The global recession has made it more important than ever before for parties to consider the prospects of enforcing an arbitration or court award at the outset of a dispute.  The ability of the English courts to grant an order freezing a defendant’s assets prevents the disposal of assets by a defendant pending the resolution of legal proceedings and/or to assist with enforcement of such proceedings.

What is a freezing order?

A freezing order is an interim order that prohibits a party from disposing of or dealing with his assets.  All types of assets can be frozen: bank account, shares, motor vehicles, land, ships, and virtually any other asset that the party holds.

It should be noted that a freezing order does not offer any security to the claimant as it provides no proprietary rights over the assets which have been frozen. It’s effect is simply that it prevents the defendant from disposing of such assets.

Orders can be obtained in respect of assets within England and Wales (domestic freezing orders) or in respect of assets situated worldwide (worldwide freezing orders or “WFOs”).

When should a freezing order be sought?

An application for a freezing order can be made before the issue of claim (or a counterclaim); during proceedings, or after judgment, as long as you can establish that there is a real risk that the defending party will dispose of their assets in order to avoid the judgment.

Whenever a party is considering taking action to obtain a freezing order, it is absolutely key for the claimant to act promptly. The Court will take into account any undue delay by the claimant. In any event, it makes sense to act as quickly as possible in order to limit the opportunity that the defendant has to dispose of their assets.

What must the applicant prove?

A freezing order is a draconian measure and will only be granted in circumstances where the Court is satisfied that specific circumstances exist. There are several very clear grounds which the Court will require that the Claimant proves. The Claimant must:

  • demonstrate that it has a “good arguable case” on an underlying cause of action. The Court will require that the Claimant demonstrates that, prima facie, its underlying claim has good grounds on which to be brought, and is arguable. The non-payment of a commercial debt, which is clearly contractually payable by the respondent, is an example of a good, arguable case.
  • demonstrate the existence of assets. There must be evidence from which it may be inferred that the respondent has assets that would be available for execution. An applicant must demonstrate a real prospect that the assets are in the country where enforcement is sought, but it is not necessary for him to prove that the assets exist.  
  • establish that there is real risk that the defendant will dissipate its assets.  The risk must be that the defendant will deal with its assets improperly or unjustifiably; an injunction will not be granted merely to prevent the defendant from paying legitimate creditors or expenses.

In considering this ground, the Court will take into account all of the circumstantial evidence that can be provided: for example, the transfer of ownership of vessels to single ship-owning companies, where this has been done suddenly or unusually; the disposal of other assets or movement of assets into different jurisdictions;  restructuring of finance arrangements; the ease with which the assets in question could be moved out of the applicant's reach; the nature and financial standing of the respondent, and any evidence as to dishonesty.

  • The claimant will usually be required to provide a cross-undertaking in damages. The Court will almost always require this in order to protect the defendant and to compensate them for any losses sustained as a result of the order, should it later transpire that the order should not have been granted.

A defendant is entitled to challenge the WFO. If it does so, then it is likely to challenge it on one, or a combination, of the following grounds:

  • there is no evidence as to dissipation of assets;
  • there is no basis for the claim;
  • there has been material non-disclosure of facts by the claimant.

If the freezing order is lifted, then the claimant will be required to pay the other side’s costs, and potentially damages to the respondent and any affected third parties (for example financial institutions on which the WFO has been served.)


A worldwide freezing order cannot be enforced overseas without the  permission of the English Court, which is obtained by way of a separate application. The freezing order will not be effective against overseas third parties, unless it has been made the subject of an enforceable order in their own jurisdiction.

In Dadourian Group International Inc and other v Simms and others. [2006] EWCA Civ 399, eight separate guidelines were formulated as to how the Court would approach an application for permission to enforce a freezing order abroad as follows:

  1. Permission to enforce should be just and convenient for the purpose of ensuring the effectiveness of the WFO, and it should not be oppressive to the parties.  
  2. All the relevant circumstances and options need to be considered, including the proportionality of the steps proposed to be taken abroad.
  3. The interests of the applicant should be balanced against the interests of other parties to the proceedings.  
  4. Permission should not normally be given in terms that would enable the applicant to obtain relief in the foreign proceedings which is superior to the relief given by the WFO.
  5. The evidence in support of the application for permission should contain all the information (so far as it can reasonably be obtained in the time available) necessary to enable the Judge to reach an informed decision.  
  6. The applicant must show that there is a real prospect that such assets are located within the jurisdiction of the foreign court in question.
  7. There must be evidence of a risk of dissipation of the assets in question.  
  8. Normally the application should be made on notice to the respondent, but in cases of urgency, permission may be given without notice.

Limitations of freezing injunctions

A freezing injunction is not a form of security: it does not provide any proprietary right to the frozen assets.

Until a freezing order has been recognised, registered or enforced in the local overseas court, it is not enforceable outside the jurisdiction, and is therefore not binding on third parties overseas.


If the defendant to the claim has no money or assets against which to enforce an arbitration or court award, then there may be little point in incurring legal costs in pursuing them. The issues of enforcing an award is a key factor which should be considered at the outset of the matter. A freezing order can be a powerful strategic method in ensuring that the defendant cannot dispose of its assets in an attempt to avoid a legal award against them.