The key function of a freezing order is to prevent dissipation of assets that may otherwise be available to satisfy a successful judgment. An asset-freezing order may not prevent a determined fraudster residing outside the jurisdiction from trying to move assets, but at least it can be used to put institutions on notice that they may be liable if they allow assets to be moved out of their control.
Nevertheless, claimants obtaining a freezing order can feel relatively reassured that the defendants are going to find it hard to make themselves judgment-proof by moving assets around the world unless they are also prepared to be punished for contempt of court and possibly be deprived of the opportunity to defend the substantive claim. While we can question the extent to which a finding of contempt of court is a deterrent for hard-line international fraudsters, it does remain another point of leverage.
How did the freezing order develop?
Over the last fifty years the true jurisdictional basis for the grant of a freezing order has been considered only occasionally at the highest level, and when it has that basis has generally not formed the core reasoning for the determination of any appeal.
Yet this analysis has become increasingly important. As the grant of freezing orders has become more common, so too has the sophistication of the claimants’ lawyers in their use of those orders, for instance in terms of the choice of jurisdiction, or jurisdictions, in which they are obtained and the identity of the persons and entities on whom they are served.
The wording of the freezing order has been developed to try to catch structures used by some defendants to hide their ownership of assets.
It is a common feature of international fraud that those who perpetrate it may well have set up asset protection structures hidden behind multiple layers of trusts, Stiftung and Anstalts, or worldwide corporate structures. It is important for claimants that they get ahead of and secure the assets in these structures as far as possible.
Claimants have therefore sought freezing orders not just against the primary defendant but also directly against other entities that the claimants believed might hold assets belonging beneficially to the defendant or in respect of which the defendant might be able to effect some form of control – so-called 'non cause of action defendants' or 'non cause of action respondents' (NCAD).
What do freezing orders look like now?
The expansion of the scope of the freezing order raised the necessary question: how could such relief be justified against an entity against which the claimant had no current claim? Indeed, what was the justification for the grant of freezing order relief more generally?
The answer (of sorts) came to be provided in a recent case called Convoy Collateral Ltd v Broad Idea Ltd [2021] UKPC 24, an appeal to the Judicial Committee of the Privy Council (the JCPC) from the Court of Appeal of the British Virgin Islands. Broad Idea was an NCAD, being a company not sued by the claimant but representing a valuable asset in the hands of a defendant, because that defendant owned a 51% shareholding in it.
The appeal to the JCPC was expedited and heard by a seven-member Board as the JCPC was invited to consider whether The Siskina [1979] AC 210 was correctly decided. If they decided to depart from The Siskina, the expectation was that it would declare that the decision was to be treated as representing the law of England and Wales (see Willers v Joyce (No 2) [2016] UKSC 44, [2018] AC 843 as recently applied from [108] in Jardine Strategic Ltd v Oasis Investments [2025] UKPC 34).
However, there was a divergence of views among the Board.
In outline, the bare majority (split 4:3) advised that there was no reason in principle to link the grant of an injunction to the existence of a cause of action (at [90]) and that Lord Nicholls’s approach in Mercedes Benz AG v Leiduck [1996] AC 284, 305-314, was to be preferred over the reasoning in the The Siskina. In their view a court can grant a freezing injunction against any person or entity over which the court has personal jurisdiction provided that (at [101]:
“(i) the applicant has already been granted or has a good arguable case for being granted a judgment or order for the payment of a sum of money that is or will be enforceable through the process of the court;
(ii) the respondent holds assets (or …. is liable to take steps other than in the ordinary course of business which will reduce the value of assets) against which such a judgment could be enforced; and
(iii) there is a real risk that, unless the injunction is granted, the respondent will deal with such assets (or take steps which make them less valuable) other than in the ordinary course of business with the result that the availability or value of the assets is impaired and the judgment is left unsatisfied.”
There are no other relevant restrictions on the availability in principle of the remedy (at [102]).
The minority of the Board disagreed and preferred to maintain the rationale of The Siskina as subsequently adopted, developed and entrenched (see the view of Lord Mustill in Mercedes Benz paraphrased at [202]).
Having split 4:3, the JCPC didn't declare that their advice represented the law of England and Wales.
Strictly speaking, therefore, the majority advice in Convoy Collateral doesn't represent the law in England and Wales, however a number of academic articles and professional texts might record that it does: the line of authority following on from The Siskina (currently) remains intact. However, there is plainly a strong pull for claimants to encourage English courts to follow the majority advice, despite the true position (see Willers v Joyce again). This could be a very useful tool for claimants given the proliferation of 'enablers' in asset protection. In the circumstances, there is a need for all the arguments to be made to the Supreme Court or the JCPC in a different case.
There is one final gem lurking in the analysis of Convoy Collateral, something that seems to be largely overlooked. That the view of the majority is entirely obiter: Convoy Collateral’s appeal was dismissed on other grounds (at [121] and [225]): there was no justification on the facts for granting any freezing order against Broad Idea (at [112]). The decision of the Eastern Caribbean Court of Appeal remains intact, although now almost entirely irrelevant in the context of the introduction, by amendment, of section 24A into the Eastern Caribbean Supreme Court (Virgin Islands) Act 1969.
Freezing orders have become a cornerstone of modern litigation strategy, from a domestic remedy to a global litigation tool. The Convoy Collateral decision signals a potential shift in thinking, even if it has not yet reshaped English law. Readers should take away the growing flexibility – and complexity – of freezing injunctions, and the need to stay alert to how they're applied in future cross-border disputes.
For more insight and guidance, get in touch with Nick Wood and Richard Morgan KC.
