Worldwide Freezing Orders

Bank of China v NBM LLC and others ([2001] 4 All ER 954 QBD)

Where the court grants a freezing order in respect of assets outside the jurisdiction, it should include in the order, unless it is inappropriate to do so, a proviso that nothing in it prevents an affected third party or its subsidiaries from complying with what they reasonably believed to be their obligations, contractual or otherwise, under the laws and obligations of the country or state in which those assets were situated or under the proper law of any account in question. Banks which were domiciled or otherwise present within the jurisdiction should not be required to decide whether to act in conflict with the terms of the freezing order or in conflict with its duties to its customer under local law. Such an approach is inconsistent with the interests of comity. In the present case UBS was a foreign bank subject to the jurisdiction of the English courts by virtue of having a London branch. It was not a party to the proceedings but was served with an order purporting to freeze assets held with any of its branches outside the jurisdiction. In particular, accounts held at its Swiss branches were subject to Swiss law and in the absence of an order from the Swiss court, those branches were obliged to operate the accounts according to their client’s instructions; a failure to do so might result in liabilities to UBS under Swiss law, but the operation of such accounts in accordance with Swiss law might amount to a breach of the freezing order.