Algeria
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes. The respondent is prohibited from dealing with the assets referred to in the freezing order. Assets may be located within Algeria or internationally. The frozen assets remain in the respondent’s possession until a decision as to their seizure or release is made. The respondent may continue to use the assets and keep any benefit resulting from them but must ensure the assets are preserved and not dissipated.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
Yes. A garnishment order may be made against a third party (the garnishee), whereby the garnishee, if they are notified of this order, must make a declaration of the goods which they hold belonging to the respondent.
3. Briefly what is the relevant legal test?
(i) The applicant must have a claim that is certain and due;
(ii) the applicant must hold the title to the debt, or have a claim that appears to be well-founded; and
(iii) there must be a real risk of unjustified dissipation.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
The applicant makes an application for an attachment order before either:
(i) the president of the Court in the respondent’s local jurisdiction; or
(ii) the president of the Court local to where the seized property is located.
The motion must be dated and signed by the applicant or their representative, and must request that an order be issued for the precautionary seizure of the respondent’s movable or immovable property.
Once the attachment order has been issued, the applicant must file a demand for the validity of the preventive seizure before the Court of first instance. The demand must be filed within fifteen days from the date the attachment order is issued, failing which the attachment order and subsequent proceedings shall be null and void.
These applications are made without notice.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
Yes. The applicant may be liable to the respondent if it transpires that the seizure is disproportionate, and has caused damage to the respondent.
6. Can it be sought against third parties?
Yes. A third party to the underlying or prospective proceedings may be made a party to a freezing order where there is good reason to suspect that its assets are in fact the assets of the defendant in the underlying litigation, or may be available to the defendant to meet a judgment or arbitral award.
An order can be sought against a third party who is not a party to the underlying litigation (for example, a bank). In this case, an application for a garnishee order must be made against the third party (the garnishee). The garnishee is designated as the custodian of the respondent’s seized assets, and any benefits resulting from those assets, until a decision of the Court to validate the seizure or discharge the order. The garnishee may also hand the assets over to a bailiff.
The garnishee must make a declaration confirming the value of available assets, or that the garnishee does not own assets to which the freezing order applies.
7. What assets are covered by a freezing (or equivalent) order?
The order will cover the entirety of the respondent’s movable and immovable property within the jurisdiction or abroad. Once a freezing order is obtained generally a bailiff will identify the movable and immovable goods by conducting research with third parties, such as financial institutions.
The Executive Decree No. 23-428 of November 29, 2023 provides a definition of Funds or other assets as any assets, including, but not limited to: financial assets, economic resources (including oil and other natural resources) and all types of property, whether tangible or intangible, movable or immovable, whatever the manner by which they were obtained; documents and titles in any form, whether electronic and digital, evidencing ownership of these assets or a share in these assets, including, but not limited to, bank credits and payment orders, actions, securities, documents, bills of exchange, letters of credit or any other interest, profits or income arising from or generated by such funds; or any other assets which may be used to obtain financing for goods and services.
The Executive Decree further refers to Economic Resources as Assets of any nature, material or intangible, tangible or intangible, movable or immovable, which can be used to obtain funds, goods, goods or services such as land, buildings and other real and tangible assets, including hardware, software, tools, machines, furniture, equipment, installations, vessels, aircraft, vehicles, goods, works of art, cultural property, artifacts, jewelry, gold, precious stones, coal, petroleum products, refineries and associated materials, including chemicals, lubricants, metals, wood or other natural resources, goods, weapons and associated materials, raw materials and components that can be used in the manufacture of explosive devices or unconventional weapons and any type of proceeds of crime, including cultivation, the production and illicit trafficking of narcotics or their derivatives, patents, trademarks, copyrights and other forms of intellectual property, web hosting services, publication on the web or associated with this and the assets made available or for the benefit, directly or indirectly, of the registered persons, including for the financing of their trip, their travel or their stay, as well as all the assets paid to them as ransom.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
Yes. A final decision by a foreign jurisdiction must have been made; an Algerian Court can then exercise their discretionary power to issue a freezing order (preventive seizure) within the jurisdiction.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes. A judge can exercise their discretionary power and make an order in support of an arbitral award, having considered the merits of the claim.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
At any stage. If sought prior to the commencement of the claim, the Court will expect an applicant to issue its claim promptly. A freezing order may also be made following a judgment, in order to assist with enforcement.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
Yes:
(i) the seized property remains in the hands of the respondent until the decision to validate the seizure or release is taken; the respondent may use the assets in the manner of a prudent, attentive reasonable person acting as if the assets were his own whilst ensuring the assets’ preservation;
(ii) a garnishee must continue to pay the respondent’s salary, any pension allocated to them or the salary of the respondent’s employees;
(iii) there is an exception for ordinary living expenses;
(iv) there is an exception for legal fees;
(vi) a garnishee may, with the authorization of the president of the Court which ordered the seizure, grant a lease over the seized property.
The persons concerned may also submit, to the Minister responsible for Finance, a request for authorization to use part of the funds and assets frozen and/or seized to cover their essential needs, those of the members of their family, as well as those of their dependents and extraordinary expenses (payment of certain types of charges, fees and remuneration for services, in particular food, clothing, rent, or mortgage repayment of the family home, medicines, care and health fees and costs, taxes, compulsory insurance premiums, water, gas, electricity, telecommunications costs as well as certain extraordinary expenses).
12. What happens after a freezing (or equivalent) order is granted?
Once an order is issued, the applicant must file an application to validate the preventive measure before the Court hearing the case, within fifteen days from the date of the freezing order. Failure to do so will result in the seizure and subsequent proceedings being void.
The freezing order will be served on the respondent and shall be immediately followed by the seizure. A bailiff will draw up a report on the seizure and an inventory of the respondent’s assets. Failure to do so will result in the seizure being null and void. The police may be called in, if necessary, to enforce the freezing order.
13. Who pays the costs of the application for a freezing (or equivalent) order?
Either the applicant or respondent may be ordered to pay the costs of obtaining the freezing order. This is usually decided during the final judgment (decision) of the underlying litigation and the losing party will be required to pay the costs of the application.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
(i) A third party is not prevented from exercising any rights of set-off arising prior to its notification of the freezing order.
(ii) A third party does not need to enquire about the application of any money withdrawn by the respondent if the withdrawal appears to be authorized by the freezing order.
(iii) A freezing order does not affect third parties outside the jurisdiction.
(iv) The third party may, in any event, claim the amount of costs incurred by them.
15. What are the consequences of breach of a freezing (or equivalent) order?
Any attempts by a respondent to transfer the title of assets subject to a freezing order to a third party will be deemed null and void.
A respondent who destroys, misappropriates or attempts to destroy or misappropriate seized assets that are entrusted to them commits a criminal offence.
If a garnishee (third party) fails to declare that they hold the assets belonging to the respondent, makes a false declaration or conceals documents which must be provided and which justify a declaration, the garnishee will be ordered to pay the amount of the debt that is subject to the freezing order, to the party with the benefit of the order. The garnishee will be ordered to pay legal expenses and may be ordered to compensate that party for any prejudice caused by their negligence or delay in making a declaration.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
No.
17. Can a freezing (or equivalent) order be enforced abroad?
No.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
No. Freezing orders from overseas jurisdictions cannot be enforced in Algeria. However, requests from States within the framework of international cooperation, tending to the freezing and/or seizure of funds and property, can be sent, through the committee for monitoring targeted international sanctions, to the processing unit of financial information, which in turn transmits it immediately to the public prosecutor at the Court of Algiers. The latter transmits the request to the president of the Court of Algiers who will be competent to issue a freezing order.
Contacts
Benslimane Samir Managing Partner BM Avocats Bejaia, Algeria benslimane@avocats-dz.com www.avocats-dz.com Bourenane Mekaouche Partner/Consulting Team Leader BM Avocats Bejaia, Algeria bourenane.mekaouche@avocats-dz.com www.avocats-dz.com
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