What is a freezing injunction?
A brief summary: a freezing injunction is a court order which prevents a party from dissipating its assets. It essentially ‘freezes’ the Respondent’s asset and is obtained for the purpose of protecting assets which may be used to satisfy a judgment sought from the court.
What is required to apply for a freezing injunction (“FI”)?
There are a number of requirements that need to be met, in order for an Applicant to apply for a FI, including:
- There must be ‘a good arguable case’, which the English court has jurisdiction over the substantive cause of action);
- There is ‘a real risk of dissipation’ of assets;
- The Respondent has sufficient assets;
- That it is just and convenient for the court to grant a freezing injunction;
- The Applicant must give an undertaking to the court to pay damages to the Respondent if it is later established that the FI should not have been granted.
The above requirements are dealt with in our article: Freezing Orders/Injunctions - Saunders Law.
A FI can be made and obtained urgently, without putting the Respondent on notice, and can be an effective measure to protect the assets that may be used to satisfy a judgment given in the Applicant’s favour.
However, it is an expensive order to obtain. As mentioned above, a substantive ‘cause of action’ is required and therefore a claim will need to be issued in order to make an application for such order; the application cannot be made on its own. There is a significant amount of work that is frontloaded.
Where an application is made without notice, there is an onus on the Applicant to ensure that full and frank disclosure is provided – that is to ensure that court is provided with information and documentation which would support the Respondent’s position if it had the opportunity to oppose. This is because a FI is a serious restriction on a person’s / a business’ liberty to deal with their assets as they wish.
The Applicant must provide an undertaking to pay damages to the Respondent if it is later found that the FI should not have been granted (e.g. after conclusion of the substantive claim). This provides the Respondent with some security that, if they succeed in the underlying claim and have suffered loss because of the restrictions on their assets, they can recover losses from the Applicant.
We are adept at advising on freezing injunctions, and these ought to be considered both from a legal standpoint and commercially/economically. There are many considerations to take into account when seeking to bring an application or indeed oppose an application, not just those contained in this article, which is for general guidance only.
Please get in touch with our team by making an enquiry online, or call us on 020 7632 4300 to discuss bringing or opposing an application for a freezing injunction.