Asset freezing orders are an essential tool in commercial litigation, but they can have devastating consequences for those targeted and damages are generally payable if they are improperly obtained. The point was strikingly underlined by one High Court case involving a businessman who won tens of millions of dollars in compensation despite his own dishonest conduct.
The businessman, a leading light in the shipping industry, was accused of bribery, corruption and diversion of assets and he and corporations that he controlled were sued by a company for sums in excess of $577 million. Two pre-trial freezing orders were obtained to a total value of more than $600 million. The company gave the usual undertakings that it would pay compensation if the orders subsequently turned out to be have been wrongly granted.
The claims against the businessman only succeeded to a very limited extent and he was ordered to pay $16 million, plus interest. The trial judge made damning findings about his honesty and credibility but was equally harsh in his views of the conduct of the company. The businessman subsequently sought damages from the company on the basis that his assets had been unjustifiably frozen for about five years, causing loss and removing his opportunity to make very substantial profits during a boom period in the industry.
In upholding his claim, the Court noted that the value of the assets frozen was far in excess of the sums for which the businessman and his companies were ultimately held liable. The orders had moreover been obtained following serious and culpable breaches of the company’s duty to make full and frank disclosure to the judge who granted them.
In awarding damages to the businessman, the Court observed that his dishonest dealings and untruthful evidence did not undermine his right to compensation for losses that he had suffered due to the improperly obtained orders. The well-founded and serious criticisms of his conduct did not mean that the company could be any less scrupulous in complying with its duties of disclosure, nor did they provide a reason why the undertakings should not be enforced. The amount of compensation payable had yet to be finally calculated but would be an eight-figure sum.