What is a freezing injunctionfreezing injunction: previously called a mareva injunction; ...?
Freezing injunctions, formerly known as Mareva injunctions are used in both commercial litigationlitigation: the bringing of a lawsuit or legal claim in cour... and civil litigationlitigation: the bringing of a lawsuit or legal claim in cour.... A freezing order may be required to prevent a party from disposing of assets or moving them outside of England and Wales until a claim has been decided by the court.
The freezing order is an interim remedy, ordered by the Court, which may be made against a potential defendantdefendant: the respondent against whom court proceedings are... prior to a case taking place, or at any point during litigationlitigation: the bringing of a lawsuit or legal claim in cour..., where a claimant can show that a defendant is likely to dissipate his assets before trial of the claim.
Claimants in commercial litigation cases may have good prospects of success at trial and obtaining a substantial award of damagesdamages: in litigation and dispute resolution, financial com.... This may all be moot however, if the defendant does not have the capacity to pay those damagesdamages: in litigation and dispute resolution, financial com..., as well as the legal costs and interest often awarded to a successful claimant.
Careful investigations on a defendant’s asset holdings and ability to pay damages must therefore be conducted at the outset of litigation, to ensure that a claimant is not throwing good money after bad.
Even where those investigations reveal adequate asset holdings however, what is to stop a defendant from disposing of assets to frustrate the claimant?
This is where a freezing injunction can be effectively deployed. Once in place, so long as the assets frozen are of sufficient value to meet the damages claimed, plus legal costs and interest, the claimant can be relatively confident that the often time consuming litigation process will not end in a hollow judgment.
How to obtain a freezing injunctionfreezing injunction: previously called a mareva injunction; ...
An application for a freezing order must be made to the High Court or County Court by the claimant. These types of injunctions will usually be made by a Judge on a “without notice” basis, meaning that the other party will not be present at the hearing, and will be unaware of the application being made.
As the defendants will be unaware of the hearing taking place, the claimant has a duty of full and frank disclosure. This means that the claimant is compelled to disclose all relevant information to the court, including material which could be unfavourable to the application.
The Court has wide discretion when it comes to granting this type of interim injunctive relief. Claimants seeking freezing injunctions must, therefore, be able to show:
- A good arguable case. Written evidence, in the form of affidavits, must be placed before the court showing that the claimant’s case is a good and arguable one.
- Risk of dissipation. The affidavit evidence must show that the defendant holds assets and is likely to move them out of the jurisdiction or dispose of them. Courts will be more likely to find that there is a risk of dissipation and grant the injunction where the allegations against the defendant involve fraud or dishonesty, or where the defendant has actually threatened to dispose of assets.
When making an application, the claimant will usually be required to agree to compensate the defendantdefendant: the respondent against whom court proceedings are... in the circumstance that the court finds at a later date that there was no legitimate reason for the freezing injunctionfreezing injunction: previously called a mareva injunction; .... This is known as an undertakingundertaking: a legal promise to do some positive act, or to ... in damagesdamages: in litigation and dispute resolution, financial com....
Which assets can be frozen?
A freezing injunctionfreezing injunction: previously called a mareva injunction; ... will cover assets for which a judgment can be attached. Examples of assets can include land, funds held in bank accounts, sharesshares: a unit in a company that quantifies what portion of ..., bonds, or vehicles. The order may be unlimited, freezing all of the defendants assets. Some orders, however, may be limited to:
- the total value of the claim, this type of injunctioninjunction: a type of remedy that a court may order in comme... is also known as a “maximum sum order”
- a specific asset ( usually with a value greater than or equal to the value of the case)
A domestic freezing injunctionfreezing injunction: previously called a mareva injunction; ... will apply to assets held within England and Wales only. Worldwide freezing injunctions can be granted to cover assets outside of England and Wales. Some injunctions may be limited in certain jurisdictions.
What to do if a freezing injunctionfreezing injunction: previously called a mareva injunction; ... has been made against you
For defendants who are the subject of a freezing injunction obtained against them at a “without notice” ex parte hearing, being served with the court documents can come as a shock to say the least. Not only will the court’s order contain a Penal Notice warning of contempt of court or imprisonment, but the order will usually require provision of detailed information about a defendant’s assets within a short period of time.
It is important for defendants in these situations to understand that they are entitled to be fairly heard by the court, and potentially have the freezing injunction lifted at the next court hearing. Affidavit evidence in reply must be filed which contradicts the claimant’s evidence that there is a good arguable case and a risk of dissipation of assets.
South Bank Legal: Freezing injunctionfreezing injunction: previously called a mareva injunction; ... solicitors
The process of obtaining a freezing order can be complex and usually requires specialist legal advice and assistance. Our London litigation solicitors frequently act in cases where freezing injunctions are obtained.
If you require advice on the matters discussed above, regardless of whether you are a claimant or defendantdefendant: the respondent against whom court proceedings are..., you can contact South Bank Legal today for a confidential discussion. We can be contacted via email at info@southbanklegal.com or telephone on 0203 1266 584.
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