An injunction is an order of the court that
- Requires a party to do a specific act or acts: a mandatory injunction
- Requires a party to refrain from doing a specific act or acts: a prohibitory injunction
These include freezing injunctions which is an interim order that prohibits a party from disposing of or dealing with assets. A claimant typically seeks a freezing injunction to preserve the defendant’s assets until judgement can be obtained or satisfied. However you should note that a freezing injunction does not provide any security over the assets.
All types of assets can be frozen including bank accounts, shares and land. Orders can be obtained in respect of assets within England and Wales (domestic freezing orders) or in respect of assets situated worldwide (worldwide freezing orders).
A freezing injunction affects not only the defendant but also their parties who must not breach the terms of the order or help or permit the defendant to do so.
A freezing injunction is draconian remedy and has been described as a ‘nuclear weapon’.
It can be sought at any time during proceedings but needs to be applied for promptly once the circumstances which justify making the order are known.
You should also note that:
- Obtaining a freezing injunction is often an expensive process
- It carries with it an onerous duty of full and frank disclosure
- It requires the applicant to give a number of undertakings to the court. These will usually include the applicant undertaking to pay the respondents damages if it is subsequently established that the order should not have been granted.
- Breach of an undertaking to the court constitutes as contempt of court.
With that said this is a useful tool to preserve assets to prevent their dissipation.
Prohibitory injunctions can be obtained to protect confidential information obtained in a commercial relationship and prevent a breach of confidence.
As with mandatory injunctions there is a need to have a substantive cause of action. An injunction is a remedy not a cause of action. It carries a sanction of contempt of court if disobeyed.
It should be only used where the applicant insists there is no other form of remedy for example damages or rescission and there is a duty of full and frank disclosure and cross undertakings in damages.