A freezing order tying up a defendant's assets is a powerful tool for claimants in English common law jurisdictions. But, they must be obtained with full and frank disclosure and come with serious ramifications when that does not occur. Typically, an applicant for freezing order must undertake to pay the defendant compensation if it is subsequently determined that he freezing order was improperly granted. When a defendant claims the order was improperly granted, the court has the discretion to conduct an inquiry into what loss the defendant suffered because of the order.

InFiona Trust & Holding Corporation v. Yuro Privalov & Others(2016) EWHC 2163, at trial, the defendant was found liable for an amount far less than the amount of assets which had been frozen. In conducting the inquiry into damages suffered by the defendant as a result of the freezing order, the court considered it relevant that the claimant breached their duty of disclosure, but noted that the defendant had been "dishonest in at least some of his business dealings", but also "untruthful in his evidence to this court." Although the court accepted that "it may seem odd" to award damages to a dishonest defendant, it held that was no reason not to enforce the cross-undertaking. "It is only just that those who obtain such orders to which they are not entitled, a fortiori when they are guilty of serious failures to disclose material facts and have pursued claims described by the trial judge as 'obviously unsustainable', should be ordered to provide appropriate compensation for losses suffered."

The court decided that the damages should be assessed on a contractual basis, but with a "liberal assessment", in recognition of the fact that assessment of damages suffered as a result of the freezing order are inherently imprecise. The court noted that damages may be awarded for lost profits, even if the defendant may have suffered a loss.

This case shows the perils where the court is misled to freeze assets by a lack of full disclosure. In that case, the court will impose a "liberal assessment" of damages

A freezing order tying up a defendant's assets is a powerful tool for claimants in English common law jurisdictions. But, they must be obtained with full and frank disclosure and come with serious ramifications when that does not occur. Typically, an applicant for freezing order must undertake to pay the defendant compensation if it is subsequently determined that he freezing order was improperly granted. When a defendant claims the order was improperly granted, the court has the discretion to conduct an inquiry into what loss the defendant suffered because of the order.

InFiona Trust & Holding Corporation v. Yuro Privalov & Others(2016) EWHC 2163, at trial, the defendant was found liable for an amount far less than the amount of assets which had been frozen. In conducting the inquiry into damages suffered by the defendant as a result of the freezing order, the court considered it relevant that the claimant breached their duty of disclosure, but noted that the defendant had been "dishonest in at least some of his business dealings", but also "untruthful in his evidence to this court." Although the court accepted that "it may seem odd" to award damages to a dishonest defendant, it held that was no reason not to enforce the cross-undertaking. "It is only just that those who obtain such orders to which they are not entitled, a fortiori when they are guilty of serious failures to disclose material facts and have pursued claims described by the trial judge as 'obviously unsustainable', should be ordered to provide appropriate compensation for losses suffered."

The court decided that the damages should be assessed on a contractual basis, but with a "liberal assessment", in recognition of the fact that assessment of damages suffered as a result of the freezing order are inherently imprecise. The court noted that damages may be awarded for lost profits, even if the defendant may have suffered a loss.

This case shows the perils where the court is misled to freeze assets by a lack of full disclosure. In that case, the court will impose a "liberal assessment" of damages.