Freezing Orders: My reflections from the front line

While the remedy is familiar to most commercial litigators, it still strikes me just how intricate and high-stakes these applications (or defending these applications) can be.

The bar is high, and the consequences for parties and even third parties are real.

I have compiled this summary as a practical reference point, with key principles and insights from recent experience.

A freezing order’s purpose is to prevent the dissipation of assets, ensuring that when a court eventually renders judgment, there will be sufficient assets available to satisfy that judgment.

It is crucial to understand what a freezing order is not: it is not designed to provide security for an applicant's claim or to give them any advantage in the underlying litigation. Instead, it is purely about preserving the status quo and protecting the administration of justice.

Courts do not grant freezing orders lightly. Given their drastic nature, applicants must satisfy several stringent requirements:

1. A Good Arguable Case

The applicant must demonstrate more than a barely arguable case, though they do not need to prove a better than 50% chance of success. This relatively modest threshold reflects the interim nature of the remedy.

2. Real Risk of Dissipation of Assets

This is often the most challenging element to establish. The court must be satisfied there is a substantial danger that assets might be removed, disposed of, or diminished in value. Importantly, you do not need to prove the defendant intends to frustrate judgment, the risk needs to be real and substantial, not merely speculative.

3. Precision in Valuation

Applicants must establish with some precision the value of their prospective judgment. Courts will not unnecessarily tie up assets beyond what's reasonably required to satisfy the potential judgment.

Balancing Competing Interests

The court must weigh the balance of convenience, which typically favours the plaintiff when jurisdictional requirements are met. However, several factors can tip this balance:

• Delay in bringing the application may work against the applicant

• Lack of candour in materials, particularly in ex parte applications, can be fatal

• The applicant's ability to provide adequate undertakings as to damages is crucial

Living with a Freezing Order

A well-crafted freezing order includes exceptions for legitimate purposes, recognising that life and business must continue. These typically include:

• Ordinary living expenses (maintaining reasonable lifestyle)

• Reasonable legal expenses

• Ordinary course of business dealings

• Discharge of bona fide pre-existing contractual obligations

Compliance Imperative

Non-compliance with a freezing order can result in contempt of court charges, which must be proven beyond reasonable doubt. The terms must be clear and unambiguous, and the alleged contemnor must have knowledge of the order's terms.

Notably, even third parties who knowingly assist in breaching a freezing order may face contempt charges, making compliance a matter of concern for banks, accountants, and other professionals who deal with frozen assets.

Looking Forward

Freezing orders represent a delicate balance between protecting legitimate interests and avoiding unnecessary interference with commercial activities.

The key is recognising that freezing orders are not about gaining tactical advantage, they are about preserving the integrity of the judicial process and ensuring that justice, when done, can be meaningfully enforced.

As always, any thoughts or comments are welcome.