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Understanding Worldwide Freezing Orders and the Impact of the Court of Appeal Decision in dos Santos.

Worldwide freezing orders are powerful legal tools used in England and Wales to prevent a defendant from dissipating assets internationally, thus ensuring the enforcement of potential court judgments. However, securing such an order requires meeting stringent legal criteria.

Requirements for a Worldwide Freezing Order

1. Substantive Cause of Action: The applicant must have a substantive legal claim against the defendant, such as a breach of contract or fraud.

2. Good Arguable Case: There must be a good arguable case on the merits of the claim. The applicant is not required to prove the case fully at this stage, but the claim should be more than speculative.

3. Real Risk of Asset Dissipation: The applicant needs to demonstrate a real risk that the defendant will dissipate assets to frustrate a future judgment. This requires credible evidence suggesting that the defendant may take actions to hide or dispose of assets.

4. Full and Frank Disclosure: The applicant must present all relevant information, including adverse evidence, to the court. This duty is especially critical because freezing orders are often granted without notice to the defendant.

5. Appropriate Undertaking in Damages: The applicant must provide an undertaking in damages, compensating the defendant if it turns out later that the freezing order was unjustly granted.

6. Jurisdictional Link: There must be a clear connection to England and Wales, either through the presence of assets, the residency of the defendant, or the jurisdiction of the underlying legal claim.

Impact of the Court of Appeal Decision in dos Santos

The dos Santos case is a landmark decision that has influenced the application and scope of worldwide freezing orders. The Court of Appeal provided clarity on the following aspects:

1. Risk Assessment for Asset Dissipation: The decision emphasised the importance of a detailed and evidence-based assessment of the risk of asset dissipation. Pure speculation or generalised assertions are insufficient; applicants need to present solid evidence, such as past behavior indicating intent to conceal assets.

2. Strengthening Full and Frank Disclosure: dos Santos reasserted the critical nature of the duty for full and frank disclosure. The court underscored that failing to disclose material facts, including potential defences available to the defendant, could lead to the discharge of the freezing order.

3. Global Reach Justification: The ruling reinforced the necessity for a clear justification for the global reach of a freezing order. Applicants must illustrate why an order limited to domestic assets would be inadequate, affirming the principle that such orders should not be broader than necessary.

4. Proportionality and Fairness: The decision underlined the need for proportionality in applying freezing orders. The courts are urged to balance the rights of the applicant with the potential undue hardship placed on the defendant, ensuring the order is fair and justifiable.

In conclusion, securing a worldwide freezing order in England and Wales remains a complex process requiring thorough preparation. The Court of Appeal’s decision in dos Santos has reinforced existing requirements, particularly emphasising the need for detailed evidence and fairness. Applicants must approach the process with comprehensive legal advice to ensure compliance with these stringent judicial standards.

This blog was prepared by Alexander JLO’s senior partner, Peter Johnson on the 27th January 2025 and is correct at the time of publication. With decades of experience in almost all areas of law Peter is happy to assist with any legal issue that you have. He is widely regarded as one of the capital’s leading business lawyers. His profile on the independent Review Solicitor website can be found Here