Although the High Court has confirmed that there is no inherent doctrinal or theoretical reason preventing freezing orders being made in connection with a domestic arbitration (and by logical extension, international arbitration), there are still practical considerations to be aware of:
1. Not a general security for judgment Freezing orders are not a general security for a potential judgment: they prevent the disposal of assets to frustrate the court's processes by depriving the plaintiff of the fruits of any judgment9.
2. An exceptional order A freezing order is an exceptional order, which has been described as one of the law's 'nuclear weapons'10. They are not granted lightly, and will be tailored to the specific circumstances of the case11. They must generally be supported by an undertaking as to damages12, which can be costly13.
3. Need to comply with relevant rules Freezing orders are now the subject of model rules prepared by a harmonisation committee of judges appointed by the Council of Chief Justices of Australia and New Zealand, which have been adopted in all Australian States and Territories as well as in the Federal Court. They require cogent evidence that the applicant has 'a good arguable case on an accrued or prospective cause of action', there is a 'sufficient prospect' of obtaining an enforceable judgment, and for the court to be satisfied 'that there is a danger that [the] judgment will be wholly or partly unsatisfied'. They may be made ex parte, which requires full disclosure of all relevant facts.
4. The Federal Court has jurisdiction in relation to international arbitrations The High Court held in Bayan v BCBC that the connection with the Foreign Judgments Act 1991 (Cth) meant that federal jurisdiction arose14. That reasoning also means that the Federal Court of Australia can hear applications
David Starkoff
David is a construction and projects disputes lawyer with a reputation for legal excellence, problem solving, and quickly understanding legal and commercial issues. His background in mathematics and computer science means that he is adept with technical issues as well.
Complementing his projects practice, David also has expertise in competition and regulatory law, and has acted on both sides of the regulatory divide.