Background
The Australian Securities and Investments Commission (ASIC) obtained a travel restraint order against Mr Ferras Merhi on 17 July 2025 under s 1323 of the Corporations Act, during an investigation into his conduct. The order prohibited Merhi from leaving Australia without court consent and required him to surrender his passport. The order was extended by consent on multiple occasions, with the most recent extension set to expire on 11 November 2026.
In June 2026, Merhi applied to vacate the travel restraint order entirely, or alternatively to obtain a carve-out permitting him to travel to Saudi Arabia and Dubai for up to two weeks. ASIC opposed the application. By the time of the hearing, ASIC had filed an amended statement of claim alleging that Merhi had contravened provisions of the Corporations Act and the Australian Securities and Investments Commission Act 2001 (Cth), seeking disqualification orders and pecuniary penalties.
The Court’s Holding
Justice Moshinsky vacated the travel restraint order, finding that the statutory prerequisites for maintaining such an order were no longer satisfied. Although ASIC’s civil proceeding against Merhi remained on foot (and possibly an ongoing investigation), the court could not be satisfied that the travel restraint was “necessary or desirable for the purpose of protecting the interests of a person to whom [Merhi] is liable, or may be or become liable, to pay money,” as required by s 1323(1)(c) and (a) of the Corporations Act.
The court noted that ASIC was unable to identify any specific basis upon which the travel restraint remained necessary. ASIC confirmed that Merhi was not required for further examinations, and it was not apparent how the restraint protected the interests of potential creditors or claimants. The judge stated: “While ASIC’s investigation may be still on foot, there is no evidence that Mr Merhi is needed for further examinations” and could point to no concrete reason why the order served its protective purpose.
Key Takeaways
- Travel restraint orders under s 1323 of the Corporations Act cannot be maintained indefinitely; they must remain necessary and desirable to protect aggrieved persons throughout the proceeding.
- The mere existence of civil proceedings is insufficient to justify a travel restraint—ASIC must affirmatively demonstrate the specific necessity for the order.
- Courts will scrutinize the connection between the restraint and the protection of potential claimants; vague assertions of ongoing investigation are not enough.
- Failure to identify persons to whom the defendant may be liable or to show how the restraint protects their interests may support vacatur.
Why It Matters
This judgment reinforces that statutory powers to restrain travel in enforcement proceedings are not self-executing indefinitely. Even where a regulator like ASIC maintains an active civil proceeding against a defendant, it must establish concrete reasons why the restraint remains justified. The decision protects defendants’ liberty interests while preserving the court’s ability to maintain restraints where genuine necessity exists.
For practitioners and regulated entities, the case illustrates that travel restraint orders are not permanent fixtures once granted. A defendant may move to vacate or vary such orders by demonstrating changed circumstances or, as here, by showing that ASIC cannot point to ongoing necessity. The burden falls on the regulatory applicant to justify continued restrictions, not on the defendant to show why they should be removed.