Freezing Orders

Freezing orders (also known as asset preservation or Mareva orders) are made by the Supreme Court to preserve the assets of a person.

The Court will make the orders to ensure the person does not have the opportunity to hide, distribute or spend assets suggested to have been illegitimately obtained (either directly or indirectly).

A clear example demonstrating how courts exercise this power is where a plaintiff or party can show there is a real risk that a defendant or respondent (the party being sued) may alienate or remove its assets from the jurisdiction, which would frustrate any judgment made against it. It is unnecessary to prove that the defendant or respondent intends to circumvent the court process, simply that its actions are likely to have that effect.

What is the purpose of a freezing order?

The purpose of a freezing order is to minimise the risk that a judgment will be wholly or partly unsatisfied. Although useful for creditors looking to protect assets, it is not an order for security and does not improve the position of the applicant creditor in the event of insolvency of the judgment debtor.

The order is usually made without notice to the respondent. This could be a defendant in other relevant proceedings or a third party who has possession, custody, or control of relevant assets. Significantly, the order will be limited until the return date of the application which is usually set down as soon as practicable after the interim order is made. The applicant then bears the onus of satisfying the Court that the order should be continued or renewed.

It is considered a drastic remedy, which is reflected in the manner in which the Court exercises its discretion and what must be proven in order to successfully obtain the order.

It is important to note that a freezing order does not require a party to provide its assets as security for any judgment that may be entered against it. The order merely operates so as to prevent a person or corporation from further obstructing or transferring those assets, particularly across borders. The frozen assets do not automatically become the property of a successful plaintiff or applicant upon the entry of judgment, they are simply ‘frozen’. It will then be necessary for the successful party to commence an enforcement action to attach a judgment debt to the money or assets in question.

If you would like to know more about Freezing Orders and how you could protect your rights and interest, simply email us at info@straitslawyers.com or call at 08 8410 9069 to arrange an appointment.

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Please note that this article does not constitute legal advice and Straits Lawyers will not be legally responsible for any actions you take based on this article.