Gibraltar Freezing Orders – Ian Watts Gibraltar Lawyer

Ian Watts – providing legal services in Gibraltar since 2002

The Jurisdiction of the Gibraltar Court

The Supreme Court of Gibraltar has the power to order Freezing Injunctions against the assets of a party who is domiciled, resident or present within the Court’s jurisdiction. There is also power to issue such orders even where the party is not domiciled, resident or present as such – for example, where there are foreign proceedings and assets kept within Gibraltar’s jurisdiction.

What is a Freezing Injunction?

A Freezing Injunction is a form of interim order restraining a party from either removing its assets from Gibraltar, or by equally restraining the party from dealing with its assets located elsewhere. Formerly known as ‘’Mareva’’ Injunctions (the descriptive term heralds from the seminal decision of the English Court of Appeal in Mareva Compania Naviera SA v International Bulk Carriers SA [1980] 1 All ER 213), injunctions of this type can therefore operate to freeze assets held in Gibraltar (‘domestic’ freezing orders) and/or anywhere else (‘worldwide’ freezing orders).

It ought to be appreciated that worldwide freezing injunctions are rare. If there are sufficient assets in Gibraltar in which to satisfy the prospective judgment debt they should not generally be ordered: however, this does not mean to say that obtaining a worldwide freezing injunction is not possible.

When are Freezing Injunctions suitable?

Seeking to obtain an injunction of this type is usually where one party has a pretty strong case against another and there is a serious risk that before the case reaches trial, the latter party will dissipate his or assets so as to become “judgment proof” – that is to say, that the party’s assets will be removed from the clutches of the judgment creditor in order to frustrate the realisation of the judgment creditor’s debt.

To what assets to Gibraltar Freezing Injunctions extend?

“Assets” have a wide definition and include, for example:-

General chattels such as cars, items of jewellery, money, stocks and works of art;
Money deposited in Gibraltar bank accounts; and
Upon grounds, the assets of “related companies”.

How can one obtain a Gibraltar Freezing Injunction?

Applications for Freezing Injunctions are ordinarily brought under Part 23 of the Civil Procedure Rules 1998 (which apply in Gibraltar) and the relevant procedural rules that apply in determining the grant or otherwise of the injunction are contained in Part 25 thereof.

Applications are usually made before the start of the proceedings but can also be made after a Court Judgment so as to support the execution of a judgment debt. Freezing Injunctions can therefore be said to be a particularly useful weapon in the armoury of a litigant.

The typical procedure

The usual process is as follows:

A without notice Part 23 application form is filed with the Court (a without notice application is made since the other side does not get to hear of the application since the entire process would naturally be otiose should a prospective defendant or judgment debtor be alerted of the application).
An affidavit is provided in support of the Part 23 application making full and frank disclosure of the applicant’s case, setting out matters such as the following:
A Claim Form with Particulars of Claim (or drafts thereof) setting out a properly formulated legal claim with a justiciable cause of action (interim injunctions are innately parasitic).
Evidence upon which the Court can properly conclude that there is a real risk of assets being removed, dissipated (as the case may be).

What are the criteria for obtaining a Freezing Injunction in Gibraltar?

Criteria to be satisfied

The starting premise is that an injunction is obtainable whenever it is just and convenient to do so. The Court therefore enjoys a wide discretion in granting or refusing relief. Generally speaking, the applicant must have:

A claim which is justiciable in Gibraltar. This is usually the case where the defendant is present in Gibraltar and can be served with legal process. An absent defendant may nevertheless submit to the jurisdiction of the Gibraltar Court.
A good arguable case. The affidavit should exhibit a properly formulated claim with a justiciable cause of action so that the Court can be satisfied that there is a good arguable case against the defendant. Note that it need not need to shown that the applicant is definitely going to win his case at trial.
Evidence to support that there is a real risk that, without the Order, the defendant will remove or dissipate the assets within the jurisdiction, or otherwise deal with them in order to stymie the execution of a judgment debt.
That it is just and convenient to grant the Order.

Cross-Undertakings as to Damages

Unless displaced with in the given circumstances of the case, the applicant will also typically be required to offer the usual “cross-undertakings” as to damages (this is an order requiring the applicant to pay a financial sum to the respondent by way of compensation, in the event that it later transpires that the injunction was improperly obtained). There are instances where the “cross-undertakings” as to damages can be ordered to protect third parties other than the respondent.

What is the overall effect of a Gibraltar Freezing Injunction?

Practice Direction 25 to the Civil Procedure Rules lays down the standard form of Order for a freezing injunction.

The Order

The Order will, amongst other things, provide:

For the Claimant to provide the standard form of undertakings as to damages.
To notify the Defendant forthwith of the application and to serve the same with the evidence in support on the Defendant.
To inform any third parties of their rights under the Order.
To indemnify any third parties as to the expenses they incur in complying with the Order.

It is important to bear in mind that the assets that are frozen under the terms of the Freezing Injunction does not confer any security on the applicant over the same since the purpose of the injunction is not to give any priority over the defendant’s creditors as a whole.

Certain provisos must be inserted into the Order which safeguard the rights of banks, ordinary living expenses if the defendant is an individual, and the legitimate dealing of assets in the usual course of business if the defendant is an individual trader or a corporation.

The Order for a freezing injunction will normally remain in force until further order of the Court or a return date, but, it may be displaced in certain instance where the defendant provides security.

The standard Order for a Freezing Injunction will also confer a right on the defendant and/or third parties to seek to apply to the Court to vary or discharge the injunction.

Further Information

For further information on obtaining Freezing Orders in Gibraltar, please contact Ian Watts.