High Court Ponders Over the Possibility of Implementing a Freezing Order on a Non-local Third Party for Enforcement Purposes
Court Clarifies Conditions for Freezing Orders Against Third Parties Outside Jurisdiction
In a recent ruling, Judge Foxton J provided guidance on the conditions for granting freezing orders against third parties located outside the jurisdiction. This principle was established in the case of Commercial Bank of Dubai PC and others v Al Sari and others [2024].
The ruling clarified that a court will grant a freezing order against a third party outside its jurisdiction using the "necessary or proper party" gateway when specific conditions are met. These conditions include:
- The third party has assets that could be subject to enforcement.
- Proceedings are served on an "anchor defendant" within the jurisdiction, who has a real issue with the claimant.
- The third party outside the jurisdiction is considered a necessary or proper party to the claim involving the anchor defendant.
- The claimant satisfies the court under Civil Procedure Rules rule 6.36 that:
- There is a good arguable case that the claim falls within this jurisdictional gateway (Practice Direction 6B.3.1).
- There is a serious issue to be tried on the merits.
- England is the clearly most appropriate forum for the trial.
In the case in question, the claimant had obtained a judgment in England and Wales against the first to third defendants, and a worldwide freezing order against the three to secure the judgment. The claimant suspected that the 10th defendant may hold assets against which the claimant could enforce, and sought a further worldwide freezing order against the 10th defendant as a non-cause of action defendant, relying on the "necessary or proper party" gateway.
However, Judge Foxton J held that gateway 3 did not apply in this case, and the court refused permission for the claimant to serve out of the jurisdiction. The judge's comment on procedural issues potentially being sufficient for the purposes of this gateway are significant.
It's worth noting that the real purpose of the application was considered to be the disclosure of assets, rather than the resolution of some live issue or common factual enquiry. Additionally, there is no requirement for the claim brought against the non-cause of action defendant to be a substantive claim.
To serve proceedings on a defendant outside of England and Wales, a claimant must apply to the court for permission, as per rule 6.36 of the Civil Procedure Rules. There must be a live substantive or procedural issue between the claimant and the anchor defendant which also arises between the claimant and the non-cause of action defendant.
Judge Foxton's analysis will undoubtedly be given considerable weight in future cases. This ruling provides valuable insight into the conditions under which a freezing order can be granted against a third party outside the jurisdiction, and underscores the importance of satisfying the court under the procedural gateway rules.
[1] Practice Direction 6B.3.1, Civil Procedure Rules [3] Commercial Bank of Dubai PC and others v Al Sari and others [2024] EWHC 1234 (Comm)
- In the context of business and finance, the ruling clarified that a court will grant a freezing order against a third party outside its jurisdiction when that third party has assets that could be subject to enforcement, and the claim involves an anchor defendant within the jurisdiction who has a real issue with the claimant, and the third party is a necessary or proper party to the claim involving the anchor defendant.
- In the realm of finance and business, a claimant must meet specific conditions to serve proceedings on a defendant outside of England and Wales, including satisfaction of the court under the procedural gateway rules that there is a good arguable case, a serious issue to be tried on the merits, and England is the clearly most appropriate forum for the trial.
