Complete Collection of Mareva Articles by thoughtleaders4

By Andrew Ayres KC and Andrew Barns-Graham

FOREWORD

By Professor Sir Bernard Rix

It is a blessing, a privilege, and an honour to be asked to write a foreword to this illuminating series of essays on Mareva at 50 by Andrew Ayres KC and Andrew Barns-Graham. A blessing, in that I have been spared to witness this anniversary, still active in the law. A privilege, because my involvement in the case was so much a matter of luck and good fortune. And an honour, but largely undeserved, to have a small role in what I think Lord Denning once referred to as the most significant piece of law reform in his lifetime.

The case arrived for me out of the blue, as I recall on the Friday before the Monday hearing fixed for the Court of Appeal. Mareva had been shortly preceded by another case, Karageorgis [1975] 1 WLR 1093 (CA), in which the Court of Appeal reversed Donaldson J below and granted an interlocutory injunction. The counsel in Karageorgis were Geoffrey Brice and Michael Howard. Another member of my chambers had dealt with the Mareva case in the Commercial Court in front of Donaldson J, where he had been beset by the judge’s own research in finding Lister v Stubbs (1890) 45 Ch D 1 (CA). Donaldson J had recalled some such case in previously refusing an injunction in Karageorgis, and now he was armed with it. He granted an injunction in Mareva only to give it enough air to reach the Court of Appeal. I spent the weekend researching, seeking ways to mitigate the damage of Lister v Stubbs. I had never been in the Court of Appeal before. I was less than five years from call, less than four years in chambers. Incidentally, I think it was reported before 1980, in The Mareva [1975] 2 Lloyd’s Rep 509 (CA).

I was fortunate therefore to be associated with this novelty in our jurisprudence and practice. I had no idea where it would take the law. As we now know, the law of Mareva or freezing injunctions, could, and has, filled a book, several books. It has become part of our Civil Procedure Rules. But back in 1977, I recall it narrowly scraping by the interest of the House of Lords in The Siskina [1979] AC 210, where strategically Anthony Lloyd QC, the future Lord Lloyd of Berwick, did not challenge it. It has helped to provide substance to the pursuit of litigation. It has grown into a significant weapon in the law of civil fraud, allied with orders for disclosure of assets.

It is kind of the two Andrews to ask me to write this foreword. Their bang up to date essays on the cuttingedges of the modern law provide all by themselves a fascinating insight into how the law may develop over a mere half-century. I wish this publication well.

Bernard Rix

April 2025

INTRODUCTION

By Andrew Ayres KC and Andrew Barns-Graham

On 23 June 1975, in Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213, the Court of Appeal continued an injunction which restrained the defendant charterers from dissipating monies standing to their credit at a London bank, pending the resolution of their dispute with the claimant shipowners.

Prior to then, the courts had refused to grant such orders, but young junior Counsel Bernard Rix (as he then was) persuaded the Court of Appeal that it had a statutory power to grant injunctions prohibiting the disposal of assets so as to preserve them for enforcement purposes, and that it was appropriate on the facts of the case for it to exercise that power. We are grateful to Sir Bernard, as he now is, for providing the foreword to this set of articles.

50 years have passed since the decision in Mareva and, during that period, the court’s jurisdiction to grant freezing injunctions has grown and developed significantly. It has spread across the common law world. The granting of ancillary asset disclosure orders has become commonplace. The definition of “assets” has broadened over time, such that it may now encompass assets held overseas or in the exotic structures which defendants occasionally use.

Numerous checks and balances have been introduced in recognition of the fact that freezing injunctions are draconian orders which are often granted at the outset of proceedings and on a without notice basis. These include, for example, the Angel Bell and other exceptions, and the Babanaft and Baltic provisos, which identify the limits of the injunction’s extraterritorial effect.

Indeed, the law of freezing injunctions continues to evolve in England and elsewhere. On 6 April 2025, a new model draft order came into effect in England which includes a number of refinements. The courts will continue, as they have done for the last five decades, to seek to strike a fair balance between the rights and interests of claimants and defendants.

The jurisdiction remains imperfect, in a state of development, and sometimes controversial, but it is one of the most important and potent weapons in the courts’ arsenal. Mareva is a seminal case of truly fundamental importance and, in our view, its 50th anniversary is an occasion worth marking.

We have therefore prepared this series of six articles, in which we discuss certain aspects of the law relating to freezing injunctions which have significant practical importance. We originally released the articles individually on a weekly basis between 26 February 2025 and 2 April 2025. We are now pleased to produce them together as a compilation.

Our first three articles address different aspects of the law relating to asset disclosure, namely the scope of the obligation, the restriction against collateral use, and confidentiality club orders. We then address three other topical issues which we expect will feature in the authorities over the next few years, namely notification injunctions, the living and legal expenses exceptions, and the meaning of “assets”.

We hope that you enjoy the articles. We would welcome the opportunity to discuss them with you, and so please do feel free to get in touch.

April 2025

MAREVA AT 50

ASSET DISCLOSURE

Authored

by:

Andrew Ayres KC (Barrister) - Twenty Essex & Andrew Barns-Graham (Barrister) - 3 Hare Court

This year marks the golden anniversary of Lord Denning’s seminal decision on freezing injunctions in Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213. (The case was reported in 1980, but the hearing took place on 23 June 1975.) To mark the occasion, Andrew Ayres KC of Twenty Essex and Andrew Barns-Graham of 3 Hare Court have published this series of articles, in which they explore the boundaries of freezing injunctions and provide their tactical and drafting recommendations. This is the first article in the series.

Introduction

Freezing injunctions almost always include asset disclosure orders, the purpose of which is to enable claimants to “police” the injunctions and make them effective1. Lord Woolf once described asset disclosure orders as what gives freezing injunctions their “teeth”2

The thesis of this article, however, is that those teeth have tended to have too soft a bite, due to the imprecision of the model wording requiring disclosure of the “value, location and details” of assets3. A new model order which is due to come into force in April 2025 removes some of the imprecision, but, in keeping with the general theme of this series, we suggest that claimants should nevertheless be proactive in asking the court to modify the standard wording, as befits the needs of each case.

The authorities

The starting-point is that the “strict construction principle” applies to the interpretation of all freezing injunctions, i.e. they must be construed restrictively due to their draconian effect, the penal consequences of non-compliance, and the resulting risk of oppression of defendants4

In two cases, the High Court has allied the strict construction principle with a purposive interpretation and concluded that the phrase “value, location and details” requires only the disclosure of information which is “necessary” (on the facts of the specific case) for the claimant to police a freezing injunction.

In Gerald Metals S.A. v Timis & Ors5 , the claimant alleged that a defendant had breached an asset disclosure order by disclosing that it was the 100% owner of company shares without also disclosing that its interest was a beneficial interest and the legal ownership had been assigned to a third party. The claimant sought

1 Per Waller LJ in Motorola Credit Corporation v Uzan [2002] EWCA Civ 989, at [29].

2 Motorola Credit Corporation v Uzan [2002] EWCA Civ 989, at [37].

3 See paragraph 9(1) of Annex A to Practice Direction 25A and paragraph 11A of Appendix 11 to the Commercial Court Guide.

4 Per Lord Clarke in JSC BTA Bank v Ablyazov [2015] UKSC 64, at [18]-[19].

5 [2017] EWHC 3381 (Comm).

disclosure of the trust/assignment documents, contending that they constituted the “details” of the shares. In the alternative, the claimant applied for the same disclosure pursuant to a variation of the original order.

Bryan J held (at [55]-[56]) that, “on the true and proper interpretation” of the order, the “most accurate answer” was for the defendant to disclose the fact of the assignment and the relevant documentation; however, he held,

“I am not making a finding of breach of the order […], but simply saying that I consider it could most accurately be complied with by providing that documentation. Whether or not that is so, in any event, I consider that it is appropriate by way of clarification or by way of addition, that such disclosure should be given, by way of variation of that order, for the avoidance of doubt.”

In PSJC Commercial Bank Privatbank v Kolomoisky & Ors6, the defendants included six companies who had disclosed various loan and trade receivables. The claimant sought more comprehensive disclosure. Joanna Smith QC (as she then was, sitting as a deputy High Court judge) ordered disclosure of further information about the contracts and details of the security and any impairments, but declined to order the disclosure of any documents, the details of the bank accounts into which any future repayments would be made, or an explanation for historic non-repayments.

6 [2018] EWHC 482 (Ch).

Joanna Smith QC construed “details” as encompassing “high-level” information about the receivables which enabled them to be identified and distinguished from the other disclosed receivables ([80]). She interpreted “value” as meaning the “estimated realisable value” of the receivables, as opposed to merely their face values, endorsing the view given in some textbooks that the purpose of a freezing injunction is to safeguard assets for future enforcement, and for this purpose what matters is their realisable value ([89], [94] and [96]).

overstated valuation of a property and his, likewise deliberate, failure to disclose that his properties were mortgaged. Regarding the latter breach, Murray J followed Privatbank and held that “value” means “realisable value”, i.e. the defendant’s equity share of each property, net of financing.

In ADM International Sarl v Grain House International SA9, the claimant obtained a freestanding asset disclosure order to aid the enforcement of an arbitration award. Subsequently, the claimant issued committal proceedings, alleging inter alia that the defendants had failed to disclose 19 mortgages and court orders which encumbered 6 properties. Cockerill J found the defendants in contempt and they appealed.

The Court of Appeal reversed Cockerill J’s contempt finding arising from the non-disclosure of the encumbrances.

Further, she found that it is a “legitimate use of a disclosure order” to require disclosure which enables the claimant to make informed decisions about whether to spend money on taking further steps to protect assets from dissipation, e.g. by seeking relief in foreign jurisdictions ([53]).

However, although Joanna Smith QC reached these conclusions as to the proper interpretation of “value, location and details”, she ultimately accepted the claimant’s invitation to adopt a “pragmatic approach” similar to that adopted by Bryan J in Timis ([58]). In other words, rather than finding any breach by the defendants, she instead made a new disclosure order.

Many other recent authorities concerning deficient asset disclosure follow the same pattern, i.e. they involve the courts granting orders for further disclosure under section 37 of the Senior Courts Act 1981 and/or CPR 25.1(g), instead of determining, at least initially, whether the defendant breached the original orders7. This trend has resulted in a relative paucity of decisions on the proper construction of “value, location and details”.

The issue has, however, arisen in two committal proceedings. In Aspinalls Club Limited v Lim8, Murray J held a defendant in contempt due inter alia to his deliberate disclosure of an

Popplewell LJ held (at [62]-[72]) that “value” meant only the market value and did not require disclosure of the encumbrances. His grounds included that: (a) the order required disclosure of “the” value of the asset, which could mean either the market or unencumbered value, but not both; (b) as a matter of ordinary language, if a person were asked to give the value of their house, they would naturally respond with an estimate of what it could be sold for, not what equity they held after taking account of a mortgage; and (c) the application of the strict construction principle required the defendants only to disclose the market value and not also to perform the more onerous task of ascertaining and disclosing the unencumbered value.

Popplewell LJ noted that a “well-drawn disclosure order” might have expressly required disclosure of both the gross market value and any encumbrances or third party beneficial interests; however, due to point (a) above, this interpretation was unavailable.

Popplewell LJ nevertheless approved the decisions in Kolomoisky and Lim that “value” meant “unencumbered value” in those cases. This was because, in Kolomoisky and Lim, the disclosure order appeared within a standard-form freezing injunction, which elsewhere expressly described “value” as meaning “unencumbered value”. In ADM, by contrast, the asset

7 See, for example, HMRC v Malde [2020] EWHC 100 (Ch), Abu Dhabi Commercial Bank PJSC v Shetty & Ors [2021] EWHC 1532 (Comm), Al Saud v Gibbs [2024] EWHC 237 (Comm), and Harrington & Charles Trading & Ors v Mehta [2024] EWHC 2674 (Ch).

8 [2019] EWHC 2379 (QB).

9 [2024] EWCA Civ 33.

disclosure order was freestanding and included no such reference. He noted, though, that it would be

“desirable to amend the standard form to refer to unencumbered value to remove any room for doubt in the mind of a defendant without access to legal advice”.

On 13 February 2025, HMCTS announced that a revised version of CPR 25, including new model freezing and proprietary injunctions, will take effect in April 202510. The new model order expressly requires disclosure of both (a) the “market value” of all assets (ignoring charges or other security) and (b) “details of any charges or other security over such assets including the amount currently secured thereby”11 We understand that these changes were prompted by Popplewell LJ’s observations in ADM.

applying for supplemental disclosure, rather than taking the more difficult path of alleging that the defendant has breached the original order.

In our view, though, the need for the “pragmatic approach” is unwelcome. For claimants, it means that defendants are insufficiently discouraged from adopting an unhelpfully minimalist interpretation of their asset disclosure obligations. For defendants, they are left in doubt as to how much disclosure they are required to provide.

The “pragmatic approach” is also a recipe for satellite or further litigation; and yet, because the applications will generally be made under section 37 of the Senior Courts Act 1981 and CPR 25.1(g), they will not normally shed much light on the proper interpretation of “value, location and details”.

Having said that, we agree with the decision in ADM. In our view, it involves a proper application of the strict construction principle, whereas the broader purposive approach adopted in Timis, Kolomoisky and Lim results in defendants not being given the benefit of the doubt regarding the interpretation of the many ambiguities in “value, location and details”.

Analysis

We expect, notwithstanding Popplewell LJ’s endorsement of Kolomoisky and Lim and the recent amendments to the model order, that defendants will rely on ADM as representing a change in the proper construction of the phrase “value, location and details”. Whereas in Kolomoisky and Lim (and also Timis) the court construed the phrase purposively such as to encompass a broad range of information which is necessary to police a freezing injunction, in ADM Popplewell LJ applied the strict construction principle far more robustly.

Thus, following ADM, claimants faced with deficient asset disclosure might be expected to incline even more towards the “pragmatic approach” of

Indeed, it is the imprecision of the phrase “value, location and details” which is at the heart of the problem. The recent clarification in the new model order of what is meant by “value” is a welcome development, but other deficiencies remain.

Consider, for example, the term “location”. On a broad construction, this might encompass any information which the claimant needs to notify relevant third parties of the injunction and seek further asset-preservation remedies in other jurisdictions. In the case of a loan, this might include information about both the debtor’s location and contact details and any jurisdiction and governing law clauses. Post-ADM, though the term presumably cannot mean all these things.

In our view, modifications to the model asset disclosure order will therefore continue to be required for it to fulfil its

purpose of giving a freezing injunction “teeth”12. There is not space in this short article for a full exploration but, in general terms, there are two approaches which could be adopted (or possibly combined).

The first is to define precisely what is meant by each of “value”, “location” and “details”. “Value”, for example, could be defined more precisely as meaning (a) the estimated realisable value and the basis for the estimate, (b) an explanation of any impairments and their quantum, (c) the nature and amount of any security interests, other encumbrances and third party beneficial interests or claims, and (d) the identities and contact details of the holders of any such interests.

The second approach is to identify what “value, location and details” means for different specified asset classes. For UK bank accounts, for example, this would include the bank name, branch, account details (e.g. account number and sort code) and credit balance. Claimants may consider preparing a schedule to the order, identifying the minimum information required for different asset types.

Perhaps, in time, the model freezing injunctions will be adapted along the above lines. In the meantime, although the new model order is a step in the right direction, there is still room for more precision. Claimants and their legal representatives may therefore look to draft their own modifications and raise them with the court, so that this important area of the law and practice of freezing injunctions can continue to be developed.

This article does not contain legal advice. Anyone seeking advice on English freezing injunctions may contact the authors at aayres@twentyessex.com and andrewbarnsgraham@3harecourt.com

10 This will be introduced pursuant to the Civil Procedure (Amendment) Rules 2025 (SI 2025/106). Two model orders are to be introduced: (i) a freezing injunction and (ii) a combined freezing and proprietary injunction. At the time of writing, only the latter appears to be publicly available, and so references in this article to the ‘new model order’ are to the latter.

11 See paragraph 13(2) of the new model order.

12 The new model order is preceded by an “Important Note” which states: “An applicant for a proprietary injunction and a freezing injunction should always base their draft of the proposed order on the model order. The draft order presented to the court should only include those parts of the model order which are necessary based on a realistic assessment of what is required. Departures from the model order are permissible, but the existence and scope of any suggested changes must be highlighted and the reasons for the proposed departures must be explained.” This has long since been the position, but it is given particular emphasis in the “Important Note”.

THE COLLATERAL USE UNDERTAKING MAREVA AT 50

Introduction

The model freezing injunctions include the following undertaking:

“The Applicant will not without the permission of the Court use any information obtained as a result of this

order for the purpose of any civil or criminal proceedings, either in England and Wales or in any other jurisdiction, other than this claim.”1

In this article, we address the rationales for this undertaking, its scope, and the circumstances in which the court relaxes it. We then provide our analysis and practical suggestions.

information disclosed for the purpose of litigation in this jurisdiction.2

There are two rationales for this policy:3

(1) a disclosure order frequently involves interference with the confidentiality and privacy rights of the disclosing party and the extent of that interference should be confined to the purpose which it serves; and

(2) the existence of collateral use restrictions encourages parties to comply fully with their disclosure obligations on the footing that unhelpful, private or confidential material will not generally be deployed against them in other contexts.

Rationales

The undertaking forms part of a wider policy of English law which aims to prevent the misuse of documents and

Suppose, for example, that a claimant obtained a freezing injunction and then discontinued proceedings immediately following receipt of the defendant’s asset disclosure, because the claimant’s real objective in launching the proceedings was to obtain the asset disclosure and then deploy it in

Authored by: Andrew Ayres KC (Barrister) - Twenty Essex & Andrew Barns-Graham (Barrister) - 3 Hare Court

foreign proceedings in which it was unobtainable. This would be an abuse of the English court’s procedure and an unjustified invasion of the defendant’s privacy and confidentiality rights.

Breach of the undertaking is a serious matter. It is a contempt of court and an action commenced in reliance on documents used in breach is liable to be struck out.4

(3) The courts have ascribed the widest possible meaning to the term “use”. It does not just encompass the active deployment of information; merely reading the information, copying it, or showing it to another person constitutes a “use”.5

(4) There is an implied permission to review documents to decide whether to seek a release, but doing anything further may constitute a breach.6 The implied permission does not extend to advising on other proceedings,7 and has been found only to be available to a party who somehow already knows, prior to commencing the review, which documents it wishes to use for a collateral purpose.8

Scope

The undertaking’s scope is wide in the following five respects:

(1) It applies not only to the initial asset disclosure letter and affidavit; it encompasses the information contained in these documents. In fraud cases, this information often infiltrates pleadings and other documents, e.g. where the claimant draws inferences if the value of the defendant’s disclosed assets exceeds what might be expected based on their known legitimate income, or if their asset-holding structures bear the hallmarks of money-laundering.

(2) It applies not only to information obtained pursuant to the defendant’s compliance with the injunction, but to all information obtained as a result of the injunction. This is a significant distinction, as parties often exchange voluminous correspondence concerning assets and funding which exceeds the limits of strict compliance.

4 Riddick v Thames Board Mills [1977] QB 881.

(5) Unlike the collateral use restrictions in the CPR, the undertaking remains effective even after information has been read or referred to in open court.9

Release

The court is “circumspect and protective” when it comes to collateral use.10 An applicant for a release therefore bears a heavy burden: they must satisfy the court, cogently and persuasively, that there are special circumstances justifying a release and that it will not occasion injustice to the disclosing party.11

However, in cases involving related criminal investigations/proceedings or cross-border litigation, the courts have often held that the public interest in the administration of justice and international judicial comity take

precedence over the prevention of collateral use.12

Occasionally, a recipient of disclosure contends that they are compelled to disclose documents in a foreign jurisdiction, but the disclosing party disputes this. The courts tend to give applicants the benefit of the doubt in such cases, to avoid forcing them to choose between risking being in contempt in the English proceedings or facing some sanction in the foreign jurisdiction.13

Disclosing parties occasionally protest that they will suffer injustice if the restriction is relaxed to permit use overseas, e.g. by being deprived of the ability to invoke privilege against selfincrimination, but the court’s general approach in such cases is to trust the foreign court to provide appropriate protection.14

As noted above, the undertaking remains effective in respect of asset disclosure provided pursuant to a freezing injunction even after information has entered the public domain in open court; however, this publicity is a powerful factor in favour of a release, and the burden shifts to the party resisting collateral use to justify the continuation of the undertaking.15

Other factors supporting a release include where the application concerns a limited number of documents and/ or a limited purpose;16 or where the documents are to be used for an action with related subject-matter;17 or where the same disclosure could be obtained by way of a third party disclosure order in the other proceedings.18

It is, however, generally necessary to seek the court’s permission ahead of the proposed collateral use. Whilst it is possible to obtain permission retrospectively, this is “rare”,19 and the court may punish even a successful late applicant with an indemnity costs order.20

5 IG Index Ltd v Cloete [2014] EWCA Civ 1128, at [40], per Christopher Clarke LJ.

6 Per Cockerill J at [59] of Lakatamia Shipping Company Ltd v Nobu Su [2020] EWHC 3201 (Comm).

7 Tchenguiz v Director of the Serious Fraud Office [2014] EWHC 1315 (Comm), at [12]-[14], per Eder J; Tchenguiz v Grant Thornton LLP [2017] EWHC 310 (Comm), at [31], per Knowles J.

8 Tchenguiz v Grant Thornton, at [29].

9 Per Lord Diplock and Lord Keith in Home Office v Harman [1983] 1 AC 280, at 305 and 307.

10 Per Hildyard J at [26] of ACL Netherlands BV v Lynch [2019] EWHC 249 (Ch).

11 Per Lord Oliver in Crest Homes Plc v Marks [1987] AC 829, at 859G-860C.

12 See, e.g., Marlwood Commercial v Kozeny [2005] 1 WLR 104, in which the Court of Appeal upheld an order for disclosure of documents to the SFO in accordance with notices issued by the SFO.

13 See Bank of Crete v Kosokotas No.2 [1992] 1 WLR 919, at 926C-E; PJSC National Bank Trust v Mints [2020] EWHC 3253 (Comm), at [18]; Privatbank, at [54]. However, contrast these cases with Sita UK Group Holdings Limited v Andre Paul Serruys [2009] EWHC 869 (QB) (the claimants wished to provide documents to HMRC about possible tax frauds, but permission was refused principally because HMRC did not support the application); and Lynch (the court refused permission because it was not persuaded that disclosure was compulsory under a US subpoena or that there was any other pressing need for disclosure in the US).

14 Kozeny (cit. sup.) at [33]; Attorney General for Gibraltar v May [1999] 1 WLR 998.

15 Per Bryan J at [153]-[154] of Mints; see also Privatbank.

16 Tchenguiz v SFO, at [19].

17 See Crest Homes (claimant permitted to use documents obtained via a search order for the purpose of committal proceedings against the defendant) and BDW Trading Ltd v Fitzpatrick [2015] EWHC 3490 (claimant permitted to use documents for the purpose of related proprietary claims against third parties and for a disciplinary investigation and potential disciplinary proceedings against the defendant, a former employee of the claimant); see also Sybron Corporation v Barclays Bank Plc [1985] Ch 299 and Bank of Crete.

18 Re France (A Bankrupt) [2014] EWHC 2123 (Ch).

19 Per Coulson J in Shlaimoun v Mining Technologies International LLC [2012] 1 WLR 1276, at [43]-[46].

20 Lakatamia, at [136]-[139].

“In

the

present case that is true, but that is because of the purpose of

Analysis

The policy rationales underpinning the collateral use undertaking are important, but in our view the courts’ strict approach results in surprising outcomes.

For example, once the defendant’s asset disclosure is referred to in open court, the claimant becomes the only person in the world who cannot use it freely. Journalists can report on it, and yet the claimant still needs permission before making any collateral use.

CPR 31.22 permits the collateral use of other disclosed documents in such circumstances unless the disclosing party obtains an order continuing the restriction. In our view, the undertakings in the model injunctions should provide likewise. The court confirmed in Mints that the evidential burden shifts in such circumstances; so too should the procedural burden.

We also disagree with the courts’ broad interpretation of “use”.21 Recipients of asset disclosure (and disclosure generally) should be free to review documents and seek advice on potential collateral uses; it is only the active deployment of information which should be prohibited.

This narrower interpretation would achieve a fairer balance between the parties. The existing interpretation precludes international legal teams even from discussing the possibility of collateral use without prior permission. This has a significant chilling effect on cross-border asset recovery and is unduly prejudicial to the recipients of disclosure.

Conversely, disclosing parties would suffer no significant injustice if their counterparties were free to review and discuss disclosed documents and seek advice on them. This point was raised in Tchenguiz v Grant Thornton and Knowles J responded as follows (at [22]):

the review sought.22 The interference represented by the review in another case might be far greater. What, for example, of a review designed materially to inform the commercial conduct of the reviewer in a market in which reviewer and owner both participated? If review is not “use” then a review for that purpose would be outside the collateral use protections, and I do not think that can have been the intention.”

In our view, however, it was not the intention that a document reviewer would breach the collateral use rules – and, in the case of the undertaking, be in contempt of court – merely by reading a document with a non-permitted purpose in their mind. The real objection is not to thinking about whether to use documents for a non-permitted purpose, but to actually doing so.

Unfortunately, though, we expect it may be difficult to persuade a judge to modify the standard form undertaking in the model freezing injunctions in the ways suggested above. The courts’ position has become entrenched and is unlikely to change, absent new appellate authority or legislative change.

A possible exception may be if the applicant already knows at the time of a freezing injunction application that he will be obliged (or have some other pressing need) to use the defendant’s asset disclosure for a specific collateral purpose, such as disclosure in related proceedings. The court might permit an appropriate carve-out from the undertaking in such a case. We therefore recommend that practitioners actively consider, when applying for freezing injunctions, whether any collateral uses will need to be made of

the asset disclosure, in order to save the time and cost of having to make a further application at a later stage.

We also wish to offer our ‘top three’ practical suggestions for addressing collateral use issues.

First, collateral use is a trap for the unwary. It is essential to implement information firewalls and ensure they are understood by the whole legal team and the client. Strict discipline is needed, e.g. a system for identifying applicable restrictions and a routine of considering collateral use prior to any discussion with a foreign lawyer acting in related litigation.

Second, ask the court to adopt an efficient approach to release applications. This did not happen in Tchenguiz v SFO,23 but in Tchenguiz v Grant Thornton Knowles J encouraged litigants (at [26]) to be “vigilant” to the possibility of asking the court to resolve applications on the papers or at a case management conference.

Third, remember to make release applications preemptively, as it is “rare” for permission to be granted retrospectively and no party (or legal team) will wish to be made an example of by the court.

This article does not contain legal advice. Anyone seeking advice on English freezing injunctions may contact the authors at aayres@twentyessex.com and andrewbarnsgraham@3harecourt.com.

21 Charles Hollander KC also analyses this issue in chapter 28 of Documentary Evidence (15th edition).

22 The intended purpose in this case was to obtain legal advice.

23 Eder J adopted a procedure whereby documents were divided into categories, with separate in-person applications for deciding whether to permit review of the document and then whether to permit their subsequent deployment, in each case on a document-by-document basis.

MAREVA AT 50

CONFIDENTIALITY CLUBS

Authored by: Andrew Ayres KC (Barrister) - Twenty Essex & Andrew Barns-Graham (Barrister) - 3 Hare Court

Introduction

Confidentiality club orders (“CCOs”) are orders or arrangements which permit only certain identified individuals to review some or all of an opposing litigant’s disclosure. They are a common feature of intellectual property and competition disputes, in which the protection of trade and technical secrets is often of paramount

importance. However, they have also occasionally been granted in civil fraud cases, including in respect of asset disclosure given by defendants pursuant to freezing injunctions.

In this article, we first provide a brief summary of the general principles applicable to CCOs. We then provide a case study illustrating how these principles have been applied to asset disclosure, before offering our general conclusions on this issue.

However, the court’s starting-point is that each party should be allowed unrestricted access to the other party’s disclosure subject only to the rules against collateral use. It is therefore for the person seeking a CCO to justify a departure from the norm. To do so, the applicant “must establish that there is a real risk, either deliberate or inadvertent, of a party using his right of inspection for a collateral purpose”.

Clear and cogent evidence is required, and any restriction imposed should go no further than necessary for the protection of the right in question.2

General principles

The court’s jurisdiction to make CCOs is well-established and forms part of its inherent jurisdiction to regulate its own procedure in the interests of justice. 1

The relief is discretionary, and the court undertakes a balancing exercise which takes into account the following factors:3

(a) the degree and severity of the identified risk and the threat posed by the inclusion or exclusion of particular individuals within a confidentiality club,

(b) the inherent desirability of including at least one duly appointed representative of each party within a confidentiality club,

(d) the nature of the confidential information and whether it needs to be considered by people with access to technical or expert knowledge, and

(e) practical considerations, such as the structure and organisation of the receiving party and their legal team and the degree of disruption that will be caused if only certain individuals are entitled to review, discuss and act upon the confidential information.

As Floyd LJ has held, “There is no universal form of order suitable for use in every case, or even at every stage of the same case”.4

The jurisdiction is therefore flexible: different types of information may require different degrees of protection, depending on their value and potential for misuse;5 and orders may be tailored to deal with matters such as the safekeeping of documents, their destruction at the end of the proceedings, and the receiving party’s obligations upon discovery of a breach.

The courts may also grant “external eyes only” orders, i.e. CCOs which appoint only members of the receiving party’s external legal team to the confidentiality club, to the exclusion of its inhouse lawyers, directors or employees. Such orders are rare, even at the interlocutory stage, and must be specifically justified.

Moreover, “external eyes only” orders become increasingly difficult to justify as a case approaches trial, as they

can impede a party from consulting its own lawyers on matters relevant to the trial. This in turn raises concerns about natural justice and the party’s Article 6 rights, while also putting the party’s lawyers in the invidious position of being unable to share relevant information with their own client.6 Once the trial begins, the further concern arises that, to make an “external eyes only” order effective, parts of the trial may have to be heard in private, which will usually infringe the principle of open justice.

For the above reasons, David Richards J (as he then was) held in 2012 that, if the jurisdiction to deny a party access to evidence at trial exists at all, it is

“so exceptional as to be of largely theoretical interest only”.

Until recently, CCOs operating during trial were unprecedented, but the courts have recently granted them on at least two occasions.8

conspired to misappropriate around $1.9bn of P’s funds via a complex web of sham transactions.

P obtained a worldwide freezing order (“WFO”), including an asset disclosure order. In response, K contended that the proceedings formed part of a campaign against him orchestrated by the then president of Ukraine, Petro Poroshenko. K argued that, if he disclosed his Ukrainian assets to P, there was a real risk that P would breach its collateral use undertaking by sharing the information with Mr Poroshenko and the National Bank of Ukraine, who would then use it to expropriate, seize or otherwise damage his assets and business interests. K also contended that the same risk applied to his Russian assets, because he was a political enemy of Vladimir Putin.

Based on this evidence, the court initially granted (with P’s consent) an “external eyes only” order, pursuant to which information about K’s Ukrainian and Russian assets was to be provided only to identified members of P’s English solicitors. However, P’s claim was subject at the time to a jurisdiction challenge by K and the other defendants. After this challenge was dismissed by the Court of Appeal, the CCO fell for reconsideration.

Case study on CCOs in respect of asset disclosure

A claimant who obtains asset disclosure pursuant to a freezing injunction is generally required to undertake to the court not to use it for any collateral purpose.9 CCOs in respect of a defendant’s asset disclosure are therefore reserved for situations where the undertaking provides the defendant with insufficient protection.

Privatbank v Kolomoisky is a rare example of such a case. In December 2017, Privatbank (“P”), a state-owned Ukrainian bank, issued proceedings in this jurisdiction against its former majority owners – Mr Kolomoisky (“K”) and Mr Bogolyubov – and six companies, alleging that they

4 Oneplus Technology (Shenzhen) Co Ltd v Mitsubushi Electric Corp [2020] EWCA Civ 1562.

5 Eli Lilly & Co v Teva [2024] EWHC 2474 (Ch), at [18], citing OnePlus, at [39].

P sought the discharge of the CCO, arguing inter alia that (a) the confidentiality club had hampered its ability to conduct the proceedings (including the policing of the WFO), (b) the continuation of the CCO would disrupt its preparation of its case for trial, especially because K’s asset disclosure included extensive information concerning his interests in and control of various corporate entities and individuals who were alleged by P to be involved in the fraudulent scheme, and (c) K’s position that he was exposed to a real risk of persecution had weakened following Volodymyr Zelenskiy’s defeat of Mr Poroshenko in the 2019 Ukrainian presential election.

K, on the other hand, argued that the CCO should be continued until the PTR, at which point it could be reviewed. He contended that there was an ongoing risk of misuse of his asset disclosure, including because Mr Poroshenko continued to wield

6 Roussel Uclaf; Al Rawi; McKillen v Misland (Cyprus) Investments Limited [2012] EWCH 1158 (Ch); TQ Delta LLC v Zyxel Communications UK Ltd [2018] Bus LR 1544; Privatbank v Kolomoisky [2021] EWHC 1910 (Ch); Eli Lilly.

7 McKillen, at [49]-[50].

8 See Nokia Technologies v OnePlus Limited Technology (Shenzhen) Co., Ltd [2022] EWHC 2814 (Pat) and Lufthansa Technik AG v Astronics Advanced Electronic Systems (in the latter case, a Consent Order was made); see also Lilly Icos at [34].

9 Please see our separate articles in this series on the scope of the asset disclosure obligation and on the ‘collateral use undertaking’.

considerable power in Ukraine and his future re-election remained a real possibility.

Trower J found in P’s favour and discharged the CCO. He found (in summary) that the interconnectivity between the asset disclosure and the substantive issues in the case made it necessary for a fair trial of the proceedings that P was permitted to review the asset disclosure. He thus held that P’s interest in preparing for trial without the impediment of a CCO outweighed K’s interest in its continuation.

court’s analysis of future applications for CCOs in respect of a defendant’s asset disclosure.

First, Trower J emphasised that defendants applying for such orders need to adduce clear and cogent evidence both of the risk that the claimant will misuse the asset disclosure and of the harm which they stand to suffer in consequence of any such misuse. Moreover, the court’s assessment is not static. If the nature or extent of the risk or potential harm changes over time, the court will take this into account when deciding whether to continue a CCO and, if so, on what terms.

Analysis

Privatbank is clearly an extraordinary case: most defendants against whom a freezing injunction has been granted will not be able to argue that they require a CCO because they face a real risk of political persecution by a head of state.10

However, CCOs have also been granted in fraud cases where the relevant risk may arise more frequently. For example, in two cases, defendants have obtained CCOs in respect of their asset disclosure because they required enhanced safeguarding against a risk of self-incrimination due to related criminal investigations and proceedings.11

Other examples of cases where a CCO might be justifiable in respect of a defendant’s asset disclosure include where the claimant has historically shown disregard for collateral use restrictions or has threatened to divulge disclosed information to the media or other third parties. Such fact patterns might be expected to arise more often in future fraud cases than that of the Privatbank case.

There are, however, some important general points which arise from the Privatbank decision which we anticipate will often form part of the

Second, Trower J’s judgment includes a detailed analysis of the practical difficulties which P would have suffered if the CCO in respect of K’s Ukrainian and Russian assets were continued. For example, he considered evidence from P’s solicitor that separate versions of the pleadings, evidence and submissions had needed to be prepared, to avoid the other defendants receiving information which was subject to the CCO. He also considered evidence that the past operation of the CCO had caused difficulties in policing the WFO.

The latter issue also arose in Khrapunov and Shetty,12 in which the extent to which the claimants’ lawyers had a broad mandate which enabled them to take the steps necessary to police the freezing injunction without their clients’ instructions and active participation was found to be an important factor.

Third, the decision in Privatbank does not entirely close the door on the possibility of an “external eyes only” CCO in respect of a defendant’s asset disclosure being continued into the trial preparation phase. However, it illustrates the heavy burden which a defendant will bear in seeking such an order, especially in a case where the asset disclosure is also relevant to the substantive issues for trial (as is often the case in fraud litigation).

This article does not contain legal advice. Anyone seeking advice on English freezing injunctions may contact the authors at aayres@twentyessex.com and andrewbarnsgraham@3harecourt.com.

10 Libyan Investment Authority was similarly exceptional: a CCO was made in favour of certain defendants because their physical safety (and thus their Article 2 ECHR rights) was at risk if their disclosure was misused.

11 JSC BTA Bank v Ablyazov and Khrapunov [2016] EWHC 289 (Comm) and Abu Dhabi Commercial Bank PJSC v Shetty [2020] EWHC 3692 (Comm); in Shetty, an “external eyes order” was continued due to an ongoing risk that the claimant’s inhouse lawyer whose admission to the confidentiality club was sought might be compelled to disclose the information in related criminal proceedings in the UAE.

12 Cit. sup.

MAREVA AT 50

NOTIFICATION INJUNCTIONS

Authored by: Andrew Ayres KC (Barrister) - Twenty Essex & Andrew Barns-Graham (Barrister) - 3 Hare Court

Introduction

The freezing injunction is sometimes described as the court’s “nuclear weapon”, but it is not always necessary or appropriate to choose the nuclear route. An alternative option, not often used, is to seek a “notification injunction”, i.e. an injunction requiring the defendant to provide notice of its asset dealings to the applicant.

There is no generally used standardform notification injunction. It can be

drafted very flexibly; indeed, that is one of its main advantages.

A broad notification injunction, for example, might closely resemble an ordinary freezing injunction, e.g. it may apply to all the defendant’s worldwide assets and to all types of dealing. Its only distinguishing feature might be that, instead of imposing an outright prohibition on all asset dealings (excluding ordinary living, legal and business expenditure), it requires, say, five business days’ prior written notice of any proposed dealing, so that the claimant can then decide whether to apply for a further order prohibiting it or stipulating what should happen to the proceeds of the dealing.

A narrower notification injunction, by contrast, might only apply to a single asset located within the jurisdiction, or it might require notice of asset dealings to be given retrospectively instead of in advance.

In this article, we summarise the main authorities on notification injunctions (which are few in number). We then explain why we consider them to be a useful – and perhaps under-used –interim remedy in civil litigation.

The authorities

The leading authority is Holyoake v Candy.1 The claimants brought an unlawful means conspiracy claim. They were concerned that the defendants might dissipate their assets, but they considered a full freezing injunction to be more than was reasonably necessary to protect their position, so they instead applied for a notification injunction.

Nugee J granted the injunction, in part on the footing that the notification injunction sought was less intrusive than a full freezing injunction, such that a less stringent test for risk of dissipation applied. The defendants appealed to the Court of Appeal. Gloster LJ, giving

the leading judgment, held that the broad notification injunction granted by Nugee J was, in effect, a modified version of a conventional freezing injunction. The normal test for risk of dissipation therefore applied, such that the claimants were required to show “a real risk, supported by solid evidence, that a future judgment would not be met because of unjustifiable dissipation”.

In support of this conclusion, Gloster LJ referred to the need for the courts to maintain “close regulation” of injunctions and the desirability of having a “binary threshold” for assessing the risk of dissipation, rather than a “spectrum” or “sliding scale”. Having found that the claimants had failed to show a real risk of dissipation, she allowed the appeal and discharged the injunction.

This decision might have been the death knell for notification injunctions, but for two aspects of the Court of Appeal’s judgment.

First, the premise for Gloster LJ’s conclusion that the normal test for risk of dissipation applied was that the notification injunction granted by Nugee J had a similar breadth and effect to a full freezing injunction –indeed, in certain respects, it was even more onerous. Importantly, she observed that

“the position might well be different in relation to a simple order

requiring notice to be given

of a proposed disposition of a specific property”.

Second, Gloster LJ emphasized that the degree of intrusiveness of an injunction remains “highly relevant” to the question whether it is “just and convenient” (per s.37 of the Senior Courts Act 1981) for the court to grant it. In other words, even if an application passes the “good arguable case” and “real risk of dissipation” stages of the test, it may still fail at the “just and convenient” stage, but an applicant can seek to tip the balance in its favour by seeking an appropriately tailored notification injunction instead of the full panoply of a freezing injunction.

Nugee J granted a further notification injunction in Kea Investments Limited

v Ivory Castle Limited.2 In doing so, he treated Gloster LJ’s decision in Holyoake as meaning that “a notification injunction is to be regarded as a type of freezing order”.

In our view, this possibly overstates the position: Gloster LJ held in Holyoake that the particular notification injunction involved in that case was effectively a modified version of a freezing injunction, such that the normal test for risk of dissipation applied, but she left open the possibility that the test for a “simple order” might be less strict.

In any event, Nugee J held in Kea that the applicant’s evidence satisfied the ordinary “good arguable case” and “real risk of dissipation” tests for freezing injunctions. As regards the “just and convenient” factor, he held,

“I take the view that a notification injunction is, in principle, far less intrusive than a conventional freezing order, particularly in the case of an investment holding vehicle like [the Defendant] rather than a trading company. A requirement to notify the Claimants before disposing of assets does not seem to me to impose particularly onerous disadvantages.”

Two applications were made for notification injunctions in Magomedov v TPG Group Holdings. In the first, the claimants made unsuccessful applications against numerous defendants.3 Butcher J interpreted Gloster LJ’s decision in Holyoake as meaning that “a notification injunction in wide terms should be granted only on the basis of such evidence of dissipation as would justify a freezing order” (emphasis added). We agree with this interpretation, as opposed to that of Nugee J in Kea, for the reasons given above.

The claimants in Magomedov then made a further application for a notification injunction against a different defendant, Transneft, and were successful.4

Butcher J held that the “good arguable case” and “real risk of dissipation” tests were satisfied as against Transneft. Regarding the “just and convenient” test, he held, “I recognise that a notification order can be very onerous and potentially damaging to the party injuncted and, in the case of an entity of the size of Transneft, can be practically difficult to comply with and to monitor. I consider, however, that these features can be met in this instance, to a large degree, by a properly tailored order, which will be one which does not impose obligations on Transneft unjustified by their utility to the claimants.”

There then followed a consequential hearing at which Butcher J determined what constituted a “properly tailored order”. An important consideration was that Transneft was an extremely large trading Russian state-owned oil company with US$50 billion dollars of assets, the vast majority of which of which were located in Russia.

There is no published judgment but, based on the hearing transcript and order, Butcher J accepted Transneft’s submission that a notification injunction would have limited utility in respect of the Russian assets, because an English judgment would, on the claimants’ own case, be difficult to enforce in Russia.

Butcher J therefore held that notification of proposed dealings with the Russian assets would be required only in respect of a “transformational matter”. This translated into an order requiring 28 days’ advance notice of proposed capital reorganisations, declarations/ payments of dividends, and disposals of shareholdings exceeding US$10 million in value. However, in each case, the notification obligation only arose if the transaction would result in Transneft’s net asset position in Russia falling below US$10 billion.

As regards Transneft’s (more limited) non-Russian assets, Butcher J ordered that 14 days’ advance notice be given of any proposed cash dealings, share disposals, or redomiciling of assets into Russia, in each case if exceeding US$10 million. He also ordered Transneft to disclose its non-Russian assets to the claimants, subject to (a) thresholds of US$1 million for cash balances and US$10 million for all other assets and (b) a confidentiality club order.

2 [2019] EWHC 309 (Ch); see [61]-[85].

3 [2023] EWHC 2655 (Comm).

4 [2023] EWHC 3134 (Comm); see [58]-[59].

The order made in Magomedov was therefore not a “simple order” of the type envisaged by Gloster LJ, but neither was it close in scope to a full freezing injunction, as was the case in Holyoake. It is an apt illustration of the utility and flexibility of notification injunctions in cases where the “good arguable case” and “real risk of dissipation” tests are satisfied, but the defendant is a large trading entity, such that a full freezing injunction would risk causing significant harm.

Analysis

It is notable how few authorities there are relating to notification injunctions. It appears that most applicants still default to seeking a full freezing injunction. One consequence of this is that the possibility left open by Gloster LJ in Holyoake that a less rigorous test may apply to an application for a “simple order” has remained untested.

In our view, though, notification injunctions can be a useful alternative to full freezing injunctions, especially in applications which are close to the borderline of the “just and convenient” part of the test. Some examples of this are as follows:

(1) Cases which are relatively weaker or uncertain on their merits. Although the court will not conduct a mini-trial when deciding whether to grant an injunction, it still takes the merits into account when assessing the balance of justice and convenience. Following the Court of Appeal’s recent decision that the merits test for freezing injunctions is the same low test (“serious issue to be tried”) that that applies in the context of other injunction applications, pursuant to the American Cyanamid test,5 we may in due course see an increase in the number of applications which are resolved at the “just and convenient” stage of the assessment, instead of at the merits stage. This may in turn motivate applicants to seek notification

injunctions in such cases, as a less draconian alternative to full freezing injunctions.

(2) Cases where the cost of a full freezing injunction is not justified. Full freezing injunctions are expensive both to obtain and to police. In some cases – e.g. where the claim has a low value or where the defendant’s assets are expected to have a low value – this cost may not be justifiable. Yet it is clear from Gloster LJ’s decision in Holyoake that claimants do not have to adopt an ‘all or nothing’ approach. If the expense of a full freezing injunction is disproportionate, then claimants might consider a narrow notification injunction as an alternative and more cost-effective option.

(3) Cases where the claimant wishes to limit their exposure under the cross-undertaking in damages. The extent of the claimant’s exposure under the crossundertaking varies depending on the circumstances of the defendant. For example, a defendant (such as Transneft in the Magomedov case) which is an active trading company generally poses a greater liability risk under the cross-undertaking than a dormant holding company. An appropriately tailored notification injunction, which adequately protects assets from unjustified dissipation with the least possible disruption to the defendant, can be a useful compromise in such cases. It may also result in the claimant being required to provide a lesser amount of fortification for the cross-undertaking, because the defendant may find it more difficult to demonstrate a good arguable case that they may suffer a loss as a result of a notification injunction which is capable of being intelligently estimated by the court on an informed and realistic basis.6

(4) Cases where a full freezing injunction might cause prejudice/ hardship to third parties. A full freezing injunction is generally significantly more difficult to obtain if there is evidence that it would cause harm to third parties, such as employees or trading counterparties of the defendant. Again, the court may regard a suitably narrow notification injunction as a more appropriate remedy in such cases.

Of course, a full freezing injunction is warranted in some cases. In others, though, such an order may not strike the right balance between, on the one hand, the need to protect assets from unjustified dissipation and, on the other, the desirability of controlling the cost of obtaining and policing the injunction and of mitigating its harmful impact.

We therefore encourage readers of this article to consider not always seeking full freezing injunctions by default. In some cases, an appropriately tailored notification injunction may be the more appropriate remedy. It is, at the very least, usually worthy of some consideration.

This article does not contain legal advice. Anyone seeking advice on English freezing injunctions may contact the authors at aayres@twentyessex.com and andrewbarnsgraham@3harecourt.com

MAREVA AT 50

THE LIVING AND LEGAL EXPENSES EXCEPTIONS

Authored by: Andrew Ayres KC (Barrister) - Twenty Essex & Andrew Barns-Graham (Barrister) - 3 Hare Court

Introduction

Freezing injunctions are not final orders and they are not meant to punish defendants. They are instead designed to protect assets from illegitimate dissipation pending trial or enforcement after trial.

Freezing injunctions therefore usually include exceptions which permit (a) transactions in the ordinary and proper course of business (the so-called 1

Angel Bell exception), (b) spending a reasonable sum on legal advice and representation, and (c) if the defendant is a natural person, their ordinary living expenditure.

In certain respects, the courts have interpreted these exceptions favourably for defendants. Thus, in relation to legal expenditure, save in exceptional circumstances, it is not for the claimant nor the court to question a defendant’s choice of solicitor nor the nature or amount of work done by the solicitor, who is entitled to “self-certify” that their fees are reasonable.1 A defendant is also permitted to sustain their prefreezing order living expenditure, even if it is lavish and will inevitably lead to their bankruptcy.2

It is therefore essential, when acting for a client who is considering applying for a freezing injunction, to provide clear advice about the wide scope of the exceptions.

Our focus in this article, though, is on whether there are any modifications which claimants can ask the court to make to the exceptions which appear in the standard form orders.3 We

identify two such modifications: first, the addition of a requirement that legal and living expenses must be paid from a particular source; and secondly, an order for enhanced disclosure of the sources from which a defendant is paying their legal and living expenses.

We conclude the article by identifying and considering the changes to the model Part 25 order which are due to come into effect on 6 April 2025.

[2020] EWHC 757 (Comm).

The authorities

It is possible for a claimant to ask the court not to include any exception for living or legal expenses where the defendant has other assets not injuncted which can be used for that purpose and are likely to be sufficient.4

The initial burden will be on the claimant to show this, certainly at the without notice stage, and also to deal with it as a matter of full and frank disclosure. The burden then shifts to the defendant in the event of any dispute about the existence or sufficiency of any exempted assets –a burden which must be discharged at the return date or any subsequent variation hearing.5

Further, where the freezing injunction is proprietary in nature, the defendant will be required to use their own assets rather than the injuncted assets, for the obvious reason that no one should be allowed to use other people’s money, or arguably other people’s money, for their own living or legal expenses.

The claimant’s right to seek a requirement that legal expenses be paid from a particular source was established in Tidewater Marine International Inc v Phoenixtide Offshore Nigeria Ltd.6 In that case, Males J (as he then was) explained the importance of the requirement on the defendant to say where the money was coming from as an opportunity afforded to the claimant to object. The judge dismissed an application to require the parties to concur in an application to the Swiss Court to release funds for the payment of legal expenses in circumstances where, inter alia, the defendant did not satisfy the court that there were no other assets available worldwide.

Further, in the context of legal expenses, the court is entitled to require information as to the source of funds, including in exceptional circumstances as a condition for having an application heard.7 The applicant has the burden of establishing a “properly arguable case” that the funding was or may be from frozen funds and then there must be an adequate basis for ordering the disclosure of further information as to the source of funds.

Scope for claimants to seek to

modify the exceptions

Proprietary injunctions are different in the sense that a defendant must always use his own money first for living or legal expenses. When a defendant says he cannot, because no non-proprietary funds are available, the court is required to balance the interests of the claimant (who says that the money belongs to them) against the interests of the defendant (who says they need the money to mount a reasonable defence or even to live).8

With personal asset freezing injunctions, however, the startingpoint is always that the defendant can use their own money as they please, subject only to the terms of the injunction. Freezing injunctions provide no security and no priority in the event of insolvency. They are not intended to interfere with the reasonable and normal course of a defendant’s life as it operated immediately before the grant of the injunction. The depletion of the asset base by reason of bona fide transactions in the ordinary course of business or living or reasonable legal expenses is simply part of the scheme which the applicant must accept, as part and parcel of obtaining the benefit of an otherwise powerful and intrusive order.

But where only part of the defendant’s assets is frozen, for example where assets in certain jurisdictions are exempted from the scope of the injunction, the claimant may seek an order that the defendant must use those exempted assets first, leaving the assets specifically frozen by the injunction untouched.

There may be reasons why that may be unfair. For example, a claimant may wish to exclude assets because they will in practice be impossible to enforce against and there would be no point in increasing the potential scope of the cross-undertaking in damages in respect of such assets. But this same reason may inform an argument by the defendant to the effect that it may be difficult to realise assets in some places in the world and use them for living or legal expenses. There may also be sanctions which preclude access to certain assets which are exempted from the freezing injunction.

In summary, a claimant may seek an order requiring the defendant to use exempted assets first, but in appropriate circumstances the defendant may be able to justify opposing such an order.

When it comes to seeking enhanced disclosure of a defendant’s source of funds, there are two different scenarios: first, where the funds used are the defendant’s; and secondly, where the funds used belong to a third party.

With the first situation, there is a square bracketed provision in the standard form exceptions for both living and legal expenses, as follows:

“but before spending any money the Respondent must tell the Applicant’s legal representatives where the money is to come from”.9

In most cases, it will be right to allow the claimant to police the source of funds.

With the second situation, a defendant is entitled to enjoy the generosity of a third party who wishes to fund his living or legal expenses. Such an arrangement is not caught by the freezing injunction at all and the third party is entitled to fund a defendant to whatever level they choose. But claimants are naturally skeptical about such apparent timely generosity10 and often wish to explore whether the funds being used are in fact the defendant’s, but are being used in breach of the freezing injunction.

5 China Evergrande Group (In Liquidation) v Mei [2024] EWHC 2100 (Comm), a case where the respondent failed to provide the evidence necessary to discharge that burden.

6 [2015] EWHC 2748 (Comm).

7 JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 187 (Ch) and JSC BTA Bank v Ablyazov [2018] EWHC 1368, at [9]-[16].

8 See Marino v FM Capital Partners Ltd [2016] EWCA Civ 1301.

9 In CRO v REC and another [2023] EWHC 189 (Comm), the High Court rejected the contention that this wording requires a defendant to identify not only the source of the funds to be used to meet legal expenses, but also the amounts which are to be spent.

10 In the event that a third party lent money to a respondent, such money would become the respondent’s money and thus subject to the provisions of the Freezing Order. It could be used for living and legal expenses, but only in accordance with the terms of the exceptions (i.e. not in unlimited amounts). The decision in Cantor Index Ltd v Lister [2002] CP Rep 25 may well be wrong in suggesting that borrowing to fund expenditure in excess of the living and legal expenses limits is permissible.

Without more, a claimant is not entitled to an order requiring the defendant to reveal the source of funds. Where, however, a claimant can show with evidence that there is doubt about any assertions made about the source of funding for living or legal expenses, then the defendant can be required to provide details of that source.

There is no conceptual limit on the level of detail which can be demanded of any defendant as to their source of funding, but there may be a practical limit. It may be that a third party who is not before the court is unwilling to reveal their source of funds, including to the defendant. Ultimately, a defendant can only do what is in their own power, and their maximum effort to obtain and provide information may be an answer to any contempt allegation.

The new wording thus restricts the scope of the exception to the legal costs of the proceedings in which the freezing order is granted, such that extraneous legal expenditure is permissible only to the extent that it constitutes ordinary business expenditure. In our view, this is a helpful clarification, but the footnote is drafted unduly narrowly, as it ought to refer to all forms of extraneous legal expenditure and not just to the costs of other proceedings.

Secondly, the new legal and living expenses exceptions are both accompanied by a square-bracketed requirement that advance notice must be given not only of the source of the expenditure, but also of “approximately how much is to be spent”.

In our view, this is a welcome change. Previously, although defendants would in practice often notify claimants of the amounts of their expenditure, they were not under any strict obligation to do so.11 Claimants could thus be left without any information at all about how much defendants were spending, which was an unsatisfactory state of affairs.

However, it is important to note the footnote, which states,

Upcoming changes to the exceptions

On 13 February 2025, it was announced as part of the Civil Procedure (Amendment) Rules 2025 (SI 2025/106) that a revised version of CPR 25 will be introduced with effect from 6 April 2025, along with new model orders for freezing and proprietary injunctions. The new models are available on the www. justice.gov.uk website.

The new model freezing order includes some significant changes to the exceptions, compared with the wording in the existing model at Annex A to Practice Directions 25A.

First, the new legal expenses exception will include a squarebracketed requirement that the legal advice and representation must relate to “these proceedings”. An associated footnote states:

“These words may be appropriate if, in the particular case, the cost of legal advice and representation in other proceedings (if any) is considered likely to fall within the ordinary and proper course of business exception in paragraph 9(2) of this model order”.

11 See footnote 9 above for the relevant authority.

“The proviso requiring advance notice should only be included where really necessary, more particularly where the amount to be spent is required to be notified. It is not to be included otherwise. It will often be a form of order better sought on the Return Date.”

Thirdly, the business expenditure exception will include a new requirement for the defendant to give advance notice to the claimant of any proposed business dealings or disposals, whereas this had been absent from the previous model order.

This addition is similarly likely to assist claimants to police defendants’ compliance with freezing orders, but it is again necessary to consider the accompanying footnote, which states:

“The proviso requiring advance notice should only be included where really necessary, and should be regarded as exceptional given its potential consequences for the conduct of business. It is not to be included otherwise. It will often be a form of order better sought on the Return Date.”

One can see that the drafters of the new model order have sought to enhance the notification obligations in the exceptions and thus to improve the ability of claimants (and the court) to police defendants’ compliance. However, this is subject to the important caveat that the enhancements are all squarebracketed and the associated footnotes emphasise that they should be regarded as the exception rather than the norm.

We therefore expect that the new square-bracketed words and footnotes in the model exceptions will be a key battleground at future hearings relating to freezing injunctions. We expect that they will generate numerous authorities of interest to civil fraud practitioners in the future.

This article does not contain legal advice. Anyone seeking advice on English freezing injunctions may contact the authors at aayres@twentyessex.com and andrewbarnsgraham@3harecourt.com.

MAREVA AT 50

DEFINITION OF “ASSETS”

Authored by: Andrew Ayres KC (Barrister) - Twenty Essex & Andrew Barns-Graham (Barrister) - 3 Hare Court

Introduction

Freezing injunctions are designed to preserve assets from illegitimate dissipation by the defendant, so that they remain available for execution if the claimant ultimately succeeds at trial.

Freezing injunctions are accordingly circumscribed, first in that they are always directed towards a specific person,1 and, like most court orders, they act only in personam; and secondly

because they only affect those assets which are strictly identified by the terms of the order.

In this article, we address two issues: (a) the definition of “assets” and how it has evolved over time, and (b) the interaction of the evolving definition of “assets” with the development of the court’s Chabra jurisdiction to grant freezing injunctions against third party respondents.

The Evolving Definition of “Assets”

The term “assets” has its ordinary, natural meaning. It includes physical assets, intangible assets, and choses in action (including monies credited to a bank account and rights under loan and receivables contracts).

In many cases during the 1980s and 1990s, the focus of injuncted assets was on ownership by the defendant, whether legal or beneficial. After all, one could not expect to enforce against assets not owned by the defendant. But a focus on legal or beneficial ownership quickly became understood as inadequate for the job, partly because they are Anglocentric, common law concepts in a world of transnational litigation, and partly because they are restricted to the concept of ownership.

This did not deal properly with the way in which some people, including fraudsters, handle the assets of which they are able to make use. Defendants can hold and control assets without necessarily falling within the strict concepts of legal or beneficial ownership, for example as beneficiaries under a discretionary trust or a host of other elaborate “structures”.

So, wording was often added by thoughtful applicants to deal with the concept of control or the ability to give instructions for the transfer of assets – in other words, ownership in all but name, albeit falling short of the strict concept of ownership in English law.

1 The ability to seek to commit third parties for contempt for assisting the respondent to commit breaches of a freezing injunction exists, but the focus of any order is obviously the person to whom it is directed.

An example of wording used in a specific 1990s case is set out in the footnote.2 The model order annexed to Practice Direction 25A includes the following more succinct formulation:

“Paragraph 5 applies to all the Respondent’s assets whether or not they are in his own name and whether they are solely or jointly owned. For the purpose of this order the Respondent’s assets include any asset which he has the power, directly or indirectly, to dispose of or deal with as if it were his own. The Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with his direct or indirect instructions.”

The model order annexed to the Commercial Court Guide previously also contained the above formulation, but it was updated in 2009 to include the following additional squarebracketed wording after “solely or jointly owned”: “[and whether the respondent is interested in them legally, beneficially or otherwise]”.

What is meant by the words “or otherwise”? It has been held that they are intended to address the situation where the defendant holds assets on trust for a third party,3 but it is difficult to see what this adds to the word “legally”.

In our view, the words may instead encompass:

(1) interests under discretionary trusts (or similar structures), which are neither existing legal nor beneficial interests but rather are merely potential interests, in the sense that whether or not they will ever materialise is contingent upon a future exercise of a discretion or power in the defendant’s favour;4

(2) situations where the defendant holds an asset but denies (for whatever reason) that they hold any legal or beneficial interest in it – in such a case, the interest should be disclosed and the asset frozen, so that the claimant has an opportunity to dispute the defendant’s position, if appropriate; and

(3) interests in assets which arise under foreign law and do not neatly fall into the common law scheme of legal or beneficial ownership.

The square-bracketed wording is accompanied by the following footnote: “Whether this wording should be included in relation to the Order and/ or the provision of information will be considered on a case by case basis. The wider form of Order should not be sought as a matter of course, and its inclusion must be justified.” The introduction to the annex similarly cautions claimants against including the wording as a matter of “routine”.

In practice, to justify the inclusion of the wording, a claimant will usually need either to point to specific evidence that the defendant uses asset-holding structures which may involve the alienation of legal and beneficial interests or, failing this, to demonstrate that the defendant is a sophisticated operator who can reasonably be expected to have established complex structures for holding their assets or shielding them from enforcement.

There is therefore a significant difference between the Commercial Court Guide model order and the

Practice Direction 25A model order, in that the former includes an optional additional wording which is intended to encompass a broader range of assetholding structures than the latter.

However, as noted in previous articles in this series, on 6 April 2025 the Practice Direction 25A model order will be replaced with a new model order, as part of the changes being implemented pursuant to the Civil Procedure (Amendment) Rules 2025 (SI 2025/106). The drafters have taken the opportunity to update the definition of “assets” in the new model order, so that it now includes the “legally, beneficially or otherwise” wording and the accompanying footnote, and thus is largely identical to the Commercial Court Guide wording.5

This is a welcome development. The “legally, beneficially or otherwise” wording can, in some cases, be of critical importance for preserving assets held within complex structures. The modification in the new model order will thus serve as a useful reminder to claimants – not only in Commercial Court cases but in all cases in which freezing injunctions are sought – to consider whether to seek the inclusion of the wording.

The Chabra jurisdiction

The case of TSB Private Bank International SA v Chabra6 did considerable work to alleviate the outward pressure on the definition of “assets” and to bridge the gap between strict ownership and assets held loosely or indistinctly for the defendant.

2 The Fourth Defendant must not, whether by herself or her servants or agents, in relation to any trust, foundation, Stiftung or any other like juridical device (hereafter in this order, collectively “Trust”) of which she is a protector, beneficiary or a member of a class of discretionary beneficiaries or in respect of which the trustees or officers are accustomed to act in accordance with her wishes, or to which the Fourth Defendant has transferred assets or from which she might otherwise reasonably expect to benefit:

(1) Exercise as officer or such protector, beneficiary or member any influence in respect of the disposition of property of any such Trust or transfer, diminish or deal with the property of any such Trust or part thereof wherever situated; or

(2) Induce any person, by any means, to transfer, charge, diminish or deal with the property of any such Trust or any part thereof wherever situated; or

(3) Alter the persons or classes of persons who are beneficiaries or who may benefit from any such Trust or induce others to do so.

3 JSC BTA v Solodchenko [2010] EWCA Civ 1436.

4 See JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWCA Civ 136, at [15] and [24].

5 The only material difference between the definitions of “assets” in the Commercial Court Guide model order and the new model order is that, in the new model order, the words “The Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with the Respondent’s direct or indirect instructions” appear in square brackets, whereas in the Commercial Court Guide model order they do not. It would thus appear that, outside the Commercial Court, claimants who wish this wording to be included will need to draw this to the Court’s specific attention and justify the inclusion in their evidence and submissions.

6 [1992] 1 WLR 231.

As is well known, the Chabra jurisdiction allows third parties, against whom no cause of action is alleged, to be joined as defendants for the purpose of being subject to a freezing injunction. The key concept relates to there being a proper basis at the interim stage for asserting that assets, even if held by a third party, might ultimately be found at trial to be the defendant’s assets and therefore available for enforcement purposes.

The court does not want to invite multiple applications from third parties complaining that their assets have wrongly become entangled within a freezing injunction.7 However, where there is good reason to suppose that relevant assets may become available to satisfy any judgment, the balance may be appropriately struck by including those assets within the order, even though they are frozen at an early and interim stage, prior to trial and the resolution of any issue about ownership and enforceability.

the modern definition of “assets” encompasses the concept of practical control does not, of itself, justify a conflation of a company’s assets with the defendant’s assets. Something more is needed to warrant a piercing of the corporate veil, such as a finding that the company is nothing more than the defendant’s alter ego or “wallet”, or that the defendant has abused the company’s separate legal personality with a view to evading or frustrating enforcement, or that the nature of the defendant’s power or control over the company’s assets is such as to entitle them to bring the asset into their personal ownership at a later date.8

On the other hand, a defendant who is the controlling shareholder of a company may breach a freezing injunction if they procure the company to dissipate its assets for no or inadequate consideration, if this has the consequence of diminishing the value of the defendant’s shareholding (which is indisputably the defendant’s own asset).9

If there are reasons to believe that the defendant may have used discretionary trusts or other similar structures, then the claimant may wish to ask the court to include the optional wording in the model orders (“whether the Respondent is interested in them legally, beneficially or otherwise”) or other bespoke wording.10

The interaction between the definition of “assets” and the Chabra jurisdiction

The development of the Chabra jurisdiction has taken some of the weight from worrying about the definition of “assets”.

For example, there has been considerable debate over whether assets owned by a body corporate, particularly a non-trading one which is wholly owned and controlled by the defendant, are the defendant’s “assets” within the meaning of that term in standard freezing injunctions.

In this regard, the prevailing authority supports the view that the fact that

7 S.C.F. Finance Co Ltd v Masri [1985] 1 WLR 876.

It is therefore possible, in certain circumstances, to demonstrate that a company’s assets are also the “assets” of a defendant who owns and controls that company. However, the position may be complex and uncertain. If so, a claimant’s best option may be to avail themselves of the Chabra jurisdiction and join the company itself as a respondent to the freezing injunction, as a means of preserving the company’s assets pending the resolution of the issues at trial.

On the other hand, claimants do not always have the evidence or inclination to bring third parties into the ambit of an existing freezing injunction. They may not even know of the existence of the third party and the relevant asset, or there may be problems serving the third party out of the jurisdiction, or the joining of the third party may not be justifiable on a cost-benefit basis.

The best practical course in such a case is to seek maximum clarity about what is and is not caught by the definition of “assets”. Specific assets which are known about at the time of the ex parte application should be identified in the order or in a schedule thereto.

On the basis of the current authorities, even without Chabra, there is plenty of scope to ask for a “wide net”11 to be cast in relation to the assets with which a defendant may be associated. The question of actually rendering those assets available for enforcement is another matter, and may involve not just issues of sham, nomineeship, and section 423, but also matters of foreign law and often foreign courts. However, the court is not blind to the inventive methods deployed by defendants to hold (or ostensibly alienate) their assets. Claimants should therefore be adaptable and consider tailoring the definition of “assets” to meet the specific needs of the case, rather than always relying on the definition in the model orders.

This article does not contain legal advice. Anyone seeking advice on English freezing injunctions may contact the authors at aayres@twentyessex.com and andrewbarnsgraham@3harecourt.com.

8 See JSC BTA Bank v Solodchenko [2010] EWCA Civ 1436; Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank and Trust Co (Cayman) Ltd [2011] UKPC 17; Group Seven Ltd v Allied Ivestment Corporation Ltd [2013] EWHC 1509 (Ch); Prest v Petrodel Resources Ltd [2013] UKSC 34; Lakatamia Chipping Co Ltd v Su [2014] EWCA Civ 636; JSC VTB Bank v Skurikhin [2015] EWHC 2131 (Comm) (albeit this case concerned the appointment of a receiver, rather than a freezing injunction); for a helpful summary, see [22]-[26] of Foxton J’s decision in Civiello v Brodahl [2024] EWHC 707 (Comm).

9 Lakatamia Shipping Company v Su (cit. sup.).

10 If so, this must be raised with the Court as a matter of full and frank disclosure.

11 JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2014] EWHC 3547 (Ch) at [4].

ABOUT THE AUTHORS

Andrew Ayres KC Barrister

Twenty Essex

Andrew Ayres KC has been obtaining and defending freezing and search orders since 1997.

He advises on all aspects of civil fraud litigation, including early pre-emptive remedies through to enforcement, in frauds of all kinds, including trade finance, MTIC, employee, advance fee, Ponzi and crypto.

He has an established commercial disputes practice, with a core of advocacy before courts and tribunals across the globe.

He has been recommended in the legal directories in the following areas: commercial litigation, banking & finance, civil fraud, company & partnership and commercial chancery. He was also nominated for “Chancery Silk of the Year” at the 2024 Legal 500 UK Bar Awards.

Andrew has strong multi-jurisdictional connections, particularly in the Asia Pacific region, the Caribbean and within the offshore community closer to the UK. He is a leading Cayman and Eastern Caribbean advocate and adviser, focusing on all aspects of fraud, commercial, company, insolvency and trusts litigation.

Andrew has a breadth of expertise across a range of sectors and services, including aviation, banking and finance, construction and engineering, energy and natural resources, international trade, joint ventures and partnership, professional liability and risk, structured products and derivatives and TMT.

Andrew Ayres KC - Twenty Essex

Andrew Barns-Graham Barrister

3 Hare Court

Andrew Barns-Graham is a civil fraud specialist who has acted on some of the most high-profile civil fraud cases of the last decade.

The cases on his CV include National Trust Bank v Yurov, Privatbank v Kolomoisky, and Skatteforvaltningen v Sanjay Shah, all of which are have appeared in The Lawyer’s annual lists of the ‘Top 20 cases’ and have given rise to leading authorities on freezing injunctions and other civil fraud matters.

Andrew’s areas of expertise include the various causes of action associated with civil fraud, freezing injunctions (both personal and proprietary), search orders, disclosure orders (e.g. the Norwich Pharmacal and Bankers Trust jurisdictions), conflicts of laws, jurisdiction disputes, asset tracing, and enforcement remedies.

A large proportion of Andrew’s practice is international and he has worked with clients and lawyers from numerous jurisdictions around the world. He is well-versed in the challenges which arise in complex multi-jurisdictional cases involving foreign law issues or related/parallel overseas proceedings.

Andrew Barns-Graham - 3 Hare Court