Freezing orders

In an article in the New Law Journal of 29 September, Alistair Craig considered the implications of the decision in Commissioners of Customs & Excise v Barclays Bank plc [2006] All ER (D) 215 June) (25/ LL p80) in which the House of Lords not only held that a bank owed no duty of care to a claimant who had obtained a freezing order in respect of its customer’s account and would only be guilty of contempt of court if it knowingly took a step to frustrate the court’s purpose in granting the order, but also that even if a contempt could be established there is no right to sue the bank for the contempt alone; no civil right to damages; and no power for the court to award compensation to the other party for the contemnor’s actions. In these circumstances Mr Craig suggested that the courts may show an increased readiness to make freezing orders directly against third parties such as banks and also to introduce more flexible remedies for contempt than merely fines, committals and sequestration orders. However, the jurisdiction is hamstrung by the requirement that a freezing order must have an underlying cause of action unless there are grounds to believe that the third party is in control of assets which are beneficially owned by the principal defendant; that the freezing order is incidental to, and in aid of, the enforcement of the judgment; or a non-party is subject to a recourse claim by the defendant, for example, by way of a claim for indemnity or contribution. The present decision may result in the court having to recognise that, as freezing orders were designed primarily to prevent abuse of process, the necessity of establishing an underlying cause of action is not an apposite consideration.