Romania
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 destroying or dissipating assets:
(i) referred to in the freezing order; or
(ii) if the freezing order does not refer to specific assets but instead to an amount to be frozen, those assets which are identified by a bailiff in charge of implementing the freezing order.
In either case the freezing order will apply until a specified time (for example, a final judgment or discontinuance of the proceedings) or further order of the Court, and the bailiff may apply the freezing order to the respondent’s assets domestically or worldwide.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
No.
3. Briefly what is the relevant legal test?
(i) The applicant has written proof that the respondent owes them a debt which is due and payable, without the applicant having an enforceable title yet; or
(ii) the applicant has filed proceedings to the effect that the respondent owes them a due and payable debt.
In specific circumstances, the freezing order may be requested when a debt is not due and payable or when there are not written proofs regarding a debt.
The applicant is not required by law to prove that there is a real risk of the respondent unjustifiably dissipating their assets prior to judgment, but the Court does usually consider this as part of its balancing exercise in deciding whether to use its discretionary power to grant the freezing order sought.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
An application for a freezing order is made to the Court, setting out in a specified form the reasons for and the basis of the request. An application can be made on or without notice to the respondent. In both cases, the applicant has a duty of full and frank disclosure and the respondent has five days after notification to challenge it.
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. In most cases the law requires the applicant to pay a security deposit, the amount of which is usually decided by the Court. This is particularly the case where the freezing order is applied for early in proceedings where the applicant has no written proof of debt.
6. Can it be sought against third parties?
Yes, a third party to the underlying proceedings or prospective proceedings may be party to a freezing order where they have possession of assets covered by it. The freezing order applies to any such third party, irrespective whether it is the proprietor of the assets or it holds them on behalf of the proprietor (including banks, financial institutions, etc).
7. What assets are covered by a freezing (or equivalent) order?
Any tangible or intangible assets within 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?
At any stage, including prior to commencing the claim (in which case the applicant has 20 days to submit an application for the Court to review the merits of the substantive claim), during the course of a claim, or following judgment to assist with enforcement. After proceedings, if a judgment debt is not paid, the freezing order can be enforced to recover the unpaid judgment sum plus interest and costs.
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. Ordinary living expenses for the respondent and their family fall outside of the scope of the freezing order.
12. What happens after a freezing (or equivalent) order is granted?
The bailiff in charge of implementing the freezing order will notify it to the respondent and/or to any third party who holds assets on behalf of the respondent and proceed with the enforcement of the order’s provisions. In case of assets which appear in registries (such as the Trade Registry or Land Registry), the freezing order must be registered in the same place in order to publicize it. The respondent may appeal the order within five days of its notification by the bailiff, and the appellate Court ultimately will either set aside or confirm the order.
13. Who pays the costs of the application for a freezing (or equivalent) order?
Either the applicant or the respondent may be ordered to pay for the costs of obtaining the freezing order, which is usually decided at the final hearing of the underlying proceedings.
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 freezing order only affects third parties outside of the jurisdiction in certain circumstances.
(iii) A third party may contest the freezing order within five days of its notification of the order. A third party may also claim compensation or a reimbursement from the respondent of costs incurred as a result of the freezing order.
(iv) The reimbursement of costs may be obtained by the affected third party from the debtor, after the debt is fully executed.
15. What are the consequences of breach of a freezing (or equivalent) order?
Breaching a freezing order may be a criminal offence, punishable by fine or imprisonment. A third party may only be held liable for breach of a freezing order if it has been notified of the freezing order or the freezing order was publicly communicated and it was knowingly involved in the breach.
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, although subject to the laws of the relevant jurisdiction. However, this can only be sought with the permission of the Court and enforcement itself will be a matter of local law.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
Freezing orders issued in the EU are enforceable in Romania under EU legislation. Freezing orders from outside the EU may be recognized according to legislative provisions on the recognition of foreign judgments.
Contact
Mihai Guia Managing Partner Eversheds Sutherland Romania Bucharest, Romania mihaiguia@eversheds.ro www.eversheds-sutherland.com
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