Using English freezing orders in foreign proceedings

English freezing orders can be highly useful to overseas litigants as they restrict the respondent’s use of its assets, thereby preventing the respondent from disposing of its assets before a judgment can be obtained and enforced.  The respondent or some of the assets it holds will need to have some connection to England. However, English freezing orders can be formulated to have worldwide effect, allowing the applicant to freeze not only the respondent’s English assets, but its assets located anywhere in the world.

The following criteria apply in deciding whether to issue a freezing order in support of foreign proceedings:

Proceedings underway. Substantive proceedings against the respondent must be underway in the primary, ie non-English, jurisdiction, or be about to be commenced.  Evidence of this will be required.

Consistent with the law of the primary jurisdiction. A freezing order can be obtained even where the primary jurisdiction’s law would not allow a freezing order to be issued there, as long as granting the freezing order in England would not be inconsistent with the policy and procedure of the primary jurisdiction.

English Law. The court will consider whether the freezing order would be granted if the application related to English proceedings.

The court will only grant freezing orders in English proceedings if certain criteria are met, including:

1. the order is just and convenient
2. there is a good arguable underlying case against the respondent
3. there is a risk the respondent will dissipate their assets
4. the existence of assets owned by the respondent
5. the applicant gives an undertaking to cover the respondent’s losses as a result of the freezing order if the applicant is later determined to have not been entitled to the relief 
6. the applicant discloses arguments favourable and unfavourable to their case.

Expediency. The court will not grant a freezing order if it believes that it would be inexpedient to do so given it is not involved in the substantive proceedings.  To determine this the court will consider, amongst other things, the extent to which a freezing order may be inconsistent with legal policy in the primary jurisdiction, the potential for inconsistency with the orders of another court and whether the court would be making an order it could not enforce.

Obtaining evidence

Orders requiring disclosure of documents or other forms of evidence to aid the substantive proceedings cannot be ordered by the court under Section 25 Civil Jurisdiction and Judgments Act 1982.  However this is because there are separate mechanisms in place for obtaining such evidence from the English court.   Please see our article regarding the Letter of Request procedure, and how this can be used for obtaining evidence in England in aid of foreign proceedings.

However, orders for the respondent to disclose the existence and location of assets are often included with freezing orders and can also be ordered by the court under Section 25 Civil Jurisdiction and Judgments Act 1982.  Such disclosure is particularly useful in forcing the respondent to be transparent about its ability to meet a judgment and providing information on the commercial merits of pursuing the case.

Supporting arbitration proceedings

The English courts can also grant a freezing order in support of arbitration proceedings and to aid with the enforcement of an arbitration award (see section 44 of the Arbitration Act 1996).
If the seat of the arbitration is England and Wales, the court may even be prepared to grant a freezing order where the respondent has no assets within the jurisdiction.

Practical points

English freezing orders tend to be quicker to obtain than in some other jurisdictions.  Therefore in a situation where speed is a key factor, an English freezing order may well be the best option.
The applicant must disclose all matters that are material to the court in deciding whether to grant the freezing order, whether favourable or unfavourable to the applicant’s case.  This duty of “full and frank” disclosure can be burdensome to applicants, however it must be complied with diligently as non-compliance may in itself give the respondent grounds for having the freezing order lifted.

If you are considering applying for a freezing order, you should urgently seek advice from English lawyers as it is a requirement that applicants avoid undue delay when applying for a freezing order.

Further reading