Nigeria
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes, freezing orders are available in Nigeria in civil matters. The resulting effect of a freezing order is that it prohibits any party or person it is directed against from dealing with the assets referred to in the freezing order until a specified time (for example, a further hearing, judgment or payment) or further order of the Court.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
Yes. The Court may order the respondent to provide disclosure in an affidavit of the nature, value, and location of his assets and in some cases may require the respondent to file an affidavit of compliance with the order of the Court, to show that he has complied with the Court’s order.
3. Briefly what is the relevant legal test?
The test for the grant of a freezing order requires that the applicant must establish, to the satisfaction of the Court, that:
(i) it has a justiciable cause of action against the respondent;
(ii) the respondent has assets, which may be within or (in the case of a worldwide freezing order) outside Nigeria (although Nigerian Courts rarely grant a worldwide freezing order in respect of assets overseas, unless there is a clear connection with Nigeria);
(iii) there is a real risk of the respondent removing the assets from the jurisdiction of the Court or dissipating the assets (for example, for the purposes of frustrating, destroying, tampering or impeding the satisfaction of a judgment or award);
(iv) it is just and convenient to grant the freezing order;
(v) the applicant has made full disclosure of all material facts relevant to the application;
(vi) full particulars of the assets within the jurisdiction of the Court have been given; and
(vii) the applicant must also undertake to indemnify the respondent for any damages or loss occasioned if the Court subsequently discovers that it ought not to have granted the order.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
Usually, the application is made ex parte (that is, without notice to the respondent), supported by an affidavit setting out the facts upon which the application is based and the premises on which the relevant conditions are met. The application is further supported by a written address which is the legal argument in support of the grant of the application. The applicant has a duty of full and frank disclosure. At times, the Court will direct that the respondent is put on notice of the application. Where the application is made without notice there will be a later return hearing date at which the respondent can challenge the order (assuming it is made in the first instance).
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. An applicant will usually be required to provide an undertaking in damages to the respondent (which can, in certain circumstances, be ordered to be backed by security).
6. Can it be sought against third parties?
Yes, in limited circumstances, a third party to the underlying proceedings or prospective proceedings may be made a party to a freezing order where there is good reason to believe that its assets are, in fact, the assets of the respondent. Similarly, a third party that is not a party to the freezing order (for example, a bank holding the respondent’s assets) will not be bound by a freezing order where it had no notice.
7. What assets are covered by a freezing (or equivalent) order?
Any tangible or intangible assets can be the subject of a freezing order, whether within the jurisdiction (a domestic freezing order) or outside (a worldwide freezing order, if they are linked to Nigeria).
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
No, except if the proceedings abroad are linked to Nigeria and vice versa. The issuance and or refusal of a Nigerian Court to grant such an order would be based on the facts presented by the applicant to convince the Court it would be in the interest of justice to grant such an order. However, as previously noted, Courts in Nigeria do not have a record of granting worldwide freezing orders.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes. The preceding highlighted requirements for the grant of the order are also applicable.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
At any stage, including prior to commencing the claim (although the Court will expect the applicant to issue its claim promptly) or following judgment 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. In Nigeria, the grant of a freezing order may be made subject to certain conditions or may be restricted only to certain assets or a monetary threshold. The order may restrict the respondent to dealing with its assets:
(i) not above a specified value;
(ii) only in the ordinary and proper course of business;
(iii) for ordinary living expenses; or
(iv) to meet legal expenses.
12. What happens after a freezing (or equivalent) order is granted?
The applicant is obliged to notify the freezing order to all identified third parties under whose control the assets of the respondent may be about. If the freezing order was obtained ex parte, as is usually the case, the Court would have indicated a return hearing date. The respondent can apply to vary or set aside the freezing order by the next hearing date. At this next hearing date, the Court may set aside, extend for a further term or replace the freezing order with a Court-sanctioned undertaking which has broadly the same effect as a freezing order.
13. Who pays the costs of the application for a freezing (or equivalent) order?
In Nigeria, parties bear their own legal costs. At the time of making the application, all legal costs are borne by the applicant. If at the final determination of the underlying litigation, it is determined that the freezing order ought not to have been granted, the respondent may be able to recover its legal costs from the applicant.
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 as to the application of any money withdrawn by the respondent if the withdrawal appears to be permitted by the freezing order.
(iii) A freezing order only affects third parties outside of the jurisdiction in certain circumstances.
(iv) As regards assets outside of the jurisdiction, a freezing order does not prevent a third party from complying with (a) what it reasonably believes to be its obligations under the law of the country where the assets are located or the law of any contract between itself and the respondent or (b) any orders of the Courts of the country where the assets are located.
(v) Applicants undertake to pay the reasonable costs of any third party which have been incurred as a result of the order, and to compensate them for any loss caused by it.
15. What are the consequences of breach of a freezing (or equivalent) order?
A respondent who disobeys a freezing order may be held in contempt of Court and may be imprisoned, fined or have their assets seized. A third party may only be in contempt of Court where it knowingly helps or permits the respondent to breach the terms of the order.
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, but where the third party who is in custody of assets affected by the freeze, and who has been notified of a freezing order, fails, refuses or neglects to comply with the order such third party can be held liable.
17. Can a freezing (or equivalent) order be enforced abroad?
Yes, in principle, although this is subject to the laws of the jurisdiction in which it is sought to be enforced.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
No, an overseas freezing order, without more, is unenforceable in Nigeria.
Contacts
Akin Omisade Senior Partner Aidan Partners Lagos, Nigeria akin.omisade@aidanpartners.com www.aidanpartners.com Wingate Uzor Associate Aidan Partners Lagos, Nigeria wingate.uzor@aidanpartners.com www.aidanpartners.com
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