Mareva injunction was discharged. The plaintiffs appealed against the discharge to the Court of Appeal. The defendant contended that it was an abuse of process for the plaintiffs, without leave of the court or his consent, to use information disclosed by him to start proceedings in other jurisdictions, and that in any event the judge should not have made an order for discovery of the foreign assets in the Mareva proceedings.

Held - Because the power of the court to grant a Mareva injunction restraining the defendant from disposing of his assets was restricted to those assets which were within the jurisdiction of the court, and because the requirement to disclose foreign assets could not be regarded as being ancillary to the making of a Mareva injunction when the injunction was limited to the English assets and nor could it stand on its own facts as a primary exercise of the court's jurisdiction if the Mareva order was limited to English assets, it followed that an order for discovery made ancillary to the grant of a Mareva injunction had to be restricted to requiring disclosure by the defendant of his assets within the jurisdiction. Accordingly, the order for disclosure by the defendant of his foreign assets ought not to have been made and the defendant was entitled to have it discharged. The appeal would therefore be dismissed (see p 975 f, p 977 e to p 978 d f to j, p 979 b c h j and p 980 d to g, post).
   Third Chandris Shipping Corp v Unimarine SA [1979] 2 All ER 972, Intraco Ltd v Notis Shipping Corp [1981] 2 Lloyd's Rep 256 and Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG [1984] 1 All ER 398 considered.
   Per Dillon LJ. If, following the grant of a Mareva injunction, it later becomes necessary for the defendant to disclose his foreign assets, eg if he seeks a variation of the Mareva injunction to enable him to make certain payments which cannot be made from his foreign assets, prima facie the plaintiff should be required to give an undertaking not to use any information disclosed without the consent of the defendant or the leave of the court (see p 977 c d and p 978 f, post).

Notes
For injunctions restraining a defendant from removing assets out of the jurisdiction, see 24 Halsbury's Laws (4th edn) para 1018.

970

Interlocutory appeal
On 23 April 1986 the plaintiffs, Esmaeel Ebrahimi Ashtiani and Majid Haj Mohammad Hossein Kashi, appealed against the order of Sir Neil Lawson, sitting as a judge of the Queen's Bench in chambers on 22 May 1986, whereby it was ordered that, on the defendant, Habibullah Haj Mohammad Hossein Kashi, undertaking to the court not to dispose of or deal with his interest in a leasehold property without giving seven days' notice to the plaintiffs' solicitors of his intention so to do, the order of Hirst J made on 23 April 1986, inter alia, restraining the defendant until after judgment or further order in the meantime from removing out of the jurisdiction or otherwise disposing of or dealing in his assets within the jurisdiction as varied by Tucker J on 29 April 1986 and further varied by Tucker J on 6 May 1986 be discharged, such discharge to take effect after 10 days from 22 May 1986. The facts are set out in the judgment of Dillon LJ.

25 June 1986. The following judgments were delivered.

DILLON LJ. This is an appeal by the plaintiffs in the action against an order of Sir Neil Lawson sitting as a judge in chambers in the Queen's Bench Division made on 22 May 1986 whereby, on an undertaking by the defendant which I shall mention, he discharged an order of Hirst J of 23 April 1986. That was an order which had granted the plaintiffs a Mareva injunction together with ancillary relief by way of orders for discovery. The appeal raises an issue of some importance in relation to the practice on the grant of Mareva injunctions.

971

   As to the facts, all three parties to the action are Iranian citizens. The first and second plaintiffs, Mr Ashtiani and Mr Majid Kashi, are resident in Iran. They are poultry breeders. The defendant, Mr Habib Kashi, is not resident in Iran. At one time he was resident in California. Currently he is resident in England. He has been duly served with these proceedings in England and is subject to the jurisdiction in personam of the English court.
   The first plaintiff, the defendant and a Mr Mohammad Kashi, who is a brother of the defendant and the father of the second plaintiff, were the shareholders and directors or partners in an Iranian company called Ashka (its exact juristic nature is not material) which was concerned with the import of grain and foodstuffs into Iran.
   The second plaintiff has a partnership with his father, Mohammad Kashi, who is referred to conveniently in these proceedings simply as Mohammad, in relation to various agricultural ventures in Iran with which the activities of Ashka are concerned.
   There is an issue between the parties in that the defendant claims that the first plaintiff and Mohammad ceased to have any interest in Ashka before the happening of the events which give rise to this litigation. That is disputed by the plaintiffs. Ashka imported some three cargoes of grain to Iran. There were then arrangements for a fourth cargo, but Ashka was defrauded by various persons in North America who secured payment for the cargo by the delivery of forged shipping documents, but failed to deliver the cargo. The defendant accordingly brought proceedings to recover the losses from these persons in the American courts and in the year 1980 he succeeded in recovering $US 5į3m by way of damages for the fraud of the United States vendors of that cargo. Subsequently, further but much smaller sums have been recovered in further litigation in the United States. That money came at one stage to London. The defendant asserts that some $US 3m of it was paid to an Iranian bank which had financed the payment for the supposed cargo in reliance on the forged shipping documents and a further sum was spent on legal costs in the United States.
   The plaintiffs and Mohammad put forward a claim to a share of these moneys, but a written agreement was made in California on 13 February 1984 whereby the defendant agreed to pay the first plaintiff $US 500,000 and to pay the second plaintiff $US 750,000, and to pay Mohammad a further $US 750,000. It is on that agreement that the plaintiffs sue in this action. They concede that $US 200,000 were paid to the second plaintiff, but they assert that there has been no further payment under the agreement. The defendant says that the agreement was entered into as a result of misrepresentation on behalf of the plaintiffs that they had suffered seizure of assets in Iran because of the activities of Ashka which were illegal by Iranian law. He also says that the agreement was entered into under duress and that there was no consideration for it if consideration is required by the proper law of the agreement. He also says that the full amounts due to either plaintiff under that agreement have been paid. He points to particular payments to each of the plaintiffs. As to the allegation of payment, the plaintiffs say either that one of the payments was never received, or, in the case of the first plaintiff, that a payment was received but was from Mohammad and not from the defendant and it was for something else not under the agreement.
   On 12 April 1985 there was a letter before action from solicitors for the plaintiffs. Nothing immediately happened, but on 19 August 1985 there was a meeting between the defendant and Mohammad. The defendant asserts that a final settlement was then reached. The effect of that meeting was that a sum of money was paid by the defendant to Mohammad and that certain post-dated cheques were given by the defendant to Mohammad, though these cheques have in fact never yet been presented.
   These proceedings were commenced in April 1986 with the application ex parte to Hirst J for the Mareva injunction. The writ was issued on the same day, 23 April 1986. So far as the facts which I have very briefly summarised are concerned, it is common ground that they raise serious questions to be tried. It is impossible to say, on the voluminous documentary evidence before the court, that there is a probability that one side rather than the other will win when the action comes on for trial.

972

   The order of Hirst J provided that, on certain undertakings in usual form by the plaintiffs, the defendant-

   The order further directed that the defendant-

   Then power was reserved to the defendant to apply to vary or discharge the order on notice. In fact the time limit for disclosure of overseas assets was extended by order of Tucker J to which I need not refer. The defendant swore affidavits disclosing his assets within the jurisdiction and outside the jurisdiction. So far as assets within the jurisdiction are concerned, there was only one, apart from trivia which do not fall to be taken into consideration having regard to the size of the sums in issue in the litigation. That was a leasehold flat at a property called Fairacres, London SW 15. As a result of a subsequent order it is charged with a sum for improvements and legal costs, and the equity is of a value of some £100,000.
   The defendants also disclosed a list of his foreign assets exhibited to an affidavit. This sets out the following. Firstly, a call deposit account with Hambros Bank (Guernsey) Ltd in Guernsey, the account number being given, with a credit balance of some $US 400,000. This account was said to have been charged to Hambros Bank to secure payment of a loan to a Dutch company. It appears that the amount in this account was transferred from England in November 1985. Secondly, there is a deposit account with Habib Bank Ltd, Brussels, and the account number is given, with a credit balance of approximately £680,000. The account was said to be charged to Habib Bank to secure the indebtedness of a business associate, a Mr Afdhal, to that bank. It appears that that amount was transferred to Belgium from London in March 1986. Thirdly, there is a term deposit account with International Mercantile Bank SA of Luxembourg with a credit balance of $US 455,503 plus interest at maturity, which was charged to the International Mercantile Bank to secure repayment of the defendant's overdraft on current account with that bank, the debit balance on which was some £274,000, it is said, in the list of assets. That sum was also transferred from England in March 1986. Then there is a bank account in Portugal which does not matter and an account in California containing a credit balance of $US 130,617, but against that are the cheques drawn in favour of Mohammad: the post-dated cheques which I have mentioned. There are certain other assets listed which I need not mention.
   The effect of the disclosure of those assets was that the plaintiffs applied in the courts973 of Guernsey, Belgium and Luxembourg and obtained orders freezing the defendant's three disclosed bank accounts in those countries together with any accruing interest. The defendant applied, as was envisaged by the form of Hirst J's order, to discharge Hirst J's order. That application came before Sir Neil Lawson, and by his order of 22 May, against which this appeal is brought, on an undertaking by the defendant not to dispose of the leasehold property at Fairacres without advance notice to the plaintiffs, he discharged that order. He stayed the operation of the discharge for ten days pending appeal with a view to a further extension of the stay being sought from this court, and a further stay over the hearing of the appeal was granted by Fox LJ subject to certain agreed modifications of the amounts which could be drawn from the foreign bank accounts or charged on the leasehold property which are set out in Fox LJ's order.
   On this appeal one of the grounds on which the plaintiffs seek to have Sir Neil Lawson's order set aside and Hirst J's order restored is that they submit that the defendant has failed to disclose all his assets within, let alone without, the jurisdiction, and therefore the Mareva should be reinstated and stand to prevent any dealings with these hitherto undisclosed assets.
   I find no sufficient basis from the evidence to support that as a ground for allowing this appeal. It rests on surmise because the defendant has not dealt specifically with certain matters mentioned in the somewhat voluminous evidence filed by or on behalf of the plaintiffs, but the defendant has set out categorically that what he is disclosing in his affidavits covers all his assets. There is no basis in fact, therefore, for that ground of appeal.
   Much more importantly, however, the plaintiffs say that the order should be restored to support the foreign orders. Conversely, the defendant says that discovery of the foreign assets should never have been ordered in the first place. That is a point not specifically taken in the respondents' notice, though other points tending in the same direction have been taken. It is a point of law only, and we allowed it to be argued in this court. The defendant further says that it was an abuse of process for the plaintiffs to use the information disclosed by the defendant pursuant to Hirst J's order, without leave of the court or consent from the defendant, to start proceedings in other jurisdictions.
   On the general question of the scope of discovery orders in orders granting Mareva injunctions and in support of the Mareva injunctions, we were referred to CBS UK Ltd v Lambert [1982] 3 All ER 188, [1983] Ch 37 as being the earliest, or one of the earliest, cases in which there had been a Mareva order including provisions for disclosure of overseas assets. While that is factually correct, this court in CBS UK Ltd v Lambert was in no way concerned with the propriety of that form of order. There was no lis about it. What was in issue (and it does not seem to be markedly a foreign element) was whether it was within the court's jurisdiction and appropriate to order the delivery up to the plaintiffs' solicitors pending judgment or further order of certain motor cars in Chingford, London.
   We are also, however, referred to the decision of Lloyd J in PCW (Underwriting Agencies) Ltd v Dixon [1983] 2 All ER 158 at 166, where, in referring to an application by the plaintiffs for an affidavit of all of a particular defendant's assets within the jurisdiction or outside, the judge said: 'This ... is an ordinary application for discovery in aid of a Mareva injunction which could have been asked for on the original application.'
   We have also had drawn to our attention the standard form of Mareva order in use in the Chancery registrars' department. This is not backed by any practice direction, but is there for the registrar to check against the form of order proposed by counsel for the plaintiff in any particular case. That too includes, as a matter almost of course, a direction for disclosure by the defendant on affidavit of all his assets within the jurisdiction or outside the jurisdiction. One has to remember that, as applications for Mareva injunctions are almost invariably made ex parte in the first place, the form of order tends to be dictated by the form of draft minute of order which the plaintiff's counsel has prepared. Not surprisingly, therefore, one finds the forms of order being progressively tightened up so as to be more and more beneficial to the plaintiff, and, conversely, more and more onerous to the defendant.

974

   The argument for the extension of the Mareva jurisdiction to attach foreign assets is based on the broad view that the function of the Mareva order is to see that a judgment when obtained will not be nugatory or fruitless for want of assets to attach, and that is coupled with reference to the accepted practice of reciprocal enforcement of judgments between various countries as a result of international treaties and statutory provisions, like the Foreign Judgments (Reciprocal Enforcement) Act 1933.
   The argument is succinctly put by Hoffmann J in his judgment in a case called Bayer v Winter (19 March 1986, unreported) which, so far as I am aware, is an unreported decision in the litigation concerning those two parties. What he said is this:

   The contrary view is that expressed by Sir Neil Lawson in his judgment now under appeal. He said:

   The history of the court's practice in respect of the attachment of assets in advance of judgment can conveniently be taken up with the case of Lister & Co v Stubbs (1890) 45 Ch D 1, [1886-90] All ER 797, which sets out the general rule. There a plaintiff was bringing a money claim against a defendant who had received certain moneys, and the plaintiff moved for an injunction to restrain the defendant from dealing with those moneys or for an order directing him to bring them into court. That order was refused as being contrary to the practice of the court. Cotton LJ said (45 Ch D 1 at 14, [1886-90] All ER Rep 797 at 799-800):

   Other authorities in support of the same viewpoint, which remains the general rule, are referred to in the speech of Lord Hailsham in Siskina (cargo owners) v Distos Cia Naviera SA, The Siskina [1977] 3 All ER 803, [1979] AC 210.

975

   The Mareva injunction is an exception to that principle. It is an exception which is now well established within certain limits, but the basis of the jurisdiction, as it seems to me, is clearly limited to the assets within the jurisdiction of this court. The present case is a mere claim, as are almost all Mareva cases, for money and not a claim to trace assets or claim ownership of assets. Where ownership of assets, by tracing or otherwise, is in question, a different approach is warranted; Lister v Stubbs has no application, but that is not this case. Notwithstanding that the claim is a claim in personam against a defendant who is within the jurisdiction or has been duly served in accordance with the process of the court, the courts have not adopted the general view that Mareva should be used in relation to foreign assets. This can be seen from various indications. I would refer, first, to Third Chandris Shipping Corp v Unimarine SA, The Pythia, The Angelic Wings, The Genie [1979] 2 All ER 972, [1979] QB 645, a decision of this court where Lord Denning MR in the course of his judgment gave valuable guidelines which the court should have in mind in exercising the Mareva jurisdiction. He said ([1979] 2 All ER 972 at 984-985, [1979] QB 645 at 668-669):

   Then there is Intraco Ltd v Notis Shipping Corp, The Bhoja Trader [1981] 2 Lloyds Rep 256, a decision of a division of this court consisting of Donaldson and Ackner LJJ. In that case the buyers of a ship had a claim for damages against the sellers. The only known asset of the sellers was their rights under a bank guarantee which had been given to them at the request of the buyers to provide part of the price of the ship in so far as that price was not payable in cash. The court held that a bank guarantee such as that, given in circumstances such that it was the equivalent of an irrevocable letter of credit, was to be treated as equivalent to cash and that therefore it was not appropriate in the absence of fraud to grant an injunction restraining the sellers from calling on the bank to make payment. The court also held that in an appropriate case a Mareva injunction might have been imposed on the fruits of a letter of credit or such a guarantee, but that it was not right to grant a Mareva injunction, and therefore the injunction granted in the court below should be discharged, since the money under this guarantee was only payable outside the jurisdiction of the court, namely in Greece, and the money was thus not an asset within the jurisdiction of this court. Therefore, there being no assets of the vendors in this country, the Mareva granted by the judge had to be discharged.
   There is also Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG, The Niedersachsen [1984] 1 All ER 398, [1983] 1 WLR 1412. There Kerr LJ in giving the judgment of this court summarised the requirement for the grant of a Mareva injunction in these terms 1 [1984] 1 All ER 398 at 419, [1983] 1 WLR 1412 at 1422):

But he goes on to show that what he is talking about is the risk that the judgment would remain unsatisfied because of the removal of assets from the jurisdiction or a dissipation of assets within this country (see [1984] 1 All ER 398 at 419, [1983] 1 WLR 1412 at 1423).
   That limited territorial approach to the grant of Mareva injunctions as a matter of practice is confirmed by s 37 of the Supreme Court Act 1981. Section 37(1) of the 1981 976Act, which reflects s 45 of the Judicature Act 1925, provides that the High Court may by order, whether interlocutory or final, grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so. Section 37(3) of the 1981 Act provides that the power of the High Court under s 37(1) to grant an interlocutory injunction restraining a party to any proceedings from removing from the jurisdiction of the High Court or otherwise dealing with assets located within that jurisdiction, shall be exercisable in cases where that party is, as well as in cases where he is not, domiciled, resident or present within that jurisdiction.
   It may be that the wide wording of s 37(1) of the 1981 Act could cover as a matter of jurisdiction the grant of an injunction of a Mareva nature in respect of assets which are not within the jurisdiction of the court and obviously it can cover an injunction in respect of foreign assets where the title to those assets is in question. But s 37(3) clearly indicates the scope of the practice of the courts in exercising the Mareva jurisdiction. It does of course put beyond doubt the question left open by the House of Lords in Siskina (owners) v Distos Cia Naviera SA, The Siskina [1977] 3 All ER 803, [1979] AC 210 as to the propriety of the grant of Mareva injunctions within that limited field. Of course there may be cases in which it will be necessary at a subsequent stage for the defendant to disclose his foreign assets. For instance, if he seeks to say that a Mareva injunction granted in respect of his assets within the jurisdiction should be varied to enable him to make certain payments, then it is incumbent on him to show what assets he has outside the jurisdiction which are not subject to the Mareva injunction, so that the court can see whether there are other sources from which he could make the payments. But that has nothing to do with the propriety of directing discovery of overseas assets at the outset when the Mareva injunction is granted ex parte.
   In my judgment there are valid reasons why the Mareva injunction should be limited to the assets of the defendant within the jurisdiction of the court. Firstly, it could very well be oppressive to the defendant that, as a result of an order of an English court, his assets everywhere should be frozen or he should be subjected to applications for seizure orders in many other jurisdictions. Secondly, it is difficult for the English court to control or police enforcement proceedings in other jurisdictions. It is not very desirable that the English court should attempt to control such foreign proceedings, and the difficulties are underlined where, as here, the plaintiffs are not resident within the jurisdiction of the English court. Thirdly, as Lord Roskill pointed out in his speech in Home Office v Harman [1982] 1 All ER 532 at 552, [1983] 1 AC 280 at 323, our judicial process in requiring discovery involves invasion of an otherwise absolute right to privacy. The particular form of discovery he was concerned with there was the discovery in the course of an action and the production of relevant documents with a view to the fair trial of the action, but his comment that the order involves an invasion of privacy applies with the fullest force to an order on an individual or a company to disclose all his or its assets throughout the world. Fourthly, it has been many times laid down that the object of a Mareva injunction is not to give the plaintiff security for the amount of his claim in advance of judgment in the action but, if there is an order for disclosure of foreign assets, that may lead to the plaintiff obtaining security in some foreign jurisdiction. For instance, in the present case an order has been obtained in Belgium. We have evidence that under Belgian law the court will not make any order attaching assets unless those assets are specifically identified. It would be necessary, for instance, in order to attach a bank account to have particulars of that account and the branch where it is kept. The defendant has been compelled by Hirst J's order to disclose and identify his bank account in Belgium. The plaintiffs have thereby been enabled to obtain an order in Belgium. That order is described as a saisie-arrte conservatoire. Prima facie its effect is not necessarily the same as a Mareva injunction, but the same as a saisie-arrte conservatoire under Belgian law, whatever that may be. Whether or not it does have that effect in Belgium, such an ancillary seizure attachment of a debt may have the effect of giving the plaintiff much greater security than the Mareva injunction gives him over English assets.
   The disclosure of foreign assets cannot be regarded as ancillary to the making of a Mareva injunction limited to the English assets. It cannot stand on its own feet as a977 primary exercise of jurisdiction if the Mareva exercise is limited to English assets, and it is only valid if so limited as an exception to the principle of Lister & Co v Stubbs (1890) 45 Ch D 1, [1886-90] All ER Rep 797 on the practice of the courts. Counsel for the plaintiffs accepts that a Mareva cannot stand if there are no assets in England, but he says that that does not matter in the present case because there is an asset here, namely the lease, and therefore the position is that foreign assets can be got at through the disclosure provisions as ancillary to the grant of a Mareva injunction or an injunction of some other sort in respect of assets within the jurisdiction such as an injunction in the terms of the undertaking that was granted in respect of the lease. I see no sense or logic in that. The lease is entirely separate from the foreign assets, and I do not see why, either as a matter of jurisdiction or as a matter of practice (indeed a fortiori not as a matter of practice), the grant of relief in respect of foreign assets should be validated because there happens to be within the jurisdiction an asset of a different sort unrelated to the foreign assets.
   I would hold, therefore, that the order for disclosure of foreign assets should not have been made. There being no evidence of undisclosed assets in England and the lease position being amply covered by the undertaking, I agree with Sir Neil Lawson that the order of Hirst J should be discharged. I agree in particular with the passage in Sir Neil's judgment cited earlier.
   It has been submitted, as I have mentioned, that the same implied term ought to be read into Hirst J's order as is read into any order for discovery automatically in the course of proceedings, that is to say, the implied term mentioned in Home Office v Harman and in earlier authorities such as Alterskye v Scott [1948] 1 All ER 469 and Riddick v Thames Board Mills Ltd [1977] 3 All ER 677, [1977] QB 881. I find it difficult to imply the same term because the purpose of the disclosure is different. Undoubtedly there is room for a term to be implied that the disclosure is not to be used for any foreign or bye purpose. However, it is unnecessary to pursue this in the present case having regard to the view I take that the order should never have been made. In justice to the plaintiffs' advisers, I should add that it seems that when Tucker J granted extensions of time he was told on behalf of the plaintiffs that the possibility of enforcing the Mareva order overseas was being considered.
   If in a future case disclosure of foreign assets is in a proper case ordered on special grounds, it does seem to me that prima facie at any rate the plaintiffs should be required to give an undertaking not to use any information disclosed without the consent of the defendant or the leave of the court. In the present case, however, it is a fortiori not appropriate to grant leave to freeze or seize the defendant's assets overseas, as on the facts of this case, as found by Sir Neil Lawson in his judgment, he has said that it is quite wrong to draw the inference that the removal of assets from the jurisdiction by the defendant was anything to do with avoiding this or any other claim. He said a bit earlier that he-

   This is not therefore a case on its facts for an order in Mareva form in respect of foreign assets or for any order which could support applications for such relief in another jurisdiction.
   I should mention one further matter, and that is that it was argued for the defendant that the injunction granted by Hirst J ought to be discharged because there was no sufficient cross-undertaking in damages given by the plaintiffs. Their cross-undertaking, as the judge commented, was probably worthless, since the first plaintiff was clearly resident in Iran and the second plaintiff was probably resident in Iran. There is evidence that the second plaintiff owns a freehold property in the St John's Wood area which was bought at a price of £150,000 as an investment and is let at a not insubstantial rent. I do978 not need to go further into this point because I would uphold Sir Neil Lawson's decision on the grounds which I have already covered, but it is important that the court considers, both when application is made ex parte for a Mareva injunction and on any inter partes hearing of an application to discharge such an injunction, whether the cross-undertaking in damages is likely to be of sufficient value to the defendant unless fortified by bank guarantee or deposit or something of that nature. That is not a matter which would lead to the automatic discharge of the injunction. The normal practice would be to accord the plaintiff an opportunity to provide the requested security, but it is a matter which should not be overlooked.
   For the reasons given, for my part I would dismiss this appeal.

NEILL LJ. I agree that this appeal should be dismissed for the reasons given by Dillon LJ.
   As, however, the appeal raises a question of practice of some general importance, I propose to add a few words of my own. In many countries a plaintiff is entitled to apply to freeze, or otherwise prevent the disposal of, assets of the defendant prior to judgment, so as to ensure that they are available to meet his judgment if he is successful in his action. Such an application can be made even though the plaintiff does not assert any proprietary claim against the assets concerned. In England, however, it has been the general rule that the plaintiff has to wait until judgment before he can take any steps to regulate the way in which the defendant deals with his own assets. That general rule was recognised in this court in Lister & Co v Stubbs (1890) 45 Ch D 1 at 13, [1886-90] All ER Rep 797 at 799, where Cotton LJ said:

   In 1975, however, a limited exception to this general rule was established by the decision of the Court of Appeal in Mareva Cia Naviera SA v International Bulkcarriers SA, The Mareva [1980] 1 All ER 213. In that case Lord Denning MR, referred to the judgments in Lister v Stubbs and then made reference to the wide powers then contained in s 45 of the Supreme Court of Judicature (Consolidation) Act 1925. He continued as follows (at 215):

   This jurisdiction to protect a plaintiff against the risk that the judgment of the court will be rendered ineffective because in the meantime the defendant will have disposed of or dissipated his assets is a jurisdiction which is exercised in personam. It may be said, therefore, that in principle there is no reason why a court could not make an order restraining a party over whom it has jurisdiction from dealing with his assets wherever such assets may be situated. Moreover, the wide words of s 37(1), of the Supreme Court Act 1981 suggest that there may be jurisdiction to grant an injunction relating to assets overseas. But it is quite clear from the way in which this jurisdiction has been exercised in the eleven years since the Mareva decision in June 1975 that Mareva injunctions, as they are generally called, are limited to restraining the dealing by a defendant with assets of his which are within the jurisdiction. It is also clear that the court will not exercise its jurisdiction to grant such an injunction at all, unless there is evidence that the defendant has some assets within the jurisdiction. This limitation on the scope of these injunctions is wholly consistent with the wording of s 37(3) of the 1981 Act to which Dillon LJ has already referred. Furthermore, in addition to the authorities to which Dillon LJ has referred, I would also draw attention to a passage in the judgment of Kerr LJ in Z Ltd v A [1982] 1 All ER 556 at 572, [1982] QB 558 at 585, where he said:

979

   In the present case we are concerned not only with a Mareva injunction but also with an order for discovery which was made ancillary to the injunction. The relevant part of the order for discovery was in these terms:

   It is important to remember that this is not an action where any proprietary claim is made, nor is it a tracing action. It is an action founded on an alleged failure to pay moneys due under a contract. What basis is there, therefore, for an order for discovery of the defendant's assets? It is not an order for discovery under RSC Ord 24. It seems to me that in the present state of the law the only basis for such an order is that it is made in aid of and ancillary to an injunction in the Mareva form. The power to order discovery exists, but it is a power which exists to make the injunction effective. It seems to me to follow that, at any rate prima facie, discovery should be limited, firstly, to the ascertainment of assets which will be covered by the Mareva order (in other words, the ascertainment of assets within the jurisdiction), and, secondly, at a later stage, to enable the court to consider any application by the party enjoined to vary the Mareva injunction. Thus, if a party applies to make use of funds which are subject to the Mareva injunction, it may become relevant at that stage for the court to inquire whether there are other assets which are not so subject to which he can have recourse: cf A J Bekhor & Co Ltd v Bilton [1981] 2 All ER 565 at 572 [1981] QB 923 at 935 per Ackner LJ. There may be other cases where a wider discovery is appropriate, but, as the scope of a Mareva injunction is restricted to assets within the jurisdiction, it seems to me to follow that, certainly in the ordinary way, any discovery in aid of the Mareva should be similarly so restricted. Accordingly, in my judgment the order for discovery that was made in this case was not a proper order to make, and I consider that Sir Neil Lawson was right when he discharged the injunction on the basis of an undertaking and made the order which is the subject of this appeal.

NICHOLLS LJ. For the reasons given in both judgments I too agree that this appeal should be dismissed.

Solicitors: Bennetts & Partners (for the plaintiffs); Toynson-Hicks (for the defendant).