In business disputes, one frequent concern is the risk that a party might attempt to dissipate assets by selling, transferring, or concealing them to avoid the enforcement of a potential judgment. To safeguard against this, the courts in the Dubai International Financial Centre (“DIFC”) and Abu Dhabi Global Market (“ADGM”) have the power to issue asset freezing orders.
This alert provides a closer look at freezing orders: what they are, when and how they can be obtained, and why they may be important for businesses.
Key Takeaways
- A freezing order is a court order that temporarily prohibits a party (an individual or company) from selling, transferring, or otherwise dealing with their assets.
- Its primary purpose is to preserve assets, ensuring they remain available to satisfy a potential future court judgment or arbitral award. It does not mean the assets are immediately seized (taken away), but they are preserved.
- Both DIFC and ADGM Courts can grant these orders, including worldwide freezing orders (WFOs), which can apply to assets located anywhere globally.
- To obtain a freezing order, the applicant must typically prove two key points: that they have a reasonably strong legal claim (a “good arguable case”), and that there is a real risk the other party might hide or transfer assets to avoid a judgment (a “real risk of asset dissipation”).
- Applications are often made ex parte (without notifying the respondent) to prevent pre-emptive asset movement. A subsequent “return date” hearing allows the respondent to contest the order.
- Applicants are required to provide an undertaking in damages to compensate the respondent and affected third parties for any losses if the order is later found to have been wrongly granted. Security (e.g., payment into court) for this undertaking may also be required.
- DIFC and ADGM Courts have shown a clear willingness to grant WFOs in support of international legal proceedings and arbitrations, even before a foreign judgment or award is obtained (e.g., the DIFC Court of Appeal case of Carmon v Cuenda).
- Violating a freezing order is a serious offence, constituting contempt of court, which can lead to severe penalties, including substantial fines and criminal charges.
1. What is a freezing order?
A freezing order is an interim (temporary) court order that acts as a “hold” placed by the court on certain assets of a person or company (the respondent or defendant). This means they are restricted from selling, transferring, or reducing the value of those frozen assets, typically up to a specific amount linked to the ongoing legal claim.
The main purpose of a freezing order is to preserve assets by preventing a situation where a party wins a lawsuit but finds no assets available for enforcement because the opposing party has already sold or moved them out of reach.
It is important to note here that a freezing order does not affect the asset ownership and does not mean that the court has decided on the validity of the merits of the main claim; it simply safeguards the assets until the main case is resolved.
2. Why and when would a court grant a freezing order?
The primary reason for a court to issue a freezing order is when there is a genuine concern about “asset dissipation”, which means that there is credible evidence suggesting a real danger that the respondent might:
- Move their assets to another country, making enforcement of a future judgment difficult.
- Deliberately hide their assets, for example, by transferring them to third parties or into complex company setups.
- Start spending or getting rid of their assets in an unusual way, that is clearly not part of their normal business or personal life, to evade a potential judgment.
Common situations that might raise such concerns include:
- evidence of dishonest behaviour or potential fraud;
- sudden, substantial, or unexplained transfers of assets, especially if this happens after the respondent becomes aware of a potential legal claim;
- the use of complex or secretive offshore corporate structures that seem designed to hide the true ownership of the assets; or
- a history of the respondent avoiding their debts.
3. Requirements for obtaining a freezing order
A freezing order cannot be granted on its own without an existing or imminent (about to start) legal claim. To convince a DIFC or ADGM court to grant a freezing order, an applicant generally needs to satisfy the following key conditions:
- Good arguable case: The applicant must show that their main legal claim has a reasonable chance of success. While full proof is not required at this stage, the claim must be serious and have real merit.
- Existence of assets: There must be evidence that the respondent holds assets that can be subject to a freezing order.
- Real risk of asset dissipation: Clear evidence must be presented indicating a genuine danger that the respondent will dissipate assets (sell, transfer, hide, or reduce their value) to frustrate the enforcement of a potential judgment. Mere suspicion is insufficient.
- Duty of full and frank disclosure: Especially in ex parte applications (made without notice to the respondent), the applicant has a strict duty to disclose all material facts to the court, including those that might be adverse to their application or supportive of the respondent’s position.
- Undertaking in damages: The applicant must give an undertaking to the court to compensate the respondent (and any affected third parties, such as banks) for any losses incurred due to the freezing order if it is later found to have been wrongly granted (e.g., if the applicant loses the main case). Courts may also require the applicant to provide security for this undertaking (e.g., payment into court or a bank guarantee), particularly if the applicant is based outside the UAE.
- Just and convenient: Ultimately, the court will only grant a freezing order if it is satisfied that it is just and convenient (i.e., proportionate) to do so, considering all the circumstances of the case.
4. What can be frozen?
DIFC and ADGM courts can issue domestic freezing orders or worldwide freezing orders, depending on the asset location and nature.
Freezing orders can cover various types of assets, including money in bank accounts, real estate, shares in companies, and valuable items such as cars. However, courts typically cap the value of assets frozen to the estimated amount of the applicant’s claim, plus an allowance for potential interest and legal costs.
5. The process in DIFC & ADGM courts
Both the DIFC and ADGM courts, being common law courts, have clear procedures for freezing orders detailed in Part 25 of the Rules of the DIFC Courts and ADGM Court Procedure Rules (Part 10 and Practice Direction 7). The typical process involves:
- The application: The process usually begins with an urgent application supported by detailed legal submissions, an affidavit (a sworn factual statement) from the applicant outlining the grounds, and supporting evidence.
- Initial ex parte hearing: The first hearing is often conducted ex parte (without notice to the respondent). This is to prevent the respondent from pre-emptively moving assets once they become aware of the application.
- Service of the order: If granted, the order must be formally served (officially delivered) on the respondent and often on third parties holding assets (e.g., banks). The order typically takes effect upon service.
- Return date hearing: The initial ex parte order is temporary. A “return date” (a second hearing) is scheduled promptly (often within 7-14 days), where the respondent can present arguments and evidence to persuade the court why the order should be modified or cancelled. The court then decides after hearing from both parties.
- Non-compliance: Violating a freezing order constitutes contempt of court, which can result in severe penalties, including substantial fines and/or criminal charges (e.g., imprisonment).
6. DIFC & ADGM courts’ broad jurisdiction: recent developments
The DIFC and ADGM courts have recently expanded their approach to worldwide freezing orders (WFOs), allowing these orders to extend globally to assets connected to international legal proceedings.
Recently, in the DIFC Court of Appeal case of Carmon v Cuenda ([2024] DIFC CA 003), the DIFC courts confirmed their willingness to grant WFOs in support of foreign proceedings, even before a foreign judgment is obtained.
Following this landmark precedent, the New DIFC Court Law (Law No. 2 of 2025) explicitly affirmed in Article 15(4) the DIFC courts’ free-standing jurisdiction to grant interim relief, including WFOs, in support of foreign litigation or arbitration proceedings.
Similarly, ADGM courts directly apply English common law, providing a well-established basis for its WFO legal framework. This is supported by the ADGM Court Procedure Rules 2016 (CPR), particularly Rule 71(1)(f), which provides the court with the discretion to grant freezing injunctions that can apply worldwide. ADGM Practice Direction 7 further details procedures for such applications, including those supporting proceedings outside ADGM.
The case of A17 v B17 & Others ([2025] ADGMCFI 0001) confirms the ADGM courts’ willingness to grant WFOs in support of foreign arbitral awards, applying the same substantive tests as English courts: a good arguable case, assets within reach, and a real risk of dissipation. The court found the reasoning in Carmon v Cuenda persuasive regarding the power to support foreign proceedings.
For any questions or inquiries, please feel free to contact:
Ahmed Tony
Partner, UAE