In commercial disputes, there are situations where one party fears that the other may dispose of or conceal assets to frustrate the enforcement of a potential judgment. In such cases, a freezing injunction can be a vital tool. This article outlines the key concepts behind freezing injunctions—what they are, how they work, and when they may be used.
What Is a Freezing Injunction?
A freezing injunction is a type of court order that restrains a party from disposing of, dealing with, or diminishing the value of their assets, whether held in the UK or abroad. Its primary function is to preserve the status quo and prevent the defendant from making themselves judgment-proof by moving or hiding assets before a legal claim is resolved.
This remedy does not give the applicant any proprietary right over the assets, nor does it secure the outcome of the case itself. Instead, it ensures that any eventual court judgment has a realistic prospect of being enforced.
What Is the Purpose of a Freezing Injunction?
Freezing injunctions serve to protect the claimant’s ability to enforce a judgment, especially where there is a real risk that the respondent might:
- Transfer funds to offshore accounts;
- Sell or transfer property to related parties at undervalue;
- Move valuable assets outside the jurisdiction;
- Dissipate business or personal wealth in anticipation of litigation.
These injunctions are often sought in cases involving fraud, breach of fiduciary duty, or commercial disputes where substantial sums are at stake. They are particularly effective in urgent scenarios where time is critical, and delay could render legal proceedings meaningless.
Interim Remedy
A freezing injunction is typically sought as an interim remedy, meaning it is granted at an early stage; often before formal proceedings have even begun, or while litigation is ongoing. Because of the urgent nature of such applications, they are frequently made without notice to the respondent (known as ex parte), to prevent tipping them off and allowing time for asset movement.
Once granted, the injunction remains in force for a defined period, subject to further court directions. The respondent will then have an opportunity to respond, and the court will decide whether the injunction should continue.
It’s important to note that courts do not grant such orders lightly. The impact of a freezing injunction on an individual or business can be significant, which is why courts demand a high degree of candour and responsibility from the applicant.
Legal Test
To obtain a freezing injunction, the applicant must satisfy the court that:
- There is a substantive cause of action: There must be an underlying legal claim that is more than merely speculative.
- A good arguable case: The claim must have a reasonable chance of success.
- A real risk of dissipation: The court must be convinced that, without the injunction, there is a genuine risk that the respondent will dispose of assets in such a way as to frustrate enforcement of a judgment.
- The balance of convenience favours the injunction: The potential harm to the claimant if the injunction is not granted outweighs the harm to the respondent if it is.
- Full and frank disclosure: Where the application is made without notice, the applicant must disclose all material facts—including those that may weaken their own case.
In many cases, the court may also require the applicant to provide an undertaking in damages—a financial safeguard in case the injunction later proves to have been wrongly granted.
Conclusion
Freezing injunctions are among the most robust tools available in litigation to protect claimants from financial injustice. However, they are legally complex, procedurally demanding, and carry serious consequences for all parties involved.
If you are concerned that a debtor or opposing party may attempt to hide or move assets to avoid paying a judgment, or if you have received a freezing order and are unsure how to respond, it is essential to act quickly and get specialist legal advice.
Our team has experience advising both claimants and defendants in freezing injunction proceedings and can help you navigate the legal process with clarity and confidence.
If you require any assistance in relation to obtaining or defending a freezing injunction, please contact Partner Jonathan Chan at J.Chan@rfblegal.co.uk.
Jonathan Chan
Litigation Partner
