Freezing Injunction Application: Advice and Guidance

Understanding the legal landscape can be complex. Especially when it comes to making a freezing injunction application.

A freezing injunction is a powerful tool in litigation. It can prevent the disposal or dissipation of assets, providing security for claimants.

But what does the application process involve? How does the court decide whether to grant one? And what are the implications for both the applicant and the respondent?

Our panel of freezing injunction solicitors can assist those who seek a freezing injunction against a defendant who might be at risk of dissipating assets. They can also assist potential defendants in their cases if a claim is brought against them.

What is a Freezing Injunction?

A freezing injunction is a type of High Court Order granted under section 37 of the Senior Courts Act 1981. It is designed to prevent a party from disposing of or dealing with their assets.

This legal tool is often used in litigation. It’s particularly useful when there’s a risk that a defendant might dissipate their assets to avoid paying a potential judgment.

If a Court grants a freezing injunction, the assets that can be frozen vary widely. They can include bank accounts, property, shares, and even intellectual property rights. A Worldwide Freezing Order may be granted if a defendant is likely to have assets in different countries.

It is important to note that a freezing injunction doesn’t confer ownership of the assets to the applicant. It merely preserves the status quo until the court can make a final decision on the matter.

Freezing Injunction Application: Criteria

Obtaining a freezing injunction is not a straightforward process. The court must be convinced that it is necessary and convenient to grant such an order to preserve the assets in question.

The applicant must demonstrate a ‘good arguable case’. This means they must show that they have a strong claim against the respondent.

The court also considers the ‘balance of convenience’. This involves weighing the potential harm to the applicant if the injunction is not granted against the potential harm to the respondent if it is.

Another key factor is the risk of dissipation of assets. The applicant must provide solid evidence that the respondent is likely to dispose of their assets to avoid enforcement of a potential judgment.

Here are the main criteria for obtaining a freezing injunction:

• A good arguable case
• A real risk of dissipation of assets
• A balance of convenience in favour of granting the injunction
• Full and frank disclosure of all relevant facts by the applicant
• An undertaking in damages by the applicant

In some circumstances, the applicant may be required to provide a cross-undertakings in damages. This means that the applicant has promised to compensate the respondent if they suffer loss as a result of the freezing order if it is later determined that the order should not have been granted.

For assistance in making an application for a freezing injunction, contact us today.

Freezing Injunction Application Process

Applying for a freezing injunction involves several steps. It is a complex process that requires careful planning and execution.

The first step is to prepare an application notice. This document outlines the reasons for the application and the order sought.

The applicant must also prepare a witness statement. This statement provides evidence to support the application. It should detail the claim, the risk of dissipation, and the need for the injunction.

The application is usually made ‘without notice’. This means the respondent is not informed of the application until the injunction is granted. This is to prevent them from disposing of their assets before the injunction takes effect.

Once the application and witness statement are prepared, they are submitted to the court. The court then reviews the documents and decides whether to grant the injunction.

If the injunction is granted, it must be served on the respondent. The respondent is then bound by the order and must not dispose of their assets.

Here are the main steps in the application process:

1. Prepare the application notice and witness statement
2. Submit the documents to the court
3. If granted, serve the injunction on the respondent

It is important to note that this is a simplified overview. The actual process can be more complex and may vary depending on the specifics of the case.

The Court’s Role and Immediate Effects of a Freezing Injunction

The court plays a crucial role in the process of a freezing injunction. It is the court’s responsibility to review the application and decide whether to grant the injunction.

In making this decision, the court considers several factors. These include the strength of the applicant’s claim, the risk of dissipation of assets, and the balance of convenience between the parties.

If the court grants the injunction, it takes immediate effect. The respondent is prohibited from disposing of their assets up to a certain value. This value is usually the amount claimed by the applicant.

The injunction can have a significant impact on the respondent. It can affect their ability to conduct business and manage their finances. It’s therefore crucial for the court to carefully consider the implications before granting an injunction.

Scope and Duration of Freezing Injunctions

The scope of a freezing injunction can vary greatly. It can apply to all of the respondent’s assets or only specific ones. The court decides this based on the nature of the case and the assets involved.

Freezing injunctions can also have a wide territorial scope. They can apply domestically or worldwide, depending on the location of the respondent’s assets. This is particularly relevant in cases involving international businesses or individuals with assets in multiple jurisdictions.

The duration of a freezing injunction is typically until the conclusion of the trial. However, the court can extend or shorten this period based on the circumstances. Key factors include the progress of the case and the conduct of the parties.

Here are some key points to remember about the scope and duration of freezing injunctions:

• The scope can be all-encompassing or specific to certain assets.
• The injunction can apply domestically or worldwide.
• The duration is typically until the end of the trial but can be adjusted.
• The court considers the nature of the case and the conduct of the parties when determining the scope and duration.

Assets Subject to Freezing Injunctions

A wide range of assets can be subject to a freezing injunction. These include bank accounts, real estate, shares, and other forms of property. The key factor is that the asset must have value and be capable of being sold or transferred.

It’s important to note that the freezing injunction does not give the applicant ownership of the assets. It merely prevents the respondent from disposing of them. The assets remain in the respondent’s possession, but they cannot be sold, transferred, or otherwise dissipated.

In some cases, the court may also freeze assets that are held by third parties. This can occur if the court believes the respondent may try to transfer assets to others to avoid the injunction.

In summary, any asset of value can be subject to a freezing injunction. The court’s primary concern is to prevent the dissipation of assets that could satisfy a potential judgment.

Respondent’s Rights and Challenging a Freezing Injunction

The respondent in a freezing injunction has certain rights. They can challenge the injunction, apply for it to be varied or discharged, and defend themselves against the underlying claim.

Challenging a freezing injunction often involves questioning the applicant’s ‘good arguable case’. The respondent may argue that there is no real risk of asset dissipation, or that the balance of convenience does not favour the injunction.

The respondent can also apply for the injunction to be varied or discharged. This usually requires showing a change in circumstances, or that the injunction is causing undue hardship. The court will consider the respondent’s needs for living expenses and legal costs.

In addition, the respondent can defend against the underlying claim. This involves disputing the applicant’s case on its merits. The freezing injunction does not prejudge the outcome of the main dispute.

In conclusion, while a freezing injunction can be a powerful tool, it is not without checks and balances. The respondent’s rights ensure that the process is fair and just.

Consequences of Breaching a Freezing Injunction

Breaching a freezing injunction can have serious consequences. The respondent may be held in contempt of court, which can lead to fines or even imprisonment.

Moreover, the breach can also affect the outcome of the underlying dispute. The court may view the breach as evidence of the respondent’s intent to dissipate assets, strengthening the applicant’s case.

In summary, it is crucial for respondents to comply with the terms of a freezing injunction. Non-compliance can lead to severe penalties and negatively impact the respondent’s position in the main dispute.

Importance of Full and Frank Disclosure

When applying for a freezing injunction, the applicant must provide full and frank disclosure. This means they must present all relevant facts to the court, including those that may weaken their case.

Failure to provide full and frank disclosure can lead to the injunction being set aside. It can also damage the applicant’s credibility in court, affecting the outcome of the main dispute.

In conclusion, full and frank disclosure is a crucial aspect of the freezing injunction application process. It ensures fairness and allows the court to make an informed decision.

Costs, Financial Implications, and Ethical Considerations

Applying for a freezing injunction can be costly. The applicant must cover legal fees, court costs, and potentially, the cost of an undertaking in damages. This is a promise to the court to pay for any loss suffered by the respondent if the injunction was wrongly granted.

The financial implications of a freezing injunction can be significant for both parties. For the respondent, their assets are frozen, potentially affecting their business operations. For the applicant, there’s the risk of paying substantial damages if the injunction is later found to be unjustified.

Ethical considerations also come into play. The applicant must act in good faith, not using the injunction as a tool of harassment or to gain an unfair advantage in litigation. Misuse of freezing injunctions can lead to penalties, including costs sanctions.

Moreover, legal practitioners involved in freezing injunction applications have ethical obligations. They must ensure they act in the best interests of their client, while also upholding their duties to the court.

In conclusion, the costs, financial implications, and ethical considerations surrounding freezing injunctions are complex. It’s crucial for parties to seek legal advice before proceeding with such applications.

Why choose Expert Commercial Law?

Our panel of freezing injunction solicitors can assist parties in taking legal action against a defendant who might be at risk of dissipating assets. They can also assist potential defendants in their cases if a claim is brought against them.

Our panel firms provide guidance throughout the freezing injunction application process and can help protect their clients’ rights and interests. They can also help evaluate the strength of the case and advise on the best course of action. If you need help with a freezing injunction order, then please get in touch with us today.

Our solicitors also help with commercial claims, such as partnership disputes, fraud claims and CCJ removal.

Please note we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a freezing injunction query or a commercial law case, we will pass your case on to a panel firm in return for a fee from our panel firms. We will never charge you for passing your case to a panel firm.