Few remedies in English litigation are as powerful, or as draconian, as freezing orders (also known as ‘freezing injunctions’ and formerly known as ‘Mareva injunctions’) and search orders (formerly known as ‘Anton Piller’ orders).
Both are exceptional remedies designed to preserve the integrity of the litigation process by preventing defendants from frustrating the administration of justice. Their effectiveness, however, depends heavily upon the court’s ability to enforce compliance through the law of contempt.
In commercial disputes, these remedies can be the difference between securing recovery or an unenforceable judgment, which is a common frustration for successful parties in a dispute. This article considers the purpose of freezing orders and search orders, the legal principles governing their grant and the consequences of non-compliance.
Freezing Orders
What is a Freezing Order?
A freezing order is a court order restraining someone from dissipating assets, up to a specified amount. This is to ensure that those assets are safeguarded and remain available if a court rules in favour of the claimant. Freezing orders are frequently encountered in commercial fraud cases.
Four of the most common types of freezing orders are:
- Domestic freezing orders (applying to assets within a single jurisdiction);
- Worldwide freezing orders (extending to assets located in other jurisdictions);
- Third-party freezing orders (also known as ‘Chabra’ injunctions) (applying to assets held by parties who are not direct parties to the dispute); and
- Property freezing orders (applying to real estate assets).
The Legal Test
The court will only grant a freezing order when it considers that it is just and convenient to do so. The following conditions must be satisfied:
- The applicant will usually have a cause of action;
- The application must demonstrate a good arguable case on the merits;
- The applicant must have grounds for believing that sufficient assets which the respondent has control over exist to meet the claim;
- The applicant must produce evidence that there is a real risk that the respondent will dissipate assets, in an attempt to frustrate enforcement;
- The applicant must provide an undertaking to the court to pay any damages to the respondent, should it later be decided that the freezing order should not have been granted (e.g. in circumstances where the applicant fails to provide full and frank disclosure (see below)).
Given the seriousness of the remedy, applications are frequently made without notice to the respondent. In such circumstances, the applicant is under a strict duty of full and frank disclosure and must draw the court’s attention to matters adverse to its case. Failure to do so may result in the order being discharged and the applicant liable to damages, irrespective of the merits.
Practical Considerations
A freezing order does not prevent a respondent from conducting ordinary business or meeting reasonable living and legal expenses.
For claimants, speed is often critical. Any delay between discovering suspected dissipation and seeking relief may undermine the application by suggesting that no genuine risk exists.
Search Orders
What is a Search Order?
A search order is one of the most intrusive remedies available in litigation. It permits the claimant’s representatives to enter the respondent’s premises to search for, inspect and preserve evidence.
The order is intended to prevent the destruction, concealment or removal of crucial documents or materials before trial. Search orders are also frequently encountered in commercial fraud cases.
The Legal Test
The court will only grant a search order where the applicant can demonstrate:
- An exceptionally strong prima facie case.
- Very serious potential or actual damage.
- Clear evidence that the respondent possesses relevant documents or material.
- A real risk of evidence destruction or concealment if advance notice is given.
Even if all four tests are met, the court must balance the intrusion against the rights of the respondent. The harm caused by the search must not be excessive or disproportionate to the legitimate aim of preserving evidence.
Therefore, search orders are subject to strict procedural requirements and extensive safeguards, such as the overseeing of the search by a supervising solicitor; full and frank disclosure by the applicant; and undertakings for damages by the applicant.
The Supervising Solicitor
A defining feature of a search order is the appointment of an independent supervising solicitor.
The supervising solicitor’s role includes (but is not limited to):
- Personally serving the order on the respondent and explaining the terms of the order;
- Informing the respondent of their rights, including the right to legal advice;
- Supervising the search process and ensuring compliance with the terms of the order;
- Ensuring the search is conducted proportionately and respectfully and preventing abuse of the order;
- Supervising the safe extraction and preservation of evidence; and
- Preparing a detailed written report to the court.
The supervising solicitor acts as an officer of the court, rather than as a representative of either party, so the court places considerable weight on the integrity and competence of the supervising solicitor.
Strategic Importance
In commercial fraud cases, freezing orders and search orders are frequently sought together. The freezing order preserves assets, whilst the search order preserves evidence. Together, they prevent a dishonest respondent from hiding assets and destroying evidence.
Contempt of Court
The effectiveness of freezing orders and search orders depends upon the court’s power to punish non-compliance.
Most orders contain a penal notice, reflecting CPR Part 81.9(1), warning the respondent that breach may constitute contempt of court and may result in imprisonment (although, this is a draconian measure), a fine, or confiscation / seizure of assets.
Contempt proceedings are intended to uphold the authority of the court and ensure compliance with its orders.
Common Examples of Contempt
Examples of conduct capable of amounting to contempt include (but are not limited to):
- Transferring assets in breach of a freezing order;
- Failing to disclose assets, as required by the order;
- Destroying documents covered by a search order;
- Obstructing a search which is conducted pursuant to a court order; and
- Providing false statements in affidavits or witness statements.
Importantly, third parties who knowingly assist a respondent in breaching an order may themselves face contempt proceedings. This is particularly relevant for directors, family members, trustees and financial institutions.
The Legal Test
In the case of Business Mortgage Finance 4 Plc -v- Hussain [2022] EWHC, Miles J specified that, in order to establish contempt, the applicant will need to demonstrate that:
- the defendant knew of the terms of the order;
- the defendant acted (or failed to act) in a manner which involved a breach of the order; and
- the defendant intended to do the act (or failed to do the act);
- the defendant knew the facts that constituted a breach, even if the defendant did not realise it was a legal breach.
The applicable standard of proof when establishing contempt for breaching the terms of an order is the criminal standard (i.e. beyond reasonable doubt).
Conclusion
Freezing orders and search orders remain among the most effective tools available to litigators. They enable claimants to preserve assets, secure evidence and prevent wrongdoing before judgment is obtained.
Their exceptional nature explains why the courts impose demanding evidential thresholds and rigorous procedural safeguards. However, these remedies would be ineffective without the law of contempt, which provides the enforcement mechanism necessary to ensure compliance.
For litigants confronting fraud, asset dissipation or the destruction of evidence, the strategic deployment of freezing orders and search orders can often mean the difference between securing an enforceable judgment and obtaining a hollow victory.
Our specialist commercial litigation team has extensive experience advising and acting in relation to freezing orders, worldwide freezing injunctions, search orders, contempt of court proceedings, civil fraud claims, asset tracing and asset recovery litigation. We regularly represent claimants and defendants in high-value and complex disputes involving allegations of fraud, dissipation of assets, breach of fiduciary duty and the concealment or destruction of evidence.
In addition to obtaining and defending urgent injunctive relief, we are also able to act as independent supervising solicitors on the execution of search orders, ensuring compliance with the court’s requirements whilst safeguarding the rights of all parties involved. Whether you require urgent advice on a freezing injunction, search order, contempt application or wider commercial fraud dispute, our experienced solicitors provide strategic, commercially focused representation throughout England and Wales.