Last August, the Uniform Law Commission, after two years of study and drafting, proposed uniform law to provide statutory authority for courts to issue in personam asset-freezing orders. Known to common-law jurisdictions around the world as "Mareva injunctions," these interim orders enjoin transfers of assets that would otherwise preclude a party from having a pool of money at the end of the case with which to satisfy its judgment.
The American Bar Association House of Delegates endorsed the uniform legislation at a meeting last month. We urge our governor and Legislature to work with New Jersey’s uniform law commissioners and Law Revision Commission to adopt this important legislation.
In 1999, the U.S. Supreme Court, in Grupo Mexicano de Desarrollo v. Alliance Bond Fund, held in a 5-4 decision that courts lack authority to enjoin transfers of assets at the outset of a case in purely monetary cases, as distinct from equitable claims. Certain states followed this line of reasoning. In other jurisdictions, courts were issuing such orders without calling them "Mareva injunctions." There was no mechanism for enforcement of foreign-issued injunctions or even such nonfinal orders as between states, apart from general considerations of comity or reliance on Restatements of law. The uniform law provides such mechanisms comparable to those found in the enforcement of judgments acts in New Jersey relating to judgments from other states and other countries.
The new legislation not only provides the statutory authority for state courts, but also enables federal courts in diversity to apply the state law substantive remedy in the same way federal courts look to state attachment rules. The standards for issuance of the extraordinary remedy are strict. It is not a pro forma application and balances the rights of third parties, debtors and creditors. Issuance of the order requires a finding of intent to dissipate assets. This requirement is consistent with the New Jersey public policy expressed by courts in favor of debtors paying their judgments. The uniform law removes the confusion and inconsistency that now dominates current practice, and brings the United States into conformity with every other significant common-law jurisdiction.
The analog age has passed. In our digital era, ownership of assets changes with the push of a button. Fraud does not recognize state and national borders. The uniform law is one whose time has come to facilitate meaningful justice for commercial entities, from "mom and pop" to the global behemoths, so that judgments really mean more than the paper on which they are written.