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Freezing Order

A freezing order, also known as a Mareva injunction, is a legal remedy or court order that prevents a party from disposing of or dealing with their assets, typically financial assets, pending the outcome of legal proceedings. The purpose of a freezing order is to preserve the assets to ensure that they remain available to satisfy a potential judgment or to prevent one party from dissipating their assets to avoid paying a judgment if they lose the case.

Asset preservation: The primary function of a freezing order is to freeze or restrain a party's assets to prevent them from selling, transferring, or otherwise dealing with those assets. It is used to prevent the dissipation of assets that could be used to satisfy a future judgment.

Jurisdiction: Freezing orders are issued by courts with jurisdiction over the matter. The court typically has the authority to issue the order if it is satisfied that there is a real risk that the assets in question will be dissipated or removed from the jurisdiction.

Prima facie case: To obtain a freezing order, the party seeking the order (usually the plaintiff or petitioner) must demonstrate a prima facie case or a strong likelihood of success in their legal claim. They must also show that there is a real risk that the opposing party will dispose of assets to avoid paying a judgment.

Safeguards: Courts may impose safeguards to protect the rights of the party against whom the freezing order is issued. These safeguards may include limiting the scope of the order, requiring the applicant to provide security, or setting a cap on the value of the frozen assets.

Disclosure orders: In some cases, a freezing order may be combined with a disclosure order, compelling the party subject to the order to provide information about their assets. This helps the party seeking the order identify and locate the assets to be frozen.

Breach consequences: Violating a freezing order can result in contempt of court charges and other legal consequences. Courts take these orders very seriously, and parties subject to such orders must comply with them.

Freezing orders are commonly used in cases involving fraud, asset dissipation, breach of contract, or other situations where there is a risk that a party will attempt to hide or dissipate their assets to evade financial responsibility. The specific procedures for obtaining a freezing order and the requirements for granting one can vary by jurisdiction, so it is crucial to seek legal advice from an attorney with expertise in the relevant jurisdiction's laws and practices.

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