UK: World-wide freezing orders overseas - the Dadourian guidelines

In a case that will be of interest to international banks who are served with a worldwide freezing order (WFO) in a non-UK office or to any bank seeking a WFO on their own account, the court has set out guidelines on how it would exercise its discretion to grant permission to a claimant seeking to enforce a WFO abroad. By setting out the criteria, claimants can be better prepared in making an application to enforce a WFO abroad.

Since 1990 it has been standard practice for the court to require an undertaking from the claimant not to try to enforce a WFO abroad without the court’s permission. Until now, there have been no guidelines showing what would persuade the court to grant permission.

The eight guidelines are listed in the judgment of the Court of Appeal and some points to note are:

• the claimant must be able to show there is a real prospect that assets are in the relevant jurisdiction and there is a risk of dissipation;

• a high standard of evidence in support of the application is required of claimants;

• the court should grant permission where to do so would be just, convenient, and not oppressive to the English parties;

• permission should be limited to making relief available in the relevant foreign jurisdiction which is comparable and not more than what you could get under the WFO;

• all relevant circumstances and options need to be considered;

• the interests of all parties need to be balanced.

In a case that will be of interest to international banks who are served with a worldwide freezing order (WFO) in a non-UK office or to any bank seeking a WFO on their own account, the court has set out guidelines on how it would exercise its discretion to grant permission to a claimant seeking to enforce a WFO abroad. By setting out the criteria, claimants can be better prepared in making an application to enforce a WFO abroad.

Since 1990 it has been standard practice for the court to require an undertaking from the claimant not to try to enforce a WFO abroad without the court’s permission. Until now, there have been no guidelines showing what would persuade the court to grant permission.

The court has a difficult job in needing to balance the need to protect the claimant’s interests to avoid assets being dissipated overseas, against oppressing the respondent - and associated third parties. The object of the guidelines is to assist the court to strike this balance.

The eight guidelines are listed in the judgment of the Court of Appeal and can be seen on the direct link at the end of this bulletin.

Some points to note are:

• the claimant must be able to show there is a real prospect that assets are in the relevant jurisdiction and there is a risk of dissipation;

• a high standard of evidence in support of the application is required of claimants;

• the court should grant permission where to do so would be just, convenient, and not oppressive to the English parties;

• permission should be limited to making relief available in the relevant foreign jurisdiction which is comparable and not more than what you could get under the WFO;

• all relevant circumstances and options need to be considered;

• the interests of all parties need to be balanced.

Claimants will potentially have a more difficult task as they will be forced to gather evidence to demonstrate a real prospect of the respondent’s assets being located within a particular jurisdiction and a likelihood of dissipation. This means they are likely to alert the respondent to the application who might take the opportunity to dissipate the assets.

Claimants will also need to find out whether the relief available in the foreign court is comparable to the WFO. This may be time consuming, but more importantly, could force claimants to reconsider their application where the relief differs to an extent that it appears unlikely that the court would provide permission to enforce the WFO in that jurisdiction.

Further reading: Dadourian Group Int Inc v Simms & Others [2006] EWCA Civ 339. For the full text of the guidelines, click here.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

The original publication date for this article was 21/06/2006.