By Iva Karen
KUALA LUMPUR, Dec 17: Malaysian courts require clear and convincing documentary proof before determining that a “good arguable case” exists against a bank, particularly where the bank itself is directly targeted in an application for a Mareva injunction, say legal experts.
Lawyer Vinayak Sri Ram said mere assertions in affidavits or court filings, without corroborating evidence, are generally insufficient to warrant the granting of a freezing order against a banking institution.
“There is no fixed list of documents that will automatically establish a good arguable case. Each matter must be assessed on its own facts and evidence,” he said.
He explained that where a bank is named not simply to ensure compliance with an order against the main defendant, but as a substantive respondent to the Mareva application, the court will be more reluctant to grant a Mareva injunction.
“At a minimum, there must be documentary evidence demonstrating one of the exceptional circumstances that justify such an injunction — such as proof that the bank acted on instructions it knew to be dishonest, that the instructions were intended to facilitate dishonest conduct, or that the bank was involved in a breach of trust,” he said.
In the absence of such proof, Vinayak said, courts are unlikely to find that a good arguable case has been established against a bank.
Meanwhile, lawyer Datuk J. Shamesh, sharing similar views, said that a high evidentiary threshold is required before a court grants a Mareva injunction against a bank.
He said, courts typically examine whether repeated red-flag transactions were allowed to continue despite internal compliance alerts or regulatory warnings, and whether the bank authorised, directed, or exercised control over improper transfers, rather than merely processing customer instructions.
“A Mareva injunction is an extraordinary remedy that freezes assets to prevent dissipation pending trial, and it is rarely issued against financial institutions without strong, objective evidence. Judges generally expect documentary and contemporaneous proof showing that a bank acted beyond its ordinary role as a service provider and assumed fiduciary responsibilities,” he said.
“Such evidence may include account mandates, escrow or trust agreements, as well as internal communications demonstrating knowledge of irregular or fraudulent transactions.”
He also noted that courts also assess whether compliance failures amount to conscious disregard or wilful blindness, rather than mere negligence.
“Mere suspicion, or the fact that disputed funds passed through a bank account, is insufficient to justify a Mareva injunction. Without proof of knowledge, participation, or wilful blindness, such an order risks unfairly imposing liability on banks before trial,” he said.
–WE