Thin Ice ' Freezing Assets Across Jurisdictions

• Published date: 16 December 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: Fenwick Elliott LLP
• Author: Sam Thyne

In international arbitration, winning your case is only half the battle. The harder part is often getting the money. Even if an unsuccessful party has assets, gaining access to them is no sure thing. Large companies, operating across multiple jurisdictions, will often have assets all over the world. Winning a case in one jurisdiction (where the losing party does not have the funds to satisfy a judgment debt) does not guarantee that its assets in other jurisdictions will be readily available to the victor.

Fortunately, it is generally straightforward to have an arbitral award recognised and enforced (provided that the jurisdictions are both signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958). However, parties need to turn to other remedies to ensure there are still assets there to recover.

A freezing order (alternatively called a Mareva injunction for the case which popularised its use¹) is a form of injunctive relief that can be awarded by a court to prevent the disposal of assets. It has the dubious distinction of being described as a "nuclear weapon"² of judicial remedies alongside the seizing order (or Anton Piller order³). A large focus of private law is the protection of private property, hence why court orders which sanction the restriction and re-appropriation of private property are viewed as weapons of mass destruction - and why courts are careful about granting them.

As the name suggests, a freezing order can freeze almost any asset, including bank accounts and property, both real and intangible. The requirements for obtaining a freezing order vary depending on jurisdiction. However, in England (and other commonwealth jurisdictions), the position is broadly that:

• The applicant must have a cause of action (i.e. an underlying legal or equitable right).
• The applicant must have a good arguable case.
• There must be assets for the order to be applied to.
• There must be a real risk of assets dissipating if the order is not put into place.
• The applicant must provide an undertaking as to damages to compensate the respondent if it is decided that the freezing order should not have been awarded.

Another feature of a freezing order is that they are typically sought on an ex parte basis. This means that they can be issued without the party that the order is subject to being notified until after the order is granted. Accordingly, the applicant needs to consider and address any possible evidence that the...