Commercial Disputes: What Is The Purpose Of Freezing Someone’s Assets?

Freezing orders are temporary court orders preventing someone from disposing of their assets and are often a critical first step towards protecting your position ahead of litigation. The expert commercial litigators at award-winning Bahamas firm ParrisWhittaker have substantial experience advising clients on freezing orders (also known as ‘freezing injunctions’).

What is a freezing order?

Freezing orders are often made by the courts ahead of, or during the course of commercial litigation. These orders are an important tool for preserving assets from dissipation until, for example a judgment debt is satisfied.

The court can grant a freezing order at any point, whether that’s before a trial, at any stage of the proceedings and even after judgment is obtained.  A freezing order can also be obtained where a judgment has been handed down from a foreign court – it is not limited to the Bahamian courts.

However, while they are flexible – the courts will not grant freezing orders if the applicant cannot satisfy them that it is just to do so. An applicant will have to demonstrate they have a credible claim; the party against whom a freezing injunction is sought owns assets in this jurisdiction or elsewhere, and there is significant risk they may dissipate those assets ahead of securing a judgment.

If a party is unsure where the defendant’s assets are located, the Supreme Court Rules allow for the court to make an order requiring them to provide information about relevant property or assets (and/or their location) which are or may be the subject of an application for a freezing order.

What is the purpose of a freezing order?

The underlying purpose is to prevent the defendant from dissipating their assets to avoid paying, eg a judgment debt, a fine or to get rid of the proceeds of crime.  The most important reasons you might want to seek a freezing order include:

Preservation of assets: Freezing assets prevents the individual against whom an order is made from transferring or disposing of those assets, putting them ‘out of reach’. The order secures the assets, ensuring they remain available to satisfy a later legal claim or judgment.

Fairness in proceedings – A freezing order allows for fairness and equity in the litigation process as it prevents another party from having an unfair advantage by disposal of or moving valuable assets.

Enforcement of judgments: Freezing assets can be used to enforce court orders or judgments. It ensures the debtor complies with their obligation to pay fines or damages. An application for a freezing injunction could be made after the court judgment is made to ensure the debtor pays up.

Preventing flight from jurisdiction: There is frequently the risk that an individual might leave the jurisdiction to avoid legal proceedings. Securing a freezing injunction often deters individuals from fleeing and cuts of their access to the funds needed to leave the jurisdiction.

Investigation and compliance: Criminal and regulatory investigations can be complex and long-lasting. Freezing the suspect’s assets allows investigations into alleged fraud, money laundering or financing of terrorism to continue within the risk of the suspect disposing of their assets, such as the suspect proceeds of crime.

Regulatory bodies may also the court to freeze an individual’s assets to ensure the individual complies with laws and regulations, particularly where financial crime or violations of economic sanctions are in issue.

How can I get a freezing injunction?

The most important step you can take is get early legal advice from the specialist litigators at ParrisWhittaker. Your application to court will need to follow due process and demonstrate that a freezing order is just and needed expeditiously.

The court will balance various factors, including your likely chance of success in the underlying claim, the risk of the defendant dissipating their assets and issues of convenience.

If the court grants an order, the defendant – and anyone else who has notice of the order –  is barred from disposing of the assets listed within the order.

Contact the commercial litigation team at ParrisWhittaker as early as you can on [  ]