Prejudgment attachments and freezing orders

Australia

Australia

Australian state and federal courts can grant interim freezing orders, which restrain a defendant from disposing of property prior to judgment. These orders are a species of interlocutory orders. Such applications may be filed at the Supreme Court or Federal Court. A freezing order is normally obtained ex parte without notice to the respondent, before service of the originating process, because notice or service may prompt the feared dissipation or dealing with assets. A freezing order or an ancillary order may be limited to assets in Australia or in a defined part of Australia, or may extend to assets anywhere in the world, and may cover all assets without limitation, assets of a particular class, or specific assets. It would therefore be possible for a freezing order to encompass bank accounts as well as assets such as real property, art, securities or motor vehicles. Such orders would, however, normally allow for access to funds for reasonable expenses, living costs and payments in the ordinary course of a defendant or third party’s business. A court may also order a freezing order against a third party, where it can be established that there is a risk that a judgment or prospective judgment may be unsatisfied as a result of a third party’s power, possession or influence over the assets in question. The power to issue a freezing order is a function of courts’ authority to prevent an abuse of the court process by the frustration of court-ordered remedies. A freezing order will be made only to preserve the status quo for the purpose of resolving a substantive cause of action brought by the plaintiff, and not as a stand-alone remedy.

The criteria for the issue of a freezing order is similar to the ordinary principles for the grant of interim relief, as discussed above, although the potentially serious impact on a defendant’s property rights raises the threshold for the granting of a freezing order. This may be overcome by an undertaking as to damages given by the applicant of the freezing order, where the applicant undertakes to submit to such order (if any) as the court may consider to be just for the payment of compensation (to be assessed by the court or as it may direct) to any person affected by the operation of the order. The High Court of Australia described freezing orders as 'a drastic remedy which should not be granted lightly.' Broadly and generally, an applicant must show that: 

  • the applicant has a good arguable case (in the substantive cause of action);
  • the refusal of a freezing order will give rise to a real risk that any judgment pronounced in the action will remain unsatisfied, or that the recovery of any judgment will be prejudiced by reason of the removal by the defendant of assets from the jurisdiction, or their dissipation within it; and
  • the balance of convenience favors the making of the order.

Last modified 19 Jul 2019

Austria

Austria

Austrian courts may grant interim relief measures equivalent to prejudgment attachments and freezing orders. 

Preventive injunctions 

As noted in Interim relief proceedings, Austrian courts may grant a series of preventive measures granted to secure the enforceability of an eventual judgment and may involve freezing a particular state of affairs or assets. 

Like other interim injunctions, they can be sought prior to the initiation of, during the proceedings or after trial. The competent court to hear the application is the court where the substantive proceedings are pending, or when such a measure is sought pre-action, the competent court is the District Court of the domicile (Allgemeiner Gerichtsstand) of the defendant.

In addition to the requirements for injunctive relief specified in Interim relief proceedings, preventive interim injunctions for monetary and non-monetary claims may be granted when: 

  • It is probable that without the requested measure the defendant would impede or considerably impede the enforcement of a claim (e.g. by damaging, destroying or relocating assets); or
  • The defendant has no assets in Austria, and enforcement is not guaranteed by European or international law.

In addition, for monetary claims, the applicant will need to prove:

  • its entitlement to the claim; and
  • its interest in the disposal of the claim. 

Parties may request the following preventive injunctions: 

  • in respect of monetary claims:
    • the deposit or administration of movable goods by the court;
    • the prohibition on the disposal or pledging of movable assets;
    • the prohibition on third parties from providing payments to a person;
    • the administration of a property; and
    • the prohibition on the disposal and pledging of property or certain rights arising from a registration in the Land Register; and
  • in respect of a non-monetary claim, there is no exhaustive list of measures. Accordingly, the court may order all the above as well as orders requiring (i) the applicant to retain custody of the respondent’s property/asset, or (ii) the respondent to take action to preserve the property/asset or prohibit him from taking actions that may adversely affect such property/asset.

In the majority of cases, decisions on applications for preventive injunctions occur in ex parte proceedings (i.e. without notice to the respondent).

The application for a preventive injunction must contain:

  • the names of the parties concerned;
  • the facts establishing the court’s jurisdiction;
  • the legal basis as to why the injunction is requested;
  • the legal interest of the party seeking the injunction;
  • the form of the requested interim relief; and
  • the desired duration.

There is no specific timeframe in which the substantive claim should be brought. The preventive injunction is granted by the court for a certain period of time. After the expiry of this period, the preventive injunction ceases to apply. The creditor can be held liable for any damage suffered by the debtor if the court subsequently finds that the relevant preventive injunction was unjustified. 

Preventive taking of evidence

In addition, orders attaching the defendant’s assets or orders freezing bank accounts may also be granted following an application for the preliminary taking of evidence. These are types of interim injunctions seeking to prevent the loss of or difficulties regarding the use of evidence or if the availability of the evidence is uncertain. 

In the application, the applicant shall identify:

  • the opponent;
  • the facts on which the taking of evidence is to be based;
  • the evidence the applicant is seeking to be secured;
  • the witnesses to be heard and any experts proposed; and
  • the reasons for the application. 

The application is usually filed with the court hearing the main proceedings. However, in urgent cases and if a legal dispute has not yet commenced, the application will need to be filed with the District Court where the object to be attached is located. In case of a freezing order, the local jurisdiction shall be determined by reference to the seat of the credit institution that hold the assets to be frozen.

Last modified 19 Jul 2019

Bahrain

Bahrain

Prejudgment attachments and freezing orders are types of interim relief in Bahrain. Any party may seek a prejudgment attachment by seeking an order from the Court of Execution, to obtain and maintain an attachment over the opposing party’s assets. 

Such applications can either be made during the course of proceedings or prior to substantive proceedings being commenced. Where such applications are made prior to substantive proceedings being commenced, they are usually made on an ex-parte basis.  

Almost all assets (whether moveable or immovable) may be attached. Assets that cannot be attached include: 

  • the home which is the dwelling of the party’s family;
  • furniture and books (i.e. records) necessary for the party to carry on his profession;
  • salaries of staff and employees; and
  • public property or property owned by the state. 

In order for an attachment application to be successful, the claimant must persuade the court that there are valid reasons for the issuance of such an order. The reasons for which a court will order an attachment are not exhaustive but include: 

  • there being a risk that the defendant will dissipate its assets; and/or
  • there being a risk that the defendant has acted (or will act) in a way that will hinder or delay the enforcement of a judgment.  

In circumstances where an attachment is applied for and granted prior to the issuance of substantive proceedings, the law requires substantive proceedings to be filed within eight days of the attachment being effected. Should this not occur, the attachment would be lifted and treated as void. 

An attachment order may be appealed to the competent court within eight days from the date when the party concerned is notified of the attachment order. As the attachment would be approved by a court order, a creditor would not be held liable for any damages caused by the attachment to the debtor, even if the attachment had been wrongly granted.

Last modified 19 Jul 2019

Belgium

Belgium

Prejudgment attachments and freezing orders are types of interim relief measures, and therefore the principles in Interim relief proceedings also apply to these measures. 

Pre-action interim remedies can be requested from the president of the competent court in summary proceedings (action en référé/kortgeding), such proceedings being particularly brief. The president of the court has broad jurisdiction to grant prejudgment attachments and freezing orders provided that the matter is urgent and that the measure is necessary to avoid imminent and unjustified damage. In principle, the president of the court will hear from both parties before deciding whether to grant a prejudgment attachment or a freezing order. In the case of absolute urgency, such measures may be requested in ex parte proceedings, i.e. without the defendant being notified. When deciding whether to grant the requested prejudgment attachment or freezing order, the president of the court will not decide on the merits of the case. 

If prejudgment attachments or freezing orders are granted before the main action has been commenced, they are usually followed by the commencement of proceedings on the merits of the case. Belgian procedural law does not specify a term within which a party must commence proceedings after an attachment or a freezing order has been granted. Instead, the judge granting the order usually sets a term during which such prejudgement attachment or freezing order will be valid but in any event they will lapse after three years. 

Although prejudgement attachments are often followed by proceedings on the merits, this is not always the case. It is possible, for example, that the parties may settle the dispute outside of court or that the proceedings are no longer required because a debtor has paid its debt. Such circumstances would render the commencement of the proceedings otiose.

Like other interim measures, prejudgment and freezing attachments can also be requested from the court hearing the main claim once the proceedings have started. 

Before granting an attachment or freezing order, the court will need to be satisfied that: 

  • the creditor has a prima facie claim against the debtor;
  •  there is a risk that the debtor will alienate its assets to the detriment of its creditor. This condition may also be met in the event that there is a real risk that the debtor will become insolvent by the time the creditor wishes to seize the debtor’s assets; and
  • there is an urgency to protect the debtor’s assets to prevent their alienation or dissipation to the detriment of the creditor.

A hearing will usually be required for the parties to argue their positions in respect of the above requirements. The hearing on an application for a prejudgment attachment or freezing order will take place at least eight days after the application for relief.

If the fulfillment of the requirements above are later disproven, the attachment will cease to apply and the creditor will be held liable for any damages caused to the debtor by the attachment/freezing order/seizure.

Should the court grant the requested attachment/freezing order, the debtor can appeal the court’s decision. 

In principle, all assets can be attached but there are a number of exceptions pertaining to the capacity of the debtor or their financial situation. The creditor can choose the assets he wishes to attach but may be held liable if he or she makes this choice in an abusive manner.

Last modified 19 Jul 2019

Brazil

Brazil

Prejudgment orders and freezing injunctions are categories of interim relief, and therefore the principles noted in Interim relief proceedings apply to applications relating to prejudgment attachments and freezing orders too. 

The Brazilian Code of Civil Procedure allows parties to request prejudgment attachments and freezing orders as provisional remedies before:

  • the court that will have jurisdiction to hear the merits of the main claim if these measures are sought pre-action; or
  • the court that is hearing the main claim if the main proceedings are pending.

For a prejudgment attachment/freezing order to be granted, the plaintiff must include in its application:

  • a brief statement of:
    • the right which the plaintiff is seeking to protect; and
    • the risk of loss to which the plaintiff is exposed; and
  • the irreparable harm that the plaintiff will suffer if the relief sought is not granted. 

Following the plaintiff’s filing of an application seeking an attachment/freezing order, the respondent will be given five business days from the date when he was served to file a defense and specify the evidence that he/she intends to produce. If a defense is not filed within this five business days, the court will:

  • presume that the facts alleged by the plaintiff are correct; and
  • render a final decision on the interim relief application within five business days of the expiry of the term given to the respondent to file their defense. 

If a defense is filed, the judge will either:

  • ask the parties to present their evidence requests; or
  • render a final decision on the interim relief request. There is no timeframe regarding this decision. 

Where a prejudgment attachment/freezing order has been granted, the plaintiff must file a claim on the merits within a maximum of 30 days after the provisional remedy has been enforced. Thereafter, the lawsuit follows the ordinary procedural steps, as described in Section: Procedural steps and timing above.

As noted in Interim relief proceedings, where the plaintiff also argues that the prejudgment attachment/freezing order must be granted on an urgent basis, the provisional remedy can be enforced by the judge inaudita altera pars or ex parte. In this case, neither the opposing party nor its attorney is granted the opportunity to file a defense. There is no provision in the Brazilian Code of Civil Procedure specifying the term within which a judge should analyze the request for an urgent injunction inaudita altera pars, but it usually takes no longer than 48 hours. Whenever a judge grants a prejudgment attachment or a freezing order (or indeed any other interim measure) inaudita altera pars, the party against whom the decision was issued can file an appeal within 15 business days.

If granted, assets will be attached in a specific order of priority:

  • money, in cash or in a deposit or invested at a financial institution;
  • Federal, State and Federal District government bonds listed on the market;
  • bonds and securities listed on the market;
  • land vehicles;
  • real estate property;
  • personal property in general;
  • livestock;
  • vessels and aircraft;
  • membership interests and shares in partnerships and companies;
  • percentage of the revenues of companies;
  • precious stones and metals;
  • rights of acquisition from a promise of sale or a fiduciary sale; and
  • other rights.

If the attachment causes any damages to the respondent, the respondent is entitled to request the competent judge to either:

  • revoke the attachment; or
  • substitute the asset attached.

Frequently, respondents allege that the assets cannot be attached because they are crucial to their survival, for example, their salary or household appliances. 

Creditors can be held liable for damages caused to the respondent when the attachment is based on an urgent request and if:

  • the final judgment is unfavorable to the party who requested the attachment;
  • the plaintiff does not provide the necessary measures to serve the respondent with the lawsuit within five business days of the granting of the pre-action attachment/freezing order;
  • the attachment becomes ineffective; or
  • the judge accepts the respondent’s allegation of statutory limitation period for filing the lawsuit.

Last modified 19 Jul 2019

Canada

Canada

Provincial superior courts and the Federal Court can grant interim freezing orders, known as Mareva orders, which restrain a defendant from disposing of property prior to judgment. Canadian courts issue Mareva orders to prevent possible abuses of process and/or frustration of court-ordered remedies, as would be the case where a defendant is dissipating, or is likely to dissipate, assets so as to frustrate the enforcement of any potential judgment against the defendant. 

Motions for a Mareva order are brought after a proceeding has already been commenced. That said, such motions can be brought:

  • before a defendant has been served with the claim; and
  • without notice to the defendant in order that the motion may achieve the objectives set out in the previous paragraph. 

A Mareva order is an interim order that merely preserves a defendant’s assets until the matter can be resolved on its merits. Accordingly, once a plaintiff obtains a Mareva order, it is incumbent on a plaintiff to seek to obtain judgment on the merits of the case. 

The criteria for the issuance of a Mareva order are similar to the criteria for the issuance of other forms of interim relief. Specifically, to obtain a Mareva order, the moving party must demonstrate the following:

  • a strong prima facie case (i.e. a strong case at first glance);
  • that the defendant has assets in the jurisdiction; and
  • that there is a serious risk that the defendant will remove property or dissipate assets before judgment.

Plaintiffs can be held liable for any damages caused to the defendant by the Mareva order.  In addition to satisfying the above test, a plaintiff seeking a Mareva order must undertake to the court that it will compensate a defendant affected by the Mareva order in circumstances where:

  • the defendant suffers damages as a result of the Mareva order, and
  • the court later finds that the Mareva order should be set aside or should not have been granted in the first place. 

The reach of a Mareva order is broad: it can apply to personal effects, bank accounts, real estate, shares, and income streams, among other things.

Last modified 19 Jul 2019

Chile

Chile

In Chile, prejudgment orders and freezing injunctions do not have the same extension or ends as in common law jurisdictions, and they are measures that the plaintiff can request to the Court before filing a claim in order to prepare for an eventual trial. 

Prejudgment attachments can be classified as preparatory, interim reliefs or probationary. The classification most similar to the common law institution of prejudgment orders and freezing injunctions would be those classified as interim reliefs, therefore the principles noted in Interim relief proceedings apply to those. We will refer to this classification below. 

The plaintiff may request prejudgment attachments and freezing orders as provisional remedies before the court that will have jurisdiction to hear the merits of the main claim. 

For a prejudgment attachment/freezing order to be granted, the plaintiff must include in its application: a brief statement of the right which the plaintiff is seeking to protect, the specific claim that will be filed; the specific amount that will be claimed (to establish the warranty the defendant may file to override the relief); and the risk of loss to which the plaintiff is exposed or irreparable harm that the plaintiff will suffer if the relief sought is not granted. 

Following the plaintiff’s filing of an application seeking an attachment/freezing order, the plaintiff must serve the application within a five day period (or any other period granted by the Court).  Afterwards, the plaintiff must file a claim within a 10 day period, though the court may extend it up to 30 days, if the plaintiff argues it is necessary. If the claim is not filed in time, if the plaintiff does not request  the relief to be maintained or the Court decides not to maintain the relief, the plaintiff will be held liable for any damage to the defendant. 

As noted in Interim relief proceedings, where the plaintiff also argues that the prejudgment attachment/freezing order must be granted urgently, the provisional remedy can be enforced by the judge without hearing the counterparty. If the court concedes the relief, the plaintiff must serve the decision to the defendant within five days, that could be extended if sufficient grounds are submitted. If the defendant is not served in this period, the relief will have no effect. 

The plaintiff can be held liable for damages caused to the defendant when the attachment is based on an urgent request and:

  • the plaintiff does not file a claim within the legal period;
  • the plaintiff files a claim in time, but does not request the attachment/freezing order to be maintained;
  • the court rejects to maintain the attachment/freezing order.

Last modified 14 Jan 2020

China

China

In China, prejudgment attachments and freezing orders are referred to as asset preservation orders. Asset preservation is an important category of the interim reliefs available under PRC law. In the PRC, asset preservation is the equivalent concept to freezing orders. It consists of an ex parte procedure which (as prescribed in various laws) allows applicants to, among other things, seal, seize and freeze assets. Like other types of interim relief, a party can apply for asset preservation both during and prior to the commencement of legal proceedings on the basis that “a party’s conduct or other reasons will make enforcement of the arbitration award / judgment difficult or cause other loss and damages to the applicant.” When necessary, the court is also empowered to make an asset preservation order at its own discretion.

Applications for asset preservation must be made to a court: (i) located in the same place as the properties to be preserved; (ii) located where the respondent is domiciled; or (iii) which has jurisdiction over the case. To apply for asset preservation, the party must submit a written application and provide relevant supporting documents. The written application should detail:

  • information relating to the counterparty;
  • the request for asset preservation;
  • the facts and reasons on which the asset preservation application is based;
  • the requested value of the asset to be preserved; and
  • the need to provide security.

The court may demand the requesting party to provide security if it deems necessary. The amount to be provided as security will usually be limited to no more than 30% of the requested value of the asset to be preserved.

Asset preservation is limited to the assets referred to in the written application or assets related to the case. The types of asset that can be subject to asset preservation include:

  • immovable property, such as land or buildings; and
  • movable property, such as funds in a bank account, vehicles or other objects owned by the party against whom the asset preservation application is being made.

When the asset preservation order has been granted pre-action, the claimant must file the relevant claim subsequently. As with any other interim relief measure granted pre-action, if the claimant fails to commence a court proceeding / arbitration within 30 days of the court’s asset preservation order, the court shall lift the order.

The claimant may be liable for any losses caused to the defendant arising from the preservation of the defendant’s assets if: (i) the asset preservation order was applied in error; or (ii) the claimant is ultimately unsuccessful with its claim.

Last modified 19 Jul 2019

Finland

Finland

All Finnish courts have the power to grant prejudgments attachments and freezing orders, which are precautionary measures that can be either interim or final. The application for any type of precautionary measure shall be delivered to the court where the proceedings of the main claim are pending or, where if no court proceedings are pending, it is usually the court of the defendant’s domicile.

In practice, all kinds of property, shares and / or receivables belonging to an opposing party can be attached by the enforcement authorities up to an amount that secures the applicant’s claim.

An applicant for precautionary measures must prove that:

  • it is probable that he or she holds a debt or prior right to a property against the defendant; and
  • there is a danger that the defendant will hide or destroy the property or otherwise endanger the payment of the debt if the measure is not granted.

In practice, the threshold for granting an injunctive measure or a freezing order is quite low.

As a general rule, an application will not be granted without giving the opposing party an opportunity to be heard (i.e. the applications will usually be made giving the defendant notice). However, to prevent the subject matter of the claim from being compromised, the court may, upon the request of the applicant, grant the relief sought, which remains in force until further notice. If the court determines that the requirements to grant the precautionary measures above have been met, the court may issue its decision within a few days of the application and without notice to the defendant. The decision will then be enforced by the enforcement authorities. In such cases, the defendant will be granted an opportunity to give its response only after the decision on the interim relief has been made and enforced.

If no court proceedings are pending before granting the prejudgment attachment or freezing order, the applicant must bring a claim on the merits within one month of the issue of the relief order by the court. Where the proceedings are not initiated within the said period, or if the case is discontinued, the precautionary measure will be reversed. Based on the written statements of the parties and the evidence presented, the court will later render its final decision on the relief. 

A party seeking relief will, as a general rule, be obliged to provide a security for any loss that the defendant may incur as a result of the relief.

The expenses incurred by the enforcement of the relief shall be covered primarily by the applicant. The issue of the final liability to cover the expenses will be decided, on the request of a party, in the final determination. A party who has unnecessarily resorted to a precautionary measure is liable to compensate the opposing party for the damage caused by the measure and its enforcement and to cover the expenses incurred in relation thereto.

The applicant shall seek enforcement of the court’s prejudgment attachment order from the enforcement authorities.

Last modified 19 Jul 2019

France

France

A civil law claim may be preceded by an interim attachment over a debtor’s assets by way of an ex parte application to either the President of the High Court or the President of the Commercial Court which has jurisdiction. Prejudgment attachments and freezing orders are types of interlocutory measures and can be sought before, during or pending final judgment.

Attachments may target any kind of assets, including immoveable and moveable assets, bank accounts, shares, etc. For the judge to order an interim attachment, two conditions must be met: (i) the debtor’s obligation towards the creditor must appear to be founded; and (ii) the creditor must demonstrate that there are circumstances threatening the repayment of the debt (e.g. the debtor may dissipate its assets). In assessing the former, the judge evaluates whether the evidence prima facie supports the creditor’s cause of action. Where an attachment order is granted, the debtor may seek its withdrawal before the same judge.

The creditor who obtained the attachment order from the judge must attach the asset within three months of the date of the order. After this time, the order is no longer valid. The creditor must commence an action on the merits within a month of the date of the attachment. In the event that the claim is not brought within the stipulated term, or the claim is dismissed in the proceedings on the merits, the creditor is liable for any damages caused to the debtor by the attachment.

Last modified 19 Jul 2019

Germany

Germany

A request to freeze assets or to issue a preliminary injunction has to be filed in the court that is competent to hear the main claim. In the case of a request to freeze assets, the request can also be made to the local court of the district where the assets are located.

Freezing orders attach assets pre-judgment to secure the enforcement of monetary claims (or claims that could become monetary claims). Assets that can be attached generally include movable and immovable property of the debtor, which includes claims and shares of the debtor.

Preliminary injunctions secure the status quo for all non-monetary claims and can either be prohibitory (i.e. refrain from doing a specified act) or, in exceptional cases, mandatory (i.e. requiring a person to take certain actions). 

In order to obtain a freezing order or a preliminary injunction the claimant must have an underlying  claim (Verfügungsanspruch) and demonstrate the need for protection (Verfügungsgrund). In respect of the need for protection, the applicant must show that a change of the status quo might frustrate the enforcement of their rights, or might make such enforcement significantly more difficult. If these preconditions are satisfied, the applicant can obtain temporary relief within days or even hours. The courts generally respond very quickly, especially in cases of breaches of competition law or patent infringements. Generally, the court will not hear the debtor as this might frustrate the purpose of the proceedings. However, once a freezing order or a preliminary injunction is made, the defendant may raise an objection to the decision by way of appeal. There is no deadline for filing this appeal. If the main action has not been started, the court can also order the party in whose favor a freezing order or a preliminary injunction has been granted to bring a claim within a deadline set by the court. If the claim is not filed within this deadline, the attachment can be lifted.

If the court decides that the freezing order or preliminary injunction was granted without merit, the party which obtained the order is under an obligation to compensate its opponent for any damages it has suffered as a result of:

  • the freezing order or the preliminary injunction;
  • its opponent having provided security in order to:
    • avoid a freezing order or the preliminary injunction being granted; or
    • obtain the repeal of such order.

Last modified 19 Jul 2019

Hong Kong, SAR

Hong Kong, SAR

Hong Kong courts can grant an interim freezing order, known as a Mareva injunction, which restrains a party from disposing of or dissipating its assets pending final judgment. A Mareva injunction is a type of interim relief, but the requirements that claimants must satisfy in order to obtain one are slightly different from the requirements referred to in Interim relief proceedings, as further explained below.

It is possible to apply for a Mareva inunction to freeze any valuable assets of the defendant such as money in bank accounts, real properties, or shares in companies. However, the Mareva injunction will only operate to restrain the defendant from diminishing the value of their assets to less than the amount (usually the amount claimed by the claimant) specified in the injunction order.

The initial application for a Mareva injunction can be made either to the Court of First Instance or the District Court and is usually heard on an ex parte basis. Like other types of interlocutory applications, if a party applies for a Mareva injunction before an action is commenced, the injunction applied for may be granted by the court with a condition requiring the party to issue a writ of summons immediately or as soon as reasonably practical.

Any orders given ex parte will generally operate only for a limited period of time until the matter can be brought to a hearing involving all parties (i.e. an inter partes hearing). An applicant seeking a Mareva injunction on an ex parte basis must provide full and frank disclosure of all matters relevant to the case, and will normally be obliged to give an undertaking to pay compensation for any losses or damage suffered by the opposing party in the event that the applicant later fails to prove that they are entitled to such an injunction order.

To obtain a Mareva injunction, an applicant must show that:

  • it has a good arguable case on a substantive claim (i.e. a higher threshold than an application for an interlocutory injunction to restrain the commission of any allegedly wrongful act) which has already been commenced or is about to be commenced against the other party;
  • the other party has assets within the jurisdiction;
  • there is a real risk that the counterparty will dissipate or dispose of its assets unless restrained by the court; and
  • the balance of convenience lies in favor of granting the injunction.

If the claimant asserts a proprietary claim over an asset currently in the possession of the defendant, the claimant may also apply for what is known as a proprietary injunction to restrain the defendant from disposing of or taking any action to diminish the value of the asset in question until final judgment.

To obtain a proprietary injunction, the applicant must show that:

  • there is a serious case to be tried as to whether the applicant is the rightful owner of the asset;
  • something ought to be done for the security of the asset, and that monetary compensation given at trial would not be an adequate remedy for the applicant; and
  • the balance of convenience lies in favor of granting an injunction.

Last modified 19 Jul 2019

Hungary

Hungary

In Hungary, there are no prejudgment attachments or freezing orders available. If the parties wish to secure movable or unmovable property in Hungary, they may seek to obtain: (i) a security measure; or (ii) register that there is a pending litigation in the land registry. These measures are not categories of interim relief. They can be distinguished from interim relief measures because: (i) the former are aimed at securing the future satisfaction of a claim, while an interim relief may also serve to prevent further damages, or to preserve the status quo; and (ii) a security measure is ordered in a standalone court procedure, while interim relief measures may be ordered during or in connection with a litigation (including prior to filing a statement of claim).

Security measure

A security measure is an instrument similar to a prejudgment attachment or a freezing order under Hungarian law. A security measure may be requested in two types of cases:

  • if the creditor’s claim is based on a resolution or judgment, which is not yet enforceable (e.g. the appeal period or the deadline to perform has not lapsed yet); or
  • if there is an ongoing litigation or arbitration on the same matter and both:
    • the amount; and
    • the date when the amount will be owed,
      is evidenced with a public deed, or a private deed with full probative effect (private deeds with full probative effect are inter alia deeds where signatures are notarized or endorsed by two witnesses, or if representatives of business associations duly execute them).

In order to request a security measure, the creditor must also demonstrate that the enforcement of its claim post-judgment is in jeopardy.

The purpose of a security measure is to secure the enforcement of claims that meet the above requirements. The security measure can secure a monetary claim, or to the sequestration of specific objects. The measure is enforced by a bailiff. Any object or asset may be subject to a security measure, including movable and immovable assets, or shares. 

General jurisdiction rules apply for the security measure as well; meaning that generally the request has to be filed with the court of the debtor’s residence. If there is ongoing litigation on the same matter, the same court has jurisdiction over the security measure. However, as the security measure procedure may also be pursued to secure claims in relation to which judgment has already been given but are not enforceable, the security measure may not have to be followed by a decision on merits.

Creditors are generally not liable for any damages the security measure may cause to the debtor. In exceptional circumstances, for example, when a creditor has acted fraudulently or abused a debtor’s rights, the creditor may be held liable, but this seldom happens.

Registration of litigation in case of property claims

A special kind of freezing order in Hungarian law is the registration of litigation in the land registry. This measure only applies in the case of immovable property. If the subject of the litigation is the ownership of immovable property, the plaintiff may ask the court to register the litigation on the land registry sheet of the property. Such a measure cannot be requested before filing a statement of claim. The court does not have to notify the defendant about such request and may order the registration of litigation prior to serving the statement of claim on the defendant.

Strictly speaking, this will not result in a freezing order, but after the registration of litigation takes place, all other rights and obligations will only be registered provisionally in the land registry, with their final registration depending on the outcome of the litigation. So, for example, if someone sues for the ownership of a property, and the litigation is registered, the owner may still sell the property during the litigation. However, if the plaintiff wins, the ownership of the buyer will be removed from the land registry.  

Plaintiffs are generally not liable for any damages the registration of litigation may cause to the defendant. In exceptional circumstances, for example, when a plaintiff has acted fraudulently or abused a defendant’s rights, the court could in theory hold a plaintiff liable for such damages, but we are not aware of any decisions when such liability has been found.

Last modified 19 Jul 2019

Italy

Italy

In Italy there are no prejudgment attachments or freezing orders.  However, some interim measures, such as seizure (sequestro) (also referred to in Interim relief proceedings), have the same effect as a prejudgment attachment or freezing order and prevent a defendant from dealing with the assets seized.

In order for a seizure to be granted, the applicant will need to prove the same requirements as those that need to be proved for the granting of all the other interim measures, namely:

  • the fumus boni iuris, that is a prima facie case of the right claimed; and
  • the periculum in mora, that is a well-founded risk that the right which the interim measure seeks to safeguard may be irreparably harmed whilst the dispute is pending.

As with all other interim measures, the request is to be filed:

  • before ordinary proceedings have started, in front of the judge that would be competent for the ordinary proceedings. If a foreign judge would be competent for the ordinary proceedings, the request is to be filed in front of the judge in the place where the measure is to be enforced;
  • pending the ordinary proceedings, in front of the judge that is in charge of the ordinary proceeding.

As with all other interim measures, the seizure can be granted ex parte whenever participation by the other party in the hearing would endanger the positive outcome of the measure. In such circumstances, a hearing must be scheduled no later than 15 days after the measure is granted and, at the hearing, the measure can be confirmed, amended or revoked.

Assets that can be seized include movable and immoveable assets and claims on third parties, with the exception of all those goods whose seizure is forbidden by the law (e.g. furniture that is necessary for the debtor and the debtor's family to live).

As with all other interim measures, the judge granting the seizure shall set a timeframe, which will not be longer than 60 days, within which a claim on the merits shall be commenced. Where the timeframe is not adhered to, the interim measure will become ineffective.

There is no specific provision that sets out the liability of a creditor for the damage it has caused to the debtor by an interim measure. However, the general rule regarding responsibility for causing losses to third parties contained in Article 96 of the Italian Code of Civil Procedure may apply. Therefore, if the party that requested the seizure loses the merit phase of the proceedings and it turns out that it acted in bad faith or with gross negligence, it may be held responsible for all the damages caused to the counterparty. Moreover, a creditor may be held responsible for any damages caused to the debtor by the seizure if: (i) it is later found that the right for which the seizure was granted does not exist; and (ii) the creditor acted without the necessary diligence.

In addition to seizures and other interim measures having similar effect, within ordinary proceedings and at the request of a party, a judge can order the payment of sums or the delivery of assets before the end of the proceedings. Such order can be made when: (i) the sums are not disputed by the parties; (ii) the conditions required for a seizure referred to above are met; or (iii) at the end of the evidence phase the judge deems that the claimant's right to payment or the delivery of assets has been proven. The purpose of such orders is to enable enforceable decisions on certain matters to be made in a shorter time than the judge may need to reach a final decision. These orders allow the party to commence an enforcement procedure, in line with normal enforcement proceedings.

Last modified 19 Jul 2019

Ireland

Ireland

Prejudgment freezing orders are a form of interlocutory order which restrain a defendant from disposing of assets or property so as to frustrate an actual or anticipated court order. In Ireland these are also referred to as Mareva injunctions.

Freezing orders can restrain a defendant in respect of assets within Ireland and overseas (though local enforcement proceedings may be advisable to safeguard the effect of the order). It is important to note that an order will only restrain the defendant from dealing with the assets and does not give the plaintiff any right to them.

The court has discretion as to whether to grant a freezing order and will do so only if:

  • There is a substantive cause of action capable of being enforced against the other party;
  • The applicant has a good arguable case (and the burden of proof here lies solely with the applicant);
  • The applicant can establish that the respondent has assets and that there is a real risk that they will remove the assets or otherwise dispose of them in some way with the sole view that the applicant would not be able to recover what is due to them and that the court order (or anticipated order would be frustrated). There must be evidence of intention on the respondent’s part in this respect (and it is not enough to show that the assets are likely to be disposed of in the ordinary course of business);
  • The assets are capable of being frozen;
  • The balance of convenience lies in favour of granting the injunction.

The usual requirements for injunction applications will also apply (full and frank disclosure, undertaking as to damages etc).

Last modified 27 May 2021

Japan

Japan

As noted in Interim relief proceedings, plaintiffs wishing to secure assets may apply for the following types of provisional remedies by filing a petition at the district courts:

  • in respect of monetary claims, a provisional attachment order, which will freeze the debtor’s assets including immovable and movable assets, bank accounts, shares and monetary claims to third parties in order to secure collection of the monetary claim; or
  • in respect of non-monetary claims, a provisional disposition order to prevent a debtor from disposing of a property the subject of the dispute to any third party.

The procedure for these civil provisional remedies is generally ex parte.

The courts will only award these provisional remedies where the creditor can substantiate an underlying claim and demonstrate that there is an imminent risk that an eventual judgment would become impossible to enforce without provisional protection. It takes only a few days from the application being filed to the remedy being awarded. The provisional remedy is revocable by the court if: (i) the creditor does not file a substantive claim within the period stipulated in the court order made in response to the provisional remedy application (the minimum period which will be stipulated is two weeks); or (ii) a creditor’s claim is rejected in the final judgment by the courts. A creditor may be liable for damages suffered by an obligor as a result of the application of provisional remedies.

Civil execution is a procedure by which an obligee may compel an obligor’s payment of a debt by seizure and sale of the obligor’s property. For instance, if a debtor fails to make a monetary payment due under a contract, the creditor (based upon a claim that has been affirmed by a judgment or a judicial settlement) may be granted the right to seize the debtor’s property, sell it by auction, and distribute the proceeds in satisfaction of the claim.

Last modified 19 Jul 2019

Kuwait

Kuwait

A plaintiff may seek a prejudgment attachment by seeking an order of the Court of Urgent Affairs, to obtain and maintain an attachment over a party’s assets before the commencement of the hearings. Conservatory attachments can be made only to movable assets and can be on third parties. The procedure is ex parte, and a prejudgment attachment must always be followed by a claim on the merits, which should be brought within eight days after attaching the assets.

A protective attachment may be obtained and maintained in the following circumstances:

  • the claimed amount is ascertainable and immediately payable;
  • the plaintiff could suffer irreversible damage without the attachment; and
  • if the plaintiff has not already done so, substantive action is commenced within eight days of the issuance of the attachment order.

Upon the grant of such interim relief, the judge issues an execution order. This order is passed to the Execution Department at the Ministry of Justice, which implements the enforcement of such relief.

The creditor can be liable for damages caused to the debtor by the attachment (if mala fide). The court will examine the intentions of the plaintiff, because the right to take legal action is a constitutional right.

Last modified 19 Jul 2019

Mexico

Mexico

Precautionary measures (providencias precautorias) are categories of interim relief that allow for the withholding of any movable and immovable assets owned by the adverse party if:

  • there is a well-founded risk that the assets that have been consigned as collateral or the assets upon which a proprietary action is going to be exercised will be disposed of, concealed, dilapidated, alienated or insufficient; and
  • in the case of personal actions, the value of the debtor’s assets does not exceed the value of the creditor’s claim for attachment, and there is a well-founded risk of the disposal, concealment, dilapidation or alienation of such assets.

Where the assets in question consist of cash or cash deposits in credit institutions, or other replaceable goods, it shall be presumed that there is a risk that they may be or will be disposed of, hidden or dilapidated, except where the defendant guarantees the amount of the debt.

Precautionary measures are granted to protect the plaintiff’s interests, where no alternative remedy would achieve the same result. The measures only stay in place until an enforceable judgment has been obtained and they can be converted into a legal seizure.

Prejudgment attachments should always be followed by a claim on the merits. Such claim must be brought within three to five days of the grant of the prejudgment attachment.

Precautionary measures may be granted by the court, both before trial, or after delivering any interlocutory judgments. Where they are issued before trial, the ruling may be issued ex parte (i.e. without summoning the person against whom the measures are sought), as long as the above requirements have been met.

The creditor can be liable for any damages caused to the debtor by the attachment. The judge will typically order the requesting party to exhibit a sufficient guarantee covering any such damages prior to issuing the attachment order.

Last modified 19 Jul 2019

Netherlands

Netherlands

Ordinary civil proceedings (including interim relief proceedings), may be preceded by a prejudgment attachment, which is a measure used to obtain security for the recovery of a claim. Although a prejudgment attachment may be provisional in nature, the procedure for obtaining it is distinct from interim relief proceedings.

The request to attach / freeze the assets of the debtor should include details of the underlying principal claim and supporting evidence, as well as a clear description of the assets a party wishes to attach. Immoveable and moveable assets (such as real estate, cars, art objects, boats and inventory), claims (including claims on banks i.e. the alleged debtor’s bank accounts) and shares may all be attached.

The judge assesses whether the evidence prima facie supports the alleged creditor’s course of action. The interim relief judge will not hear the alleged debtor, as the procedure is ex parte. After receiving the judge’s approval, a bailiff can attach the assets. The procedure for this depends on the type of asset. In general it is relatively easy, and if an urgent interest is deemed to exist (for example if a reasonable fear of embezzlement exists) judges might even grant approval the same day.

In contrast to interim relief proceedings, a prejudgment attachment must always be followed by a civil claim on the merits, which can be filed in the Netherlands or anywhere else. The claim must usually be brought within two weeks after attaching the assets. However, in complex or international cases the judge might set a longer term. If the claim is not brought within the stipulated term, the attachments are lifted by operation of law. If this happens, or if the claim is dismissed in the proceedings on the merits, the creditor might be liable for any damages caused to the debtor by the attachment(s).

Last modified 19 Jul 2019

New Zealand

New Zealand

Freezing orders are a type of interim relief, which restrain a defendant from disposing of property prior to judgment.  These applications are usually made in the High Court, and they can be made on a 'ex parte' (or without notice) basis, if there are good reasons for that, i.e. that notice or service may prompt the feared dissipation or dealing with assets. 

A freezing order or an ancillary order can be made over any type of assets, for example bank accounts, shares, real property or motor vehicles, but will generally be limited to those assets within New Zealand. 

A freezing order will be made only to preserve the status quo for the purpose of resolving a substantive cause of action brought by the plaintiff, and not as a stand-alone remedy.

The criteria for the issue of a freezing order is similar to the ordinary principles for the grant of interim relief, as discussed above, although the potentially serious impact on a defendant's property rights raises the threshold for the granting of a freezing order. Generally, an applicant must show that:

  • the applicant has a good arguable case (in the substantive cause of action);
  • the refusal of a freezing order will give rise to a real risk that any judgment pronounced in the action will remain unsatisfied, or that the recovery of any judgment will be prejudiced by reason of the removal by the defendant of assets from the jurisdiction, or their dissipation within it; and
  • the balance of convenience favours the making of the order. 

An applicant for a freezing order is required to provide an undertaking as to damages, where the applicant undertakes to submit to an order of the Court for the payment of compensation to any person affected by the operation of the order, should the applicant be ultimately unsuccessful in the substantive cause of action.

Last modified 20 Dec 2019

Norway

Norway

Prejdugement attachments and freezing orders are a category of interim relief, and hence governed by the same principles as set out in Interim relief proceedings. This form of relief is temporary and may be obtained before main proceedings are commenced. An application should be submitted to the district court where the defendant is ordinarily domiciled or, in the case of attachments, where assets belonging to the defendant are or are expected to arrive in the foreseeable future.

Norwegian courts have the power to order attachment of assets. Such order of attachment can relate to any object / asset which can be converted to money and belongs to the defendant. The exemptions are very limited, and are drawn up to protect private individuals from losing essential assets such as clothing and the ability to sustain their means of livelihood.

The interim measures may only be granted if both the substantive claim underpinning the interim proceedings and the basis for why interim relief is necessary are established on the balance of probabilities. Main proceedings must ordinarily be commenced within two weeks of interim relief being ordered. A party may represent themself without the need for counsel, although this is a rarity.

Norwegian courts may order the party requesting such relief to provide security for any compensation that may subsequently be awarded to the other party for any unjustifiable loss it suffers as a result of the relief given. An asset arrest may be discharged if new evidence emerges showing that the claim or the basis for security no longer exists. It may also be discharged if the petitioner improperly delays the main proceedings.

Last modified 19 Jul 2019

Poland

Poland

As noted in Interim relief proceedings, prejudgment attachments and freezing orders are interim relief measures, referred to in the CPC as security. Security may be sought in any civil case heard by a court or an arbitration tribunal. The court may grant security prior to the commencement or during the course of the proceedings. In principle, the court competent to hear a case at first instance is also competent to grant security.

Security may be sought by any party to or participant in or before the proceedings if the party / participant substantiates its claim and legal interest (demonstrates prima facie that its claim is legitimate and has a legal basis) in having the security or injunction granted. A legal interest in having the security or injunction granted exists where the absence of security or injunction would prevent or significantly hinder the enforcement of a judgment issued in the case, or would otherwise prevent or significantly hinder the achievement of the objective of the proceedings. Except as otherwise provided by law, no security may be sought to satisfy a claim.

Pecuniary claims can be secured through:

  • attachment of movable property, remuneration for work, bank account receivables, other receivables or other property rights;
  • encumbrance of the debtor’s immovable property with a compulsory mortgage;
  • injunction prohibiting the transfer or encumbrance of immovable property which has no land and mortgage register or whose land and mortgage register has been lost or destroyed;
  • encumbrance of a ship or a ship under construction with a maritime mortgage;
  • injunction prohibiting the sale of a cooperative title to premises; or
  • receivership established over an enterprise, agricultural farm or plant constituting part of the enterprise (in whole or in part).

With respect to claims other than pecuniary claims, the court shall grant such an injunction as it considers appropriate in the circumstances, not excluding a security or injunction applicable to pecuniary claims. In particular, the court may:

  • regulate the rights and obligations of the parties to or participants in proceedings or pending proceedings;
  • prohibit the disposal of assets or rights involved in the proceedings;
  • stay enforcement or other proceedings aimed at enforcing a decision;
  • decide on the custody of minors and contact with a child; or
  • order that a relevant warning notice be recorded in a land and mortgage register or another relevant register.

In principle, the court should grant the methods of securing the claims preferred by the claimant.

The process takes place ex parte, i.e. except as otherwise provided by a specific regulation, an order granting security issued in the judge’s chambers and enforceable by an enforcement authority is only served on the creditor. Service on the debtor is effected by the enforcement authority after the order has been made. In the case of an order granting security, the creditor’s appeal or the decision of the court of second instance regarding the appeal will not be served on the debtor when the decision is enforceable by an enforcement authority.

A prejudgment attachment must always be followed by a claim on the merits. If the court grants security before proceedings are commenced, the court will set a deadline for filing the statement of claim of two weeks from the order granting security. Security will be lifted if (i) the statement of claim is not filed by the deadline set by the court; or (ii) the creditor (a) does not pursue the entire secured claim; or (b) pursues a claim other than that which was secured.

Equally, if (i) the creditor fails to file a statement of claim by the prescribed deadline or withdraws a statement of claim; (ii) a statement of claim is returned or rejected; (iii) an action is dismissed; (iv) proceedings are discontinued; or (v) the creditor does not pursue the entire claim or pursues a claim other than that which was secured, the debtor may claim damages against the creditor for losses caused by the enforcement of security. The claim for damages has a one-year limitation period from the date when the statement of claim is returned or rejected, or an action is dismissed or proceedings are discontinued. If an appeal is filed with the Supreme Court, the one-year time limit will start running on the day the proceedings initiated by the filing thereof are concluded with a judgment or decision that cannot be challenged.

Last modified 19 Jul 2019

Qatar

Qatar

In Qatar, prejudgement attachments are referred to as precautionary attachments. In summary, a precautionary attachment can be sought from the Court of First Instance either as a precautionary measure or as an enforcement measure.

A precautionary attachment may be granted in circumstances where a party can prove: (i) that it is owed a due and payable debt; and (ii) the debtor is at risk of dissipating its assets and / or a flight risk.

An application for a precautionary attachment is an ex parte application which requires substantive proceedings on the merits to be filed, by way of a claim, within two weeks of the application being granted.

Any fixed and / or movable assets of the debtor are liable to attachment, including:

  • licenses and registrations (including its trade / commercial license and accounts with the labor/immigration authorities);
  • fixed assets (including real property);
  • moveable assets (including bank accounts, plant, office furniture, machinery and securities); and
  • receivables owed to the debtor from third parties in Qatar (including debts and liabilities).

Once an attachment order is granted, the court will write to various institutions where a debtor may have assets, and the governmental bodies who regulate them. Those institutions include:

  • the central bank;
  • the real property registration authority;
  • the commercial licensing authorities;
  • the vehicle registration authorities; and
  • the stock exchange.

In its letters, the court will confirm the value of attachment and request the relevant institutions to confirm the debtor’s assets that are held by and / or registered by them. The court will then ask for attachment to take place over the assets to the relevant value.

The court can also attach specific assets that the applicant believes are in the possession of a third party but are owned by the debtor. This includes instances where the debtor has goods in the warehouse of a third party or receivables / debts owed to it under a contract or some other instrument. The difficulty with placing an attachment on such assets is an evidential one; not only must the applicant be aware of the existence of the relevant assets / debts / receivables, it must also prove to the court that the assets belong to the debtor.

In circumstances where a debtor’s assets are not sufficient to satisfy the value of the attachment, it is possible that some or all of its assets will be subject to attachment (to the extent they are discovered) regardless of whether or not they have any monetary value. (For example, an empty / overdrawn bank account or plant / machinery whose depreciation value is zero may nevertheless be subject to attachment).

The effects of an attachment is that assets are effectively frozen. For example, bank accounts are frozen and cannot be operated by their holder, and moveable assets and / or property are affixed with signs or seals to identify that they have been attached and cannot therefore be used. 

It is also possible for a party to seek to impose travel bans on the authorized signatories and / or managers of the debtor. The individuals at risk will usually be those that are listed on the commercial license of the debtor.

There are two ways in which a party may lift an attachment on its assets:

  • by providing security to the Court Treasury. Once this security is provided, the attachment can be transferred to the security, and so released from the debtor’s assets. The form of security is at the discretion of the court and can include:
    • a payment into the Court Treasury for the amount of the attachment. Such payment can be made by a third party, such as any other debtor entity on behalf of the debtor; and / or
    • the authorized signatory(ies) and / or manager(s) of the debtor depositing their travel documents with the Court; or
  • by successfully challenging the attachment. Challenges to an attachment proceed through the following tiered appeal system:
    • an initial grievance before the court that granted the attachment. It may be possible to successfully discharge a precautionary attachment after a successful grievance which usually takes three to four weeks to resolve (assuming that service of proceedings is effected swiftly);
    • an appeal before the higher Court of Appeal; and
    • an appeal before the Court of Cassation.

An attachment, if granted, remains in place while the challenge to the attachment is being considered, which can take up to two years to conclude.

It is not possible for the debtor to claim damages incurred as a result of the attachment.

Last modified 19 Jul 2019

Romania

Romania

In order to preserve the status quo or to prevent the defendant from trying to dispose of his assets prior to a final judgment, Romanian courts can grant several types of provisional measures. These provisional measures and the interim relief referred to in Interim relief proceedings are both special proceedings and have in some ways similarities in that, for example, they have a temporary nature. However, (i) provisional measures ordered to preserve the status quo or to prevent the defendant from trying to dispose of his assets prior to a final judgment; and (ii) interim relief ordered to preserve the claimant’s rights, or to prevent irreparable damage to the claimant, until a final decision on the merits of the case is granted, require distinct procedures under Romanian law.

Among the provisional measures that Romanian courts can grant, of the highest importance and utility in practice are the freezing of immovable assets and the freezing of bank accounts. In general, the provisional measures are granted by the same courts that have jurisdiction over the merits of the substantive claim.

Although each measure has individual admissibility conditions, there are several features common to them all:

  • the judge has discretion in granting the interim measure, taking into account:
    • the risks associated with delay; and
    • the prima facie analysis of the claimant’s right;
  • in most cases, the law requires the claimant to deposit a security of a variable amount (up to 20% of the amount of the claim, or, in certain exceptional cases, 50% of the amount of the claim);
  • the interested party must produce the proof that the claim on the merits has been filed previously to the filing of the provisional measures request. Accordingly, these provisional measures cannot be requested pre-action; and
  • the measures granted by the court are usually for a limited time period, until a final decision is rendered on the merits of the case.

The claimant can request the attachment of any movable or immovable assets belonging to the defendant (with limited exceptions such as personal or domestic use assets which are necessary for the daily living of the defendant or his family, letters, photos, etc.) or the freezing of bank accounts. It is not necessary for the claimant to identify in their request either the assets or the bank accounts.

The procedure is resolved in the first instance without the summoning of the parties. The appeal must be filed within five days of the decision and it is mandatory for the court to summon the parties for the hearing of such appeal. Claimants can be held liable for damage caused to the defendant by the attachment should the court subsequently find that the attachment should not have been granted.

Last modified 19 Jul 2019

Russia

Russia

Pre-judgment attachments / freezing orders are categories of interim relief intended to secure the assets before the statement of claim is submitted to the court. The respective application may be filed to the court, for example, at the claimant’s registered address, or at the location of monetary assets or other property in respect of which the preliminary relief is requested.

The application should specify the subject-matter of the case, the reason for seeking the preliminary injunction and the relief sought, for example: attachment of respondent’s property or funds in a bank account or transfer of the item in dispute into the custody of the claimant or a third party. The respondent’s money and other assets may be subject to a freezing order.

When submitting such application, the applicant is usually required to also provide counter security (by way of a bank guarantee, deposit etc.) in the amount of the relief sought. A preliminary injunction is granted ex parte and state commercial courts are reluctant to grant preliminary injunctive relief even if sufficient counter security is provided by the applicant

If the preliminary injunctive relief is granted, the claim on the merits must be submitted to the court within a period set by the court, which will be no more than 15 days, otherwise the injunction will be lifted. If the claim is not brought within the stipulated time period, or the claim is later dismissed on the merits, the claimant will also be liable for the damages of the respondent arising from the injunction.

Last modified 19 Jul 2019

Saudi Arabia

Saudi Arabia

Saudi law does not explicitly categorise prejudgment attachments, such as freezing orders, as a type of interim relief. However, Saudi law gives judges a wide discretion as to what can be granted as interim relief, subject to the conditions listed under the Enforcement Law, which completes and supplements the application of the Civil Procedures Law. In the circumstances, (i) when the debtor has no established residence in the Kingdom; or (ii) when there is a risk of dissipation of assets, a claimant may make an application to the judge hearing the main claim, asking the judge to attach or freeze a defendant's asset(s). Such application may be made during the consideration of the main claim, or immediately before proceedings are commenced. However, it is extremely rare for this type of application to be made before the judge hearing the main claim.

In practice, attachments are ordered by the enforcement courts. In other words, in circumstances (i) and (ii) referred to in the preceding paragraph, Saudi judges usually seek to expedite the main proceedings and provide a final judgment as quickly as possible. Accordingly, claimants usually first establish their claims and obtain a judgement on the merits, and then they seek to attach or freeze the defendant's assets before the enforcement courts. As per the Enforcement law, the enforcement judge would most likely entrust the defendants with the custody of the attached assets on the condition of providing a guarantee or solvent guarantor. If the defendant refuses to retain the attached assets under their custody, or fails to provide a security or guarantor, the judge shall appoint a certified guardian to keep the attached assets under his / her custody. 

According to the Enforcement Law, all of the debtor's assets shall guarantee their debts. However, attachment of the debtor's assets shall not apply to the following:

  • assets that are owned by the Kingdom;
  • the residence of the debtor and their dependents, unless it is pledged to the creditors;
  • means of transport of the debtor and their dependents, unless it is pledged to the creditors;
  • wages and salaries, except for:
    • one-half of the total wage or salary in order to pay the alimony and child support; or
    • one-third of the total wage or salary in order to pay for other debts;
  • tools necessary for the debtor to practice their profession; and
  • in relation to the debtor's personal items, the judge will decide which items would be considered adequate for the debtor.

Last modified 19 Jul 2019

Spain

Spain

Prejudgment attachments and freezing orders are types of interim relief. They can be applied for both before and during the proceedings. An application for a prejudgment attachment or freezing order should be made before the court that will be competent to hear the dispute once proceedings are commenced, or before the court hearing the dispute in the event that the freezing order is sought during the proceedings.

These measures are initiated by the plaintiff (or future plaintiff) in the main proceedings. In principle, the court is required to hear both parties. However, if there is urgency and there is a risk that the property to which the attachment / freezing order relates may disappear before the court can hear the parties, the court will make its decision without hearing the debtor (in absentia or ex parte). It is mandatory for parties to be assisted in the hearing by a lawyer and legal representative (procurador de los tribunales).

In order to be successful, an applicant seeking a prejudgment attachment / freezing order will need to satisfy the criteria for granting interim measures referred to in Interim relief proceedings, briefly: (i) appearance of a good claim; (ii) risk of irreparable harm if the granting prejudgment of the attachment / freezing order is delayed; and (iii) offer of security to the court. The assets that can be attached by way of a prejudgment attachment or freezing order are: money or bank accounts of any kind; credits; securities or other financial instruments; immoveable assets or remuneration; and pensions and income from self-employed professional and commercial activities.

Where prejudgment attachments and freezing orders are requested before issuing the claim, the party requesting the relief must plead and prove urgency or necessity. Pre-action measures will become void if the main claim is not brought before the same court within 20 days of granting such pre-action relief.

If the claimant is eventually unsuccessful in its claim or the court later finds that the prejudgment attachment or freezing order was granted wrongly, it could be held liable for any damages caused to the debtor by the prejudgment attachment or freezing order.

Last modified 19 Jul 2019

Sweden

Sweden

In Sweden, prejudgment attachments / freezing orders are types of interim relief. A request to attach / freeze assets of a debtor should be filed in the court that will hear the substantive claim (or is hearing the substantive claim if the request is made while the proceedings are pending). All assets that may be subject to enforcement (for example, immoveable and moveable assets, claims on third parties and shares) may be attached or frozen.

The judge will assess whether the evidence prima facie supports the creditor’s claims and may decide not to hear the debtor’s response before granting the measure (i.e. the measures may be granted ex parte) if there is a risk that the property will be disposed of in the meantime. A prejudgment attachment must be followed by a claim on the merits within one month, otherwise the attachment will be lifted. The creditor can be held liable for damage inflicted on the debtor by the attachment.

Last modified 19 Jul 2019

Thailand

Thailand

The prejudgment attachments and freezing orders are categories of interim relief. A claimant is entitled to file, with its complaint or at any time before judgment, an ex parte application requesting the court for an attachment order. The claimant must file such a request at the same Court of First Instance that it filed its complaint at.

Any objects / assets can be attached, including (without limitation): immovable and movable assets, IP rights, claims on third parties and company shares.

The court must generally be satisfied that:

  • the claimant has a fair and reasonable cause and sufficient grounds for applying for the protective measures; and
  • the defendant intends to remove the whole or part of the property in dispute from the jurisdiction of the court, or transfer, sell or dispose of such property, in order to delay or obstruct the execution of any order made against it or in order to prejudice the claimant.

The court may also grant such an order on any other ground that it thinks is fair and reasonable.

The request for a prejudgment attachment and freezing order will need to be made in parallel with the claim on merits.

The applicant of an attachment order can be liable for any damages caused to the defendant by the attachment on the following grounds:

  • the applicant is unsuccessful and had misled the court into believing that its application had merit; or
  • regardless of whether the applicant is successful or not, it misled the court into believing it had satisfied the grounds to request for interim relief.

Last modified 19 Jul 2019

UK - England & Wales UK - England & Wales

UK - England & Wales

Freezing orders are a type of interim relief. Like other types of interim relief, a freezing order can only be granted before proceedings are commenced if the matter is urgent or it is otherwise necessary to do so in the interest of justice. Where no claim form has been issued, the applicant will be required to undertake to the court that it will issue a claim form immediately or as directed by the court. 

Freezing orders can be obtained from the courts in respect of assets within England and Wales or beyond where the respondent has insufficient assets within the jurisdiction to cover the amount of the claim. 

Freezing orders are typically applied for without notice and, if granted, will usually be made for a period of time following which a return date will be fixed for a full, with notice hearing. The return date, usually between 7 to 14 days from the grant of the freezing injunction, provides the respondent with an opportunity to challenge the order. A worldwide freezing order will cover assets anywhere in the world, though local enforcement proceedings will be required to give it effect. 

All types of assets may be frozen, including bank accounts, shares, motor vehicles and land. The assets should not be perishable but may be intangible, for example goodwill or after-the-event insurance premium. 

An application must be made to the court where the claim was started. The court has discretion as to whether to grant a freezing order and will do so only if:

  • the applicant has a cause of action against the respondent;
  • the applicant has a good arguable case;
  • the respondent has assets that exist within the jurisdiction;
  • there is a real risk of dissipation of those assets without the freezing order; and
  • it is just and convenient for the court to exercise its discretion in favor of the grant of the freezing order.

The applicant will usually also have to provide an undertaking in relation to damages to the court, agreeing to compensate the respondent if it later turns out that the applicant was not entitled to the freezing order and the respondent has suffered loss in the meantime.

Last modified 19 Jul 2019

UK - Scotland

UK - Scotland

Interim attachment is a type of interim relief measure. It is a remedy available in Scotland to freeze a party’s corporeal moveable assets (with certain exceptions) pending the outcome of legal proceedings. To obtain the remedy the applicant is required to demonstrate, on the balance of probabilities:

  • a prima facie case on the merits;
  • that there is a real and substantial risk that any judgment in favor of the applicant would be defeated or prejudiced by the debtor’s insolvency, or the debtor disposing of the assets in some manner; and
  • that the order is reasonable in the circumstances.

The remedy can be applied for at any time during the progress of a court action or shortly before one commences. The order can be obtained without notifying the other party in advance (ex parte), but in such circumstances a subsequent hearing is fixed to enable the other party to be heard. If an interim attachment order is executed wrongfully the creditor can be held liable in damages to the debtor.

Please note that only corporeal moveable property may be subject to an interim attachment order. Banks accounts and funds in the hands of a third party may be subject to an arrestment on the dependence of an action. Arrestment prevents the debtor from disposing of funds or goods held by a third party. Inhibition prohibits the debtor from disposing of, or otherwise transacting with, heritable property (real estate), pending the outcome of a court action. The criteria for obtaining an arrestment or inhibition on the dependence of the action are the same as those for interim attachment.

These remedies are available in both the Court of Session and the Sheriff Court. The application must be made in the same court in which the action has been (or is being) commenced. The application is made as part of a claim on the merits, either when warrant (or authorization) to serve the claim is applied for or during the progress of the action through the court. Where the application is made and granted before the claim is served then service of the claim will follow immediately and a hearing will be fixed for the respondent to address the court.

Where an interim attachment order is executed wrongfully, the creditor can be held liable in damages to the debtor.

Last modified 19 Jul 2019

United Arab Emirates

United Arab Emirates

Freezing orders are a category of interim relief that both the DIFC and ADGM courts have the power to grant. It is also worth noting that, in the case of the DIFC courts, there are cases in which freezing orders granted in other jurisdictions have been enforced. These applications are made to the relevant Court of First Instance.

Orders can be made for the freezing of any assets (moveable and immoveable). However, the enforceability of those orders will depend on whether the jurisdiction in which they will be enforced recognizes such orders (or have the power to grant such relief). For example, the DIFC court could make an order to freeze (or otherwise attach) the shares of a limited liability company in onshore Dubai. Whether that attachment will be effective will be subject to: (i) whether the Dubai courts will recognize the DIFC court’s order; and (ii) whether such a form of relief is one that is available under the laws of Dubai and the UAE (and therefore one that the Dubai courts can grant).

The DIFC court generally follows English law principles when considering applications for freezing orders. The considerations for such applications include:

  • that there is a serious question to be tried;
  • that the balance of convenience is in favor of granting such an order;
  • that there is a likelihood of injury / damage for which damages would not be an adequate remedy;
  • the applicant having an underlying cause of action, in that the applicant must have a substantive claim that may give rise to a judgment that will be enforced against the respondent’s (potentially frozen) assets;
  • the applicant having a good arguable case;
  • the existence of the respondent’s assets and such assets being sufficient to meet the applicant’s substantive claim; and
  • a real risk of dissipation of the respondent’s assets.

Furthermore, in ex parte applications (i.e. where the respondent is not present at the first hearing), the applicant is under a duty of full and frank disclosure which in turn requires it to disclose all relevant material to the court, including material which may be adverse to its case.

Additionally, an applicant obtaining a freezing order from the DIFC courts is generally required to provide a cross-undertaking in damages. This would act to satisfy any damages the respondent incurs where it transpires that the application was wrongfully granted.

The ADGM courts are likely to apply a similar approach.

Both the ADGM and DIFC court rules recognize that applications for interim relief (which include freezing orders), may be made before any substantive proceeds are commenced. In that regard, both court rules provide that the court may give directions requiring a claim to be commenced. Therefore, the issuance of any substantive proceedings will be subject to the discretion of the court.

Last modified 19 Jul 2019

United States

United States

No common law right to prejudgment attachment exists in the US. Attachment may be available as a prejudgment remedy under state statutes addressing the subject. Federal courts may attach property to the extent permitted by the law of the state in which they sit. A request for a prejudgment attachment or freezing order must be requested from the applicable trial court. A request for attachment or a freezing order may be made at the time the complaint is filed but cannot be requested prior to a suit being commenced. When prejudgment attachment is authorized, courts typically have discretion to issue prejudgment writs of attachment that prevent a defendant from disposing of or hiding tangible or intangible assets that may be used to satisfy any judgment the plaintiff ultimately obtains. A plaintiff seeking prejudgment attachment may be required to post bond to cover any damage caused to defendant’s property in the event that the plaintiff does not succeed on its claims.

The criteria for the issue of a prejudgment writ of attachment are similar to the ordinary principles for granting injunctive relief, although courts have recognized that attachment is a severe remedy that is appropriate only if the plaintiff produces evidence showing an appreciable risk of being unable to enforce a future judgment. Relief may not be sought on an ex parte basis. It is primarily requested in the context of a pending litigation, not prior to a suit being filed. Because the procedure seeks to attach assets prior to a judgment being entered, a court is likely to require a high burden of proof showing that the plaintiff will be entitled to relief once the litigation concludes.

Broadly and generally, an applicant must show that:

  • the applicant is likely to prevail on the merits of its case;
  • the refusal of a writ of attachment will give rise to a real risk that the plaintiff will be unable to enforce any judgment rendered in its favor;
  • the balance of the equities favor the attachment; and
  • the public interest favors the attachment, meaning that attachment must further an important interest beyond the claims in the litigation itself.

Notable State Variations

California. By statute, only property located in California is subject to attachment. Property outside the state may not be attached by a California court.

Delaware. The banking and insurance industries are exempt from prejudgment attachment, both as to deposits held in Delaware as well as any asset owned by an entity that qualifies as a bank.

Illinois. By statute, Illinois requires that a plaintiff requesting a writ of attachment post a bond equal to double the value of the property to be attached.

Last modified 19 Jul 2019

Australia’s courts operate under the common law legal system. Australia has a federal system of government, with legislative power divided between the federal branch of government and six state and two territory governments (for ease, we refer collectively to the states and territories as the state or states). Australia’s courts are similarly divided into eight separate state jurisdictions and a federal jurisdiction, which each operate on a parallel but independent hierarchy of courts. State and federal courts broadly have jurisdiction over the application of legislation enacted by the state and federal parliaments respectively. The High Court of Australia is the ultimate court of appeal in Australia for all court systems. There are also tribunals created by specific legislation under state and federal jurisdictions.

In each state or territory of Australia, specific legislation imposes a time period before the end of which proceedings must be commenced for a claim or dispute. 

The specific legislation is: 

  • Limitation Act 1985 (ACT)
  • Limitation Act 1981 (NT)
  • Limitation Act 1969 (NSW)
  • Limitation of Actions Act 1974 (QLD)
  • Limitation of Actions Act 1936 (SA)
  • Limitation Act 1974 (TAS)
  • Limitation of Actions Act 1958 (VIC)
  • Limitation Act 2005 (WA) 

These time periods vary from state to state and depend upon the type of claim. A failure to issue proceedings before the relevant time period expires is likely to result in that claim becoming time barred. 

In most Australian states, actions in simple contract or tort must be brought within six years of either the date of breach (contract) or the date on which loss was incurred (tort). 

The limitation period may be extended in some circumstances, for example where someone with legal incapacity (such as a minor or a person of unsound mind) has entered into a contract. Some jurisdictions also permit for the limitation period to be extended at the court’s discretion.

The process of litigation is broadly similar across Australian courts. Proceedings are initiated by a claim or application, which must be filed in the relevant court and served on all parties to the proceeding. Parties will then exchange pleadings (such as statements of claim, defenses, counterclaims, and replies) which define the parameters of the dispute between the parties and the specific issues which are to be proved by each party. Timeframes for the progression of litigation are found in the civil procedure rules applicable in each jurisdiction. Generally, a defense must be filed within 28 days of service of a statement of claim. 

For proceedings in the Federal Court, parties are required to file a genuine steps statement, which outlines the steps taken to make a sincere and genuine attempt to resolve the dispute prior to commencing litigation. Superior courts in the states may also require a party to litigation to provide details of attempts made to resolve a dispute before proceedings were commenced.  

Once the exchange of pleadings is complete, parties will generally undertake the discovery (also known as the disclosure) process, and then go on to prepare their evidence for a final hearing of the dispute. It is common, particularly in complex litigation, for the parties to be obliged to attend court at regular intervals for directions hearings, in which orders are given to manage the conduct and timeframes of the case up until its final hearing. 

Timeframes for each stage of proceedings vary greatly with the complexity and case management style of an individual matter and the specific jurisdiction in which the case is commenced. Each superior court in the states has in place specific practice notes or directions for the conduct of commercial disputes with the aim of ensuring that those commercial disputes are resolved in the most cost-effective and time-efficient manner possible. Generally, across all jurisdictions, parties will have 28 days from receipt of a claim to put on a defense. As noted above, the timetable from that point of time will depend on the nature of the dispute.  

A straightforward commercial contract dispute will normally, court resources permitting, be resolved within 12 months. 

Most state and federal courts require a corporate entity to be represented by a lawyer (which could include a lawyer employed by a company). Some jurisdictions dealing with small claims / employment issues may allow a company to appear by its director. Individuals may appear on their own behalf in most jurisdictions without a lawyer.

In Australia, the discovery process is designed to allow parties to civil litigation to obtain from an opponent all documents relevant to the issues in dispute. Australian courts strictly prohibit “fishing expeditions” through discovery. Discovery is usually undertaken after the close of pleadings (although in some courts in some states this may not be permitted until after evidence is complete) when the points of dispute between the parties have crystallized. Discovery may however be ordered, in limited circumstances, prior to the commencement of proceedings where an applicant is able to satisfy the court that he or she needs to obtain discovery in order to find out whether or not a cause of action exists against a potential defendant.  

The practice of disclosure varies between those jurisdictions which mandate a general right of discovery and those in which the right is more limited. In the Northern Territory and the states of South Australia and Queensland, parties have a mandatory duty of disclosure which is discharged by the exchange of lists or copies of discoverable documents. In Tasmania, Victoria and Western Australia, a party may, by written notice to another party, require that party to make general discovery. In the Federal Court of Australia and New South Wales, the right to discovery is limited and requires an order of the court and will usually be limited to specific categories.  

There have been recent attempts by some of the states’ superior courts to more tightly control the disclosure process. For example, the preparation of disclosure plans (which identify the categories of documents to be disclosed and how they will be disclosed), and the courts ordering that discovery being provided after the exchange of written evidence with a view to limiting the number of documents to be exchanged. 

In the Federal Court and most state courts, discovery can be ordered to be made by non-parties to the dispute where the court is satisfied as to the likelihood of the non-party having relevant documents. Courts in Australia will also generally permit the issuing of subpoenas to produce documents to non-parties to litigation and this process will be more straightforward than seeking non-party disclosure orders. 

Default judgment can be applied for in proceedings in any court where a defendant does not:

  • file a defense within the specified timeframe after a statement of claim has been served; or
  • fails to make an appearance at a hearing.

Once a default judgment is ordered against a defendant, a defendant can, in limited circumstances, seek to challenge the granting of judgment by default. The defendant will need to file an application or motion to set aside the default judgment within a specified period of time and show cause for why (usually lack of notice of the claim or that notice was given of intent to defend but that notice was not brought to the attention of the court which granted the default judgment) the judgment should be set aside.

Judgments of civil courts in Australia can be appealed to a superior court. Civil procedure legislation in each jurisdiction sets out the rules and procedure for appeals. Ordinarily, it will be necessary to seek leave from the superior court to appeal. The Court of Appeal in each state, and the Full Federal Court, are the ultimate courts of appeal for each of those jurisdictions. Cases that emanate from the Federal Circuit Court are appealable to the Federal Court and then the Full Federal Court, whereas matters emanating from a State Magistrates Court are appealable to the Supreme Court and the Court of Appeal. Decisions made by the District Court (County Court in certain states) are appealable to the Supreme Court and decisions of the Supreme Court can be appealed to the state’s Court of Appeal. The High Court of Australia hears appeals from courts of appeal (sometimes referred to as the full court) in all jurisdictions, and has limited original jurisdiction (which predominantly relates to constitutional matters). 

Parties generally, depending on the jurisdiction, have 28 days from the date of judgment or final order, to lodge an appeal in a civil matter to the relevant appeal court. Appeals will generally, because of the limitation of introducing new evidence in most civil appeals, be resolved more quickly than matters at first instance. Most appeals of civil matters will be heard and judgment given within six to eight months from commencement of the appeal. 

All superior Australian courts have a wide power and discretion to grant both interlocutory orders and interlocutory injunctions. An interlocutory application, generally speaking, is an application which seeks any order other than a final judgment. 

As in other jurisdictions, interlocutory injunctions are a species of interlocutory orders. Where those orders are sought on an urgent and temporary basis until a more extended form of relief is sought, they are often referred to as interim orders. 

Interlocutory orders (including interlocutory injunctions) can require a party to undertake or refrain from a particular act, and can be granted before proceedings have commenced, once they are on foot and after judgment has been entered. Applications for these types of orders may be made by self-represented litigants or through legal representation. 

The categories of non-urgent interlocutory orders that an applicant may seek are many and varied and include, by way of example, applications for security for costs, discovery (including preliminary discovery before proceedings have been commenced), the filing of expert evidence or orders for particulars, The evidence required to obtain non-urgent interlocutory orders will turn on the type of orders sought, although at the very least substantive interlocutory applications usually require a sworn affidavit to be filed. 

The kinds of relief that can be sought by way of an urgent interlocutory injunction are equally varied. This is because the orders have the purpose of preserving the status quo until the rights of the parties can be determined finally, and the types of matters that can be heard by the court are vast. Common urgent interlocutory injunctions include applications for the preservation of property, the freezing of assets and applications to search premises to preserve evidence.

An applicant for an interlocutory injunction (either urgent or not) must prove that: 

  • there is a serious question of law to be tried;
  • the balance of convenience favors the granting of the injunction; and
  • an award of damages (at the conclusion of the proceeding) would not be an adequate remedy. 

It is possible for urgent interlocutory injunction applications to be heard by the court ex parte, without the opposing party’s involvement. Any orders given ex parte will generally operate only for a limited period of time until the matter can be brought to a hearing. The duration of any ex parte order will ordinarily be limited to a period terminating on the return date of the summons, which should be as early as practicable (usually not more than a day or two) after the order was made, when the respondent will have the opportunity to be heard. For this reason appeals of ex parte interlocutory injunctions are not usually made to a superior court. The applicant will then bear the onus of satisfying the court that the order should be continued or renewed. A party seeking an interlocutory injunction will ordinarily be obliged to give an undertaking to pay any damages by the defendant suffered as a result of the injunction in the event that the claim for final relief at trial fails. 

The decision to grant an interlocutory injunction can be appealed on an urgent basis to a relevant appeal court. The appeal court will usually list the matter before a single judge to assess the urgency (often the same or the day following the day on which the appeal is lodged) and set a timetable based on the information provided at that first listing. 

Australian state and federal courts can grant interim freezing orders, which restrain a defendant from disposing of property prior to judgment. These orders are a species of interlocutory orders. Such applications may be filed at the Supreme Court or Federal Court. A freezing order is normally obtained ex parte without notice to the respondent, before service of the originating process, because notice or service may prompt the feared dissipation or dealing with assets. A freezing order or an ancillary order may be limited to assets in Australia or in a defined part of Australia, or may extend to assets anywhere in the world, and may cover all assets without limitation, assets of a particular class, or specific assets. It would therefore be possible for a freezing order to encompass bank accounts as well as assets such as real property, art, securities or motor vehicles. Such orders would, however, normally allow for access to funds for reasonable expenses, living costs and payments in the ordinary course of a defendant or third party’s business. A court may also order a freezing order against a third party, where it can be established that there is a risk that a judgment or prospective judgment may be unsatisfied as a result of a third party’s power, possession or influence over the assets in question. The power to issue a freezing order is a function of courts’ authority to prevent an abuse of the court process by the frustration of court-ordered remedies. A freezing order will be made only to preserve the status quo for the purpose of resolving a substantive cause of action brought by the plaintiff, and not as a stand-alone remedy.

The criteria for the issue of a freezing order is similar to the ordinary principles for the grant of interim relief, as discussed above, although the potentially serious impact on a defendant’s property rights raises the threshold for the granting of a freezing order. This may be overcome by an undertaking as to damages given by the applicant of the freezing order, where the applicant undertakes to submit to such order (if any) as the court may consider to be just for the payment of compensation (to be assessed by the court or as it may direct) to any person affected by the operation of the order. The High Court of Australia described freezing orders as 'a drastic remedy which should not be granted lightly.' Broadly and generally, an applicant must show that: 

  • the applicant has a good arguable case (in the substantive cause of action);
  • the refusal of a freezing order will give rise to a real risk that any judgment pronounced in the action will remain unsatisfied, or that the recovery of any judgment will be prejudiced by reason of the removal by the defendant of assets from the jurisdiction, or their dissipation within it; and
  • the balance of convenience favors the making of the order.

Australian courts have wide discretion to award costs orders against either party to cover the opposing party’s costs of litigation. The general rule is that costs follow the event. This means that the unsuccessful party will be liable to pay the litigation costs of the successful party. The aim of this rule is to achieve a just outcome by shifting the costs burden on to the party which is found to have either unjustifiably brought another party before the court or given another party cause to have recourse to the court to obtain their rights. 

Where each litigant has enjoyed some success in the proceedings, courts may modify the general rule to make costs orders that reflect the litigants’ relative success and failure. Courts may depart from the general rule by requiring a successful party to bear their own costs where there is good cause to do so. Such an outcome may be justified where, for example, a successful plaintiff is awarded only nominal damages, or a party succeeds only due to late and substantial amendments to their case. 

Of particular strategic importance is the rule that generally a court will not award costs to a successful party which has obtained relief no more favorable than had already been offered by his or her opponent in settlement discussions. This rule is designed to encourage the early resolution of litigated disputes. 

Costs orders are subject to a costs assessment process administered by the courts. It is unusual that a party will be able to recover all of its actual legal costs through this process. On a standard assessment, parties may recover approximately 60% to 75% of their actual costs. A higher rate of assessment, on an indemnity basis, may be employed where a party has engaged in unreasonable conduct in the proceeding. 

All courts in Australia will charge fees for commencing civil proceedings (often referred to as a filing fee). Some jurisdictions, particularly superior courts, will also charge additional fees including but not limited to daily hearing fees (calculated by reference to the length of the trial), filing fees for notices of motions/applications and the issuing of subpoenas to third parties. These fees are set by the courts and are published on their websites. They are usually reviewed on a yearly basis. By way of example, the current (2019) rate for commencing proceedings in the Federal Court of Australia is AUD4,045 for corporations and the hearing fee for a five-day trial is AUD19,730 for corporations.

In all Australian jurisdictions, a representative proceeding, or class action (as it is more commonly known in Australia) may be commenced by or against any one person as a representative of numerous persons (the minimum number required is generally seven people) who have the same interest in the proceeding and the claims brought give rise to a substantial common issue of law or fact. It is possible to commence a class action against multiple defendants and there is no requirement for every group member to have a claim against every defendant.  

An overarching consideration of the courts in hearing a representative proceeding is whether it involves less delay, expense, and prejudice to the parties than alternative forms of trial. If not, the court may discontinue the proceedings. 

The Federal, New South Wales, Victorian and, most recently, Queensland jurisdictions contain further statutory provisions in relation to representative proceedings, which are arguably more liberal and plaintiff-friendly than other jurisdictions. These jurisdictions allow representative proceedings to be brought where seven or more people have claims which arise out of the same or related circumstances and give rise to a substantial common issue of fact or law. Over 90% of all class actions filed in Australia from 1992-2009 were filed in the Federal Court of Australia. 

When a representative proceeding is commenced, all potential plaintiffs who fall within a class become members of the class, whether they are aware of the claim or not. Members can then opt out of the proceedings before a date set by the court. All class members who do not opt out will be bound by the judgment of the court or by any approved settlement. 

It is important to note that, although some states have yet to formally abolish the law of champerty and maintenance, outside of the US, Australia has one of the most developed class action industries, with a variety of large, class action plaintiff law firms and with many litigation funders having been active in the jurisdiction for over 20 years. This active funding industry has seen a continued increase in the number of class actions being commenced in Australia. 

Cameron Maclean

Cameron Maclean

Partner
DLA Piper Australia
[email protected]
T +61 8 6467 6013
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