Keep calm and react swiftly: what to do if you've been served with a freezing order

Immediate steps for dealing with a freezing order.

Speed is crucial. Your first step should be to share the freezing order with key stakeholders and seek urgent legal advice.

You should read the order very carefully and fully understand its terms, making sure that you comply with the terms of the order. As part of the order, you will likely be required to disclose information in respect of your assets, and you will be prevented from disposing of the assets covered by the order. Caution should be exercised to preserve all documents and to ensure that no-one within the business takes any action that would contravene the terms of the freezing order.

You should take a note of any deadlines contained within the order and any dates given for a ‘return date’ hearing. Freezing orders often impose short deadlines and require swift responses.

You should also check whether you are able to rely on any insurance policies (such as D&O insurance) which may provide cover including legal costs in the event that you are served with a freezing order. 

After the Initial 24 Hours

You will likely have a return date for court, usually 7 to 14 days after the initial 'without notice' hearing (attended only by the applicant's legal team). Freezing order applications are typically made without notice, followed by a more detailed return date hearing where all parties can make submissions.

Given the tight timescales, work will therefore need to take place with your lawyers in short order ahead of the return date hearing, and you will have to quickly decide on the appropriate response to the order.

• Discharging a Freezing Order 
  
  When seeking the discharge of a freezing order at a return date hearing, the starting point is to consider the key points that applicants need to establish, which include:

• That there is a good arguable case against the respondent, meaning that it must be “more than barely capable of serious argument but not necessarily one which the judge considers would have a better than 50% chance of success”¹; and
• That the assets exist, their location and that there is a real risk that the respondent may dissipate their assets to frustrate the enforcement of ultimate judgment. 

For without notice applications, applicants must also give a full and fair presentation of the facts to the court, known as ‘full and frank disclosure’.

Each of these issues may present an opportunity to challenge and seek to discharge the order. However, discharge is not the only option available, and whether it is right to seek this will need to be considered carefully.

• Varying a Freezing Order 

Varying the freezing order can minimize its effect and can be an alternative to discharging it. For instance, you could seek to vary the order to decrease the maximum sum of frozen assets by arguing that the applicant’s claim is not worth as much as they say, or that the assets subject to the freezer are worth significantly more than the applicant believes.

Respondents can also apply to vary the carve-out for ordinary living expenses (for individuals). The carve-out is usually a stipulated sum, which respondents can apply to increase if appropriate.

• Fortification 

When obtaining the freezing order, the applicant will almost certainly have given a ‘cross-undertaking’ agreeing to comply with any court order to compensate the respondent for losses arising from the freezing order.

If it is later shown that the freezing order should not have been granted and the respondent has suffered losses, the respondent can be compensated.

An applicant can be required to provide security for the cross-undertaking (fortification), for example by paying sums into court. Fortification can protect a respondent facing significant losses from the freezing order. Tactically, obtaining a large fortification order can also drive early settlement, as the applicant has to tie up significant sums with the risk of not seeing them returned if their claim fails.

• Consent

Challenging the freezing order is not always the right decision. Consenting to the order, or to aspects of it, or offering to provide substitute security (for example payment of a specified sum into court), can limit the negative impact of the order. This route can be attractive to both the applicant and the respondent. If the parties can reach an agreement, they can potentially avoid the need for a return date hearing, its associated costs, and importantly the risk of being unsuccessful at the hearing.

Conclusion

If you are on the receiving end of a freezing order it is important to act quickly, whilst also acting carefully and keeping in mind that there are various options available to defeat or minimise its impact.

¹ Dos Santos v Unitel S.A. [2024] EWCA Civ 1109