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What is a Freezing Injunction?

Posted by: Gherson Litigation

One partial solution to concerns regarding the practical enforceability of a judgment is provided by the rules on the recognition and enforcement of judgments.

However, the mobility of assets may frustrate the enforcement. The English courts, therefore, developed a remedy to protect the interests of the claimant and the effectiveness of English Courts’ jurisdiction – a freezing injunction.

An asset freezing injunction, or ‘the Mareva injunction’, is an order directed against a party requiring them not to dissipate assets or remove them from a particular jurisdiction. An asset freezing injunction prevents a party from disposing of its assets and frustrating enforcement of any existing or potential future judgment.

Nature of Freezing Order

Assetfreezing injunctions are used in domestic cases, however, this form of remedy has a higher importance in international commercial litigation. The reason is that international parties are generally more interested and have the ability to move assets between jurisdictions. What is a Freezing Injunction

The freezing injunction claim does not give any title to the frozen property, nor does it make the claimant entitled to any additional damages from the defendant if the order is breached. The frozen assets may or may not be directly involved in the proceedings. Nevertheless, the court does not have direct powers over such assets.

A standard freezing injunction is non-proprietary and restrains a proposed defendant from disposing of, dealing with, or diminishing his assets up to a certain value in the jurisdiction, or removing those assets from the jurisdiction.

Who is subject to a Freezing Injunction?

A freezing injunction may be made against a defendant (or a potential defendant). The assets may belong to the defendant alone, held on trust by a third party for the defendant’s benefit, or jointly owned with a third party. Therefore, a freezing order may be also obtained against a third party holding the assets on the defendant’s behalf.

When should an application for a Freezing Injunction be made?

An application for a freezing injunction is usually made prior to court proceedings being issued. The rationale behind making an application prior to proceedings is that the defendant can dispose of the assets before a judgment is obtained.

Nevertheless, a freezing injunction can be sought during or after the proceedings in order to prevent the disposal of assets before the enforcement of the judgment.

An asset freezing injunction can also be given in support of arbitration proceedings, where the seat of the arbitration is in England. The English Courts are quite liberal in granting freezing orders to aid enforcement of arbitral awards, especially in international commercial arbitration.

How Gherson can assist

Gherson litigation team has considerable experience conducting your arbitration, litigation and freezing orders. If you have a potential claim, please contact us to discuss potential funding options.

For any queries about your specific circumstances, please do not hesitate to contact us for advice, send us an e-mail, or alternatively, follow us on TwitterFacebook, or LinkedIn to stay-up-to-date.

 

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2021

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