[1989] 1 All ER 433

The plaintiffs obtained judgment for over $15m against the defendants, who were two brothers who were Lebanese nationals, one of whom lived mainly in Switzerland while the other lived mainly in Greece. They owned property in the United Kingdom and carried on shipping and oil-trading transactions worldwide. They had a peripatetic lifestyle and carried out their business transactions in a secretive manner through a network of family companies. When the defendants failed to satisfy the judgment the judge made an order for the examination of the defendants under RSC Ord 48 to determine what assets were available to meet the judgment debt. The judge also ordered the defendants to file an affidavit disclosing their assets wherever situated and, because he considered that they would be likely to take any step open to them to frustrate the execution of the judgment, he granted an injunction restraining the defendants from dealing with their assets outside the jurisdiction without giving the plaintiffs notice of their intention to do so. The defendants appealed against the injunction.

Held - Although the court had jurisdiction to grant a Mareva injunction over a defendant's foreign assets after judgment, had been given the court would not make an unqualified Mareva injunction covering assets abroad because it would involve an exorbitant and extra-territorial assertion of jurisdiction of an in rem nature over third parties outside the jurisdiction. Instead, such an injunction, if made, should be qualified by an express proviso making it clear that the injunction was directed to the defendant himself and did not affect the rights of third parties or seek to control their activities. Accordingly, the unconditional injunction made by the judge would be replaced by an injunction directed specifically to the defendants and to that extent the appeal would be allowed (see p 438 g h, p 440 h j, p 441 a to c, p 446 e to h p 447 d e, p 449 c, p 450 b to g j, p 452 d e and p 453 d e, post).
   Dictum of Hoffmann J in Bayer AG v Winter (No 3) [1986] FSR 357 at 362 approved.
   Ashtiani v Kashi [1986] 2 All ER 970 considered.
   Per Kerr LJ. (1) The principles applying to the grant of a worldwide post-judgment Mareva injunction also apply to a pre-trial worldwide injunction (although the cases in which it is appropriate to grant such an injunction will be rare) (see p 441 e and p 447 j, post).
   (2) A Mareva injunction covering assets abroad should provide that it does not affect the rights of third parties except to the extent that the order is enforced by the courts of states in which the defendant's assets are located (see p 441 c e f j to p 442 a and p 447 f g, post).

Notes
For Mareva injunctions, see 37 Halsbury's Laws (4th edn) 362, and for cases on the subject, see 37(2) Digest (Reissue) 474-476, 2947-2962.

433

Appeals
The defendants, Bahaedine Bassatne and Walid Mohamed Bassatne, appealed against the decisions of Vinelott J whereby (i) on 19 April 1988 he granted, on the application of the plaintiffs, Babanaft International Co SA, a Mareva injunction precluding the defendants from dealing with any of their assets worldwide without giving five days' notice to the plaintiffs' solicitors and (ii) on 20 April 1988 he refused the defendants' application to restrain the plaintiffs from giving notice of the injunction to persons who might hold the defendants' assets. The facts are set out in the judgment of Kerr LJ.

At the conclusion of the argument the court announced that the appeals would be allowed, the injunction discharged and an injunction limited to the defendants personally substituted for reasons to be given later.

29 June 1988. The following judgments were delivered.

KERR LJ. On 29 March 1988, after a trial which had lasted several weeks, Vinelott J gave judgment for the plaintiff company (Babanaft) against both defendants in a total sum which exceeded $15m inclusive of interest. On the following day, on an ex parte434 application on notice, he made an order for the disclosure by the defendants of their assets worldwide pursuant to RSC Ord 48 and for the oral examination of the defendants in relation to their assets. He also granted a Mareva injunction covering any assets of the defendants in this country, but refused to extend this to assets outside the jurisdiction. He said that he concluded, with some regret, that he was precluded from doing so by the reasoning of the decision of this court in Reilly v Fryer (1987) 138 NLJ 134 in which Mustill LJ had delivered the main judgment. The plaintiffs appealed against this refusal on the same day, the last day of the term, and sought a 'holding order' freezing the defendants' assets worldwide pending a full hearing of their appeal after the Easter vacation. A division of this court consisting of Slade, Mustill and Russell LJJ declined to make any order to this effect and adjourned the plaintiffs' appeal. However, in the course of the discussion, in particular as the result of comments from Mustill LJ, it became apparent to the plaintiffs' advisers that neither the decision nor the reasoning in Reilly v Fryer would have precluded Vinelott J from granting the worldwide Mareva injunction which they sought. They therefore renewed their application to him on 15 April 1988 to extend the injunction to assets outside the jurisdiction. That application was heard inter partes. On seeing the notes of what had been said in the Court of Appeal on 30 March, Vinelott J agreed that Reilly v Fryer did not stand in the way of the order which he had wanted to make, and it is now common ground that he was correct in this view. We have accordingly not been referred to Reilly v Fryer and I say no more about it. Having heard the application, the judge then granted a Mareva injunction on 19 April 1988 precluding the defendants from dealing with any of their assets worldwide without giving five days' notice to the plaintiffs' solicitors in every case. On the following day he gave a further brief judgment in which he refused the defendants' application to restrain the plaintiffs from giving notice of the injunction to persons such as banks or other institutions who might hold assets of the defendants. In pursuance of that judgment the plaintiffs' solicitors notified some 47 entities in various countries of the terms of the injunction, including some 24 banks and two international credit card companies.
   The defendants appealed against both of these judgments. We heard the appeals on 12 and 13 May. On 18 May we allowed the appeals, discharged the order of 19 April and substituted an order limited to the defendants personally, as explained below, which expressly excluded any effect on any third party. We also ordered that all persons who had been informed of the previous order should be notified that they should now disregard it, since it had been discharged and replaced by an order which merely affected the defendants personally. We announced that we would put our reasons in writing and give them as soon as convenient. We adopted this course because of the urgency of the situation and of pressures of time which would not have enabled us to give full judgments before the spring vacation and during the absence of two members of the court for some weeks, also bearing in mind that the case obviously raises issues of general importance.
   Before giving my reasons for allowing the appeals to that extent I must summarise the history. It is most unusual, and judgments of the order of $15m against individual defendants are of course also not common. Although we all concluded that the orders made by Vinelott J could not stand, one can readily see why he considered that drastic measures were necessary.
   The defendants are brothers, and I will refer to them as 'BB' and 'WB'. Babanaft is a Panamanian company which was incorporated in 1976 but insolvent and in members' voluntary liquidation since May 1985. Its incorporators, shareholders, directors and officers were BB as the president and WB as secretary and treasurer respectively, together with a Mr Aladin Hassan Bahri as vice-president, who is believed to have died in August 1979 when travelling in a private jet which crashed in the desert on a flight to Jeddah. These three persons had until then operated highly successfully in shipping and oil transactions through a number of companies, and from about 1978 they decided to combine their operations into a joint venture which was channelled through Babanaft. But, after the death of Mr Bahri, the moving spirit in the shipping business, and also due435 to trade recessions in oil, the business of the company deteriorated, and it was evidently stripped of its assets, which had been very substantial. There was a lengthy and highly complex history of BB and WB's dealings with the company's assets and of proceedings concerning the estate of Mr Bahri, which were closely examined in the lengthy judgment of Vinelott J in the action. But for present purposes it is only necessary to refer to the matters which gave rise to the judgment against the defendants. In 1979 Babanaft had entered into a long-term time charter for a new building, subsequently named the 'Eastern Venture', with Beeston Shipping Ltd, a Liberian company. The vessel was delivered in December 1980, but in March 1982 Babanaft ceased to pay hire. In May 1982 Beeston treated the charterparty as repudiated and brought proceedings in the Commercial Court. These resulted in a judgment for some $700,000 against Babanaft for unpaid hire, and a reference to arbitration to assess the full damages to which Beeston was entitled. This led to a default award against Babanaft for about $12m and an additional sum of �41,000, and judgment in terms of the award was entered in March 1987.
   A Mr C T E Hayward had meanwhile been appointed as receiver of Babanaft in January 1985. He brought the present action in the name of Babanaft against BB and WB in the Commercial Court, and the action was subsequently transferred to the Chancery Division. The substance of the plaintiff's allegation was that, although BB, WB and Mr Bahri had nominally merely been shareholders and directors of Babanaft, in truth they had carried on a joint venture as partners which used Babanaft as a vehicle and as a screen to protect them from personal liability, with the result that they were jointly and severally liable to indemnify Babanaft in respect of, inter alia, the judgment debt owed to Beeston. This is the allegation which Vinelott J found to be established and which resulted in the judgment for over $15m against the defendants. We understand that the defendants intend to appeal.
   It is now necessary to say something about them. They are unusually peripatetic in their lifestyle and elusive in the way they do business and hold assets. Both are Lebanese nationals, but it is not clear whether they are still domiciled in the Lebanon. BB is mainly resident in Switzerland and WB mainly in Greece. However, three substantial residential properties are also available to BB in this country (which are comprised in the domestic Mareva injunction) and the brothers are also joint owners of a number of properties in the Lebanon. Both are described as oil traders in a very substantial way, and BB says that he has an income from transactions and commissions of the order of $400,000 to $500,000 a year. All 'their' assets appear to be held in the names of a large network of companies incorporated in many countries in which they or members of their families hold bearer shares. The properties available to BB in this country appear to be owned in this way. He appears to spend considerable time here and was served with these proceedings when he was here in hospital after an attack with a knife, following which he says that both brothers received anonymous threats to their lives and demands for money. WB has no apparent connection with this country but submitted to the jurisdiction after the proceedings had been served on his brother. Thereafter both defendants have complied with the orders made for the disclosure of their assets pursuant to RSC Ord 48, but the true nature and location of their assets remains unclear, and they are due to be cross-examined on their affidavits in the near future. In his judgment of 29 March 1988, when he granted the domestic Mareva injunction but at that stage refused to extend it abroad, Vinelott J said:

436

In the judgment of 19 April now under appeal, whereby he extended the Mareva injunction worldwide, he said about the defendants:

The judge then considered the decisions of this court in Faith Panton Property Plan Ltd v Hodgetts [1981] 2 All ER 877, [1981] 1 WLR 927, Ashtiani v Kashi [1986] 2 All ER 970, [1987] QB 888 and Reilly v Fryer and concluded that he was-

In considering this, he gave particular weight to the second reason given by Dillon LJ in Ashtiani v Kashi [1986] 2 All ER 970 at 977, [1987] QB 888 at 901, namely the difficulty for English courts to control or police enforcement proceedings in other countries, and the problems liable to arise from notification of such orders to third parties in other countries. He then said:

   The order which he subsequently made was subject to an undertaking on behalf of Babanaft to pay the reasonable costs and expenses of third parties served with notice of the order and to indemnify them against liability arising from compliance with it. It was pointed out on behalf of the defendants on this appeal that this was unsatisfactory, since437 Babanaft was insolvent and there was no undertaking to pay damages. These matters were disposed of without opposition from the plaintiffs by a full undertaking in damages given on behalf of Beeston's P & I club who had supported the litigation, the London Steamship Owners Association, and no more need be said about that aspect. The operative part of the order which is relevant for present purposes restrained the defendants until further order, whether by themselves, their servants or agents or otherwise howsoever from-

This order was qualified by a proviso in the following terms:

   We understand that this is nowadays a standard type of proviso to Mareva injunctions, and it is of course inserted for the benefit of third parties who may be affected by the freezing order. My reason for quoting it is that it illustrates that, although Mareva injunctions are orders made in personam against defendants, they also have an in rem effect on third parties. It shows that, save to the extent of the proviso, the order is binding on third parties who have notice of the injunction. Although the passage in the judgment of Lord Denning MR in Z Ltd v A [1982] 1 All ER 556 at 562, [1982] QB 558 at 573 headed 'Operation in rem' may well go too far in a number of respects, there cannot be any doubt that Mareva injunctions have a direct effect on third parties who are notified of them and who hold assets comprised in the order.
   This needs no elaboration and is demonstrated by the events which followed. I have already mentioned that, pursuant to leave granted by Vinelott J in general terms, some 47 entities in various countries were notified of the terms of the order by the plaintiff's solicitors. This was done by telexes which quoted the order in full and then concluded as follows:

   We were also briefly referred to a number of the responses. Many of the replies were to the effect that the addressees held no assets of the defendants'. Others queried the meaning and effect of the order or its validity. In one case a foreign bank rejected it in strong terms, perhaps unnecessarily drawing the senders' attention to the fact that 'the decisions have been rendered by a British court'. In other cases further correspondence was necessary in an attempt to clarify the effect of the orders. In some cases the clarifications contained phrases such as 'We are sure that you, as their lawyers in France, will also be keen to ensure that your clients are not in breach of court orders'. And in the case of one international bank with a branch in England a telex to its Athens branch included the following:

This correspondence speaks for itself. The judge clearly had some misgivings about the implications of his order. In his short judgment of 20 April he said in this connection:

I then turn to the law.
   The jurisdiction of the court to grant injunctions is now to be found in s 37 of the Supreme Court Act 1981:

   Subsection (3) is clearly directed specifically to Mareva injunctions covering assets located within the jurisdiction. In Ashtiani v Kashi [1986] 2 All ER 970 at 976, 979, [1987] 439QB 888 at 900, 904 both Dillon and Neill LJ attached some importance to this provision in support of their conclusion that Mareva injunctions should be limited to assets located within the jurisdiction, and Nicholls LJ agreed with both judgments. But it is clear from a reading of these judgments as a whole that the decisions were not founded on the construction of s 37 but on wider considerations of policy. The purpose of sub-s (3) was not to restrict the territorial ambit of Mareva injunctions but to ensure that there should be no discrimination against persons not domiciled, resident or present within the jurisdiction. Subsection (3) does not restrict the scope, geographical or otherwise, of sub-s (1). And it is perhaps worth noting that the appointment of a receiver pursuant to sub-s (1) may extend to assets outside the jurisdiction, whether movable or immovable (see 8 Halsbury's Laws (4th edn) para 648 (Conflict of Laws) and 39 ibid para 855 (Receivers).
And, in regard to the proper scope of the exercise of the court's discretion, the practice is clearly still in a state of development which has moved on since then. Thus, the Australian courts have not followed the policy indicated in Ashtiani v Kashi by granting Mareva injunctions before judgment covering assets located in other Australian jurisdictions: see Ballabil Holdings Pty Ltd v Hospital Products Ltd (1985) 1 NSWLR 155 and Coombs & Barei Constructions Pty Ltd v Dynasty Pty Ltd (1986) 42 SASR 413; and the General Division of the Federal Court of Australia has granted an interim injunction against a bankrupt living in Western Australia from dealing with real property in the Cocos (Keeling) Islands Territory pending the hearing of a substantive application: see Re Clunies-Ross, ex p Totterdell (1987) 72 ALR 241. Moreover, for the reasons mentioned hereafter it is in my view also necessary to consider the policy of the Ashtiani v Kashi decision in the context of international reciprocity as evidenced by the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Brussels, 27 September 1968; EC 46 (1978); Cmnd 7395), or, to give it its popular title, the European Judgments Convention, set out in Sch 1 to the Civil Jurisdiction and Judgments Act 1982.
   The fact that the practice in this field is still in a state of development is also shown by recent decisions concerning orders for the disclosure of assets outside the jurisdiction. In Ashtiani v Kashi, albeit on the particular facts, this court took a restrictive view of an order for the disclosure of assets situated abroad because, it was said, such a disclosure might enable the plaintiffs to use the disclosed information to obtain an attachment of the defendant's assets in other jurisdictions. That was a pre-judgment case, and the court was not referred to any of the relevant international jurisprudence discussed below. However, two more recent decisions of this court have held that the position is in any event different in principle once a judgment has been obtained. The first was Interpool Ltd v Galani [1987] 2 All ER 981, [1988] QB 738, which decided that orders for the disclosure of assets after judgment pursuant to Ord 48 could properly extend to assets outside the jurisdiction. And in Maclaine Watson & Co Ltd v International Tin Council (No 2) [1988] 3 All ER 257, [1988] 3 WLR 1190 this court held that the defendants should make a full disclosure of their assets, both within and outside the jurisdiction, where the plaintiffs had obtained judgment but were unable to rely on Ord 48. The order for extra-territorial disclosure was made pursuant to s 37(1) of the Supreme Court Act 1981.
   I therefore proceed on the basis that in appropriate cases, though these may well be rare, there is nothing to preclude our courts from granting Mareva-type injunctions against defendants which extend to their assets outside the jurisdiction.
   On that assumption three questions fall to be answered which did not arise or were not raised in Ashtiani v Kashi but which now need to be considered in principle. To take them in the order in which they were raised in the present case, they are as follows. (1) Should we adopt a different policy in relation to applications made after judgment, in line with the authorities on post-judgment orders for the disclosure of assets, by granting unqualified Mareva injunctions over foreign assets after judgment in appropriate cases? 440That was the conclusion of Vinelott J and the main issue argued on this appeal, distinguishing Ashtiani v Kashi on that ground. (2) If the answer to (1) is in the negative, because this would involve an exorbitant assertion of extra-territorial jurisdiction over third parties, should we restrict such orders expressly so as to bind only the defendant personally by adding a proviso to make it clear that third parties shall not be affected by the order? This was a fall-back position suggested on behalf of the defendants as a compromise between upholding the unqualified Mareva injunction, which they submitted was clearly wrong in law, and declining to make any order affecting the defendants' foreign assets, which they recognised to be more or less unacceptable on the facts of this case. As explained below, on the basis of the oral arguments addressed to us, this was the solution which we ultimately adopted in the order which we announced after the hearing. (3) Alternatively to (2), should the terms of the order in such cases take the form of a normal Mareva injunction, but with the qualification that the order shall not affect third parties unless and to the extent that it is enforced by the courts of the state in which the assets are located? This appears to me to be the correct international approach, stemming from the jurisprudence dealing with art 24 of convention entitled 'Provisional, including protective, measures', to which I come shortly. That aspect was only raised by the court itself towards the end of the oral argument. After the conclusion of the hearing counsel then referred us in writing to some of the relevant material, including the three Australian cases to which I have referred, and they also submitted brief comments on one of the relevant decisions of the Court of Justice of the European Communities mentioned below.
   Three matters should be noted about solutions (2) and (3). First, both are in principle equally relevant before and after judgment. Second, neither militates against the reasoning of the judgments of this court in Ashtiani v Kashi. Third, it may be that in some foreign jurisdictions there would be no real difference between these solutions in their practical effect. Thus, some foreign courts might enforce orders in terms of solution (2) in ways which would affect third parties holding assets of the defendant, and to that extent the proviso to such orders might in practice prove to be nugatory. This is an additional reason, together with those set out hereafter, for the conclusion that in my view solution (3) is the correct approach in principle in those cases where a Mareva-type injunction extending to foreign assets is considered to be appropriate.
   However, before coming to these aspects, I must briefly refer to the reasons which led Vinelott J to adopt solution (1).
   The judge founded himself squarely on the consideration that in the present case the order was sought after judgment and therefore in aid of execution. In that connection he dealt at length with the judgments in this court in Faith Panton Property Plan Ltd v Hodgetts [1981] 2 All ER 877, [1981] 1 WLR 927, which had been an appeal from himself. This court had there granted a Mareva injunction after judgment to protect an order for costs in favour of the plaintiffs pending taxation, and the judgments emphasised the difference in approach to orders of this kind when the plaintiff has already obtained a judgment. That is of course understandable. The court is then no longer so concerned to protect the defendant, and there are good reasons for assisting judgment creditors, as shown by Interpool Ltd v Galani and Maclaine Watson & Co Ltd International Tin Council (No 2). But the Faith Panton case had no foreign element of any kind and is no authority for present purposes. In the context of orders which operate extra-territorially, wholly different considerations arise, as discussed below. These show that unqualified Mareva-type injunctions applying to foreign assets can never be justified, neither after nor before judgment. None of the counsel could recollect any order of any foreign court, however 'long-arm' the nature of the jurisdiction claimed, which had gone as far as the order made in this case.
   In my view, the key to the proper exercise of any extra-territorial jurisdiction must lie in the question whether there is international reciprocity for the recognition and enforcement of the type of order which is under consideration, in this case a Mareva441 injunction or a variant of it purporting to operate on the defendants' assets abroad. In that context one must have regard to the practice and jurisprudence concerning art 24 of the convention. This was concluded in 1968 between the original six members of the European Economic Coummunity (the EEC) and extended to the United Kingdom, among others, by the Convention on Accession of 9 October 1978 of the Kingdom of Denmark, of Ireland and of the United Kingdom of Great Britain and Northern Ireland to the Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters and to the Protocol on its Interpretation by the Court of Justice (Cmnd 7395, OJ L304/78 p 1), without any alteration to art 24. The convention requires the recognition and enforcement of all judgments or orders which fall within its scope, whether final or interlocutory, subject to limited exceptions which have no application in the present case: see arts 1, 25, 26 to 28 and 31 of the convention and the comments of Mr P Jenard on Title III of the convention (OJ 1979 C59, p 42ff). The convention therefore applies prima facie to any order made on the plaintiffs' application in this case, ie both to the order made by Vinelott J and to the qualified order which we substituted on this appeal.
   But this is not the main reason for the importance of the convention in the present context. The main reason lies in the fact that it contains the most extensive code evidencing international reciprocity in the recognition and enforcement of judgments and orders issued in foreign jurisdictions, and that it includes art 24 dealing with provisional and protective measures. The forerunner of the European Judgments Convention had been a network of bilateral conventions, and among the original six member states nearly all of these had included a provision corresponding to art 24: see the comment on this article by Mr P Jenard (at 42). So the European Judgments Convention is now the widest embodiment of international consensus in this field, founded on decades of bilateral conventions. A parallel convention in similar terms to the Judgments Convention, including art 24 without alteration, between the EEC and the European Free Trade Association (EFTA) states (Austria, Finland, Iceland, Norway, Sweden and Switzerland) will be discussed at a diplomatic conference later this year. It will probably result in the adoption of art 24 throughout virtually the whole of Western Europe, and with it the decisions of the European Court concerning it. A discussion of the relevant jurisprudence as it stood some years ago will be found in the valuable article by Mr Lawrence Collins, the editor of Dicey and Morris Conflict of Laws, 'Provisional Measures, the Conflict of Laws and the Brussels Convention' [1981] Yearbook of European Law 249.
   With apologies for this lengthy introduction, I then come to the text of art 24 which is in the following terms:

   Without legislation this provision could not have been used by our courts to grant, for instance, Mareva injunctions over assets situated in this country in aid of substantive proceedings pending in other EEC jurisdictions. To do so would have been contrary to the decision of the House of Lords in Siskina (cargo owners) v Distos Cia, The Siskina [1977] 3 All ER 803, [1979] AC 210. This had held that, unless our courts were properly seised of the substance of an action, there was no jurisdiction to grant a Mareva injunction over assets in this country in aid of proceedings abroad. The reversal of The Siskina and adherence to art 24 was achieved by s 25 of the 1982 Act. It is unnecessary to set this out for present purposes. However, its effect was to focus attention on only one aspect of art 24: the power of a court in EEC state A, which is not seised of the substantive action, to make some provisional or protective order in aid of a substantive action pending in state B. I will refer to this as the primary effect of art 24. However, that leaves out of442 account a secondary and entirely distinct effect of art 24, to take a corresponding example: the recognition and enforcement by the courts of state A, pursuant to the requirements of the convention, of provisional or protective orders made by a court in state B pursuant to art 24 in aid of a substantive action pending before it, which orders purport to have effect in state A. It is this latter aspect which is material in the present context.
   Two important decisions of the European Court on art 24 indicate that extra-territorial orders akin to Mareva injunctions, made by the courts in one EEC state and purporting to operate on assets located in another EEC state, will be recognised and enforced by the courts of the latter state if they fall within the scope of the European Judgments Convention and satisfy certain requirements designed to protect the defendant against whom the orders were made. They are de Cavel v de Cavel Case 143/78 [1979] ECR 1055 and Denilauler v Snc Couchet Fr�res Case 125/79 [1980] ECR 1553. Both cases concerned a pre-judgment saisie conservatoire issued by a French court over assets of the defendants located in Germany. In the first case divorce proceedings were pending before a court in France. On the application of the husband the court froze the furniture, effects and other objects situated in the couple's flat in Frankfurt and in a safe hired in the wife's name in a bank in Frankfurt, and the wife's account at that bank. The husband sought enforcement of this order by proceedings in Germany pursuant to art 24 of the European Judgments Convention. The German Federal Court of Justice referred his entitlement to enforcement to the European Court. The issue was whether art 24 applied to orders made in divorce proceedings which involved the status of the parties and proprietary legal relations resulting from the matrimonial relationship. Since these are not matters falling within art 1 of the convention, the European Court held that the French order was not entitled to recognition and enforcement in Germany under art 24. In Denilauler v Snc Couchet Fr�res a French court was seised of a commercial action and in the course of it made an order authorising the freezing of the defendants' assets in a bank in Frankfurt as security. The plaintiffs sought to enforce that order under art 24, but the German court referred the case to Luxembourg on the ground that the German defendants had had no notice of the order before it had been made. On that ground the European Court held that the order was not entitled to recognition and enforcement by the German courts under art 24. But there was no suggestion in the opinion of either Advocate General in either case (who was Mr Advocate General J-P Warner in de Cavel v de Cavel), or in the judgments of the court, that there was any basis for criticising the orders of the French courts on the ground that, subject to their recognition and enforcement by the German courts, they purported to operate extra-territorially. This is not at all surprising when it is remembered that the object of the European Judgments Convention was to create something analogous to a single law district for the whole of the EEC.
   I have expressed the outcome of these cases in Luxembourg in broad terms which may well to some extent oversimplify the detailed grounds of the decisions. But that does not matter for present purposes. What these cases show, if one transposes them by reference to our courts, can be summarised as follows. A pre-judgment Mareva injunction granted by an English court in aid of English proceedings, freezing specific assets of a defendant located in the territory of any EEC state, is entitled to recognition and enforcement by the courts of that state if (i) the English proceedings fall within the scope of art 1 of the Judgments Convention (civil and commercial matters) and do not fall within any of the exceptions, in particular those in arts 27 and 28, and (ii) the order was made inter partes, or at any rate after the defendant had had an opportunity to resist the plaintiff's application for the order. Depending on the local law and practice, it may be that the same would apply to orders covering the defendant's assets generally, without specifying their nature or location.
   There are three important implications of these decisions.
   (A) Viewed purely from the point of view of international comity, and indeed reciprocity, there appears to be no reason why our courts should refrain from granting inter partes pre-judgment Mareva injunctions in cases falling within the European443 Judgments Convention in relation to assets situated in the territories of other EEC states; and the same may soon apply to the territories of all or most of the EFTA states.
   (B) However, there can be no question of such orders operating directly on the foreign assets by way of attachment, or on third parties, such as banks, holding the assets. The effectiveness of such orders for these purposes can only derive from their recognition and enforcement by the local courts, as should be made clear in the terms of the orders to avoid any misunderstanding suggesting an unwarranted assumption of extra-territorial jurisdiction. However, if the orders fulfil the requirements of (i) and (ii) above, then the local courts will be bound to recognise and enforce them.
   (C) Apart from any EEC or EFTA connection, there is in any event no jurisdictional (as opposed to discretionary) ground which would preclude an English court from granting a pre-judgment Mareva injunction over assets situated anywhere outside the jurisdiction, which are owned or controlled by a defendant who is subject to the jurisdiction of our courts, provided that the order makes it clear that it is not to have any direct effect on the assets or on any third parties outside the jurisdiction save to the extent that the order may be enforced by the local courts. Whether an order which is qualified in this way would be enforced by the courts of states where the defendant's assets are situated would of course depend on the local law, as would the question whether such orders would be recognised and enforced if they refer to the assets of the defendant generally or only if specified assets are mentioned in the order. As the European Court said in Denilauler v Snc Couchet Fr�res [1980] ECR 1553 at 1570 (para 16):

That comment applies equally to what I have referred to as the primary as well as to the secondary effect of art 24.
   Before turning to post-judgment orders I would add two further comments on the decision of this court in Ashtiani v Kashi [1986] 2 All ER 970, [1987] QB 888, bearing in mind that none of this jurisprudence was brought to the court's attention in that case.
   First Dillon LJ expressed the view that ([1986] 2 All ER 970 at 978, [1987] QB 888 at 903)-

With all due respect, I do not think that as a general rule this comment can be correct, and it was regarded as 'somewhat surprising' by Rogers J hearing the Commercial List of the Common Law Division of the Supreme Court of New South Wales: see Yandil Holdings Pty Ltd v Insurance Co of North America (1986) 7 NSWLR 571 at 577. Its application would deny the intended effect, both primary and secondary, of art 24. No doubt, as emphasised by Nicholls LJ at the end of his judgment in the present case, any orders affecting foreign assets should always be considered with great care, since they may have unforeseen and unintended consequences for defendants. But it should also be said, with equal emphasis, that some situations, which are nowadays by no means uncommon, cry out, as a matter of justice to plaintiffs, for disclosure orders and Mareva-type injunctions covering foreign assets of defendants even before judgment. Indeed, that is precisely the philosophy which underlies art 24 and which has been applied by the development of the common law in Australia.

444

   Second in Ashtiani v Kashi [1986] 2 All ER 970 at 975, [1987] QB 888 at 898 there is a lengthy citation of a passage from the judgment of Hoffmann J in Bayer AG v Winter (No 3) [1986] FSR 357 at 362, which was also cited by Rogers J in the Yandil Holdings case 7 NSWLR 571 at 575. I do not propose to repeat it in full, but the passage concluded as follows:

Dillon LJ rejected the view expressed in this passage in favour of a contrary view which had been expressed by Sir Neil Lawson at first instance (see [1986] 2 All ER 970 at 978, [1987] QB 888 at 902). However, since none of the foregoing considerations had been brought to the attention of the court in Ashtiani v Kashi, I feel entitled to suggest that, viewed internationally, Hoffmann J was quite right in his approach, at any rate within the scope of the decisions of the European Court on what I have referred to as the secondary effect of art 24. Indeed, I would respectfully go further by suggesting that this approach, based as it is on international reciprocity, is in principle altogether correct.
   I then turn to post-judgment Mareva injunctions purporting to freeze foreign assets. Perhaps surprisingly from an English point of view, it appears at first sight to be more difficult to justify such orders than pre-judgment Mareva injunctions. The reason is that it can be suggested that they would not be regarded as provisional or protective measures within art 24. It seems that the jurisprudence of our continental partners may not recognise provisional orders having the character of attachments or saisies conservatoires after judgment. Thus, as was pointed out by Collins in 'Provisional Measures, the Conflict of Laws and Brussels Convention' [1981] Yearbook of European Law 249 at 263, referred to above:

One can see the same approach in art 16(5) of the European Judgments Convention, on which Miss Dohmann QC for the defendants relied in her argument. This provides that, regardless of domicile, 'in proceedings concerned with the enforcement of judgments, the courts of the Contracting State in which the judgment has been or is to be enforced' shall have 'exclusive jurisdiction'. In Interpool Ltd v Galani [1987] 2 All ER 981, [1988] QB 738 this court ordered the defendant to make a full disclosure after judgment of his assets abroad, clearly in order to enable the plaintiff to use the disclosure for the purpose of enforcement proceedings in the jurisdictions where the disclosed assets were situated. The court also held that an order for disclosure by the defendant of his assets worldwide pursuant to Ord 48 did not infringe art 16(5) of the European Judgments Convention (see [1987] 2 All ER 981 at 984-985, [1988] QB 738 at 742-743). In my view, the correctness of that decision is not open to doubt. However, there remains the question whether an English court would be precluded by art 16(5) from granting a Mareva injunction over assets situated elsewhere within the EEC. The commentary on this article by Mr P Jenard, which is an admissible aid to the construction of the European Judgments Convention scheduled to the 1982 Act by virtue of s 3(3) of the Act, is in the following terms (OJ 1979 C59, p 36):

Mr P Jenard adds: 'Provisions of this kind appear in the internal law of many Member States, and cites the position in France, whereby:

Despite the apparent width of these comments I do not think that a 'holding order' in the form of a post-judgment Mareva injunction, covering assets of a defendant in the territory of an EEC state pending proceedings for the enforcement of the judgment in accordance with the applicable provisions of the European Judgments Convention and the national law of that state, would constitute any infringement of art 16(5). It seems illogical, at any rate from an English point of view, that a post-judgment provisional protective order should fall outside the scope of art 24. The better view would be that after judgment 'the substance of the matter' referred to in art 24 consists of the 'proceedings concerned with the enforcement of judgments' referred to in art 16(5). The latter are of course within the exclusive jurisdiction of the state where the assets are. But I can see no reason why art 24 should not be available in the interim, pending enforcement of the judgment there, to entitle our courts, if the judgment has been given here, to grant a Mareva injunction over the foreign assets pending execution abroad.
   I appreciate that in this discussion I have strayed a long way from the course which the present appeal in fact took on the basis of the limited issues which were debated. Unfortunately, the important international perspective was only touched on superficially at the end of the hearing and briefly in the subsequent written submissions. But, if one goes back to the suggested alternative solutions numbered (1), (2) and (3) to the problems posed by extra-territorial Mareva-type injunctions which I have set out earlier, I think that I have said enough to indicate my reasons for concluding that solution (1) is clearly unacceptable, and that this appeal therefore had to be allowed to that extent in any event. Unqualified Mareva injunctions covering assets abroad can never be justified, either before or after judgment, because they involve an exorbitant assertion of jurisdiction of an in rem nature over third parties outside the jurisdiction of our courts. They cannot be controlled or policed by our courts, and they are not subjected to the control of the local courts, as the European Court advised in Denilauler v Snc Couchet Fr�res [1980] ECR 1553 at 1570 (para 16) they should be. In consequence, as can be seen from the correspondence between the plaintiffs' solicitors and the 47 or so third parties to whom the injunctions were notified in the present case, any purported assertion of such jurisdiction is unworkable and merely gives rise to problems and disputes.
   Solution (3), which I believe to be the correct solution in principle, was never canvassed, for the reasons which I have stated. It obviously binds the defendant personally, in common with solution (2), but would go further and would therefore be more useful. So that leaves our adoption of solution (2) in the present case. For the reasons set out in the judgment of Nicholls LJ there is clearly no objection to making a personal order binding on the defendant alone. That was the effect of the order made by Hobhouse J in Crown Petroleum Corp v Ibrahim (27 April 1988, unreported), to which Nicholls LJ has referred. The order which we made in the present case went further, and its terms covered immovable as well as movable property of the defendants. Its crucial difference from the order made by Vinelott J was that it was qualified by the following proviso:

   In addition, to complete the history, we added a paragraph entitling each of the defendants to draw living and other expenses which they claimed to be necessary and for which no allowance had been made below. Since both defendants undertook that these would come exclusively out of income to be generated by their business activities and that they would not dispose of any capital assets, we agreed to the lavish amounts for which they asked, �15,000 per month for BB and $17,000 for WB. In that connection we bore in mind that the whole position will be reviewed in whatever way may appear to be necessary in the light of the defendants' full evidence which they are required to give pursuant to Ord 48. They undertook to supplement their present inadequate affidavits by supplying full details of the nature, value and location of their assets, and they will then be cross-examined on them.
   Finally, it is perhaps hardly necessary to add an emphatic note of caution in relation to those parts of this judgment which, as I have indicated, were not canvassed in the arguments of counsel, either before Vinelott J or on this appeal. In these circumstances, it is obviously particularly likely that there may be errors in what I have said. But, in view of its great general importance, I feel that it is right to air this topic more fully, albeit obiter, than was necessary for the purposes of this particular appeal. Viewed in that way I can summarise my present views as follows. (A) An unqualified Mareva-type injunction purporting to freeze assets situated outside the jurisdiction of our courts is always inadmissible, both after and before judgment. (B) A Mareva-type injunction (perhaps it should be called 'a personal Mareva' for identification) qualified by an express proviso excluding any effect on third parties, which was the order which we made on the present appeal, is clearly unobjectionable in principle. But it is not a satisfactory formulation, because it disregards the realities which a Mareva injunction seeks to achieve. Hobhouse J recognised this in Crown Petroleum Corp v Ibrahim when he said that the order 'will be solely binding on the conscience of the defendant ... ' (C) Subject to the note of caution which I have sounded, if the arguments addressed to us had fully deployed the considerations discussed in this judgment, then it would in my view have been equally permissible, and the better course, to have allowed this appeal by making an order in terms of my solution (3), viz an order in the form of a normal Mareva injunction against both defendants with a qualification that the order should not affect third parties unless and to the extent that it is enforced by the courts of the states in which any of the defendants' assets are located. This would be the logical and internationally appropriate course, and it would have taken the plaintiffs further than the order which we made, without, so far as I can see, any basis for objection by the defendants; nor in principle, for the reasons discussed. (D) Viewed purely jurisdictionally, the comments in (B) and (C) above apply equally to orders made after, as well as before, judgment. However, as a matter of discretion, such orders will in practice no doubt be made much more readily after judgment. (E) The orders for the disclosure of the defendants' assets abroad pursuant to RSC Ord 48 were not in issue on this appeal, and their jurisdictional justification was not open to question in view of the decisions of this court in Interpool Ltd v Galani [1987] 2 All ER 981, [1988] QB 738 and Maclaine Watson & Co Ltd v International Tin Council (No 2) [1988] 3 All ER 257, [1988] 3 WLR 1190. However, in my view there is equally no jurisdictional objection to such orders before judgment. The cautionary comments in the judgments in Ashtiani v Kashi [1986] 2 All ER 970, [1987] QB 888 should no doubt be borne in mind in this context. But in extreme situations, which justify a pre-judgment Mareva injunction covering a defendant's assets outside the jurisdiction, orders for the disclosure of the nature and location of such assets must be equally justifiable. Prima facie, both types of orders should be considered in parallel.

447

NEILL LJ. We are concerned in this appeal with a branch of the law which is in a stage of development and where the court will be asked to exercise its discretion to grant injunctive relief in many differing sets of circumstances. It seems to me therefore that any guidelines which are laid down by this court should be expressed in general terms.
   The power of the High Court to grant injunctions is now a statutory power. It is conferred by s 37(1) of the Supreme Court Act 1981, which is in similar terms to s 45(1) of the Supreme Court of Judicature (Consolidation) Act 1925 and s 25(8) of the Supreme Court of Judicature Act 1873. Section 37(1) of the 1981 Act provides:

   It will be seen that the power to grant injunctions is expressed in very wide terms. It contains no territorial limitation. Furthermore, there is abundant authority for the proposition that, where a defendant is personally subject to the jurisdiction of the court, an injunction may be granted in appropriate circumstances to control his activities abroad. Thus, for example, a party to an action may be restrained from commencing or continuing an action in a foreign court. Nevertheless, as Lord Brandon explained in South Carolina Insurance Co v Assurantie Maatschappij 'De Zeven Provincien' NV [1986] 3 All ER 487 at 495, [1987] AC 24 at 40, the wide power conferred by s 37(1) and its predecessors has been circumscribed by judicial authority dating back for many years.
   The decision of this court in Ashtiani v Kashi [1986] 2 All ER 970, [1987] QB 888 is authority for the proposition that, where a Mareva injunction is granted before judgment, the injunction should be limited to assets within the jurisdiction of the court. Dillon LJ gave four reasons to explain this general rule ([1986] 2 All ER 970 at 977, [1987] QB 888 at 901-902):

   I was a party to the decision in Ashtiani v Kashi and I remain of the opinion that it accurately reflected the way in which the jurisdiction to grant Mareva injunctions had been exercised and developed in England in the period between the original decision in Mareva Cia Naviera SA v International Bulkcarriers SA, The Mareva (1975) [1980] 1 All ER 213 in June 1975 and June 1986.
   I am satisfied, however, that the court has jurisdiction to grant a Mareva injunction over foreign assets, and that in this developing branch of the law the decision in Ashtiani v Kashi may require further consideration in a future case.
   In the present case we are concerned with an injunction which has been granted following a judgment. I therefore propose to restrict my comments on pre-trial injunctions to the following matters to which our attention was drawn either in the course of or following the conclusion of the argument.
   It is first to be noted that the Court of Justice of the European Communities has recognised the right of a court of one state to grant 'provisional, including protective, measures' within the meaning of art 24 of the European Judgments Convention of 1968 affecting assets situated in another state: see Denilauler v Snc Couchet Fr�res Case 125/79 [1980] ECR 1553.
   It is also to be observed that several courts in Australia have granted interlocutory injunctions of a Mareva type in relation to assets which were outside the jurisdiction of the relevant court: see, for example, Coombs & Barei Constructions Pty Ltd v Dynasty Pty Ltd (1986) 42 SASR 413, Re Clunies-Ross, ex p Totterdell (1987) 72 ALR 241 and Yandil Holdings Pty Ltd v Insurance Co of North America (1986) 7 NSWLR 571.
   At the same time it is to be remembered that art 24 of the 1968 convention is not the source of any power to grant protective measures. It is the relevant national law which supplies the remedy. Furthermore, it is important to bear in mind the need for caution where a court is minded to grant an injunction which may take effect outside the territory of its own jurisdiction. In Denilauler v Couchet Fr�res [1980] ECR 1553 at 1570 (paras 15, 16) the European Court underlined the need for care:

I turn now to the present case.

449

   It is clear that, after a judgment has been obtained, an order for the disclosure of assets can be made pursuant to RSC Ord 48: see Interpool Ltd v Galani [1987] 2 All ER 981, [1988] QB 738. Leave to appeal against that decision was refused by the Appeal Committee of the House of Lords (see [1987] 3 All ER facing p 1, [1988] 1 WLR 134). It is further clear that an order for extra-territorial disclosure can be made pursuant to s 37(1) of the 1981 Act in a case where judgment has been obtained but where the applicants for disclosure cannot rely on Ord 48: see Maclaine Watson & Co Ltd v International Tin Council (No 2) [1988] 3 All ER 257, [1988] 3 WLR 1190.
   In my judgment, the arguments against granting a Mareva-type injunction extending to assets outside the jurisdiction are much weaker in a case where judgment has been obtained than in a case where an interlocutory order is sought before trial. Indeed, I am satisfied that there will be many cases, of which the present case is one, where justice requires that, once judgment has been obtained, the successful plaintiffs should be able to obtain the protection of an injunction extending to all the assets of the defendants whether within or outside the jurisdiction of the court. It is always to be remembered, however, that a Mareva injunction is not a form of attachment but is a form of relief in personam which prohibits certain acts in relation to the assets in question: see Iraqi Ministry of Defence v Arcepey Shipping Co SA, The Angel Bell [1980] 1 All ER 480 at 486, [1981] QB 65 at 72. In other words, the injunction has its legal operation not on the property itself but on the person who is subject to the jurisdiction of the court.
   I have had the advantage of reading in draft the judgments of Kerr and Nicholls LJJ. Kerr LJ has explained the difficulties which arose in this case when notice of the judge's order was given to the 47 banks and other institutions who held or might have held assets of the defendants. I am satisfied that it is wrong in principle to make an order which, though intended merely to restrain and control the actions of a person who is subject to the jurisdiction of the court, may be understood to have some coercive effect over persons who are resident abroad and who are in no sense subject to the court's jurisdiction. It was with these considerations in mind that I took the view that the following proviso should be added to the injunction:

The purpose of this proviso was to make it clear that the injunction was and was intended to be directed to the defendants themselves and did not affect the rights of third parties or control their activities.
   The present order is intended to hold the ring for the time being and to prevent the defendants from making dispositions in breach of the order. I envisage that in due course further orders may be required. The plaintiffs may require directions as to what steps they can take to obtain additional relief abroad in respect of specific assets. I also envisage that in future orders of this type a less widely drafted proviso may be appropriate so as to limit the protection of third parties to acts by them outside the jurisdiction.
   Like Nicholls LJ, however, I consider it to be important that the court should not abandon control of what use is made of the discovery which plaintiffs are able to obtain by means of orders of the kind made in this case.
   For the reasons which I have endeavoured to outline I am satisfied that the unconditional order which was made by the judge cannot be supported, though I can well understand the reasons which led him to make this order. In my view, it will take time before the courts will be able to work out, on a case-by-case basis, the most satisfactory way of controlling injunctions and discovery orders which relate to assets outside the jurisdiction. It will be necessary to take full account of the European450 Judgments Convention, and also of the policy which underlines that convention. Thus it may be appropriate to seek to follow the policy of the convention even though in the particular case the convention itself has no direct application. At the same time, however, it will be necessary to remember that, where an English order relates to foreign assets, the enforcement of the order may be under the control of a court which is unfamiliar with a form of relief which takes effect in personam rather than in rem. A proviso in the terms of that included in our order, or in similar terms, would, I think, go a long way towards explaining to the foreign court the limited and personal nature of the order made by the English court. Nevertheless, in my view, an English court should remain alert to the possibility that a foreign court might treat the injunction as though it were a form of attachment in rem.

NICHOLLS LJ.

In personam
   Equity acts in personam and an injunction is an equitable remedy. At first sight, therefore, there would seem to be no reason why, faced with defendants who are amenable to the court's jurisdiction and who, as the judge found, would be likely to take any step open to them to frustrate or delay execution of the judgment, the court should not exercise its wide jurisdiction under s 37(1) of the Supreme Court Act 1981 by granting against them a 'holding' injunction in respect of their overseas assets, to give the plaintiff time to apply to the relevant foreign court for appropriate orders of attachment or the like. The jurisdiction to make such an order would, of course, need to be exercised with caution, and the terms of any injunction would need to be framed with care to ensure that the injunction did not operate oppressively. In particular, as is usual in Mareva orders, the normal conduct of a defendant's business should not be impeded, and provision should be made for his living expenses and payment of legal fees. Further, the 'holding' nature of the injunction might well be reflected in a provision to the effect that the injunction would cease to apply to any specific asset or assets once the defendant has given, with due particularity, a specified number of days' notice to the plaintiff regarding that asset or those assets. But, in principle, the observations of Lord Brougham LC in Lord Portarlington v Soulby (1834) My & K 104 at 108, [1824-34] All ER Rep 610 at 612, concerning an application for an injunction to restrain a defendant from taking proceedings in Ireland on a bill of exchange, would be apt to the making of an order such as I have described:

   I can see nothing in the decision of this court in Ashtiani v Kashi [1986] 2 All ER 970, [1987] QB 888 inconsistent with this approach. That was a 'disclosure' case, concerned with the position of a defendant before any judgment had been obtained against him. There the court was troubled about the unsatisfactory, even oppressive, consequences451 that might befall a defendant if he were compelled by an English court to disclose the whereabouts of his overseas assets in advance of judgment. But after judgment has been obtained the parties' positions are different in an important respect. Under English law, unlike the position before judgment, after judgment a plaintiff is able to attach assets of the defendant against whom he has obtained judgment. Thus it is now established that, after judgment has been obtained, there is no objection in principle to the judgment debtor being required to give disclosure of his assets worldwide under RSC Ord 48, r 1(1) (Interpool Ltd v Galani [1987] 2 All ER 981, [1988] QB 738) or, in a case outside Ord 48, under s 37 (Maclaine Watson & Co Ltd v International Tin Council (No 2) [1988] 3 All ER 257, [1988] 3 WLR 1190). The object of ordering such disclosure is to render the judgment effective, by enabling the judgment creditor to discover whether, in the absence of sufficient assets within the jurisdiction, there are assets elsewhere which may be attached by him if he seeks to enforce his judgment overseas. But, in a given case, that purpose, for which such worldwide disclosure is ordered, may itself be at real risk of being defeated if an unscrupulous judgment debtor, after he has (truly) disclosed the whereabouts of overseas assets, remains at liberty to move them from one country to another before the judgment creditor has had an opportunity, however diligent he and his advisers may be, to apply to the local court for an attachment of the assets. Many assets, ranging from money in a bank through bearer shares to valuable postage stamps, can be moved speedily and easily from country to country. That being so, such a case, in principle, would be an eminently proper occasion for the court to exercise its ample jurisdiction under s 37 by making a temporary 'holding' injunction against the judgment debtor, requiring him not to move or deal with his assets without giving to the judgment creditor the few days' notice which is the minimum reasonably required to enable the judgment creditor to invoke any assistance which the local court may afford to him in respect of his judgment debt. Such an injunction would be supplementary to the worldwide disclosure order.

Third parties
   But there is a troublesome point here concerning third parties. An injunction, as an order of the court, can affect the conduct of persons other than the defendant in the proceedings against whom the order is made. This was a matter considered in the recent Spycatcher litigation (A-G v Newspaper Publishing plc [1987] 3 All ER 276, [1988] Ch 333). For the purposes of the present appeal it is sufficient to note that it is well established that a person who knowingly assists in the breach of a court order is himself in contempt of court: see, for example, Seaward v Paterson [1897] 1 Ch 545, [1895-9] All ER Rep 1127 and, in the context of a Mareva injunction, Z Ltd v A [1982] 1 All ER 556, [1982] QB 558. This principle is one of the strengths of a Mareva order, but it is the application of this principle to an injunction in respect of overseas assets such as I have described above that causes difficulty.
   Take the present case. After the judge made the order under appeal on 19 April 1988, the plaintiffs' solicitors gave notice of the order to numerous overseas banks and other organisations. In some of their telexes the plaintiffs' solicitors strongly advised the recipients that, before allowing the defendants to deal with any of the defendants' assets held by them, they should check with the plaintiffs' solicitors directly to see that the defendants had given the requisite notice. There is no question of the solicitors having acted improperly in taking these steps. These matters were ventilated before the judge, and on 20 April 1988 he declined to place any restraint on dissemination of notice of the injunction by the plaintiffs' solicitors. In so doing the judge recognised that, inevitably, he was having to feel his way in a new situation, no similar worldwide injunction having been ordered previously even after judgment. But a consequence of the plaintiffs taking these steps was that, so far as the English court was concerned, if a French or Swiss bank, or other person to whom notice was given, thereafter parted with money or some other asset of either defendant without proper advance warning having been given to the452 plaintiffs' solicitors, the bank or other person would or might be in contempt of the English court. Indeed, it was precisely for this purpose that the notice of the injunction was being given to third parties. By thus affording the plaintiffs a possible sanction against third parties the plaintiffs' position was intended to be fortified.
   This is not an acceptable situation. It would be wrong for an English court, by making an order in respect of overseas assets against a defendant amenable to its jurisdiction, to impose or attempt to impose obligations on persons not before the court in respect of acts to be done by them abroad regarding property outside the jurisdiction. That, self-evidently, would be for the English court to claim an altogether exorbitant, extra-territorial jurisdiction.
   In Crown Petroleum Corp v Ibrahim (27 April 1988, unreported) Hobhouse J sought to avoid this difficulty by accepting from the plaintiff an undertaking not to serve notice of a post-judgment restraint order in respect of assets outside the jurisdiction on any person other than the defendant (and, in that case, another person who was a party to the action) and his legal representatives. This, in practice, would go a long way towards resolving the difficulty, but in my view it does not go far enough. This form of order is still unsatisfactory in respect of a third party who may learn of the existence of the order without being formally notified by the plaintiff's solicitors.
   To meet this difficulty I can see no alternative but to grasp the nettle firmly, and write into the order, which applies only to property outside the jurisdiction, an express provision to the effect that nothing in the relevant part of the order is to affect any person other than the defendants personally. This will remove any extra-territorial vice which otherwise the order might have, or be thought to have. The order will be binding only on the conscience of the defendants.
   I have considered anxiously whether an order in such a form would be wrong in principle. It is certainly unattractive to make an order which, contrary to the normal position, third parties are bidden to ignore. But in this case the alternative is not to make any temporary 'holding' order at all. Given that choice, I think that justice and convenience require an order binding only on the defendants rather than no order at all. The touching concern shown by the defendants on this appeal for the integrity of banks and others overseas should not be allowed to obscure the judge's finding that these defendants would be likely to do whatever they can to frustrate execution of the judgment.
   This is a novel form of order, and in this developing field still further refinements may be shown to be necessary. For instance, it may be that the proviso protecting third parties should, in a given case, be confined to acts done by them outside the jurisdiction. This was not a point explored in the present case, and so I say no more about it. But, as to the novelty, I echo the words of Fox LJ in Bayer AG v Winter [1986] 1 All ER 733 at 737, [1986] 1 WLR 497 at 502:

   To the above I add four comments. First, if an order is made in the terms just mentioned, I do not see why land need be excluded. Second, the defendants will be restrained from doing the prohibited acts by any means whatsoever, whether by their servants or agents or otherwise. In that respect the order will have the usual, wide ambit. But the order should be confined in its effect to the defendants personally, thus excluding everyone else, even the defendants' servants or agents. The defendants' servants or agents, as much as banks and other third parties, may be acting outside the jurisdiction, so that the problem of extra-territorial effect may be as much relevant to them as it is to banks and others. Third, I do not think that it would be right to attempt to distinguish between453 third parties who are resident or domiciled or present within the jurisdiction and those who are not. This could give rise, for instance, to a distinction between an overseas bank which has a branch in London and one which does not. More importantly, however, attempting to draw any such distinction is wrong in principle. If it is to be free from extra-territorial vice, the order must not attempt to regulate the conduct abroad of persons who are not duly-joined parties to the English action in respect of property outside the jurisdiction. The actual residence or domicile of such persons, or their presence within the jurisdiction, is essentially irrelevant. For instance, Banque Nationale de Paris should not be affected by this order in respect of any money it may hold for the defendants abroad. This should be so whether or not it has a branch in London. Likewise with Lloyds Bank. It is resident here, but it should not be affected by the order in respect of any money it holds for the defendants abroad.
   Fourth, for the plaintiff it was submitted that banks and others not amenable to the jurisdiction of the English court who disregard an order freezing a defendant's assets overseas would not be in contempt of the English court. No authority was cited on this point, nor were the underlying principles analysed further. The point does not call for decision on this appeal, and it is preferable therefore not to express a view, necessarily obiter, on such an important point. For, even if giving notice to a third party abroad does not have the effect, so far as an English court is concerned, that the third party may be in contempt of court if he knowingly assists in a breach of the order of which he has been given notice, I consider that it is still not desirable to make an unqualified order freezing assets abroad. If, under English law, notice to a third party abroad has no effect on him, at any rate as to acts outside the jurisdiction, Vinelott J's order would seem, strictly, to be free of extra-territorial vice so far as such a party is concerned. Nevertheless, it would still be potentially misleading for a plaintiff to give notice of an English court order to an overseas third party without explaining that the third party was not affected by the order, and, even if such an explanation were given with the notice, there would remain a real risk of confusion. Moreover, there would remain a difficulty about overseas banks and others with branches in this country. The sensible course must be to include in the order itself a limiting provision as mentioned above, and thereby (a) ensure that the order does not purport to have an (unintended) extra-territorial operation and (b) remove the risk of third parties being confused about the effect of the order so far as they are concerned.

The European Judgments Convention
   The defendants placed some reliance on the exclusive jursdiction provision in art 16(5) of the convention. I was not persuaded by these submissions. The order, binding the defendants only, albeit in respect of assets in other countries, is not an order made in proceedings in which the judgment is sought to be enforced in those countries. It is a provisional or protective measure within art 24, with a strictly limited objective and scope. The enforcement of the judgment in other countries, by attachment or like process, in respect of assets which are situated there is not affected by the order. The order does not attach those assets. It does not create, or purport to create, a charge on those assets, nor does it give the plaintiff any proprietary interest in them. The English court is not attempting in any way to interfere with or control the enforcement process in respect of those assets.

Addendum
   Since writing the above I have had the advantage of reading a draft of Kerr LJ's judgment. He has raised a point on the making of Mareva orders with extra-territorial effect, both before and after judgment, in cases where such orders of an English court would be recognised and enforced by the court of the state in which the assets are located. I prefer to reserve my view on this interesting suggestion, which was not canvassed or explored in argument.

454

   However, having considered Kerr LJ's observations on Ashtiani v Kashi, one point which strikes me forcefully is this. I say nothing concerning the circumstances in which it will be proper for the court to make an order for the disclosure of information regarding assets situated abroad, either before judgment or after judgment. That is not a matter which arose, or was argued, on this appeal. But in all cases where such an order is sought or made the court will need to be alive to the importance of exercising control over the use of information disclosed compulsorily about assets situated overseas. It is obvious that such information can be used by a plaintiff in a manner that, in some circumstances, would be unjust to the defendant who has been compelled to disclose it. Dillon LJ gave some examples of this, in a pre-judgment case, in Ashtiani v Kashi [1986] 2 All ER 970 at 977-978, [1987] QB 888 at 901-902. I add the further example that, apparently, in some countries the mere presence of assets within the country is regarded as giving to the court of that country jurisdiction over the owner of the assets. As noted by Mr Lawrence Collins in his valuable article 'Provisional Measures, the Conflict of Laws and the Brussels Convention', [1981] Yearbook of European Law 249, in some such instances any judgment obtained is limited to the value of the locally-sited assets. In other instances the jurisdiction assumed from the presence of assets is unlimited in its extent. Thus an order for the disclosure of information, whether made before or after judgment, can easily have results not foreseen or intended by an English court. Hence the need for the court to control strictly the use made of the information overseas. In some cases it may be possible and proper, in advance of the disclosure of the information, for the court to spell out with sufficient precision in the disclosure order one or more uses which the plaintiff may make of the information in a particular country or countries. In other cases, where in advance of disclosure little is known of what assets a defendant has overseas, the court will need to have the information about the assets and be told of the overseas proceedings envisaged, before the court can decide what use it will permit to be made of that information in foreign proceedings, either in countries which are parties to the 1968 convention or elsewhere. Hence the need for the undertaking mentioned by Dillon LJ in Ashtiani v Kashi [1986] 2 All ER 970 at 978, [1987] QB 888 at 903.
   A second point follows from this. Once information has been disclosed it cannot be recalled. The disclosure of information is an irreversible step. The only means available to the English court to control the use made abroad of information disclosed concerning foreign assets is such control as the English court may have in the circumstances over the plaintiff to whom it has compelled the defendant to make disclosure. Thus, before making a disclosure order in respect of foreign assets, the court normally will need to be satisfied that, by reason of the plaintiff's continuing connection with this country or otherwise, the court has over the plaintiff a degree of control sufficient to ensure compliance with any orders it may make regarding the use of the information.

Solicitors: Theodore Goddard (for the defendants); Holman Fenwick & Willan (for the plaintiffs).