Germany
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 German equivalent of freezing orders is seizure. The Court can grant the applicant preferential rights in relation to certain assets either within the jurisdiction or worldwide in order to secure the enforcement of monetary claims (the right does not apply to proprietary or repossession claims).
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
No.
3. Briefly what is the relevant legal test?
The applicant has to show that:
(i) it has an underlying monetary claim; and
(ii) there is a risk that a change to the status quo might frustrate enforcement of the applicant’s rights or make such enforcement significantly more difficult.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
The applicant files an application for seizure with evidence to satisfy the Court that both requirements in question 3, above, have been met. If these preconditions are satisfied, the applicant can obtain the seizure as an ex parte decision within days.
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?
No security is required, but the applicant will be liable for damages suffered by the respondent if the seizure is found to have been granted without merit.
6. Can it be sought against third parties?
No.
7. What assets are covered by a freezing (or equivalent) order?
All assets legally owned by the debtor – tangible, intangible, moveable, land – whether within the jurisdiction or outside the jurisdiction.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
Yes.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
Seizure can be sought before and after proceedings have been commenced. It is no longer available after judgment has been obtained.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
Assets serving the debtor’s personal use, or their household, are not subject to seizure.
12. What happens after a freezing (or equivalent) order is granted?
The applicant must serve the respondent with the order. The respondent can object to the seizure. Any objections are dealt with at a hearing. The decision at that hearing can be appealed.
13. Who pays the costs of the application for a freezing (or equivalent) order?
If the applicant successfully obtains a seizure order, the respondent will bear the costs of the proceedings. However, the respondent’s duty to bear the costs only covers the Court fees and the statutory lawyers’ fees under German law.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
Third parties have limited rights under German law. If a third party is the legal owner of an asset, it may object to the seizure.
Once the seizure order is in place, the third party will be served with it, prohibiting them from making further payments to the respondent in relation to the affected assets. If the third party nevertheless pays the respondent, this payment does not affect (for example, fulfil) the claim. Generally, this means that any transactions during the period of the order will be invalid, though the impact of seizure depends on the specific type of asset. There is no protection of the third party in this situation.
15. What are the consequences of breach of a freezing (or equivalent) order?
A respondent that prevents the enforcement of a seizure by obstructing the applicant’s access to the asset may face criminal liability pursuant to the German Criminal Code.
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?
Yes, in principle. The decision to enforce the seizure order rests with the foreign jurisdiction.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
Yes, orders (interim or final) made in the EU can be enforced in Germany. Interim decisions from outside the EU are not acknowledged or enforced. Only final orders from outside the EU are enforceable.
Contacts
Joos Hellert Partner Eversheds Sutherland Munich, Germany jooshellert@eversheds-sutherland.com www.eversheds-sutherland.com Tatjana Tscherevko Principal Associate Eversheds Sutherland Munich, Germany tatjanatscherevko@eversheds-sutherland.com www.eversheds-sutherland.com
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