In fraud cases, a principal objective is usually to safeguard the proceeds of the fraud until trial through the use of "freezing" (formerly "Mareva") injunctions which restrain a party from dealing with its assets. Lord Woolf's reforms on civil procedure have had very little impact on the Court's jurisdiction to make freezing injunctions. In this article we recap on the nature of freezing injunctions and we examine some of the recent developments in this area.
The English Court has jurisdiction (see Section 37 Supreme Court Act 1981) to make freezing injunctions not only for the purposes of English proceedings but also where there are assets within the English Court's jurisdiction, in aid of substantive proceedings in other jurisdictions (see Section 25 Civil Jurisdiction and Judgments Act 1982).
Nature and characteristics of a freezing injunction
A freezing injunction can be granted before judgment in order to prevent the defendant from removing assets from the jurisdiction, or from disposing of or dealing with them within the jurisdiction in such a way as to leave the final judgment unsatisfied. Alternatively, a freezing injunction can be granted after judgment as an aid to execution of an English or a foreign judgment.
A freezing injunction does not give the claimant priority over any other creditors of the defendant or any proprietary rights over the assets of the defendant but, since it acts on the individual, it prevents the defendant from carrying out certain acts in relation to those assets. The order (which takes effect at the moment it is made) is addressed to the defendant in the action but it will attempt to control all assets to which the defendant is beneficially entitled. The standard wording is that the order will apply to the assets of the defendant "whether in his own name or not and whether solely or jointly owned". The Court of Appeal in Federal Bank of the Middle East v. Hadkinson and others  2 AII ER 395 held that this standard wording would not bite on assets held by the defendant as a bare trustee and in which he had no beneficial interest.
One possible solution to the above scenario, if there is some uncertainty over whether assets (e.g. bank accounts) are owned beneficially by the defendant, is that the standard wording should be amended (to e.g. "bank accounts in the name of the defendant") to ensure that they are caught by the terms of the order.
Any third party given notice of a freezing injunction...