United States – Georgia
Below is a brief summary on Georgia’s treatment of freezing orders, otherwise known in the United States as prejudgment attachments. Prejudgment attachment is a provisional remedy that allows for seizure of a defendant’s property prior to judgment. This ensures that a plaintiff successful on the merits may recover the amount owed by the defendant.
Note: Federal Courts only allow for prejudgment attachment to the extent that applicable state statutes allow it.
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes. Georgia allows for an order of attachment, which allows the sheriff to seize property to secure a judgment and prevents a debtor-defendant from using or disposing of property prior to judgment. When attachment results from an interlocutory injunction (a Court order compelling or preventing a party from engaging in certain acts until the litigation is resolved) or a temporary restraining order (TRO) (a shorter-term injunction that prevents a party from taking certain action), the respondent is prohibited from dealing with the assets referred to in the attachment order until a specified time (for example, a further hearing, judgment or payment) or further order of the Court. An attachment may be issued against individuals, partnerships, and corporations.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
Yes. Proponents typically request a TRO when filing an interlocutory injunction through a complaint or motion. If the party requesting injunctive relief does not move by the hearing for an interlocutory injunction, the TRO will dissolve. Thus, moving parties often make a request for both a TRO and interlocutory injunctive relief at the same time and as part of the same papers.
3. Briefly what is the relevant legal test?
Attachment can be issued against a debtor only when the debtor:
(i) resides out of state;
(ii) moves or is about to move outside the limits of the country;
(iii) absconds;
(iv) conceals himself;
(v) resists arrest; or
(vi) is causing the property to be removed outside of the state.
If no property exists in Georgia, there is no basis for a writ of attachment, even if the defendant resides out of state.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
A plaintiff must make an ex parte application to the judge in the county where the defendant resides (if known), or in the county where the property to be attached is located if the county of residence is not known. The application must be in writing, made under oath, and set forth:
(i) the facts showing grounds for attachment;
(ii) the nature of the claim; and
(iii) the amount of indebtedness, and include a proposed order of attachment directed to the sheriff.
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 plaintiff must provide a bond for all costs and damages the defendant may incur if the Court determines:
(i) the amount claimed was not due;
(ii) no lawful ground for issuance of the attachment existed; or
(iii) the property sought was not subject to attachment.
The bond must have security, be equal to twice the amount claimed in the application, and be payable to the defendant.
6. Can it be sought against third parties?
Yes. A preliminary or interlocutory injunction will bind not only the specifically named respondent, but also agents of the respondent; attorneys for the respondent; and anyone else who has been given notice of the order. This means that any other person or entity who is in “active concert or participation” with the enjoined party can also be enjoined simply by being provided with notice of the injunction.
7. What assets are covered by a freezing (or equivalent) order?
Any tangible or intangible non-perishable 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?
A plaintiff may apply for an order of attachment before commencing proceedings or prior to judgment.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
No.
12. What happens after a freezing (or equivalent) order is granted?
When the Court grants a motion for an order of attachment, the plaintiff must file the order, deliver it to the sheriff, and serve it on the defendant. The sheriff will levy the order on the defendant’s real or personal property to satisfy the plaintiff’s claim.
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. Generally, the party who dismisses, loses, or is cast in the action shall be liable for the costs thereof.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
As against bona fide purchasers for value without actual notice of an attachment order or other third parties acting in good faith and without notice who acquired a transfer or lien binding the defendant’s property, no money judgment obtained shall create a lien upon the property.
As against the interests of third parties acting in good faith and without notice of an attachment order who acquired a transfer or lien binding any real estate situated in this state owned by a non-resident, no money judgment obtained shall create a lien upon the real estate of the non-resident unless the execution issuing thereon is entered upon the general execution docket of the county in which the real estate is situated.
15. What are the consequences of breach of a freezing (or equivalent) order?
If the enjoined party fails to comply with an attachment, a TRO or interlocutory injunction, they may be found in contempt of Court.
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. It will be 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?
A Georgia Court shall recognize a foreign-country judgment if it grants or denies recovery of a sum of money, and, under the law of the foreign country where rendered, is final, conclusive, and enforceable.
However, we have not identified authority stating whether attachment orders from foreign jurisdictions will be enforced.
Contacts
William O’Brien Partner – Head of Cross-Border Litigation & International Commercial Arbitration Eversheds Sutherland Washington, DC, United States williamobrien@eversheds-sutherland.us www.eversheds-sutherland.com Kymberly Kochis Partner – Co-Head of Global Litigation Co-Head of Insurance Litigation and Class Action groups Eversheds Sutherland New York, United States kymberlykochis@eversheds-sutherland.us www.eversheds-sutherland.com Francis X. Nolan IV Partner Eversheds Sutherland New York, United States franknolan@eversheds-sutherland.us www.eversheds-sutherland.com
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