This article explores what a freezing injunction is, the requirements needed to obtain one, and an analysis on recent case law on what the court considers a “good and arguable case”.
What is a freezing injunction?
A form of injunctive relief that prevents a party from disposing of an asset(s) (whether it is cash in the bank, transferring a property, or even from selling fine art).
When can a freezing injunction be made?
A freezing injunction can be implemented before or after proceedings have been issued. If you apply for one before proceedings have been issued, you must issue a claim immediately, or undertake to issue a claim as soon as possible.
What are the requirements for a freezing injunction?
- There must be full and frank disclosure by the applicant.
- There must be a demonstrable risk of dissipation (of the relevant asset you are attempting to ‘freeze’).
- There must be a “good and arguable case.”
- It must be just and convenient for the sitting judge to grant the order.
- Cross undertaking in damages.
What is a “good and arguable case”?
Recent case law has affirmed the court’s position on what determines a good and arguable case. In Unitel SA v Unitel International Holdings BV and another [2023] EWHC 3231 (Comm) (“Unitel”), Justice Bright (“Bright”) affirmed the test for a good and arguable case (in the context of freezing injunctions), derived from Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH [1984] 1 All ER 398 (otherwise known as the “Niedersachen”).
That is, a case that is “…more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50% chance of success.” The defendant argued that the test had changed the test of what constitutes and good and arguable case in Lakatamia Shipping Company Ltd v Morimoto [2019] EWCA Civ 2203 (“Lakatamia”), and that there is now a three-limb test derived from Brownlie v Four Seasons Holdings Inc [2017 UKSC 80.
Bright commented that “the law is in a confused state, which cries out for a definitive answer from the Court of Appeal.” Bright made the point that in the “good and arguable case”, in the context of freezing injunctions, had mostly applied the test from the Niedersachen, and that the judge sitting in Lakatamia did not intend (or at least it was not clear it was his intention) to transform the application of a “good and arguable case”.
The judgment for the Unitel judgment can be found here.
What is full and frank disclosure?
In matters where an application is without notice, there is a duty on the applicant to make full and frank disclosure. The applicant must disclose all matters that are material to the court in deciding whether to grant the order.
This includes documents/facts that may adversely affect the applicant’s overall case, so long as it is materially relevant to the order sought. This duty applies to all facts known by the applicant, including any likely defences the respondent may make to the claim the applicant will be making.
If your application is particularly urgent, this will not be a defence for failure to disclose material information to the court, and the order will be immediately discharged, if discovered by the court. This position has been affirmed in the Court of Appeal, in the matter of Deutsche Bank Suisse SA v Khan and others [2013] EWCA Civ 1149.
This duty of full and frank disclosure continues, even after the freezing injunction has been ordered. The applicant must keep the respondent updated as to the applicant’s financial position while the freezing injunction is in place. This is to satisfy the applicant’s ability to satisfy the cross undertakings in damages.
Can we help?
If you have a bona fide claim and believe the party is attempting to dissipate their assets and hide the proceeds offshore, or other company accounts before you’re able to obtain judgment, please know that Griffin Law has extensive experience in obtaining Freezing Injunctions against defendants.
Griffin Law is a dispute resolution firm comprising innovative, proactive, tenacious and commercially-minded lawyers. We pride ourselves on our close client relationships, which are uniquely enhanced by our transparent fee guarantee and a commitment to share the risks of litigation. For more details of our services please email justice@griffin.law or call 01732 52 59 23.
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