Imagine if you could make a secret application to have your opponent’s global assets frozen and disclosed to you, to limit their weekly personal and legal spend, to have their premises summarily searched, their computers and papers seized, their Gmail, Hotmail, and Yahoo accounts secretly monitored, their passport confiscated, their trust service providers gagged and required to give you disclosure in secret and then, if these draconian orders are breached, have your opponent (or their company directors, trustees or nominees) arrested, fined and imprisoned – all before trial.
The English Courts and (to varying degrees) courts in other “offshore” common law jurisdictions outside the USA (such as Cayman Islands, BVI, Cyprus, Hong Kong, Singapore, Guernsey, Jersey, Isle of Man, Bermuda, ADGM and DIFC) have developed powerful and innovative remedies such as these to assist victims of fraud and to punish parties that knowingly breach court orders. While they may be familiar to English and offshore civil fraud lawyers, they are likely less familiar to lawyers in other jurisdictions.
In this article, we summarise some of the different types of aggressive and innovative measures that are available in English and offshore civil fraud litigation, including asset seizures, orders to search premises, email monitoring orders, fines and even imprisonment. These are effective remedies and deterrents and one of the reasons why victims of international fraud frequently turn to the English and offshore courts, sometimes in preference to US courts. Partly in recognition of these unique, wide ranging, and creative remedies, civil fraud litigation is treated as a separate, specialized practice area in England and offshore.
We also consider how defendant parties faced with such orders can respond to them effectively and minimize their risk exposure.
Worldwide Freezing Orders – the “Nuclear Weapon” of English and offshore litigation
“Worldwide Freezing Orders” (WWFOs for short) are referred to as the “nuclear weapons” of English litigation. They force potential fraudsters to (i) disclose their assets in very short order, wherever they may be, freeze those assets, and ultimately prevent them from being dissipated. WWFOs can be made in support of both English proceedings and foreign proceedings. They can be made against parties domiciled outside England.
Compliance with WWFO’s can be extremely time consuming and burdensome. Very frequently the respondent may attempt to breach a WWFO in an effort to conceal assets or in the mistaken belief that there will be no consequences. The Court, however, has developed numerous devices to police compliance. In view of its powerful effect, an application for a WWFO is almost always made without notice, so that the respondent cannot dissipate its assets after it has been given notice of the application.
Assets Covered: the definition of assets for the purposes of the WWFO is broad. In addition to encompassing traditional assets (bank accounts, properties, investments, etc.), it can also extend to less obvious assets: for example, loan facilities, assets owned by wholly owned companies, interests in a trust fund, and assets owned by a trust. It includes assets in which the respondent has a legal or beneficial interest including cryptocurrency. WWFOs also cover assets acquired during the duration of the order, while it is also possible to freeze assets that the defendant holds as a trustee or nominee for a third party. A Supreme Court decision recently allowed for freezing of assets which the defendant was empowered to directly or indirectly dispose of – this means that the WWFO can even extend to assets held by a company in which the defendant is the sole creditor and director.
“John Doe” WWFOs: it is even possible to obtain a freezing order against “persons unknown” in the context of fraud claims, for which it is sufficient to make reference to…