Snapshot: Freezing Injunctions in the Isle of Man in aid of foreign proceedings

The ability in offshore jurisdictions for claimants to obtain injunctive relief in aid of foreign proceedings has been a rather high-profile topic following the recent British Virgin Islands decision in the Eastern Caribbean Court of Appeal in Broad Idea International Limited v Convoy Collateral Limited (BVIHCMAP2019/0026) to overrule Black Swan Investment ISA v Harvest View Limited (BVIHCV 2009/0399). 

The BVI Court of Appeal decision in Broad Idea caused surprised amongst many as it held that the decision in Black Swan (which had regularly been applied on previous occasions as common law authority in the BVI for the Court having jurisdiction to grant freestanding freezing injunctions without the need to bring a substantive claim in the jurisdiction) was wrongly decided, and further (with the Court of Appeal applying what it considered the binding Privy Council decision in Mercedes-Benz AG v Leiduck [1996] AC 284), that Courts in the BVI do not to have jurisdiction under common law to grant freestanding freezing injunctions in aid of foreign proceedings.

The jurisdiction to obtain relief in the Isle of Man

In contrast to the BVI, the situation in the Isle of Man is well-settled. There has long been statutory jurisdiction for the Isle of Man High Court of Justice to grant injunctive relief in aid of foreign proceedings, whether before or after proceedings in that jurisdiction have actually commenced.  In this regard, section 56B of the High Court Act 1991 states:

The High Court shall have power to grant interim relief where proceedings have been or are to be commenced in a country or territory outside the Island.

The position in respect of obtaining freezing injunctions in the Isle of Man is similar to the position in England. As such, generally-speaking to succeed in obtaining a freezing injunction a claimant must satisfy the High Court of each of the following:

  1. That proceedings have or are to be commenced in a country or territory outside of the Isle of Man.
  2. There must be a good arguable case on the merits. This means a case “which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50 per cent chance of success” (as per Ninemia Maritime Corp v Trave Schiffahrtgesellschaft mbH (The Niedersachen) [1983] 1 WLR 1412).
  3. That there is a real risk that the defendant may dissipate assets and that there is solid evidence of that risk.
  4. There must be assets within the jurisdiction.
  5. That it is just and convenient to grant the freezing injunction and that it is not inexpedient.

It is also the case in the Isle of Man that with applications of this nature there is a duty upon the claimant to make full and frank disclosure, a duty of fair presentation and also to provide a cross undertaking in damages, being, a legally binding promise to the court to compensate the respondent to an injunction for any loss or damage they might suffer if the High Court later finds that the injunctive relief should not have been made and has caused loss.

DQ has a market leading Dispute Resolution team, which has experience of obtaining injunctive relief (including on an urgent without-notice basis in aid of foreign and/or domestic proceedings). Should you require any further information or assistance please do not hesitate to contact Mark Emery or Leanne McKeown.