To obtain a freezing injunction, one of the factors an applicant must prove is that there is a real risk that the respondent will dissipate assets to make enforcement of any award or judgment more difficult.

The recent case of Les Ambassadeurs Club Ltd v Albluewi [2020]  is the latest in a line of cases which show that the Court will not continue a freezing injunction where the evidence of risk of dissipation relied upon by the applicant is speculative and is pegged primarily to the respondent’s character rather than the likelihood of dissipation. 

In Albluewi, a simple lack of “commercial probity” (i.e. integrity in business) such as a history of defaulting on debts or failing to honour promises of payment is not in itself enough to prove a risk of dissipation. All of the circumstances of the conduct of the respondent and the case must be considered when reaching a decision on the existence or inference of such a risk. 

The Court drew parallels with the well-established position that dishonesty itself does not necessarily mean there is a risk of dissipation. It was highlighted that where poor commercial probity falling short of dishonesty is being considered, it will be even harder it will be for an applicant to use that conduct as a basis to prove risk of dissipation. 

Whilst the message is not new, applicants who have obtained freezing orders on less than solid risk of dissipation evidence can expect those orders to be discharged with substantial costs awards against them. Given the number of freezing orders discharged on this basis, it is vital that applicants in future have clear evidence demonstrating a real risk that a respondent will take steps to dissipate assets to frustrate a judgment. Simply having evidence that the respondent in unreliable or untrustworthy – or even dishonest – will not be enough.

Nikolas Ireland is a senior solicitor specialising in international fraud litigation and asset tracing claims.