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Rapid Response Team: 0800 559 3500
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Consequences of breaching a worldwide freezing order

Author: Nicola Sharp  22 February 2024
2 min read

The purpose of a worldwide freezing order (WFO) is to prevent the defendant from dissipating their assets before a judgment is found against them.

WFOs are often an essential tool in cases of civil fraud, where the claim is against an allegedly dishonest person, who may go to lengths to avoid the consequences of their wrongdoing.

Even when a WFO has been granted, a defendant may breach its terms. For example, by:

  • Disposing of assets (i.e. selling a property).
  • Failing to provide proper disclosure of documents.
  • Serving evidence that was untrue or only partially true.
  • Failing to disclose certain assets.

Contempt of court

If a respondent has breached a WFO, a claimant may seek an order to find the defendant in contempt of a court order (a committal application).

Contempt of court is serious, and it is an important tool for claimants in fraud claims in order to secure compliance and punish a breach. This is a long-standing power of the courts and derives from the inherent jurisdiction of the court to secure the effective administration of justice.

It’s often the case that a minor breach will not be treated as contempt, particularly if compliance of a particular section of the order was impossible (for example if the relevant documents to be disclosed were in possession of a third party).

But a deliberate and wilful breach which leads to a defendant being found in contempt of court is punishable by any of the following:

  • Sequestration of assets: Assets are held by a sequester pending further order of the court.
  • A fine in an unlimited amount
  • A prison sentence of up to two years

A recent example is ADM International SARL v Grain House International SA & Anor [2024] EWCA Civ 33 One defendant was ordered to pay a fine of £75,000 for failing to provide unredacted copies of documents and failure to disclose documents (reduced to £50K on appeal). Another was ordered to be committed to prison for 12 months for failure to disclose encumbrances on properties and breaching the WFO by trading.

Debarment from proceedings

A defendant who is found to be in contempt of court may also be debarred from taking any further part in proceedings. The defendant will not be permitted to adduce evidence, cross-examine the claimant's witnesses, or make submissions in defence of the claim.

The defendant will usually be prevented not just from advancing a positive case, but also from making any submissions that challenge the claimant’s case.

In the recent case of HRH Princess Deema Bint Sultan Bin Abdulaziz Al Saud v Ronald William Gibbs [2024] EWHC 123 (Comm) the defendant was debarred from defending the proceedings because he failed to comply with a disclosure order.

Proving a breach

A defendant is guilty of a contempt of court if they breach the court order, in accordance with principles summarised by Christopher Clarke J in Masri v Consolidated Contractors Intl Co SAL & Ors [2011] EWHC 1024 (Comm) [144] – [147], which are (briefly):

  • The judgment creditor carries the onus of proving the acts of contempt. The burden of proof is the criminal standard (beyond reasonable doubt).
  • The court may draw inferences in reaching its conclusions.
  • Where evidence is circumstantial, the court must be satisfied that the facts are inconsistent with any conclusion other than that the contempt in question has been committed.

Proving a breach is not straightforward. There may be significant room for doubt as to whether an action constituted contravention of the terms of the order.

For example, a defendant may give inaccurate information about the value of one of his assets, but he did so by reasonably relying on information from others. Perhaps the defendant failed to disclose an asset, but he wrongly, but reasonably, believed it to be below the value threshold for disclosure under the freezing order.

In those circumstances, a respondent is given the opportunity to ‘purge’ his contempt by swearing a supplemental affidavit setting out the true position in relation to their assets, or remedying any previous failure to comply with the terms of the order.

Nicola Sharp C 09983

Nicola Sharp

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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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