Introduction to Freezing Orders and how we can help
A freezing order (also known as a freezing injunction or Mareva order) is one of the most serious remedies a court can grant in civil litigation. It prevents a person or business from disposing of, dealing with or hiding assets before a claim is resolved. To obtain one, the applicant must meet a strict legal test and give important safeguards to the court, including a cross-undertaking in damages.
FWJ has over 25 years’ experience advising businesses, directors, shareholders and insolvency practitioners on applying for, defending and complying with freezing orders. Our team includes experienced partners, Maria Koureas-Jones, Andrew Carter and Stephen Downie and who regularly act in high-value and urgent applications.
If you have been served with a freezing order or are considering applying for one, early legal advice is essential. Our team can help you today.
At a glance
- Courts only grant freezing orders in serious cases where there is clear evidence of a risk that assets may be moved or hidden.
- Both applicants and respondents face significant obligations and risks.
- A cross-undertaking in damages protects the respondent if the order should not have been granted.
- Early advice can prevent mistakes, manage costs and reduce exposure.
What is a freezing order and when will a court grant one?
A freezing order is an interim injunction made under Civil Procedure Rules Part 25. Its purpose is to preserve assets until a claim is decided. It does not determine who ultimately owns the assets; it simply prevents dissipation while the court process continues.
To grant a freezing order, the court must be satisfied that:
- The applicant has a good arguable case.
- There is a real risk that the respondent will deal with assets in a way that may defeat a judgment.
- It is just and convenient to grant the order.
In urgent cases, freezing orders can be made “without notice” if giving advance warning would increase the risk of dissipation. Applicants must then return to court shortly afterwards for a full hearing (known as the “return date”).
Freezing orders can be limited to assets within England & Wales or extend worldwide. They may cover money in bank accounts, property, shares, vehicles and other valuable assets. The order is binding not just on the respondent, but also on any third party (such as a bank) who receives notice of it.
Because of the serious consequences, courts apply the test carefully. The evidence must be clear, consistent and fully presented.
FWJ Takeaway: A freezing order is an exceptional remedy. Courts grant them only when the evidence demonstrates both a strong underlying claim and a genuine risk that assets may disappear. We have 25 years’ experience dealing with freezing order claims both in terms of obtaining them but also defending them. This all round experience is hugely valuable for our clients when dealing with freezing orders.
What evidence is needed to show a real risk of asset dissipation?
The most important part of any freezing order application is the evidence. The court will not grant an order simply because there is a dispute or unpaid debt.
You must show a real, objective risk that the respondent may dispose of assets to avoid enforcement. Courts expect specific examples, such as:
- funds being moved to unfamiliar accounts
- sudden transfers to family members or connected companies
- disposal of assets below market value
- unexplained withdrawals of large sums
- steps taken to place assets offshore
- inconsistent or misleading statements about financial position
- historic behaviour showing concealment or dishonesty
This risk often arises in:
- Fraud claims, including misappropriation of funds or dishonest conduct
- Some shareholder disputes, such as 50/50 deadlock where there are allegations of diversion of assets
- Director misconduct cases, including breach of fiduciary duty or misuse of company money
- Claims brought by insolvency practitioners, where pre-liquidation transactions suggest assets may have been moved
Courts look at the overall pattern. A single suspicious transaction may not be enough, but a series of movements or inconsistencies can justify a freezing order.
Applicants must also explain why a freezing order is necessary rather than another remedy.
FWJ Takeaway: Strong evidence drives the a successful outcome. Courts look for clear, documented examples that assets may not be available by the time judgment is enforced. Our free Guide to Freezing Orders sets out in detail the areas a court will consider when making a Freezing Order.
What are the risks for applicants when seeking a freezing injunction?
Although freezing orders are powerful, they carry significant risks for applicants.
- The first risk is the duty of full and frank disclosure. In a without-notice application, the applicant must present all relevant facts to the court, including facts that may help the respondent. If anything is omitted, the order may be set aside. Applicants can face adverse costs orders and may lose credibility with the court.
- The second risk is that the order may be too wide. Freezing orders must be carefully tailored to the value of the claim and the assets involved. An over-broad order can harm the respondent and lead to costs consequences if it isn’t granted.
- The third risk lies in the cross-undertaking in damages. This is a binding promise to compensate the respondent (and potentially third parties) if the order is later shown to have been granted wrongly. If the order damages the respondent’s business or prevents legitimate transactions, the financial consequences can be significant.
There are also general litigation risks. If the underlying claim fails, the applicant may be ordered to pay the respondent’s costs and any losses arising from the injunction. And these can be expensive applications.
For corporate applicants, the court may also require security for the cross-undertaking, especially where the applicant’s ability to pay compensation is unclear.
FWJ Takeaway: Applying for a freezing order is not risk-free. Applicants must be confident in their evidence and ready to comply with strict duties and potential cost consequences. Our guide on what to consider before applying for a freezing order is a good way to read more about the risks and obligations on the applicant.
What should a person or business do when served with a freezing order?
Being served with a freezing order can be alarming. Bank accounts may be frozen immediately, and the order may place heavy reporting duties on the respondent. However, calm and prompt action is essential.
Step 1
The first step is to read the order carefully. Typical obligations include:
- stopping all dealings with assets over a certain value
- preparing and serving detailed financial disclosure
- attending a return hearing within days
- preserving documents and electronic records
- allowing the applicant’s solicitors to serve the order on banks and third parties
Breaking the order, even accidentally, can result in contempt of court and possible imprisonment.
Step 2
The second step is to obtain urgent legal advice. The terms of the order may be too wide, unclear or unnecessary. An experienced team can help you prepare the required disclosure, negotiate amendments, or apply to vary or discharge the order.
If business accounts are frozen, you may need a court order to permit essential payments.
Step 3
The third step is to gather evidence. Courts want to see full, accurate information about your assets and financial position. Any gaps or inconsistencies can create additional risk.
FWJ regularly advises directors, companies and individuals served with freezing orders. We help prepare responses, manage urgent hearings and protect business continuity.
FWJ Takeaway: Responding effectively requires early advice, full disclosure and careful compliance. Delay or incorrect responses can make the situation worse. Call our freezing order experts for a free consultation today.
How does a cross-undertaking in damages work and why does it matter?
A cross-undertaking in damages is a critical safeguard in freezing order cases. It protects the respondent from loss if the court later decides the injunction should not have been granted.
The applicant must promise to compensate the respondent for losses caused by the order. These losses might include:
- business disruption
- inability to complete contracts
- lost opportunities
- legal costs
- reputational damage (in certain cases)
If the claim fails or the order is discharged, the respondent can apply to recover damages.
Courts take cross-undertakings seriously. They ensure that applicants think carefully before seeking a freezing order. Where losses could be substantial, the court may require security to ensure the cross-undertaking can be honoured.
Respondents should always keep detailed records of any financial impact, as this will be vital in assessing a damages claim later.
FWJ Takeaway: The cross-undertaking balances the severity of a freezing order. It protects respondents and encourages applicants to act responsibly and proportionately.
FAQs
Speak to FWJ today about defending a Freezing Order
If you are applying for or defending a freezing order, our specialist freezing order team at FWJ can help. We offer clear, practical advice grounded in decades of experience. Contact us today to speak with one of our experts.
