DMC Category Rating: Developed

Background
A freezing order temporarily freezes a defendant's assets up to the value of the other side's claim and guards, so far as possible, against the risk that he will dispose of them before a judgment is satisfied. In an appropriate case, the court has the power to grant a worldwide freezing order (or WFO), which extends to the defendant's assets wherever they happen to be in the world.

The making of the order is a serious step because of the obvious risk of prejudice to the defendant and to third parties. A WFO, therefore, usually contains an undertaking by the claimant not to seek to enforce the order in another jurisdiction without the court's permission. Until now, however, there have been no guidelines on the circumstances in which the court would give that permission.

Judgment
The Court of Appeal in the Dadourian case has now set out guidance for courts considering such applications.

• Guideline 1: The grant of permission should be just and convenient for the purpose of ensuring the effectiveness of the WFO and, in addition, should not be oppressive to the parties to the English proceedings or to any third parties. It is not possible to foresee all the circumstances in which such applications would arise, so it is important to allow judges maximum flexibility in deciding whether or not to grant an order.
• Guideline 2: All the relevant circumstances and options need to be considered - in particular, whether relief should be granted on terms. Consideration should also be given to the proportionality of the steps proposed to be taken abroad and to the form of any order. The court must be astute to see that there is a real prospect that something will be gained by starting proceedings abroad.
• Guideline 3: The interests of the applicant should be balanced against the interests of the other parties to the proceedings and any new party likely to be joined to the foreign proceedings.
• Guideline 4: The order should not normally give the applicant permission to obtain a superior form of protection in the foreign court without good reason. In an appropriate case, however, it may do so. Under English law, a WFO does not give the applicant any interest in the assets which fall within its scope. Many foreign jurisdictions, however, can grant orders that give the applicant priority over other creditors in the event of insolvency.
• Guideline 5: The evidence in support of the application for permission should contain all the information necessary to allow the judge to reach an informed decision (so far as can reasonably be obtained in the time). The applicant should file evidence describing the applicable law and practice in the foreign court, the nature of the proceedings which it proposes to commence, details of the assets believed to be located in the foreign jurisdiction (so far as is known) and the names of the parties holding them.
• Guideline 6: The applicant must show that there is a real prospect that the assets falling within the ambit of the WFO are located within the jurisdiction of the foreign court. It does not have to show that assets are likely to exist but merely that there is a real prospect that such assets exist.
• Guideline 7: There must be evidence of a risk of dissipation of the assets in question. If there is a real prospect that the assets are beneficially owned by the defendant, this burden is likely to have been discharged by the evidence already filed in the English proceedings.
• Guideline 8: Normally, the application should be made on notice to the respondent but in cases of urgency where it is just to do so, the permission may be given without notice to the other party. However, that party should be given the earliest practicable opportunity of having the matter reconsidered by the court at a hearing of which he is given notice.

The Dadourian case concerned proceedings to enforce an arbitration award of US$4.5 million. The claimant (the Dadourian Group) obtained a WFO, giving the usual undertaking not to enforce the order abroad without permission and subsequently applied for permission to enforce in Switzerland.

Applying the guidelines to the fact of the case, the Court of Appeal concluded that the judge had not taken into account the question of possible oppression of a third party the claimant proposed to join to the proceedings in Switzerland, nor had he properly considered evidence as to the law and practice in Switzerland and the terms on which the order should have been made.

Exercising its own discretion, however, the appeal court held that the permission should stand. The claimant had shown there was a real prospect that the defendant had assets in Switzerland and that it was reasonable and proportionate for it to seek to enforce the WFO there.

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