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06 December 2012
The Belize Supreme Court has jurisdiction to grant a free-standing freezing order in respect of the assets of an international business company – more colloquially known as an offshore company – in order to freeze the company's assets in aid of ongoing foreign proceedings. In Irish Bank Resolution Corporation Limited v Galfis Overseas Limited the Supreme Court exercised this jurisdiction to grant a freezing order in aid of foreign proceedings in circumstances where the claim form was endorsed with a claim for a freezing order only, often referred to in offshore jurisdictions as a free-standing Mareva or freezing order. This is a developing jurisdiction which was first recognised in England in the dissenting judgment of Mercedez Benz AG v Leiduck, and which has since been established authoritatively in the British Virgin Islands (Black Swan Investment ISA v Harvest View Limited) and Guernsey (Solvalub Ltd v Match Investments Limited).
The Supreme Court ordinarily exercises its jurisdiction to grant a free-standing freezing order only if the order is sought against a party within the jurisdiction of the court. The court must be satisfied that the assets which are the subject of the freezing order are located within the jurisdiction of the court.
In order to obtain a freezing order of this nature, the claimant must establish that there is a real risk that the defendant will dissipate its assets pending the outcome of the foreign proceedings if the court does not freeze such assets. It must be shown that the defendant will not retain sufficient property to meet a money or proprietary judgment which the claimant expects to obtain in the foreign proceedings. The claimant must also establish:
Importantly, the Supreme Court is likely to grant a freezing order only to duplicate injunctive relief already granted in the foreign jurisdiction. The absence of such duplicative injunctive relief in the foreign proceedings is a factor which will militate against such relief being granted by the court.
Apart from the grant of a freezing order, in certain circumstances the Supreme Court has jurisdiction to appoint a receiver of a Belize offshore company for the purpose of preserving assets in aid of ongoing foreign proceedings where the freezing order has been breached or is otherwise ineffective. A receivership order will be appropriate only in cases where a freezing order alone would be insufficient to preserve assets.
The prerequisites for the appointment of a receiver are threefold:
While the Supreme Court is at liberty to grant an order appointing a receiver as a remedy of first resort and in the absence of a freezing order, this jurisdiction is exercised only exceptionally. Case law confirms that where the defendant is involved in fraud or has used an offshore company to hide assets, the court will not consider it heavy handed to appoint a receiver.
The court will also appoint a receiver over property in support of a freezing order where to do so is necessary in order to preserve assets and prevent their dissipation before trial. Good reason must be shown in order for the court to appoint a receiver. The court must consider the effect of the order on the defendant and ultimately balance the competing factors in order to decide whether the appointment of a receiver is just and convenient in all the circumstances of the case. Evidence that a freezing order will be circumvented will clearly support a submission that a receivership order may be necessary to prevent the dissipation of assets, notwithstanding the existence of a freezing order. However, evidence of such circumvention will not be present in every case and an order appointing a receiver may be granted in the absence of such evidence.
Ultimately, the jurisdiction to appoint a receiver is one which the Supreme Court exercises with great caution, and often reluctantly in view of the draconian nature of the remedy; however, where the circumstances of the case justify such an order, the Supreme Court will not hestitate in this regard.
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