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Procedural Weapons of Mass Destruction: Pre-Judgment Remedies in English and Offshore Fraud Litigation

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.[1] 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.[2] 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.[3]

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 par­tic­u­lar bank account trans­fers. English courts are also able to grant John Doe dis­clo­sure orders requir­ing an unknown trustee of a known trust to dis­close its iden­ti­ty, so that it can be added as a defen­dant to a pend­ing claim and required to com­ply with a WWFO in the meantime.

Generally No Priority or Security: a WWFO does not give the inno­cent par­ty any pri­or­i­ty or secu­ri­ty over the frozen assets in ques­tion. Rather, it seeks to pre­serve the assets so that any sub­se­quent judg­ment in favor of the appli­cant can be enforced against the assets so pre­served. In cer­tain cir­cum­stances, a WWFO may also be made against oth­er par­ties who appear to hold assets on behalf of the respon­dent. This is a very effec­tive tool where a respon­dent con­trols (direct­ly or indi­rect­ly) third par­ties and uses those third par­ties to cre­ate an arti­fi­cial sep­a­ra­tion of own­er­ship of assets. Where how­ev­er a plain­tiff alleges an own­er­ship (pro­pri­etary) right over assets, a WWFO can help the plain­tiff pre­serve secu­ri­ty over them.

Legal Test for WWFOs: in order to obtain a WWFO in England, the appli­cant must demon­strate to the Court that: (i) it has a cause of action, i.e., an under­ly­ing legal or equi­table right that has been breached; (ii) the English Court has juris­dic­tion; (iii) it has a good arguable case against the poten­tial fraud­ster – i.e., a case “which is more than bare­ly capa­ble of seri­ous argu­ment and yet not nec­es­sar­i­ly one which the judge believes to have a bet­ter than 50 per cent chance of suc­cess”; (iv) there is a real risk that, with­out the WWFO, the fraud­ster will seek to dis­si­pate assets beyond the reach of the inno­cent party—the court may infer a risk of dis­si­pa­tion from the par­ties’ pre­vi­ous con­duct, par­tic­u­lar­ly if there is evi­dence of fraud or if the assets could eas­i­ly be trans­ferred to third par­ties; and (v) under the cir­cum­stances, it is just and con­ve­nient for the order to be grant­ed. Out of all these con­di­tions, risk of dis­si­pa­tion is often the most dif­fi­cult to prove – the mere exis­tence of a strong claim for a sub­stan­tial amount is not suf­fi­cient. The courts will con­sid­er, objec­tive­ly, whether there is a risk of dis­si­pa­tion, tak­ing into account all the circumstances.

Burdensome Compliance: once a WWFO is obtained and served, the respon­dent is required to give dis­clo­sure of his world­wide assets over a defined de min­imis amount, for exam­ple USD 5,000. This dis­clo­sure must be giv­en in an extreme­ly lim­it­ed timeframe—often a mat­ter of days. This makes com­pli­ance both bur­den­some and time-con­sum­ing, par­tic­u­lar­ly where the respon­dent holds assets around the world in com­plex structures.

The infor­ma­tion pro­vid­ed must include (among oth­er things) the val­ue of the assets; their loca­tion; and whether or not the assets are indi­vid­u­al­ly or joint­ly owned. In addi­tion, with­in a fur­ther few days, the infor­ma­tion must be ver­i­fied by a sworn affi­davit from the respon­dent to the Court. The oblig­a­tion to pro­vide the infor­ma­tion is on-going and new­ly acquired assets must also be dis­closed on a rolling basis. There is very rarely suf­fi­cient time to apply to set aside a WWFO before the dead­line for asset disclosure.

It is there­fore a dra­con­ian ex parte rem­e­dy which can put a defen­dant on the back foot before the lit­i­ga­tion has even commenced.

WWFO’s typ­i­cal­ly also lim­it a defendant’s abil­i­ty to spend funds on liv­ing expens­es above a spec­i­fied amount and legal defense costs.

Non-Compliance with a WWFO: fail­ure to com­ply with a WWFO (includ­ing third par­ties, such as banks, trustees and com­pa­ny direc­tors, that are placed on notice of the terms of the WWFO) is a seri­ous offense. It may result in impris­on­ment, fines or asset seizures. If the dis­clo­sure pro­vid­ed by the respon­dent is defi­cient, there are a num­ber of steps that the appli­cant can take to fur­ther increase pres­sure on the respon­dent: so called “sanc­tion based litigation”.

Contempt of Court – Imprisonment: when a respon­dent has failed prop­er­ly to com­ply with its oblig­a­tions pur­suant to a WWFO, it may be open to the appli­cant to issue con­tempt pro­ceed­ings. These can be brought on an urgent basis soon after a respon­dent has breached its oblig­a­tions, the pur­pose being to seek relief from the Court in an attempt to secure com­pli­ance with the order and to secure avail­able assets. Sanctions are severe. In recent years, for instance, there have been many instances of respon­dents being giv­en prison sen­tences of up to two years for breach­es of WWFOs. Border author­i­ties keep records of par­ties in con­tempt of court, who are liable (if they are in tran­sit through England) to be arrest­ed and imme­di­ate­ly tak­en to court for sen­tenc­ing and impris­on­ment. Every year, there are sto­ries of unwary fraud defen­dants who are impris­oned after they are caught in delib­er­ate breach and they fail to escape the long arm of the law.

Debarring Orders: the Court is also increas­ing­ly issu­ing so-called “Debarring Orders” if it is sat­is­fied that the defen­dant has failed to com­ply with a WWFO. The plain­tiff vic­tim obtains an “unless order”, which requires the respon­dent to prop­er­ly com­ply with the WWFO, fail­ing which the defen­dant will be barred from defend­ing the claim against it. While this can be seen as a dra­con­ian mea­sure, the English Courts have tra­di­tion­al­ly con­sid­ered that the over­rid­ing inter­est of jus­tice includes orders of the court being respect­ed and obeyed.

Receivership Orders: the courts of some juris­dic­tions, includ­ing in par­tic­u­lar BVI and Cayman, can some­times be per­suad­ed to appoint pro­vi­sion­al liq­uida­tors or receivers to pre­serve assets which are at risk of dissipation.

Third-Party Disclosure Orders: a plaintiff’s pri­or­i­ty is invari­ably to posi­tion itself so that it can recov­er the assets that were tak­en from it as quick­ly as pos­si­ble. If a defen­dant com­plies ful­ly with a WWFO, the inno­cent par­ty will learn not only the loca­tion of the defendant’s assets but will also know that they are frozen by the WWFO. If, how­ev­er, the defen­dant has been less than hon­est with its asset dis­clo­sures, the inno­cent par­ty must locate the fraud­u­lent pro­ceeds as a pri­or­i­ty. This can be far from straight­for­ward, with poten­tial fraud­sters becom­ing increas­ing­ly sophis­ti­cat­ed in hid­ing funds, often by means of com­plex cor­po­rate struc­tures spread across numer­ous off­shore jurisdictions.

In order to enable vic­tims of frauds to trace the flow of funds from source to their cur­rent loca­tion, the English Courts have devel­oped a num­ber of dif­fer­ent forms of dis­clo­sure orders (“Disclosure Orders”), which can be used to obtain infor­ma­tion from third par­ties as to the where­abouts of the stolen assets. In many cas­es, Disclosure Orders are obtained against trust/corporate ser­vice providers and banks that the respon­dent is known to have accounts with. The trustees or banks can be required to pro­vide the appli­cant with bank­ing records held in rela­tion to the respon­dent, includ­ing (but not lim­it­ed to) client open­ing infor­ma­tion, bank account state­ments and copies of checks. Critically, they can be ordered to pro­vide the infor­ma­tion in a very short time frame (usu­al­ly a mat­ter of days) and to pro­vide it not just in rela­tion to the known bank accounts of the respon­dent but also in rela­tion to any oth­er account held by that indi­vid­ual. The inno­cent third par­ty can there­fore effec­tive­ly “trace” the flow of funds through var­i­ous accounts.

Gagging Orders: when seek­ing Disclosure Orders is the inno­cent par­ty can request a “gag­ging order” from the Court. The gag­ging order pre­vents the dis­clos­ing par­ty from “tip­ping off” the fraud­ster (who is like­ly to be a valu­able cus­tomer of the dis­clos­ing par­ty) to the fact of the appli­ca­tion or result­ing dis­clo­sure. This allows vic­tims to stay ahead of a fraud­ster seek­ing to dis­si­pate assets or avoid orders of the English or off­shore courts. It max­i­mizes inno­cent par­ties’ prospects of locat­ing both where funds have flowed since the fraud­u­lent scheme took place and where they present­ly are.

Email Monitoring Orders: more recent­ly, in addi­tion to Disclosure Orders against banks and trustees, the Courts have been will­ing to grant Disclosure Orders against Internet and email providers, such as Yahoo. Such an order allows vic­tims of fraud to secret­ly access and review elec­tron­ic com­mu­ni­ca­tions in rela­tion to a fraud that had been com­mit­ted. This order was obtained in the JSC BTA Bank v. Ablyazov lit­i­ga­tion and had dev­as­tat­ing con­se­quences as it effec­tive­ly grant­ed the Court a pri­vate win­dow into the fraudster’s activ­i­ties. This type of order is demon­stra­tive of the extent to which courts are increas­ing­ly pre­pared to help vic­tims who are faced with a recal­ci­trant oppo­nent which repeat­ed­ly ignores the court’s orders.

Passport Seizure: if an indi­vid­ual defen­dant is con­sid­ered a flight risk, the Court is some­times pre­pared to order the respon­dent to hand over his/her pass­port to the applicant’s solic­i­tors, pre­vent­ing him/her from flee­ing the jurisdiction.

Enforcement Abroad of WWFOs: to avoid abuse and the poten­tial for con­flict­ing orders from mul­ti­ple courts, it is gen­er­al­ly the English court’s prac­tice to require the plain­tiff to seek spe­cif­ic per­mis­sion to enforce or rec­og­nize a WWFO abroad (or to apply for sim­i­lar relief in anoth­er juris­dic­tion). In prac­tice, WWFOs are often giv­en effect by ser­vice on banks or trust providers who have a pres­ence in England or off­shore, or by the obtain­ing (with per­mis­sion) of par­al­lel freez­ing or attach­ment orders where banks and providers have a presence.

Search and Seize Orders: plain­tiffs are in suf­fi­cient­ly seri­ous and urgent cas­es able to seek Search and Seize Orders from the English Court. Search orders are a form of manda­to­ry injunc­tion, which require a defen­dant to allow the applicant’s rep­re­sen­ta­tives, under the super­vi­sion of an inde­pen­dent “super­vis­ing solic­i­tor” appoint­ed by the court, to enter the defendant’s premis­es and to search for, copy, remove, and detain doc­u­ments, infor­ma­tion, or mate­r­i­al. The pur­pose of a search order is to allow appli­cants to pre­serve evi­dence or prop­er­ty which is, or may be, the sub­ject of an action. Under cer­tain cir­cum­stances, search orders can even be issued with regard to premis­es locat­ed abroad. Where search orders are con­sid­ered by the court to be too inva­sive, “doorstep” or “deliv­ery up” orders have been issued, requir­ing the appli­cant to hand over rel­e­vant doc­u­ments at his/her doorstep or to the court respectively.

Responding to WWFOs – Defense Strategies

Defendants who receive WWFOs need to move quick­ly. It is a rare case where a Defendant is able to get before the court and set aside a WWFO before hav­ing to give asset dis­clo­sure. Defendants are there­fore best advised to focus their resources on short term com­pli­ance with an order before turn­ing defense into attack by apply­ing to set aside or vary the WWFO.

  • Set aside appli­ca­tions: the most com­mon ground to set aside a WWFO is where a plain­tiff fails to give “full and frank dis­clo­sure” at the ex partestage, for exam­ple by fail­ing to dis­close mate­r­i­al points which oper­ate in a defendant’s favour in rela­tion to the claim or the alleged risk of dis­si­pa­tion of assets, or where (even if prop­er dis­clo­sure was giv­en) the court is not sat­is­fied on the return date, hav­ing heard from the defen­dant, that the claim is suf­fi­cient­ly strong or the risk of dis­si­pa­tion so great as to jus­ti­fy the con­tin­u­a­tion of the order.
  • Security pay­ments: anoth­er com­mon defense strat­e­gy is to require a plain­tiff, par­tic­u­lar­ly an impe­cu­nious one or based over­seas, to make a sub­stan­tial pay­ment into court or pro­vide a bank guar­an­tee. Failure to make such a pay­ment or guar­an­tee by the man­dat­ed dead­line results in the auto­mat­ic dis­charge of the WWFO, with a defen­dant then hav­ing a right to seek dam­ages for loss­es suf­fered as a result of the WWFO. In 2021, for exam­ple, we obtained an order for a defen­dant client requir­ing an over­seas plain­tiff bank to pro­vide GBP 10 mil­lion of cash secu­ri­ty, which it failed to do, result­ing in the imme­di­ate dis­charge of the freez­ing order and the release of GBP 100m of London real estate assets which had pre­vi­ous­ly been frozen.
  • Variation appli­ca­tions: final­ly, defen­dants often apply to vary WWFOs to allow them to increase their per­mit­ted week­ly expen­di­ture on liv­ing or legal expens­es and to carve out cer­tain assets from the scope of the WWFO, par­tic­u­lar­ly where a plain­tiff is obvi­ous­ly “over­se­cured”.



  1. JSC BTA Bank v Ablyazov [2015] UKSC 64; Vorotyntseva v Money‑4 Ltd (T/A and oth­ers [2018] EWHC 2596 (Ch).
  2. JSC BTA Bank v Ablyazov [2015] UKSC 64.
  3. Lakatamia Shipping Company Ltd v Nobu Su and oth­ers [2014] EWCA Civ 636.

JDSUPRA by Quinn Emanuel Urquhart & Sullivan, LLP

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