A “nuclear weapon”

Described by the Courts as a litigant’s “nuclear weapon”, Worldwide Freezing Orders or freezing injunctions are extremely powerful remedies that a party can use to prevent their opponent from disposing of or dealing with assets or putting them out of reach of enforcement of a Judgment. These injunctions can apply to assets in England and Wales or worldwide and are usually granted only in circumstances of particular urgency and secrecy, without the other party knowing an application is being made, so no opportunity is given to hide assets. They can substantially alter the risks involved in and the costs/benefit analysis of litigation, enabling a claimant to proceed in the knowledge that assets have been frozen and protected by the Court and will be available for the enforcement of any judgment in the proceedings.

Fair presentation

When a freezing order is granted without notice (with only the applying party present), the applicant must give a fair presentation of both sides of the argument. This includes setting out the arguments the absent party would make so that the Judge can make a decision on a properly informed basis. The Judge must be able to rely on a party which appears alone to not present the evidence in a biased or partial manner or to gloss over unhelpful details. This is described by the Court as the duty of full and frank disclosure of all material facts  such as are necessary for the Judge to know when dealing with the applicants. This includes a duty to make all reasonable enquiries to establish the correct position to be put before the Court. In cases which are particularly complex, the Judge hearing the application will often be under time constraints and, as such, an application must be fair in all material respects and not misleading or unfairly one sided.

Effect on the respondent

A freezing injunction takes immediate effect on the respondent and their assets, both within the jurisdiction and worldwide, subject to any necessary supportive enforcement procedures by foreign Courts. For the defendant, the effect can be immediate and devastating.  The initial one-party hearing is followed by a hearing which both sides attend. At this second hearing, the respondent can ask the Judge to discharge the freezing order if the applicant did not fairly present both sides of the case when the respondent was not present. Inevitably, given the urgency of the position, matters proceed very quickly from a respondent’s point of view. While a claimant may have had many weeks or months to prepare the freezing injunction, assisted by an experienced legal team, the respondent will have to react very quickly so as to protect their position. It is essential in these circumstances that a respondent has the right lawyers. One of the first matters which the defendant’s legal team will wish to analyse is whether the claimant made a fair presentation at the original hearing.

Court’s approach

Recent cases have served as a stark reminder of the rigour the Court will apply in assessing the fairness of the original presentation, on an application to discharge a freezing injunction granted in secret. Discharge of the freezing injunction is a real (and expensive) risk for an applicant who has not fairly presented his opponent’s side of the argument. For applicants this emphasises the care that needs to be taken to present an application and to maintain an analytical approach, carefully considering all potentially unhelpful material and drawing that to the Court’s attention as part of a forceful and credible application. For respondents, these recent cases demonstrate the opportunity to obtain discharge of a freezing injunction through cogent demonstration to the Court of the unfairness of the applicant’s presentation at the original hearing.

Grosvenor Law recently acted for the respondent to a US$3bn Worldwide Freezing Order which was obtained without notice to our client. The Order was subsequently discharged by the Court at the inter partes hearing because the applicants had not presented the case fairly at the original hearing. The Judge made severe criticism of the applicants’ unfair presentation, which he described as “serious and culpable” and found that there had been a breach of the duty to make a fair presentation of the case in eight material respects.

Joshua Jefferies is a managing associate at Grosvenor Law and regularly acts in freezing injunction cases.

The contents of our blog posts do not constitute legal advice and are provided for general information purposes only