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
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;
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
It prevents the respondent from dissipating assets which the
applicant may want to enforce against if he is successful in his
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.
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
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.
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Lehman claimed for the balance of the sum which it argued was properly due from the defendant arising out of early termination of four option transactions.
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