Freezing Injunctions - All you need to know

A freezing injunction, also known as a Mareva injunction or a freezing order, is a legal remedy and interim injunction issued by the court that restrains a party from disposing of or dealing with its assets in a way that might frustrate the enforcement of a potential judgment. Where this is a real risk of dissipation of assets, a freezing injunction prevents a defendant from dissipating any assets that could be used to satisfy a judgment in favour of the claimant.

Freezing injunctions are typically sought in cases involving fraud, where there is a concern that the defendant may attempt to move or hide assets to avoid paying damages or other legal obligations.

To obtain a freezing injunction, a claimant must show that there is a good arguable case on the merits of the underlying claim. The court has the discretion to grant a freezing order and will carefully consider the evidence before making its decision. 

Once a freezing injunction is granted, it usually applies to all of the defendant’s assets, whether they are located within England and Wales or overseas (either a domestic freezing injunction or a worldwide freezing order). The defendant must comply with the terms of the order and refrain from disposing of or dealing with their assets beyond certain specified limits. Failure to comply with a freezing injunction can result in contempt of court proceedings, which can lead to fines or imprisonment.

Freezing injunctions are complex legal measures that require careful preparation and skilled legal representation. If you believe a freezing injunction may be relevant to your situation, then you must act quickly. Our team at Expert Commercial Law can provide you with an experienced and knowledgeable freezing injunction solicitor who specialises in this area of the law.

Applying for a freezing injunction

Making an application for a freezing injunction is typically done through the court system. A general overview of the application process is as follows:

  • Seek Legal Advice:

Before applying for a freezing injunction, it is crucial to seek legal advice from a solicitor or barrister experienced in the relevant area of law. They can assess the circumstances of your case, advise on the likelihood of success, and guide you through the process.

  • Gather Evidence:

To support your application, you’ll need strong evidence demonstrating that there is a real risk that the defendant will dissipate their assets. This evidence may include financial records, communications, or any other relevant documents that support your claim.

  • Draft an Application Notice:

Your solicitor will help you draft an application notice. This is a formal document that sets out the details of your case, the orders you are seeking (including the freezing injunction), and the legal basis for your application. It should be accompanied by witness statements and other supporting documents.

  • Issue Court Proceedings:

The application notice and supporting documents need to be filed with the court to initiate legal proceedings. The court will then consider the application, and a hearing date will be set.

  • Attend Court Hearing:

Attend the court hearing, where the judge will consider your application. The defendant will also have an opportunity to present their case. It’s essential to be prepared to address any legal arguments and questions from the judge.

  • Court Decision:

The judge will decide whether to grant the freezing injunction based on the evidence and legal arguments presented. If granted, the freezing injunction will specify the assets to be frozen and any other relevant conditions. The court has the power to grant an injunction under section 37 of the Senior Courts Act 1981.

  • Serve the Order:

Once the freezing injunction is granted, it needs to be served on the defendant. An order is also generally accompanied by a penal notice. The defendant will then be legally bound by the terms of the order.

  • Enforce the Order:

If the defendant breaches the freezing injunction, there are legal remedies available to enforce compliance. This may include contempt of court proceedings.

 

What are the requirements for a freezing injunction?

To obtain a freezing injunction (or Mareva injunction), certain requirements must generally be met. 

The applicant must have a good, arguable case on the merits of the underlying claim. This means that there must be a reasonable likelihood of success in the main legal action. Similarly, the applicant must show that there is a real risk that the respondent (the party against whom the freezing injunction is sought) will dissipate or dispose of their assets with the intention of frustrating the enforcement of a judgment.

From this, the court must be satisfied that, without the freezing injunction, there is a risk that any judgment obtained by the applicant would not be enforceable because the respondent might have moved or disposed of their assets.

The applicant has a duty to make full and frank disclosure of all material facts, including those that may be detrimental to their case. Failing to do so could result in the injunction being set aside. The applicant may also be required to provide undertakings to the court. Undertakings are promises to the court to compensate the respondent for any losses suffered as a result of the freezing injunction if it is later determined that the injunction should not have been granted.

The claimant may be required to provide and disclose all relevant information about the assets of the respondent. This could include bank account details, property ownership, and other relevant financial information.

The court will then consider the balance of convenience. This involves weighing the potential harm to the respondent if the freezing injunction is granted against the potential harm to the applicant if the injunction is not granted. It must be ‘just and convenient’ to grant the freezing injunction. 

In some cases, a freezing injunction may be sought without notice to the respondent (ex parte). However, the applicant has a duty to make full disclosure to the court, even if the respondent is not initially informed.

It’s important to note that the requirements for obtaining a freezing injunction can be complex, and as such, it is highly recommended you seek the expertise of a specialist freezing injunction solicitor to assist you with your case. 

Enforcing a freezing injunction

Enforcing a freezing injunction involves ensuring that the respondent complies with the terms of the court order. If the defendant breaches the freezing injunction, there are legal remedies available to the claimant. Enforcement measures can vary, and the court has the authority to take appropriate action.

If the respondent breaches the freezing injunction, the applicant can initiate contempt of court proceedings. Contempt of court arises when there is a willful disobedience of a court order. If the court finds the respondent in contempt, it can impose penalties, including fines or imprisonment.

The court may also order the seizure of assets that are subject to the freezing injunction. This could involve appointing a receiver or taking other measures to secure and preserve the assets. The court may issue a writ of control or a writ of sequestration, allowing the enforcement officer to seize and sell the respondent’s assets to satisfy the judgment.

In some cases, if the respondent is an individual, the applicant may initiate bankruptcy proceedings. If the respondent is a company, winding-up proceedings may be pursued. These actions can lead to the sale of assets to satisfy the judgment.

If the freezing injunction was granted on an ex parte basis, the applicant may be required to provide cross-undertakings in damages. This means that the applicant has promised to compensate the respondent for any losses suffered as a result of the freezing order if it is later determined that the order should not have been granted.

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 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 disputesfraud 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. 

 

 

 

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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 commercial law case, we will pass your case onto a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm. 

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