A claimant can win a substantial case at trial and still be left with nothing of practical value if the defendant’s assets have been moved, sold, spent or placed beyond reach in the meantime.
However, the Courts have a powerful, exceptional answer to that risk: the freezing injunction. This is often still called a Mareva injunction, it does not decide who will ultimately win the dispute but instead, it preserves the position while the court determines the underlying claim.
For a broader explanation of the application process and the evidence required, read our guide to obtaining a freezing order where a debtor may be hiding or moving assets.
In a recent high-value commercial matter, we acted in connection with ongoing proceedings where a without-notice freezing order had been obtained in the Business and Property Courts. The order restrained dealings with assets up to £5.63 million and required rapid disclosure of assets worldwide. Its scope extended across property, corporate interests, cryptocurrency and other identifiable assets.
Freezing orders: powerful, but far from automatic
The court’s procedural power is found in CPR Part 25. It can grant a freezing injunction preventing a party from removing assets from England and Wales or from dealing with assets wherever they are located.
The remedy originated in the Court of Appeal’s decision in Mareva Compania Naviera SA v International Bulkcarriers SA [1975]. The court recognised that where a claimant has a legal right and there is a genuine danger that assets will be disposed of before judgment, an injunction can prevent the defendant frustrating the court process.
That does not mean a freezing order is a tactical shortcut in an ordinary commercial dispute. The applicant must establish a good arguable case on the merits, a real risk of unjustified dissipation which would prevent a future judgment being met, and that the order is just and convenient in all the circumstances.
The court is therefore being asked to exercise a jurisdiction of considerable force before it has determined liability at trial. The application must be approached with precision, fairness and a clear understanding of the safeguards owed both to the applicant and to the respondent.
Why speed and secrecy can matter
A freezing application may be made without notice where the court considers that there are good reasons for not giving notice.
CPR r 25.3 requires supporting evidence, unless the court directs otherwise, and that evidence must explain why notice has not been given. CPR r 25.8 further prescribes the steps for a without-notice hearing, including timely filing, notification of the respondent unless the applicant reasonably believes secrecy is essential, and taking and serving a note of the hearing.
Unless the court orders otherwise, an injunction granted without notice must include a return date for a further hearing at which the respondent can attend under CPR r 25.9(3)(c).
A freezing-injunction application must be supported by evidence on affidavit or affirmation under CPR r 25.13. The approved model order is the starting point: CPR r 25.14 requires its wording to be used, modified as appropriate, with any modifications drawn to the judge’s attention at the application hearing.
Anyone affected by an order must act quickly. Our separate guide explains what to do if you have been served with a freezing order, including immediate compliance, disclosure and potential variation or discharge.
We assisted with the practical management of the order and the litigation that followed: coordinating the immediate procedural steps, monitoring compliance, handling service and communications, and helping the client manage the commercial consequences of a live asset-preservation order.
The order does not take ownership away
A common misunderstanding is that a freezing injunction confiscates assets. It does not. Its purpose is to prevent assets being dissipated before judgment, so that a successful claimant is not left with a judgment that cannot be satisfied.
In Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd’s Rep 509, the shipowners sought to preserve money held by the defendant charterers at a London bank after the charterers failed to pay hire and indicated that they had no alternative but to stop trading. The Court of Appeal continued the injunction restraining the defendants from disposing of the assets or moving them out of the jurisdiction until trial, judgment or further order, with liberty to apply. The concern was that the money might otherwise disappear before the shipowners could obtain judgment.
The protection was therefore preservative, not confiscatory: the court did not direct that the money be paid to the shipowners. The defendants remained entitled to apply to discharge the injunction.
Disclosure: the order’s intelligence-gathering function
Freezing relief is often as much about information as restraint, but both serve the same protective purpose: preserving the effectiveness of a future judgment. Broadly, the claimant must show a good arguable case for a money judgment, assets against which it could be enforced and a real risk that, without an injunction, the respondent will deal with assets outside the ordinary course of business in a way that impairs their availability or value and leaves the judgment unsatisfied. The possibility that a defendant might sell or move assets is not, by itself, enough. The court must also consider whether granting relief is just and convenient.
Where relief is sought without notice, the applicant owes the court a duty of full and frank disclosure and fair presentation. This requires reasonable enquiries and disclosure of all material matters, including adverse evidence, significant legal or procedural difficulties and arguments the respondent could reasonably be expected to advance. Simply placing documents before the judge without highlighting important points is insufficient. Material non-disclosure can lead to the injunction being discharged, even where the underlying claim is strong, although the court retains discretion to continue or regrant relief in the interests of justice.
The applicant’s duty is distinct from the respondent’s obligation to provide asset information under the order. A respondent may be required to identify relevant assets, their location, value and the identity of those owning or controlling them. That information can be decisive: it helps identify the assets to which the restraint applies, enables compliance to be monitored and informs whether further protective measures are needed to preserve assets available for enforcement. Disclosure is nevertheless ancillary to making the freezing relief effective, not a general investigation tool or a means of gathering evidence for the underlying claim.
The safeguards are a feature, not an inconvenience
Anyone seeking a freezing order must recognise the seriousness of the undertaking in damages. The applicant undertakes to compensate the respondent if the court later decides that the order caused loss for which compensation should be paid. The applicant must also give full and frank disclosure at a without-notice hearing, placing before the court the matters that assist as well as those that may undermine the application.
Those duties are fundamental. The recent decision in Mex Group Worldwide Ltd v Ford [2024] EWCA Civ 959 illustrates how closely the Court of Appeal scrutinises both the evidential basis for a worldwide freezing order and the alleged risk of dissipation.
When should you seek advice?
Freezing relief is not appropriate merely because a defendant owes money or has assets overseas, but it should be considered urgently where there is a substantial claim, reliable evidence indicating a real risk of dissipation and a genuine prospect that ordinary proceedings will be too slow to protect the eventual Judgment.
Where the issue begins with an unpaid commercial debt, it is also important to assess whether issuing proceedings and pursuing legal enforcement options will be commercially worthwhile.
The decision is strategic as well as legal. A business must consider the quality of its evidence, the cost of the application, the cross-undertaking in damages, the need for prompt and full disclosure, and the commercial consequences of obtaining the order.
Adam Benedict Limited assists clients in urgent commercial disputes, interim injunctions, asset-preservation work and enforcement strategy.
Concerned that assets may be moved beyond reach?
Freezing orders require urgent action, strong evidence and careful handling. If you need to protect a claim or respond to an existing order, speak with our experienced commercial litigation lawyers about the steps available to you.
Article by Lauderdale Ladele
This article is provided for general information only and does not constitute legal advice. You should not act or refrain from acting based on its contents without seeking advice tailored to your specific circumstances.
