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/ Legal Articles / Establishing the risk of dissipation when applying for a freezing order

Establishing the risk of dissipation when applying for a freezing order



Nicola Sharp of Rahman Ravelli considers the importance of proof of a dissipation risk in freezing order applications, with reference to the recent case of Les Ambassadeurs Club Limited v Sheikh Salah Hamdan Albluewi [2020].

A freezing order is, to put it simply, an interim injunction that restrains a defendant from disposing of particular assets. When considering whether to grant one, therefore, a court needs to be satisfied that there is a real risk of the defendant dissipating the assets that are the subject of the application for the freezing order.

The importance of this requirement – and of the need for strong proof of the risk of dissipation – was shown in the case of Les Ambassadeurs Club Limited v Sheikh Salah Hamdan Albluewi [2020] EWHC 1313 (QB).

The claimant (Les Ambassadeurs) applied for the continuation of a worldwide freezing order (WFO) it had established against the defendant (Albluewi), relating to a claim for the sum of £2 million, plus contractual interest, arising out the dishonour of 17 cheques and/or loans for the same sum. The claimants were seeking the continuation based on the necessity that there was a continued fear that Albluewi would dissipate his assets, which would then prevent Les Ambassadeurs from being able to enforce a judgment sought in respect of debts owed to it.

Albluewi, on the other hand, applied to discharge the WFO on the grounds that:

  • there was no real risk of dissipation of assets
  • the WFO was not just and convenient, and
  • Les Ambassadeurs breached its duty to make full and frank disclosure on the without notice application.

The Judgment

The claimant’s application was dismissed and the WFO was discharged by the court as it found there was no real risk of dissipation of assets.

Freedman J found that the defendant had significant links to the UK. Freedman J also found that the defendant’s trip to Saudi Arabia during the course of the proceedings - which had been advanced as a justification for the continuation - coincided with his annual trip to the country, making a removal of all assets outside of the jurisdiction unlikely. Further, it was acknowledged that Albluewi owned more than enough assets that could be enforced against in order to discharge any debts.

On the three grounds listed above, therefore, the need for the WFO fell away. Importantly, it was also recognised by the court that in failing to disclose material information in full and frank disclosure, the claimant breached their duty to give a fair presentation of the real risk of dissipation. 

Conclusion

The outcome of this case emphasises just how vital it is for those seeking a WFO to have strong proof of a real risk that the respondent will dissipate their assets. Although the test for this is set at a relatively low threshold – one of a “good arguable case” – it is not enough to merely assert or infer the risk. The risk has to be established by robust evidence. If the applicant of a WFO fails to establish this, the court will undoubtedly discharge the WFO and the applicant will be ordered to pay the respondent’s costs.

This case also underlines the applicant’s duty to give full and frank disclosure. An applicant must make concerted enquiries to ensure all the relevant evidence - above and beyond what is within their knowledge - is before the court. Breaches of this duty, as in this case, will inevitably be considered as a ground to discharge WFO.

Nicola Sharp

Nicola Sharp

Legal Director

nicola.sharp@rahmanravelli.co.uk
+44 (0)203 910 4567 vCard

Specialist Areas of Practice: International Regulation and Corporate Crime, Fraud and Business Crime, Civil Fraud, Corporate Investigations

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