I do a lot of work around commercial disputes, and freezing injunctions are a good example of why obtaining the legal remedy you want isn’t necessarily the end of the story.
A freezing injunction can be a powerful tool where there is a genuine risk that assets could be moved or dissipated before a judgment can be enforced. But once the order has been secured, it still needs to be actively monitored if it is going to achieve its purpose.
Lord Bingham put the problem particularly well in Société Eram Shipping Co Ltd v Cie Internationale de Navigation:
“It is one thing to recover a favourable judgment; it may prove quite another to enforce it against an unscrupulous defendant.”
He went on to describe an unenforceable judgment as being “at best valueless, at worst a source of additional loss” ([2003] UKHL 30).
That, for me, is the practical point worth remembering.
What can a freezing injunction actually protect?
A freezing injunction operates against the defendant personally, preventing them from dealing with or disposing of assets without the claimant’s consent or the court’s approval.
Those assets can take many forms. They might include land, artwork, or money held in a bank account. The High Court has also confirmed that cryptoassets, including cryptocurrencies such as Bitcoin, are capable of being frozen, including in AA v Persons Unknown and others [2019] EWHC 3556 (Comm) and D’Aloia v Persons Unknown [2024] EWHC 2342 (Ch).
That is particularly interesting as the nature of commercial assets continues to evolve.
What a freezing injunction does not do is give the claimant ownership of, security over, or priority in relation to those assets. Its purpose is to help preserve assets against which a future judgment might ultimately be enforced.
Why I think ongoing monitoring matters
One of the useful features of a freezing injunction is the requirement for the defendant to disclose their assets. That gives the claimant a starting point for understanding what is available and monitoring compliance with the order. But it is only a starting point.
The standard form freezing injunction requires disclosure of assets at the date of the injunction. It doesn’t automatically require the defendant to keep providing updated asset disclosure at regular intervals.
That can create a very practical problem where litigation continues for months or years. Assets can change, debts can be repaid and money can move between accounts, while the claimant’s original picture becomes increasingly out of date.
This is why I think the initial disclosure needs to be scrutinised properly and early.
If, for example, an asset includes a debt owed to the defendant, I would want to understand who owes it, their relationship with the defendant, where they are based, when repayment is due, whether the debt is secured and when any limitation period might expire.
If something isn’t clear, further information can be sought from the defendant and, where necessary, an application can be made to the court for additional disclosure.
We have seen the courts take a practical approach to this. In the PrivatBank proceedings, for example, the High Court ordered one defendant to provide further information and documents relating to a Bitcoin investment (JSC CB PrivatBank v Kolomoisky and others [2021] EWHC 403 (Ch)).
Assets don’t stand still
Monitoring also needs to continue as proceedings develop.
In the run-up to trial in another PrivatBank decision, the High Court required two defendants to provide updated information including details of bank accounts exceeding £1 million at a specified date, as well as certain dividends, distributions and other income received since the freezing order (JSC CB PrivatBank v Kolomoisky and others [2023] EWHC 165 (Ch)).
There can even be circumstances where preventing someone from disposing of an asset isn’t enough.
If doing nothing could itself cause an asset to lose its value, the court can require a defendant to take positive steps to preserve it.
One striking example again comes from the PrivatBank litigation. A defendant said that he was owed almost $1 billion following the purported transfer of an interest in an operating company, but almost five years later none of the consideration had been paid. The court ordered him to demand payment and use reasonable endeavours to obtain the money, alongside continuing disclosure requirements.
That is a useful illustration of how active the management of a freezing injunction can sometimes need to be.
Securing the order is the beginning, not the solution
For me, the practical message is that a freezing injunction should never be treated as a “set and forget” remedy.
Obtaining the order may be a significant moment in a commercial dispute, but claimants still need to understand what has actually been frozen, scrutinise the information they receive and keep an eye on how those assets change as the case progresses.
And if circumstances do change, further action may be necessary.
Ultimately, the objective isn’t simply to win a case and obtain a favourable judgment. It is to make sure that, when you reach the point of enforcement, that judgment still has real value.
Where reserved legal work is required, I undertake this through one of the authorised firms I consult with.