Typically, your primary concern will be the safekeeping of your funds. Legal injunctions of the type known as ‘ freezing orders’ constitute a first line of response for ensuring that litigants are prevented from hiding or liquidating their assets.
These orders may be issued in respect of bank accounts, real estate, or even crypto assets. But how effective these orders are is a separate matter! The best approach is tactical, given its pros and cons and limited scope.
What’s a Freezing Order and What Can It Protect?
Freezing orders are court-issued directives that prevent defendants from accessing their assets while legal proceedings are ongoing. These orders are either global in scope or domestic. Assets that are subject to domestic orders include, as illustrative and not exhaustive: real estate, vehicles, IP, crypto and digital currencies, and contracts which may be traded and sold.
These orders pertain to various types of assets:
- Bank accounts and stocks
- Property and cars
- Intellectual property
- Cryptocurrency
Courts often issue these without prior notification to the defendant. The Senior Courts Act 1981 allows courts to stop the transfer of assets pending a hearing.
How Freezing Orders Keep Your Assets Safe
Freezing orders work because they have instant legal punch:
Immediate Legal Enforcement:
As soon as the orders are granted, movements and hiding of money by the defendants are stopped. Defendants can be fined or jailed for contempt of court if the order is disobeyed. To prevent the defendant from hiding the assets, the order takes effect immediately.
Comprehensive Protection:
- The order can extend to joint and foreign accounts to protect third-party assets.
- The order can protect any form of property, digital or physical.
- The order can extend to assets that the defendant does not currently possess but are held for them by others.
Court Requirements:
- Relief will not be granted unless there is substantial proof that there is a risk of real dissipation.
- There must be proof of the risk of concealment of assets.
Why This Matters:
According to PwC, 46% Of Businesses Reported They Were Victims Of Fraud Or Economic Crime In The Past 24 Months. As These Risks Escalate, The Importance Of Freezing Orders As Active Risk Mitigators Cannot Be Overstated.
Problems and Limits
Nonetheless, there are reasons why freezing orders may not be effective:
Recovery Limits:
- They won’t allow you to recover any assets, you still must identify and locate the defendant’s assets.
- There are additional legal hurdles when the assets are located in other countries, and you will need the courts in the other country to cooperate.
Recent figures show that restraint orders issued by the courts totalled £468.8 million as of March 2025, a 29% decline from previous years. This drop underlines the ongoing difficulties in maintaining asset liquidity, even when freezing measures are in place.
Defendant Challenges:
- Defendants may dispute the orders, asserting there is no evidence to support the claim of dissipation risk.
- They will claim that any orders placed are overly burdensome.
- Court orders may be revised or removed altogether when one party fails to disclose relevant information.
Temporary Nature:
- Freezing orders are temporary by nature, meaning their effectiveness depends heavily on the pace of legal proceedings and the strength of the supporting evidence
- The success of evidence, litigation court rules, and the court rules within the litigation all impact success.
Impact on Negotiations
Freezing orders significantly affect how disputes get resolved:
- They improve your negotiating leverage by immobilizing the opponent’s assets.
- Settling accounts encourages the defendant to settle.
- By restricting access to assets, freezing orders make it much harder for defendants to conceal wealth, which in turn reduces the likelihood of fraudulent behaviour.
- There are substantial time and cost savings because the resolution of the dispute is fast and efficient.
Getting the Most Protection
To maximise the benefits of freezing orders, do the following:
- Get legal advice as early as possible.
- Present compelling prospective evidence demonstrating a genuine risk of dissipation.
- Meet all your disclosure obligations. Not including negative evidence will cause irreparable harm to your case.
- When tracing assets, especially foreign assets and cryptocurrency, you should hire a professional.
Be cautious of the associated and possible outcome damages of a failed application for a financial freezing order because these are quite expensive.
Continuously monitor compliance during the proceedings and make sure the required ongoing adherence to disclosure obligations is met, as the court assumes this will be the case. Work closely with your lawyers and prepare to act quickly to any moves to change the order that the defendants make to protect your order and its effectiveness.
Conclusion
Freezing orders are one of the most effective tools for safeguarding contested assets. Even if full recovery is not possible, these orders preserve value and provide critical leverage in disputes. The combination of solid evidence, comprehensive legal measures, and promptness will vastly improve your chances. Having a strong legal team will support your asset protection measures