Freezing Orders in the UK: A Powerful Legal Tool to Protect Assets

Freezing orders, sometimes known as Mareva injunctions, are one of the most effective legal tools in the UK for protecting assets. They are used to prevent individuals or businesses from disposing of or hiding assets during litigation, ensuring that any future judgment can be enforced. Whether you’re a creditor, business owner, or involved in litigation, understanding freezing orders can be crucial to securing the financial outcome you need. This article will explore what freezing orders are, the legal framework behind them, and how they can be obtained and enforced.

A freezing order is a court order that prevents a party from dealing with or disposing of their assets, either in the UK or globally. It is a temporary measure used to prevent the defendant from dissipating assets before a judgment is made, ensuring they remain available to satisfy a future court ruling. Freezing orders can be either domestic, targeting assets within the UK or worldwide covering assets held in multiple jurisdictions. These orders are commonly granted when there is a serious risk that a defendant will hide, transfer, or deplete assets to avoid paying a future judgment.

To obtain a freezing order, applicants must demonstrate that there is an urgent need to prevent the dissipation of assets. The application is often made without notice (ex parte), meaning the defendant is not informed before the order is granted to avoid tipping them off.

The court will consider several factors, including:

• A real risk of asset dissipation.
• The applicant’s likelihood of success in the underlying claim.
• Whether it is “just and convenient” to grant the order.

Key steps in obtaining a freezing order usually include filing an application supported by evidence of the risk of dissipation, demonstrating a strong underlying case and offering an undertaking in damages, which is a promise to compensate the defendant if the freezing order was wrongfully granted.

However, due to the strong nature of freezing orders and their effects on the defendant, securing one can be difficult due to the high threshold of proof. The applicant must provide compelling evidence that there is a real risk the defendant will dissipate assets, and courts are cautious when restricting someone’s control over their property. Courts will also consider the rights of the defendant, ensuring that the order is not overly burdensome. They exercise judicial discretion carefully, making it essential for the applicant to present a solid, evidence-backed argument.

Once a freezing order is in place, it effectively freezes the respondent’s assets up to the value of the claim. The respondent must comply with strict limitations on their ability to move or use their assets. This can have far-reaching effects on their financial dealings, business operations, and relationships with third parties like banks. Moreover, a breach of the freezing order can lead to severe penalties, including fines, asset seizures, and imprisonment.

On the other hand, the defendant has the right to apply to the court to discharge or vary the freezing order if he can prove that the order granted by the court is overly burdensome. The defendant can achieve this by demonstrating to the court that there is no real risk of asset dissipation, the underlying claim is frivolous and is unlikely to succeed or prove that the order was improperly granted or too oppressive. The Courts will then balance the interests of both parties before deciding whether to lift or modify a freezing order.

Applying for a freezing order is not without its risks, as costs can be significant, particularly if the order is challenged or involves complex cross-border enforcement. In most cases, applicants are required to provide an undertaking in damages, meaning they may be held liable for the respondent’s losses if the court later finds that the freezing order was wrongfully granted. This underscores the importance of seeking expert legal advice before pursuing such an order. Despite the risks, freezing orders remain a critical tool in UK litigation, offering a powerful means to protect assets and ensure the enforcement of judgments.