Definition
A freezing injunction is a court order that restrains a defendant from dispersing or dealing with specified assets. This legal measure is typically taken when there is a significant risk that any judgment against the defendant will be rendered worthless due to asset dissipation. Originally known as a Mareva injunction, it takes its name from the 1975 case Mareva Compania Naviera SA v. International Bulkcarriers SA. The order can apply to assets within the jurisdiction of the English courts and, in exceptional cases, to assets abroad.
Examples
- Domestic Scenario: A company involved in a breach of contract lawsuit may have a freezing injunction placed on their bank accounts and properties to prevent them from transferring assets to avoid fulfilling a potential judgment.
- International Scenario: An individual facing criminal charges for fraud in the UK might have their overseas investments frozen to ensure the enforcement of any financial penalties imposed by a UK court.
- High-Profile Cases: In matters related to high-stakes divorce or insolvency cases, courts may freeze significant property or financial assets to prevent their dissipation before final judgments are made.
Frequently Asked Questions (FAQs)
What is the historical significance of the term “Mareva injunction”?
The term “Mareva injunction” comes from the landmark 1975 case Mareva Compania Naviera SA v International Bulkcarriers SA, which established the legal precedent for freezing orders to prevent asset dissipation.
When can a freezing injunction be granted?
A freezing injunction can be granted when the plaintiff can demonstrate a substantial risk that the defendant may dispose of their assets to avoid satisfying a judgment.
Can a freezing injunction apply to assets abroad?
Yes, although usually granted to prevent assets within the jurisdiction of English courts from leaving, in exceptional circumstances a freezing injunction can extend to assets located abroad.
What assets can be subject to a freezing injunction?
Any assets, including bank accounts, real estate, vehicles, stocks, and bonds, can be subject to a freezing injunction to prevent their dissipation.
How long does a freezing injunction last?
The duration of a freezing injunction varies. It can be temporary, lasting until a certain point in the legal process, or it can extend indefinitely until a court orders otherwise.
Related Terms
- Injunction: A legal order by which a court directs a party to do or refrain from doing certain acts.
- Asset Dissipation: The act of reducing the value or quantity of assets, making them unavailable to meet claims or debts.
- Contempt of Court: Failure to comply with a court order, which can lead to penalties, including fines and imprisonment.
- Receivership: A legal process in which a receiver is appointed to manage and protect the company’s assets during litigation.
Online Resources
- HM Courts & Tribunals Service Guidance on Freezing Orders
- The Judiciary of England and Wales
- LexisNexis Practical Guidance
Suggested Books for Further Studies
- “Injunctions” by David Bean and Isabel Parry – A comprehensive guide to obtaining and enforcing injunctions.
- “Freezing and Search Orders” by Mark W. Horowitz and Mark Heywood QC – In-depth analysis and practical guidance on freezing orders.
- “Law of International Trade: Cross-Border Commercial Transactions” by Jason Chuah – Covers legal principles related to international freezing orders.
Accounting Basics: “Freezing Injunction” Fundamentals Quiz
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