A Freezing Injunction
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Costs and Risks of Applying for a Freezing Injunction

Freezing injunctions are a powerful legal tool used to prevent individuals or businesses from dissipating assets before a court judgment can be enforced. While they offer significant protection in legal disputes, obtaining a freezing injunction comes with substantial costs and risks. Here, we explore the financial implications of applying for a freezing injunction, the potential risks involved, and alternative strategies that might serve as effective asset protection measures.

What is a Freezing Injunction?

A freezing injunction (also known as a freezing order) is a court order that prevents a party from disposing of or dealing with certain assets while legal proceedings are ongoing. It is often used in cases where there is a risk that a defendant may move, hide, or deplete assets to avoid meeting a potential judgment.

There are two main types of freezing injunctions:

  • Domestic Freezing Orders – Limited to assets within a single jurisdiction.
  • Worldwide Freezing Orders (WFOs) – Applies to assets across multiple countries, making enforcement more complex.

Given their serious impact, courts do not grant a freezing injunction lightly. The applicant must demonstrate a strong case, urgency, and a real risk of asset dissipation.

Legal Costs of Applying for a Freezing Injunction

Applying for a freezing injunction involves substantial legal costs, which vary based on factors such as jurisdiction, complexity of the case, and whether the injunction is domestic or worldwide. The main cost components include:

Legal Fees

Solicitors and barristers specialising in injunctions typically charge high fees due to the urgent and complex nature of these cases.

  • Solicitor Fees – Can range from £10,000 to £50,000 (or more) for preparing and filing the application.
  • Barrister Fees – If specialist counsel is needed, costs can range from £5,000 to £30,000 for representation.

Court Fees

The applicant must pay court filing fees, which differ depending on the jurisdiction. For example:

  • In England & Wales, the fee for issuing a freezing order is typically £528.
  • Additional costs may apply for urgent applications requiring an immediate hearing.

Security for Costs (Cross-Undertaking in Damages)

One of the most significant financial risks is the requirement to provide a cross-undertaking in damages.

  • This means that if the injunction is later found to have been wrongly granted, the applicant must compensate the defendant for financial losses suffered.
  • Courts often require applicants to provide financial security (e.g., a bank guarantee or deposit).
  • The amount can range from tens of thousands to millions of pounds, depending on the case’s complexity and the assets involved.

Investigatory Costs

Before applying for a freezing injunction, the applicant often needs to gather evidence showing the risk of asset dissipation. This may involve:

  • Forensic accountants – To trace assets, costing £5,000 to £20,000+.
  • Private investigators – For asset tracking, costing £2,000 to £10,000+.

These costs can add up significantly, especially in complex international cases.

Risks of Applying for a Freezing Injunction

While freezing injunctions offer strong legal protection, they also carry several risks:

Risk of Paying Damages if the Injunction is Wrongly Granted

If the court later determines that the freezing order was unjustified, the applicant may be liable to pay substantial damages to the defendant.

  • Defendants can claim compensation for business losses, legal fees, and reputational damage.
  • This can amount to millions in high-value commercial disputes.

Risk of Non-Compliance with Full Disclosure Duty

Applicants must provide full and frank disclosure when applying for a freezing injunction.

  • Failing to disclose material facts (even unintentionally) can result in the injunction being discharged.
  • The court may also penalise the applicant with adverse costs orders.

Risk of Adverse Costs Orders

If the application is unsuccessful, the applicant may be ordered to pay the defendant’s legal costs.

  • In complex cases, adverse cost orders can be £50,000 to £500,000+.

Enforcement Challenges in International Cases

If applying for a Worldwide Freezing Order (WFO), enforcing it in foreign jurisdictions can be difficult.

  • Some countries may not recognise or enforce UK/US court orders.
  • Additional legal fees and court applications may be required for enforcement.

Reputational Risks

If the injunction is challenged or overturned, the applicant may face:

  • Negative publicity, especially if the case involves businesses or high-net-worth individuals.
  • Business relationship breakdowns, as aggressive legal action can damage trust.

Alternative Asset Protection Strategies

Given the costs and risks of freezing injunctions, some parties may explore alternative ways to protect assets in legal disputes:

Interim Charging Orders

Instead of freezing all assets, an interim charging order secures a claim over a specific property or asset.

  • Pros: Easier to obtain, does not require cross-undertaking in damages.
  • Cons: Only applies to identified assets.

Third-Party Debt Orders

Allows creditors to seize money owed to the defendant by third parties (e.g., bank accounts).

  • Pros: Directly targets liquid assets.
  • Cons: Limited to specific funds.

Receivership Orders

A court-appointed receiver takes control of a defendant’s assets to prevent dissipation.

  • Pros: Strong oversight and asset protection.
  • Cons: More expensive than freezing orders.

Negotiated Settlements

Before seeking an injunction, parties may consider negotiating asset preservation agreements, reducing legal costs and risks.

  • Pros: Faster resolution, lower costs.
  • Cons: Relies on defendant’s cooperation.

Conclusion: Is a Freezing Injunction Worth It?

While freezing injunctions are a powerful legal remedy, they should not be pursued lightly due to the high costs and significant risks involved. Before applying, parties must carefully weigh:

  • The strength of their legal case
  • The likelihood of asset dissipation
  • The potential costs and financial exposure

In some cases, alternative strategies such as charging orders, debt orders, or negotiated agreements may offer a more cost-effective solution. However, in urgent cases where there is a genuine risk of asset dissipation, a freezing injunction may be the only viable option to safeguard assets.

Given the complexities, seeking expert legal advice is crucial to making an informed decision.

For more information on a Freezing Injunction contact Blake-Turner LLP.