Tim Elliot:
Welcome to Lawgical, the UAE’s first, and still only, regular legal podcast. My name’s Tim Elliot. As ever, I’m at the Dubai-based legal firm, Yamalova & Plewka, in Jumeirah Lakes Towers here in Dubai, with the Managing Partner, Ludmila Yamalova. Nice to see you, as always.
Ludmila Yamalova:
Good to be here, Tim, as always.
Tim Elliot:
This time on Lawgical, Ludmila, freezing orders, which wasn’t a term I’d heard until a day or two ago, but I’m kind of up to speed. Can we start with why you might need a freezing order? Let me put this to you in simple terms. If you were to apply for a freezing order against me for something untoward—let’s leave it at untoward—I might have done something that would mean you’d be within your rights legally to cause me financial inconvenience or pain, by applying to freeze my assets. Is that basically what it is?
Ludmila Yamalova:
Yes. Essentially, it’s a tool for a party in a dispute to ensure that, while the matter is being litigated or adjudicated, the defendant doesn’t dispose of their assets or flee before the court issues a judgment. It’s a form of interim relief or injunction that temporarily prohibits a defendant—let’s say you—from dealing with or moving your assets. It’s not indefinite or final, just a freeze until a final decision is made.
Tim Elliot:
Okay. So, it limits my access to my assets in order to secure the judgment the court might make?
Ludmila Yamalova:
Exactly. The goal is to ensure that the defendant doesn’t transfer or get rid of assets before a judgment, especially in cases of anticipated financial compensation. As court cases can take time, this precautionary measure freezes assets as a safeguard against potential asset dissipation.
Tim Elliot:
Let’s assume, for the sake of argument, that I’m ethically dubious. The thing about a freezing order is you’re not obliged to let me know that you’ve applied for one, correct?
Ludmila Yamalova:
That’s right. A freezing order is typically applied for ex parte, meaning the defendant isn’t notified. I’d apply to the court, and the defendant wouldn’t be served until the court decides whether the order is appropriate. If the court rejects it, you’d never know because you weren’t part of the initial proceedings. If granted, I’m required to serve you, and at that point, you’d have the opportunity to challenge it.
Tim Elliot:
Interesting.
Ludmila Yamalova:
Another critical point is that, in many cases, I don’t even need to have filed a substantive case against you yet.
Tim Elliot:
So, you could just approach the court and say, “That guy who does the podcast is a bit dodgy,” and get a freezing order against me? Surely, there’s more to it than that.
Ludmila Yamalova:
There is more to it, yes. It depends on the court and the evidence presented. For example, in the UAE, depending on the jurisdiction, there must be evidence that a case is either filed or about to be filed. Additionally, you must demonstrate a risk of the defendant fleeing or divesting assets. In local UAE courts, a substantive case must be filed within seven days of the freezing order. However, it’s possible that, as far as you know, we have no dispute, and suddenly you receive a freezing order stating your assets are frozen. That order typically remains only if followed by a substantive case.
The reasoning behind this process is that once a defendant knows about a case, they might divest assets to avoid financial liability. The ex parte nature prevents such actions and preserves the status quo.
Tim Elliot:
The freezing order doesn’t affect freedom of movement but focuses on tangible assets, correct?
Ludmila Yamalova:
Correct, but in some cases, especially in UAE local courts, it may be paired with travel restrictions to prevent the defendant from leaving the UAE. Freezing orders can be highly restrictive and sometimes feel extreme. They often come with a penal notice, which outlines severe consequences—such as fines or imprisonment—for breaching the order.
For example, if the court issues an order preventing you from accessing your bank account, the bank might not freeze the account immediately. Instead, it’s your responsibility to comply. Violating this order could result in penalties for contempt of court, even if the asset is under your control, like personal property or valuable items.
Tim Elliot:
It seems like freezing orders are particularly impactful in divorce cases.
Ludmila Yamalova:
Yes, especially in acrimonious divorces. They are often used to prevent a party—frequently the spouse with significant wealth—from divesting assets to limit liability for spousal or child support. The idea is to maintain the status quo until a final decision.
Freezing orders can also be abused, paralyzing a person’s ability to litigate, as they might lose access to funds needed for legal representation.
Tim Elliot:
In Dubai, freezing orders are called precautionary attachments. Are they the same thing in the DIFC and ADGM courts?
Ludmila Yamalova:
Yes, though the terminology differs. In the DIFC and ADGM courts, the term “freezing order” is used and is a direct adaptation of English legal practices. These courts follow common law principles, whereas the UAE mainland courts operate under a civil law system.
Freezing orders in DIFC and ADGM courts can sometimes be broader and easier to obtain compared to mainland precautionary attachments. This has led to instances of forum shopping, where claimants bypass local courts to seek freezing orders in the DIFC or ADGM courts.
Tim Elliot:
Could freezing orders apply globally?
Ludmila Yamalova:
Yes. Freezing orders from DIFC or ADGM courts can have global reach, particularly when supported by MOUs or agreements with foreign jurisdictions. However, enforcing them depends on whether other jurisdictions honor the order. English courts, for instance, are more likely to enforce DIFC or ADGM freezing orders due to their common legal foundation.
Tim Elliot:
How expensive are freezing orders?
Ludmila Yamalova:
They’re extraordinarily costly. In one case, claimants incurred over GBP 1 million (around AED 4.5 million) in legal fees within a couple of months, just for a freezing order—not the substantive case. This high cost limits freezing orders to those with significant resources.
Tim Elliot:
Thanks for clarifying all this, Ludmila. That wraps up this edition of Lawgical, discussing freezing orders or precautionary attachments in the UAE. As always, thank you for your insights, Ludmila Yamalova, Managing Partner at Yamalova & Plewka.
Ludmila Yamalova:
Thank you, Tim. It’s always a pleasure.
Tim Elliot:
You can follow us on social media at LYLaw and find our podcasts at lylawyers.com. If you’d like a legal question answered on Lawgical or want to consult an experienced UAE legal professional, visit lylawyers.com and click “Contact.”