Pakistan
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes, equivalent orders can be obtained in Pakistan under Section 94 and Order 39 (which empowers the Court to grant a temporary injunction to prevent the ends of justice from being defeated), and under Order 38 Rule 5 (attachment of property before judgment) of the Code of Civil Procedure, 1908. The orders are domestic and enforceable in Pakistan, however proceedings can be brought in foreign jurisdictions in order to enforce the orders abroad. It is binding on the party against whom it is ordered. The respondent is prohibited 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 pass any directions it may deem fit and appropriate in the circumstances of the case at the time of passing a freezing order, however, the onus is on the applicant to disclose the assets of the respondent.
3. Briefly what is the relevant legal test?
The applicant is required to establish:
(i) a good prima facie case;
(ii) the respondent’s assets identified within the Court’s jurisdiction;
(iii) that the balance of convenience lies in favor of granting the application;
(iv) that the applicant shall suffer irreparable loss/harm if the application is not granted;
(v) that there is a real risk that the respondent will or is in the process of disposing of the assets with the intention to defraud creditors or to frustrate a judgment and decree which may be passed.
Furthermore, an order of attachment of assets before judgment may not be passed unless the defendant makes an attempt to dispose of the property to avoid the execution of a decree.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
The applicant must make an application to the Court, supported by an affidavit, which needs to contain the reasoning behind the application and the basis on which the relevant test is met. An application can be made on or without notice to the respondent. Where it is made without notice, the order is usually valid up to the next date of hearing, where after the hearing the Court may confirm or recall the order.
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, the applicant is not ordinarily required to provide security, however if the applicant’s claim is unsuccessful, the respondent may sue for damages arising out of a wrongful order of attachment.
6. Can it be sought against third parties?
Yes, it may be sought against third parties only if it can be established that the third party’s assets are in fact owned by the respondent. A freezing order may also contain directions for third parties (for example, banks, financial institutions, securities depositaries, etc) who hold the assets on behalf of the respondent.
7. What assets are covered by a freezing (or equivalent) order?
All immovable and movable properties are covered by a freezing order except agricultural produce/perishable goods.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
Yes, by filing Court proceedings on the basis of the order/judgment passed by a foreign Court.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes, by filing appropriate legal proceedings for obtaining an interim order or for the enforcement of the award.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
A freezing order can be sought by the applicant at any stage after commencement of its claim. There is no provision to seek injunctive relief prior to the commencement of proceedings.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
It would depend on the nature of the order and the nature of the respondent’s assets. For immovable property, for example, freezing such an asset would involve the deposit of title documents and a prohibition of sale, including transfer or creation of third-party interests. Frozen bank accounts, for example, cannot be accessed or used by the respondent. However, it is also possible for the respondent to submit an alternative security or bank guarantee to the satisfaction of the Court to have the assets unfrozen. While not part of the law governing freezing orders, it is unlikely that the Court would grant a freezing order in respect of necessary clothing, cooking utensils, beds and bedding, ornaments of religious significance, tools of trade, agricultural equipment, livestock and grain, or the wages of laborers and domestic servants, on the basis that these items cannot be attached and sold in the execution of decrees (which are issued by the Court after a judgment is announced).
12. What happens after a freezing (or equivalent) order is granted?
The Court will notify the respondent as well as any third parties who are party to or affected by the freezing order. If the original order was obtained without notice (which it often will be), a hearing will be listed for the date stated on the face of the order, at which point the respondent may challenge the order. At this point the original order will usually either be set aside, extended or replaced with a Court-sanctioned undertaking given by the parties which has broadly the same effect as a freezing order until trial.
13. Who pays the costs of the application for a freezing (or equivalent) order?
The applicant pays the costs (if any) for the application of a freezing order.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
A freezing order typically does not impact the rights of third parties and if an order affects a third party’s rights, the third party can bring an application to vary or set aside the freezing order.
15. What are the consequences of breach of a freezing (or equivalent) order?
A respondent who disobeys or breaches 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 they knowingly help or permit 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)?
If it is established that the third party, who had notice or knowledge of the freezing order, breached or permitted or acquiesced in a violation of the order, the third party too could be held in contempt of Court. The applicant can also sue the third party for damages caused by their non-compliance.
17. Can a freezing (or equivalent) order be enforced abroad?
Yes, a freezing order may be enforced abroad in a country with whom Pakistan has a reciprocal arrangement, for example, the United Kingdom. Alternatively, a freezing order may be enforced abroad by commencing legal proceedings on the basis of the freezing order, subject to the local laws of the foreign country in question.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
Yes, orders from reciprocating countries can be enforced through a local Court directly and orders from non-reciprocating jurisdictions can be enforced by filing fresh proceedings on the basis of the foreign order.
Contact
Khalid A. Rehman Senior Partner Surridge & Beecheno Karachi, Pakistan khalidrehamn@surridgebeecheno.com www.surridgeandbeecheno.com
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