Freezing Injunction

A freezing injunction prevents a person from dealing with their own assets. The application can be limited to assets within the jurisdiction in which the application is made or can be extended to cover worldwide assets. It can also be limited to specific assets or a specific value (normally the value of the claim).

In order to obtain a freezing injunction the Applicant must satisfy the Court that:

1) The court has jurisdiction to order the injunction;

2) The applicant has a cause of action against the respondent;

3) There is a good arguable case on the merits;

4) There is a real risk that the respondent will dissipate his assets – this requires the applicant to make the application for a freezing injunction urgently;

5) The respondent holds assets that can be frozen.

If the application is for a domestic injunction the applicant must show that the respondent has assets within the jurisdiction; and

6) The applicant has sufficient assets of his own to satisfy a cross undertaking in damages.

There are a number of advantages in obtaining a freezing injunction:

  • It prevents the respondent from dissipating assets which the applicant may want to enforce against if he is successful in his claim.
  • It forces the respondent to provide early disclosure of his assets. This can then be used by the applicant to decide what the likelihood of enforcing an order against the respondent would be if the claim was pursued.
  • It restricts the respondent's access to funds, which may encourage early settlement and may increase the respondent's motivation to defend the claim.

However, an applicant must bear the following considerations in mind when deciding whether to apply for a freezing injunction: l The applicant must provide a cross undertaking in damages. The cross undertaking is of particular concern to an applicant if the respondent is a company and its business will be negatively affected by the freezing of its assets.

  • The applicant will be required to provide full and frank disclosure and so will have to reveal to the Court and the arespondent any weaknesses in his case.
  • Normally a freezing injunction will contain an allowance for the respondent's legal and living expenses.
  • The legal costs involved in obtaining a freezing injunction (including the drafting of the claim form and ideally particulars of claim which should be exhibited to the applicant's evidence) are likely to be significant for both parties due to the short period of time in which the solicitors have to prepare all of the documents. The application can therefore be very costly for the applicant if he is unsuccessful.

Proprietary Injunction

A proprietary injunction prevents a person from dealing with assets in which the claimant has a proprietary interest.

In order to obtain a proprietary injunction the applicant must show that he has an arguable case that the assets which are the subject of the application either belong to him or can be traced into by him. It is not necessary to show that there is a risk of dissipation.

As with a freezing injunction, the applicant will be required to provide cross undertakings in damages. However, unlike a freezing injunction, a proprietary injunction will not normally include an allowance for legal or living expenses to be taken from the assets that are subject to the injunction. A proprietary injunction is therefore particularly effective if the applicant can show that there is an arguable case that all of the respondent's assets belong to him.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.