Freezing Injunction Application: What is the process?
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A freezing injunction, also known as a freezing order or Mareva injunction is a legal remedy granted by a court to prevent a party from disposing of or dealing with their assets in a way that would frustrate the enforcement of a potential judgment.
These injunctions are often sought in cases where there is a risk that a defendant might move or dissipate their assets to avoid paying a judgment or to frustrate the claimant’s ability to recover what they are owed. Freezing injunctions are a form of interim relief and are typically granted before a full trial on the merits of the case.
Once granted, a freezing injunction prohibits the defendant from disposing of, dealing with, or diminishing the value of their assets up to a specified limit without the court’s permission. This helps ensure that assets are preserved pending resolution of the underlying dispute and that the claimant will have meaningful recourse if successful in their claim. A worldwide freezing order can be used to ensure the defendant does not dispose of any international assets.
Freezing injunctions are a powerful tool in legal proceedings, particularly in cases involving fraud, breach of contract, or other disputes where there is a risk of dissipation of assets. However, they are granted at the court’s discretion and typically require the claimant to demonstrate a strong prima facie case, a real risk of dissipation of assets, and that the balance of convenience favours granting the injunction.
ARC Costs maintains an extensive legal network of expert commercial litigation solicitors with a track record of success on these types of cases, and we would be happy to pass on your details to assist in your case.
If you require more information on the freezing injunction application process and are in search of expert legal advice and representation, whether you are bringing or defending a claim, then please get in touch with us today to find out more about our network of specialist freezing injunction application solicitors.
What is the freezing injunction application process?
The freezing injunction application process typically involves several steps. A general overview of the process goes as follows:
- Preparation of the Application: The claimant, usually through their legal representatives, prepares the application for a freezing injunction. This involves gathering evidence to support the application, such as documentation showing the existence of the claim, the defendant’s assets, and the risk of dissipation.
- Drafting the Application: The application is drafted in accordance with the relevant procedural rules and court requirements. It typically includes details of the claim, the specific assets sought to be frozen, the grounds for the application (e.g., risk of dissipation), and any other relevant information.
- Filing the Application: The application is filed with the court, along with any supporting documents and evidence. The claimant may also be required to pay a fee to initiate the application process. It is important to note that freezing orders are typically granted on an interim basis pending a return date, where the court reviews the case more comprehensively. At the return date, the court considers the balance of convenience, weighing the interests of both parties. This evaluation is crucial in determining whether the freezing order should be continued, varied, or discharged.
- Service of Documents: Once the application is filed, the claimant serves copies of the application and supporting documents on the defendant in accordance with the court rules. This ensures that the defendant is aware of the application and has an opportunity to respond.
- Hearing: The court schedules a hearing to consider the application for the freezing injunction. At the hearing, both parties have an opportunity to present their arguments and evidence. The court will consider factors such as the strength of the claim, the risk of dissipation of assets, and the balance of convenience.
- Decision: After hearing from both parties, the court will make a decision on whether to grant the freezing injunction. If awarded, the court will typically specify the assets to be frozen, the duration of the injunction, any exceptions or conditions, and the process for compliance.
- Enforcement: Once granted, the freezing injunction is served on the relevant parties, such as banks or financial institutions holding the frozen assets. The claimant may also take steps to enforce the injunction, such as monitoring compliance and seeking further court orders if necessary.
It’s important to note that the freezing injunction application process can be complex and may require the assistance of legal professionals with experience in this area of law.
Requirements for obtaining a freezing injunction
Obtaining a freezing injunction can be a delicate process, and securing one is reliant upon meeting several key requirements set by the court. Some of the essential elements in obtaining a freezing order include:
- Good Arguable Case: You must demonstrate a solid chance of winning the underlying lawsuit against the defendant. This means presenting compelling evidence and legal arguments supporting your claim.
- Risk of Asset Dissipation: You need to convince the court that a real risk exists of the defendant moving, hiding, or otherwise disposing of their assets before a judgment is reached. This could involve evidence of past behaviour, financial difficulties, or threats to abscond.
- Balance of Convenience: The court weighs the potential harm to you if the injunction is not granted against the inconvenience caused to the defendant by having their assets frozen. This involves demonstrating that the threat to your legal rights outweighs the disruption to the defendant’s financial affairs.
- Evidence: You must provide strong and verifiable evidence through affidavits, witness statements, and financial records to support your claims and the risk of asset dissipation.
The requirements for obtaining a freezing injunction are complex and subject to interpretation by the court. Seeking legal advice from a qualified professional is crucial for navigating the application process and maximising your chances of success. Obtaining a freezing injunction is a powerful legal tool, but it should be used strategically and only as a last resort.
What assets can be frozen?
In a freezing injunction, the court has the authority to order the freezing of various assets owned or controlled by the defendant. These assets typically include bank accounts, property such as houses or land, investments like stocks and bonds, business assets such as inventory and intellectual property, trusts, offshore accounts, and other high-value assets.
The purpose of freezing these assets is to prevent the defendant from disposing of or dealing with them in any way that could hinder the enforcement of a potential judgment. Freezing injunctions are specific and may only apply to certain assets identified in the court order. However, exceptions may be made for certain expenses or transactions, such as reasonable living expenses or legal fees.
If you are considering seeking a freezing injunction, it is essential to consult with a qualified legal professional to discuss the specific assets you want to freeze and the likelihood of success. ARC has access to a network of specialist commercial solicitors with many years of experience in dealing with freezing injunctions and the application process. Please get in touch with us to find out more.
How is a freezing injunction enforced?
Upon the court’s granting of the freezing injunction, copies of the injunction order are served on the defendant and relevant third parties, such as banks or financial institutions holding the frozen assets. This serves as notification of the court’s order and its obligations under it.
If the freezing injunction extends to third parties, such as banks, the claimant may notify them of their obligations under the court order, providing copies of the injunction and relevant instructions for compliance.
Should the defendant or third parties fail to adhere to the freezing injunction, the claimant has the option to seek further orders from the court to enforce compliance. This could involve orders for disclosing financial information, appointing a receiver to oversee compliance, or other remedies ensuring the injunction’s effectiveness.
In cases of deliberate breach by the defendant, they may be held in contempt of court, potentially facing fines or imprisonment. The court possesses the authority to enforce its orders and ensure compliance with the freezing injunction.
Ultimately, the freezing injunction serves to preserve the defendant’s assets pending the resolution of the legal dispute. Upon the claimant’s success in their claim and obtaining a judgment, they can then proceed to enforce the judgment and recover the assets subject to the freezing injunction.
It is important to note that enforcing a freezing injunction demands vigilant monitoring, persistent effort, and often ongoing legal support to address any breaches or non-compliance effectively.
How can ARC assist?
If you are in search of expert advice regarding the freezing injunction application process, ARC can introduce you to a professional who is equipped to take legal action in your best interests. Our network of specialist commercial lawyers is highly knowledgeable and will provide you with the most appropriate legal advice.
In addition to introducing you to a freezing injunction solicitor, we can also assist in the recovery and negotiation of legal costs in commercial cases, whether you are the paying or receiving party.
ARC Costs is highly experienced in advising and assisting with cost issues and disputes in different areas of law. As Costs Draftsman and Costs Lawyers, we can help you with your commercial litigation costs issues.
To find out more about how we can provide you with assistance, please get in touch with us at 012014 397302 or email one of our expert team at info@arccosts.co.uk. Alternatively, please use our free chat facility to speak to an expert directly.
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