Should a freezing order over the domestic assets of a foreign defendant with foreign assets contain the usual exception for payments in the ordinary course of business and/or for living and legal expenses?

Lalor-Harbord

The applicant in Parvalorem v Oliveira was a Portuguese state-owned organization and the first respondent (a director of the second and third respondent companies) was the subject of criminal proceedings together with associated civil proceedings in Portugal.

The applicant had obtained a without notice freezing order as interim relief ancillary to the Portuguese proceedings pursuant to section 25 of the Civil Jurisdiction and Judgments Act 1982.  However, the freezing order did not contain the standard form exception for dealing with assets in the ordinary course of business.

The court held that:

  • In the case of a worldwide freezing order, the starting point would be to include the usual exemptions. However, the position was different in the case of a freezing order over the domestic assets of a foreign defendant with foreign assets.
  • In this case, there were reasons to infer that the respondents had free assets from which they could meet their ordinary business expenses so, on balance, the freezing order should not contain the standard form exclusion. This did not mean, however, that the same approach should be taken in all cases involving a freezing order over a defendant’s English, but not foreign, assets.  The respondents might subsequently be able to apply to release funds if they had evidence to rebut the inference drawn.

Parvalorem v Olivera [2013] EWHC 4195 (Ch).  The judgment is available to Practical Law subscribers at http://uk.practicallaw.com/0-553-9245.

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