A freezing order will usually only be made where the claimant can show that there was at least a good arguable case that they would succeed at trial and that the refusal of an injunction would involve a real risk that a judgment or award in their favour would remain unsatisfied.
[9] It is recognised as being quite harsh on defendants because the order is often granted at the pre-trial stage in ex parte hearings, based on affidavit evidence alone.
A Norwich Pharmacal order is form of pre-action discovery that allows an aggrieved party to trace otherwise hidden or dissipated assets, with a view to their preservation.
While it is not advisable to obtain such an order on purely strategic grounds,[13] asset freezing has a persuasive effect on settlement negotiations.
The claimant will have no restrictions on legal fee spending, putting huge financial pressure on the defendant,[15][16] and negotiation and settlement avoid the return to court.
[22] Since January 2017, a uniform European Account Preservation Order has been implemented in all EU member states (other than Denmark and the United Kingdom).
[23] Mareva was rejected by the Supreme Court of the United States in 1999 in Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc.[24] For the majority, Justice Scalia held that, as such jurisdiction did not exist at the time of the passage of the Judiciary Act of 1789, the federal courts had no authority to exercise it.
While Grupo Mexicano is consistent with other Supreme Court jurisprudence in the matter of preliminary injunctions,[25] there has been debate as to whether this decision should be reversed.
[27] In place of Mareva, US civil jurisprudence relies more on prejudgment writs of attachment,[28] preliminary injunctions and temporary restraining orders,[29] which have a more limited scope of application.
In 2007, Lord Bingham declared: Mareva (or freezing) injunctions were from the beginning, and continue to be, granted for an important but limited purpose: to prevent a defendant dissipating his assets with the intention or effect of frustrating enforcement of a prospective judgment.
Such devices may be employed in cases where a victim of fraud suspects that targeted funds or assets may be transferred to another location where it might be impractical to gain access to them.