Effective Methods for Securing Assets in Germany

German law offers defrauded parties a unique opportunity to secure claims for restitution of property and for damages by combining freezing orders pursuant to private law with seizure orders from the German criminal law authorities. This article outlines how this tool can be effectively utilised.

Freezing orders under German law

Freezing orders are designed to secure the main claim which is, or may become, the subject matter of a lawsuit. Freezing orders aim to prevent a defendant from removing assets out of the reach of a claimant, and thus to frustrate the enforcement of the judgment. A freezing order is granted by the competent German court without notice to the defendant if the following conditions are met:

Jurisdiction

In accordance with Art. 31 of Council Regulation 44/2001, the German courts apply their autonomous law to determine international jurisdiction and venue. The claimant can choose to file his application for a freezing order either with the court competent to hear the main lawsuit or with the Local Court (Amtsgericht) within the district in which the assets to be seized are located. The German courts usually assume broad jurisdiction.

Main claim to be secured

The application for the freezing order must contain all the facts upon which the main claim to be secured by the order is based. For these facts, prima facie evidence has to be provided by the claimant. The court will determine the content of the applicable law. If the main claim is subject to foreign law, however, the claimant is under an obligation to provide sufficient evidence that the legal claim exists under the applicable law. In practice, affidavits of lawyers qualified in the respective jurisdiction are widely accepted by the courts.

Necessity of a freezing order

The claimant also has to furnish prima facie evidence that the enforcement of its main claim would be impeded or prevented without the issuance of the freezing order. The German courts are quite strict in endorsing this requirement to balance the broad jurisdiction with the fairly low standard of proof for the main claim. If a claimant cannot provide convincing evidence that the defendant is actually trying to remove assets from the reach of the claimant, or that assets are being squandered by the defendant in bad faith, the German courts will not issue a freezing order.

However, these strict standards do not apply in cases where the defendant is domiciled outside Europe, which is common in...