WHY A FREEZING ORDER IS NOT AS EFFECTIVE AS YOU MIGHT THINK

Freezing orders have been described as a “nuclear weapon” by the English courts (Bank Mellat v. Nikpour [1985]). They are one of the most powerful tools available to the civil courts; claimants traditionally will look to use them because they are generally an effective way to preserve assets as well as having an ancillary benefit of putting pressure on defendants as the consequence of breaching an order could lead to imprisonment for contempt of court. However, in international frauds where the majority of assets are outside the UK, how effective are they and is there any other option?

A freezing order is an interim injunction and its primary objective is to prevent a defendant from dissipating its assets before trial or the enforcement of judgment. In National Bank Trust v Yurov [2016], Mr Justice Males explained that the purpose of a freezing order is “...not to provide the claimant with security but to restrain a defendant from evading justice by disposing of assets otherwise than in the ordinary course of business in a way which will have the effect of making itself judgment proof”.

Jan-Mar 2018 Issue

Steptoe & Johnson UK LLP

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