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Fighting fraud: obtaining searching, freezing & tracing orders

A comparative Guide

Canada

Czech Republic

Denmark

England & Wales

France

Germany

Hungary

The Netherlands

Poland

Romania

Russia

Scotland

Switzerland

United States

Fighting Fraud: obtaining searching, freezing & tracing orders

Canada (Ontario)Power Budd LLP

Salima Viranisviriani@cmck.com

Czech-RepublicCMS Cameron McKenna

Jaroslav Tajbrjaroslav.tajbr@cmck.com

DenmarkDania Advokater

Jacob Strandgaard Andersenjsa@dania-law.dk

England & WalesCMS Cameron McKenna

Duncan Aldredduncan.aldred@cmck.com

FranceCMS Bureau Frances Lefebvre

Didier Skornickidskornicki@bfl-avocats.com

Germany CMS Hasche Sigle

Dr Claus-Peter Fabian claus-peter.fabian@cmslegal.de

HungaryOrmai és Társai CMS Cameron McKenna

dr. Tamás Engeltamas.engel@cmck.com

Italy CMS Adonnino Ascoli & Cavasola Scamoni

Laura Opilio laura.opilio@aacs.it

The NetherlandsCMS Derks Starr Busmann

Leonard Bohmerl.bohmer@cmsderks.nl

PolandCMS Cameron McKenna

Michal Suboczmichal.subocz@cmck.com

RomaniaCMS Cameron McKenna

Adelina Elena Marin adm@cmck.com

Russia CMS Cameron McKenna

Sergei Yuriev svy@cmck.com

ScotlandCMS Cameron McKenna

Valerie Allanvalerie.allan@cmck.com

SpainCMS Bureau Frances Lefebvre

Esther Adroher adroher@bfl-abogados.com

Switzerland CMS von Erlach Klainguti Stettler Wille

Fabienne Crisovanf.crisovan@cmslegal.ch

United States (New York)Thacher Proffitt & Wood

John Doherty jdoherty@tpwlaw.com

For more information

If you would like further information on the rules applicable in each jurisdiction,

please do not hesitate to contact:

Disclaimer: This commentary is not a full review of the topic it covers and does not purport to give legal advice. If you would like to receivespecific legal advice, please contact your usual CMS contact.

All liability for damages arising from the information provided is explicitly excluded.

Fraud, in all its many forms, knows no

national boundaries. The revolution in

information technology has enabled

fraudsters to move funds quickly and

easily between accounts across the world.

The victims of fraud range from banks and

other financial institutions, to small

companies and individuals.

The essential weapons of those acting

for the victims of fraud, seeking to recover

funds, are the powers of the civil courts to

grant search orders to assist in tracing of

missing funds; and when they have been

located, to make freezing orders to prevent

removal of the funds. Those acting to

recover funds increasingly need to take

action in many different jurisdictions,

often simultaneously.

This Guide aims to assist the victims of

fraud and those acting for them by providing

a comparison of the powers of the civil

courts across various jurisdictions in Europe

and North America, to grant search and

freezing orders.

We hope you find the Guide informative

and useful.

Tony Marks

CMS Cameron McKenna

April 2003

Fighting Fraud: obtaining searching, freezing & tracing orders2003

Introduction

Canada (Ontario)

Czech Republic

Denmark

England & Wales

France

Germany

Hungary

The Netherlands

Poland

Romania

Russia

Scotland

Switzerland

United States (New York)

Fighting fraud: A comparative Guide to powers in different jurisdictions to obtain searching, freezing and tracing orders

Country / jurisdiction

The summary below reflects the position

in relation to Ontario law only as each

Canadian province has its own procedure

and laws.

Freezing orders• Available in both criminal and civil

proceedings (called a “Mareva

injunction” in civil proceedings).

• Usually sought on an urgent,

without notice, basis to ensure

element of surprise and can be

obtained before proceedings are

issued (as well as during or after).

• A claimant must show:

- a strong prima facie case (i.e.

more than a “good arguable case”

as under English law);

- grounds for the claimant’s belief

that the defendant has assets

within the jurisdiction of the court;

- persuasive evidence that the

defendant will remove or dispose

of assets if the order is not granted.

• A claimant must provide an undertaking

to be liable in damages to the defendant

in case the injunction turns out to have

been unjustified and the defendant

suffers damages as a result.

• A defendant is permitted to deal with

his assets in the ordinary course of his

business or living.

• A claimant does not acquire any title

or proprietary interest in the frozen

assets or any advantage or priority

over other creditors.

• An injunction can freeze any asset to

which the defendant has title, provided

the assets are within the jurisdiction

of the court and can be the subject

of execution.

• The court will sometimes order the

defendant to list his assets and their

location in an affidavit.

• A claimant may be ordered to bear

any expenses incurred by a third party

(for example a bank) in complying

with the order.

Search orders• Available in civil proceedings and

usually obtained without notice

and in secret prior to the

commencement of the action to

ensure the element of surprise.

• The order must include the

claimant’s undertaking in damages

as with freezing orders.

• Authorised persons (typically the

claimant and/or a limited number

of his employees or agents, his

solicitor and an independent third

party e.g. an accountant) are

permitted to inspect and search

the defendant’s premises.

• If the defendant fails to comply

with the order the claimant has no

right to force entry; his remedy is

to pursue contempt proceedings.

• To obtain such an order the claimant

must show that very serious harm,

actual or potential, will be suffered

if the order is not granted (can include

damage to the claimant’s case due

to the disappearance of evidence).

• Search orders are also available in

criminal proceedings.

Tracing orders• The Fraudulent Conveyances Act

assists a creditor in recovering

property where the debtor has

Canada(Ontario)

conveyed or transferred it to others

with the intent to defeat, delay or

defraud the rights of creditors.

• The Act permits the creditor to set

aside the transfer to the third party so

that it is returned to the debtor/

transferor and is then available for

seizure by creditors. Any transfer of

property made with the intent to

defeat, hinder, delay or defraud creditors

is void, notwithstanding if the transfer

was made for valuable consideration,

unless the transferee acquired the

property bona fide without notice. The

claimant must show an intent to defeat,

hinder, delay or defraud creditors by

both the debtor and the transferee. In

certain circumstances this is subject to

certain presumptions.

• Only applies to property against which

a judgment could be executed.

• To succeed a claimant must in practice

show that the property was transferred

for little or no consideration compared

to its market value at the time of

the transfer.

• No requirement to show the debtor’s

insolvency at the time of the transfer

and the claim is not subject to any

limitation period.

• A claimant is not able to claim relief

against the proceeds of any transferred

property under the Act (certain rights

are available under the Assignment

and Preferences Act).

General• The Absconding Debtors Act

(Ontario) provides that where a

resident of Ontario leaves the province

with the intention of defrauding his

creditors or to avoid being arrested

or served with process and the

debtor has property against which a

judgment could be executed within

Ontario he shall be deemed to be

an absconding debtor, in which case

his property within the jurisdiction

may be seized in order to satisfy the

debts. This relief is only available in

pending proceedings.

Freezing orders• Available in civil proceedings in the form

of an “interlocutory order” pursuant to

the Act on Civil Proceedings.

• Granted by the court if it is considered

necessary to regulate the parties’

relationship or if there is concern that

the execution of a future court decision

might be in jeopardy.

• May be served on a person who is

not a party to the proceedings (e.g.

on a bank holding the account of

a defendant).

• The order may be issued before as

well as during proceedings.

• An order can generally only be issued on

the basis of a motion. The court must

decide whether or not to pursue the

motion without unnecessary delay, and

in any case no later than seven days

from the filing of the motion. If the

motion is filed before the start of the

main proceedings, the court will ask the

claimant to file with the court the

petition to start the main proceedings

within a certain period, failing which the

order will become void.

• The claimant will be liable for any

damage caused by an interlocutory

order becoming void (an interlocutory

order becomes void if the petition

regarding the main proceedings is

dismissed, the time limit for which it

was issued has passed, or the reasons

for which it was issued no longer apply).

• Available in criminal proceedings if the

circumstances of a particular case

indicate that the money has been used

for, or gained by, criminal activity. Can

be issued by the court or by the policewith the consent of the prosecutor or

by the prosecutor himself. The order

must be delivered to the bank holding

the account, and once the bank has

blocked the account the decision must

also be delivered to the account holder.

• Also available against the account of

a third party not accused of committing

the crime.

Search orders• Only available for criminal proceedings.

• The Czech constitution states that this

can be done only with a written decision

of a judge and that such decision must

be justified (i.e. if there is a reasonable

suspicion that there is on the premises

any thing, person or material for the

purposes of criminal activity). The

conditions under which a search of

other premises may be ordered are not

as strictly stipulated as those for the

search of residential premises.

Tracing orders• Available as an interlocutory order in

civil and criminal proceedings (known

as “adhesion proceedings”).

• Generally, if information on the asset is

kept at an official registry, such as the

Land Registry, Securities Centre, or

Registry of Motor Vehicles, the asset

can be traced.

• A claim can be brought against a

defendant or against a third party

who now has ownership of the asset.

The third party would then be entitled

to claim damages against the person

who fraudulently sold it the asset. If

the victim is no longer the owner of

the asset, he may only claim

damages against the person who

Czech Republic

committed the fraud and against

other transferors of the asset who

were not bona fide.

• If the proceeds from the sale of an

asset are in the form of money in a

bank account, banks are obliged to

provide information to the court, on

request, for the purposes of the

civil proceedings.

• Criminal proceedings can only be

brought against the defendant and not

against any third party in possession of

the asset. If the decision requires

additional evidence, the court will not

make a decision regarding the adhesion

proceedings and will require the victim

to bring civil proceedings.

Evidence• Evidence may be secured by way of

court proceedings if there is concern

that such evidence might not be

available later, or only obtainable with

great difficulty.

• Once the investigation of a crime

has been commenced and if the

investigation is successful, the victim

of fraud is entitled to inspect and take

copies of the documents held in the

prosecutor’s files Such documents can

also be used as evidence in civil claims.

• In general, it is not possible to obtain

disclosure of any documents before

the proceedings begin.

• After the civil proceedings begin the

parties are obliged to refer to all

evidence that supports their arguments.

This means there is no limitation on

the evidence that can be referred to

the court (including the evidence

examined in the criminal proceedings).

The court itself determines what

evidence will be examined.

• Attorneys are liable to maintain the

confidentiality of all facts learned in

relation to the provision of legal services.

This duty can be lifted only by the

client or following the demise of the

client or expiration of the legal entity's

legal representation. The duty of

confidentiality does not affect the

legal obligation to prevent a criminal

offence being committed as stated in

the Act on Criminal Proceedings.

• Other providers of financial and

professional services (bankers, auditors,

accountants etc.) are liable to maintain

the confidentiality of all facts learned

in relation to the provision of their

services. This duty may be overridden

only under special circumstances e.g. as

a result of a court order (or prosecuting

authority in criminal proceedings) or as a

result of their legal duty to do so e.g.

reporting to a supervisory authority or

to a superior body.

• In criminal proceedings it is not possible

to use evidence that has been obtained

illegally. Any actions of the prosecutor

or police have to be in accordance with

the criminal procedure legal provisions.

In civil proceedings, the parties are

entitled to refer to all evidence that

supports their case, irrespective of how

it has been obtained. The court itself

determines which of the proposed

items of evidence will be examined.

Freezing orders• Available in both civil and

• In civil proceedings, this can take the

form of an “attachment” to funds or

assets until a creditor has obtained a

judgment confirming his claim for

money on a debtor or while proceedings

for such are pending.

• In order to obtain an attachment,

the claimant must substantiate his

claim and demonstrate that his

chances of recovering the debt will

diminish significantly if the attachment

is not granted.

• The bailiff can require the claimant to

provide security for possible damages

to the defendant, and will often do

so. Attachment is a preliminary action,

subject to subsequent confirmatory

action before a high court.

• Alternatively, assets can be frozen by a

restraining injunction, and the defendant

can be ordered not to pursue certain

actions, e.g. to dispose of or remove

assets. If necessary the court can take

the asset into custody, and may receive

assistance from the police to do so.

• To obtain a restraining injunction,

the claimant must demonstrate that

the defendant’s use or intended use

of the assets is contrary to the

claimant’s rights.

• An injunction will not be granted if

subsequent criminal punishment or

civil compensation can satisfy the

claimant’s loss sufficiently, or if such an

injunction would be disproportionate

to the claimant’s potential loss.

• The bailiff can require the claimant to

provide security for possible damages to

the defendant. An injunction is also a

preliminary action, subject to subsequent

confirmatory action before a high court.

• In criminal proceedings, a freezing

order prevents the defendant (or a

third party) from disposing of his assets

or funds involved in or suspected of

being involved in a crime.

• Such orders are commonly used by the

police during their investigations or

during proceedings and must be put

before a judge for validation. If a court

order cannot be awaited without risk or

jeopardizing the purpose, a preliminary

freezing action may be executed by

the police but will be subject to

confirmation by a court order to be

requested within 24 hours.

• The purpose of a freezing order in

criminal proceedings must be to secure

evidence, assets expected to be subject

to confiscation, or assets subject to

recovery by the rightful owner. Such

orders may also be used to remove

things suitable for committing violence

or to prevent absconding (by freezing

a passport and similar personal

documentation) or as security for

court costs and damages payable.

Search orders• Available in both civil and

criminal proceedings

• In civil proceedings, the search of a

person's home or business location is

very restricted and can only be ordered

at the discretion of a bailiff if a debtor

or defendant has been summoned to a

court hearing and has failed to attend.

• The bailiff carries out the search, and

can only search for funds or assets

Denmark

with the purpose of levying execution.

Searching paperwork, documents, etc

is not allowed.

• In bankruptcy cases the trustee in

bankruptcy is granted access to the

debtor’s home and business, and can

as such search the debtor’s documents,

financial records, etc. If necessary the

trustee may apply to a judge in the

bankruptcy court for assistance to carry

out a search.

• In criminal investigations, only the

police can carry out a search (or

seizure). It requires a court order,

unless awaiting the court order

jeopardizes the purpose of the search.

The police must substantiate to the

court that the defendant is the suspect

of a crime punishable by prison

sentence, unless the search is outside

his home (e.g. open garages, unlocked

cars, gardens).

Tracing orders• Available in both civil and

• In civil proceedings the right to trace

assets is relatively limited and only

available on the request of a claimant

if the claimant can prove or substantiate

his claim. If the claim is disputed, and

the dispute has merits, the bailiff can

refer the settlement of the claim to

the regular courts.

• As part of criminal investigation a

judge can order assets to be seized

or frozen by police during the

investigation or trial. The rightful

owner can then, via the police/

prosecution, make a claim to have

the assets returned to him.

Evidence• In criminal cases the court can order

people (other than the defendant

or charged person) to disclose

documents or other evidence and

to testify under oath.

• In civil proceedings each party

supplies his own evidence, although

parties usually disclose information

requested by the counterparts, as they

otherwise risk a prejudicial effect on

their case.

• In exceptional cases a judge can issue

an order of discovery.

• A debtor appearing before the judge

or deputy judge can be ordered to

reveal his financial situation and his

assets and their whereabouts.

• In bankruptcy cases the receiver may

summon anyone with knowledge of

the debtor’s financial situation before

the bankruptcy court to give evidence

as a witness. Lying or withholding

of information can be prosecuted

as perjury.

General• Correspondence and other information

between a lawyer and his client

are confidential.

• In criminal investigations, this can only

be overcome when the police become

aware that a lawyer has committed

indictable crimes or where a lawyer

has a suspicion of money laundering.

• Banks have a duty of confidentiality

concerning information on their clients.

Board members, local board members,

members of bank councils, CEO’s or

other employees may not disclose or

otherwise exploit any confidential

information, which they have access

to as a result of their position.

• If a bank suspects that a transaction

has a connection to money laundering

it has an obligation to inspect it and,

if suspicious, to delay the transaction

until the police are informed or to

inform the police as soon as possible

after the transaction is complete.

• Land and real estate ownership

information is accessible to the public,

and information on ownership,

mortgages, easements and

encumbrances is available in writing

or by telephone from local courts, or

electronically via the Internet.

Mortgages on movables and cars can

be voluntarily registered in two separate

court administered registries, which

also have public access.

• Danish and foreign companies in

Denmark have to be registered in the

Danish Commerce and Companies

Agency. The agency keeps publicly

accessible registers of public and

private limited companies, commercial

foundations, European Economic

Interest Groupings, financial institutions

(banks and insurance companies),

co-operative societies, partnerships,

commercial associations and a number

of other enterprises with limited liability.

Ownership information of a company

is not accessible in the registry.

However, ownership of more than 5%

of the share capital must be disclosed

in the annual accounts of a company

with limited liability if it is an

“A/S” company.

Freezing orders• Freezing orders or injunctions

(formerly known as “Mareva Orders”)

are a means by which a party to

proceedings or intended proceedings

can be restrained from removing

assets from the jurisdiction of the

Court or restrained from dealing with

assets wherever located.

• Available in civil proceedings at any

time, although usually obtained before

proceedings are issued. Typically, draft

pleadings will need to be produced to

the Court to demonstrate a real

intention to commence a claim.

• Usually made without notice to the

defendant to ensure element of

surprise. In that case, the claimant

is subject to a duty to make full and

frank disclosure of all relevant matters

to the Court. If such disclosure is not

made the order can be overturned

regardless of the merits of the claimant’s

case or entitlement to the order.

• A claimant must give an undertaking

to the Court to pay any damages

which the defendant (or any other

party served with or notified of the

order) sustains if it turns out that the

order should not have been granted.

If the claimant has insufficient assets

within the jurisdiction to support the

undertaking he will be required to

provide appropriate security.

• A claimant must show a good arguable

case and a risk that the defendant will

dispose of assets or remove assets

from the jurisdiction so as to make it

likely that any judgment against the

defendant could not be satisfied in

the absence of a freezing order.

• Order cannot be used oppressively, for

example to cause the defendant to

cease trading. Defendant usually

allowed to continue using assets, for

example, to pay employees and trade

creditors and to discharge reasonable

living expenses and/or legal fees.

• Can freeze assets legally and

beneficially owned by the defendant,

including those located outside the

jurisdiction and in support of foreign

proceedings, but usually limited to the

amount of the claim so that the

defendant is free to deal with assets

above that sum.

• A defendant and any third parties who

fail to comply with the order are in

contempt of Court and liable to a fine

and/or imprisonment. Third parties

who knowingly assist in a breach of

the order are guilty of contempt (for

example if a bank pays money out of

the defendant’s bank account). A

freezing order does not, however, bind

third parties outside the jurisdiction (for

example a foreign branch of a bank

with a presence in England).

• Order usually contains a provision

requiring the defendant to disclose

information about his assets or about

the alleged fraud, but cannot be used

as a “fishing expedition”.

• In criminal proceedings, a restraint

order can be obtained which has the

effect of freezing assets suspected of

being funded by the proceeds of

crime. The order may be granted by

the High Court after application by

the prosecuting authority e.g. Crown

Prosecution Service, the Serious Fraud

Office or Customs & Excise.

England & Wales

Search orders• A search order can be obtained

against a party to proceedings or

intended proceedings in order to

preserve evidence which is or may be

relevant or for the purpose of

preserving property which may be the

subject of proceedings.

• Formerly known as “Anton Piller” orders.

• In civil proceedings search orders

are available by application to the

Court (usually without notice to

the defendant).

• A claimant must show real grounds

for suspecting that the defendant is

destroying or will destroy documents

or would not comply with an order

for disclosure.

• A search order must be supervised by

a Supervising Solicitor who must be

experienced in the operation of search

orders and who is independent of

the claimant.

• The Supervising Solicitor’s obligations

include, amongst other things, listing all

material removed from the defendant’s

premises and explaining the terms and

effect of the order to the defendant.

• As a matter of principle the Court in

England and Wales may order a search

of premises located overseas, but in

practice it is unlikely to do so.

• Extremely effective tool in determining

the whereabouts of assets and proceeds

of the fraud.

• Search orders can also be obtained in

criminal proceedings, either from the

County Court (e.g. under tax legislation)

or from the Magistrates’ Court

(search warrants). Evidence obtainedfrom a search in criminal proceedings

cannot be used directly in civil

proceedings but transcripts of the

evidence used in court in the criminal

proceedings are permitted.

Tracing orders• It is possible to make a claim for the

return of fraudulently obtained assets

on the basis that the claimant has a

“proprietary claim” to such assets;

this can include the proceeds of assets

obtained by fraud. The prospects of

succeeding on such an application are

based upon the claimant’s interest in

the property or proceeds.

• A claimant can pursue both personal

claims against the fraudster and

proprietary claims against the fraudster

and others, at the same time.

• Tracing claims can be more effective

than personal claims as they can prevent

the defendant from dealing with the

claimant’s money so that the defendant

cannot use it until the entitlement to the

funds has been established even, for

example, to pay his reasonable expenses.

• A defendant is also obliged to inform

the claimant what has happened to all

the claimant’s money that has passed

through his hands i.e. not limited to

the defendant’s current assets.

• Tracing rules are flexible – basic

principle is “just and convenient”.

• A defence to a tracing claim exists if

the defendant received assets bona

fide without notice, so that he takes

free of the claimant’s claims.

General• “Tipping off” i.e. alerting the alleged

fraudster to the fact that he is being

investigated by the authorities, is an

offence. Banks can now apply in

private for an interim declaration.

• Other options to protect assets

include applying for the appointment

of a receiver, for example where an

asset needs managing and cannot

simply be frozen, or, where the claim

cannot be disputed, applying for the

appointment of a provisional liquidator.

Freezing orders• Available in both civil and

• In civil matters, an order to freeze

funds is typically used as a means of

enforcement, and is commonly called

a garnishment or attachment. A

garnishment may be a protective

measure, in which case it is merely

aimed at making the asset unavailable.

• Beyond this limited purpose, a

garnishment can be used as the first

step in a procedure leading to a form

of compulsory surrender of the asset

garnished. Generally speaking,

garnishment procedures are instituted

by creditors in whose interest it is

to make the their debtors' assets

unavailable or to liquidate them.

• In criminal matters, a decision to

freeze funds stems from a request by

a judge and not that of a creditor.

• In both cases, a bank account may

be garnished.

• In criminal matters, the purpose is to

freeze the disputed assets, thereby

permitting a stabilization of the situation

during the ongoing proceedings.

• In the instance of garnishment for

security, a creditor must possess

proof of a claim, which may not

be enforceable, and obtain the

court's permission to carry out

the garnishment.

• In both cases, a creditor always

institutes the procedure: the creditor

therefore controls the timetable.

• Two bodies of rules apply to

attachments, depending on whether

personality or real property is

being seized.

• In criminal matters, the attachment

procedure takes place in the context

of the wider criminal proceedings. It is

therefore up to the judge to decide,

for example, to affix seals to assets or

to freeze a bank account, depending

on what he feels is in the best interests

of his investigation.

• Whether the attachment falls into a

civil or criminal procedure, its effect is to

make the assets attached unavailable to

the defendant, (but sometimes only

temporarily).

• Some assets, such as remuneration,

cannot be attached as they are too

closely tied in with the debtor's

personal survival.

• In civil matters, the attachment itself

grants no proprietary rights to the

creditor to the things attached.

• In principle, enforcement procedures rely

on the judge's power of distraint, which

is necessarily limited to national territory.

Thus, the jurisdiction of the French judge

is exhausted in the event that assets

located abroad are to be attached,

and the ruling enforced.

Search orders• Usually only available in

• The search can take place at any stage

of an investigation, depending on the

requirement of the investigating judge.

• In civil matters, if documents are

located during the course of the

garnishment procedure, they may

be placed before the court. The civil

and criminal procedures often merge.

France

Tracing orders• An owner can file a claim against

the holder or current occupant of

a material asset.

• In matters involving personality, a

claim for ownership of personality

seized may be prevented if the current

possessor has acquired it under lawful

conditions (i.e. in good faith).

• The above point is an exception to the

usual rule that the owner must always

be entitled to recover possession of

his assets if he has been deprived of

them unjustly.

• If the person who has embezzled

funds has utilized them to acquire an

asset, it is possible to bring an action

for recovery of this asset, in particular

using the procedure of forced sale.

• If the embezzled funds have been

used to purchase an asset that is in

the hands of a third party, there is no

possibility per se of filing action

against the owner on the basis of the

embezzlement. The plaintiff can at

best attempt to prove, through the

process of Paulienne action (in which

a creditor can have declared void

certain transactions by a debtor which

are prejudicial to his interests) that

the asset has been placed in the

custody of the third party only for the

purpose of violating the rights of the

creditors of the perpetrator of the

embezzlement, thereby permitting the

attachment thereof.

• The result is that generally, the

claimant claims funds because he has

been the victim of embezzlement,

however it hardly matters whether

these funds are his – which would

imply that they can be identified, for

example because they have been

deposited on a separate account -, or

are from any other origin.

General• Banks are prohibited from providing

direct replies to individuals questioning

them concerning a debtor’s assets.

Germany

Freezing orders• Available in civil and

• In civil cases can only be used for

money claims – not proprietary or

repossession claims.

• Can usually be obtained without

hearing the proposed defendant if the

purpose of the order would otherwise

be placed at risk or undermined.

• Can be obtained before and after

proceedings have been commenced

(until judgment obtained).

• Can include all assets legally owned

by the defendant - tangible, intangible,

moveable, land and assets

located abroad.

• Entitles the claimant to have all assets

of which he is aware attached by a

further court order (for example a

garnishee order in the case of debts

owed to the defendant, a charge in

the case of land or by seizure in the

case of moveables). The consequence

of seizure is that the creditor has

preferential rights in relation to

those assets.

• The attachment does not entitle the

claimant to realise the value of the

respective assets by way of sale.

Realisation requires a judgment in the

claimant’s favour following a full trial.

- the existence of a claim; and

- the enforcement of a judgment is

being endangered. This would be

the case if, for example, the

judgment needs to be enforced

outside one of the signatory states

of the Brussels or Lugano Conventions

or if the defendant has transferred or

is about to transfer or sell assets

without consideration.

• Disclosure not generally ordered as

part of freezing order.

Preliminary injunction• Used to secure claims other than

payment claims such as:

- contractual claims for repossession;

- proprietary claims; and

- claims for removal or retrieval

of assets.

• Can be obtained without hearing

the proposed defendant where

circumstances require immediate action.

- existence of a claim; and

- that enforcement of claim, if it

succeeds at trial, is being endangered.

• Relief available is wide and includes:

- a restrictive or preventative order

(Unterlassungsverfuegung); and/or

- the appointment of a receiver over

certain assets (sequestration);

and/or

- specific performance

(Regelungsverfuegung).

Search orders• In civil proceedings, search orders can

only be obtained for the purpose of

enforcing or executing a judgment, an

attachment order or a preliminary

injunction. They are therefore only

obtainable once the claimant has

obtained a provisional or final legal

decision on the claim from the court.

• A court order is required if the place

to be searched is the place of

residence or the business premises of

the defendant although this can be

waived in extremely urgent cases. Thedefendant is given an opportunity to

be heard before the search order is

made unless the purpose of the search

would be placed at risk, in which case

the order will be made without hearing

the defendant.

• The search is undertaken by the bailiff

and either the defendant, a member of

his family, a local government officer, a

police officer or two adults must be

present as witnesses while the bailiff

carries out the search. In extremely urgent

cases the bailiff can undertake the search

immediately without a court order.

• In criminal proceedings, a search

order must specify the criminal act

which was the reason for the search

and the purpose and extent of the

search. Such a search must be carried

out within six months of the order

and is carried out by the police. The

Judge, the Public Prosecutor, a local

government official or two members

of the relevant local authority must be

present. If the defendant objects to

any documents being inspected, only

the Public Prosecutor or the Judge

may carry out an inspection of such

documents. (In civil proceedings there

is no corresponding provision. The

bailiff may carry out an inspection of

such documents).

Tracing orders• Can claim against property in the

hands of a party not directly involved

in the fraud, by way of an arrest order

or by way of an interim injunction.

• In criminal proceedings it is also

possible to obtain a security order

over the relevant asset or assets

purchased with the proceeds.

General• The Public Prosecutor may invoke a

criminal investigation and if the

investigation is successful, the victim

of fraud is entitled to inspect and

take copies of the Public Prosecutor’s

files and use such evidence to pursue

civil claims.

• In criminal proceedings a freezing

order may transfer ownership of

assets to the state, but the rights of

the victim of the fraudster take priority

against those of Public Prosecutor (but

not against other creditors) regardless

of when the orders were obtained.

Freezing orders• Although available in both criminal and

civil cases, in practice the Hungarian

courts are very reluctant to grant freezing

orders in relation to civil law proceedings.

• Freezing orders therefore currently

tend to be used either in criminal

investigations or as a tool to assist

in the future enforcement of an

outstanding debt or monetary claim.

In the latter case, assets are typically

frozen by the court with the court

enforcement officer subsequently

enforcing against the frozen assets.

• There are currently very limited

examples of cases where a court has

issued a freezing order in connection

with a civil law matter, in order to

"protect" the position of a claimant in

such proceedings. However, in certain

circumstances, it might be possible to

achieve this.

• In relation to civil law matters, a

freezing order can be issued if the

court determines that the enforcement

of a future court decision might be in

danger, i.e. the losing party would

dispose of assets and has no other

assets which would cover the claim.

• In order to obtain a freezing order, the

applicants must:

- have filed their statement of claim

with the relevant court or

arbitral tribunal;

- demonstrate that their chances of

successfully enforcing the future

court decision will diminish

significantly; and

- substantiate (by public documents

or by private documents with full

probative force) that they do have

an existing claim, that such claim is

for a quantifiable amount and that

the claim has fallen due.

• A freezing order can be made in

respect of all or over specified assets

owned by the respondent party.

• Once a freezing order has been made,

the affected party is permitted to use

their assets in the ordinary course of

business or living. However the

alienation/disposal of, or the creation

of any kind of encumbrance over, the

frozen assets is prohibited.

• A freezing order in respect a bank

account will normally specify a threshold

above which no money can be removed

from the account.

• In order to issue a freezing order, the

applicant must submit a motion to the

court. The court must decide within

eight days of receipt of the motion and

may issue the freezing order without

having first notified or having heard

from the affected party. Once the

freezing order has been issued, it is

always served on the affected party

and the affected party may appeal. In

any event, once a freezing order has

been issued it is effective and must be

followed without delay and regardless

of the initiation of an appeal.

Search orders• Available in criminal proceedings and in

court enforcement proceedings.

• Depending on what stage the

proceedings have reached, the police,

the public prosecutor or the judge

may issue a search order.

• In court enforcement proceedings, the

court enforcement officer may inspect

Hungary

and search the judgment debtor's

residence and other premises, any

property and assets and documents on

his business activities. Frisking however is

not allowed in the course of execution.

Tracing orders• The court enforcement officer may

seize assets subject to a freezing

order, but where such assets are held

by a third party, the court enforcement

officer can only seize such assets if

there is no dispute that such assets

are owned by the party subject to the

freezing order.

• If a third party does dispute that

the relevant assets are owned by a

party affected by a freezing order,

the applicant may initiate a special

proceeding, requesting the court to

oblige such third party to accept

and co-operate with the seizure

of/enforcement over the relevant assets.

• The applicant may also initiate

proceedings if a third party holds/

owns the asset in bad faith or obtained

such assets by way of fraud.

• In criminal proceedings, the assets that

constitute evidence or are subject to

seizure or confiscation pursuant to the

provisions of the Hungarian Criminal

Code, may be traced from anybody

regardless of whether or not such third

party holds/owns such assets in good faith.

Evidence• In criminal cases, the judge may order

third parties to disclose documents or

other evidence.

• In civil cases, a judge can only order

that a court, other authority, public

notary or other organisation, disclose

documents or other evidence, if the

applicant is not entitled to request

such disclosure directly from such

persons/bodies.

Freezing orders• Available in both civil and criminal

proceedings at any time.

• In certain cases, the order can be

made in the absence of the defendant

particularly if the claimant is able to

produce evidence to show that if the

defendant is given notice the

effectiveness of the freezing order

might be prejudiced. In those cases a

further hearing will be scheduled at

which the defendant has the right to

be present.

• To obtain a freezing order the

claimant must produce:

- evidence of a risk that the defendant

will not be able to meet the losses

suffered by the claimant;

- evidence in a summary proceeding

of his right (“fumus boni iuris”);

- evidence to show that, if the order

is not granted, the claimant will

suffer loss from the delay (“periculum

in mora”); and

- evidence that the defendant

has assets to which the freezing

order can attach (NB the burden

of identifying assets lies on

the claimant).

• Once granted, the defendant must be

notified of the freezing order, where-

upon a Public Officer determines

which assets have been frozen and

nominates a custodian. The order only

extends to assets identified by the

Public Officer and binds third parties

who are holding the defendant’s

assets (for example banks where the

defendant has an account).

• The claimant usually applies for a

general freezing order to enable the

Public Officer to freeze any subsequently

identified assets (up to a certain value),

subject to the judge’s authorisation.

Alternatively, the freezing order is made

specific to a single asset, and, if the

claimant discovers further assets, he

must make a fresh application for a new

freezing order to include these assets.

• The defendant loses any right to deal

with, or dispose of, the frozen assets

until the end of the proceedings.

• The judge may request the claimant

to give an undertaking to pay any

damages which the defendant may

sustain.Failure to comply with this

request may lead to the freezing order

being made ineffective.

• In theory, the freezing order can

extend to assets outside the Italian

jurisdiction, but in practice such an

order is unlikely to be effective.

• The freezing order only covers

the assets to which the defendant

has legal title and not assets

beneficially owned (unless the

claimant applies for the disposal of

assets to be revoked).

• There is no obligation on the defendant

to disclose any further assets that the

claimant has not identified.

• In criminal proceedings a freezing

order can be issued by the judge on

the request of the Public Prosecutor

whenever there is a risk that the

defendant cannot guarantee the

payment of the fee. The fee includes

the costs of the criminal proceedings

and, if payable, a fine - the amount of

which varies according to the gravity

of the crime. For simple fraud, the

fine may be up to Euro 1.000,00.

Search orders• Only available in criminal proceedings.

• The Public Prosecutor can apply for a

search order to gather evidence of the

alleged fraud.

• The Public Prosecutor usually issues

the search order himself, alternatively

issue can be delegated to the Police

(i.e. it does not require an order from

the court).

• It is possible for evidence obtained in

criminal proceedings to be released to

the judge in the civil proceedings

provided that the claimant has

produced evidence of his right (“fumus

boni iuris”) and evidence of the

damage which will result from any

delay (“periculum in mora”).

Tracing orders• It is not possible, in general terms, to

make a claim against a party who has

received property belonging to the

claimant, but who is not directly

involved in the fraud.

• It is a criminal offence to buy goods

when the purchaser reasonably

suspects that the goods are proceeds

of a fraud (even if the purchaser is not

involved in the fraud).

• It is possible to request the judge to

freeze assets in civil proceedings where

the origin of property is in doubt, until

the court has determined the ownership

of the property and that no fraud

is involved.

• A claimant can also apply to have a

disposal of assets set aside where the

disposal has decreased the possibility

of the claimant obtaining compensation

for the fraud.

General• Article 700 of the Italian Civil Procedure

Code provides a generic emergency

remedy to obtain any precautionary

measure not expressly set out or

regulated by the Code in order to

prevent “an irreparable and imminent

damage” (for example, an order

preventing a third party from disposing

of goods).

• If a fraud has been committed both

criminal and civil proceedings may be

issued. If a party has suffered loss

because of a fraud, he has a right to

decide whether to bring civil proceedings

to obtain compensation or to enter

into criminal proceedings and to ask

for compensation before the Criminal

Court. The criminal prosecutors face

fewer limits on their powers to obtain

evidence. If a report to the police

authority and/or the Public Prosecutor

is produced and criminal proceedings

are instituted, this evidence can then

be used in the civil proceedings. This

transfer process may, however, increase

the cost of and delay proceedings.

• The violation of or non-compliance

with, any of the orders mentioned

above is a criminal offence if

committed with intentional

will (“dolus”).

proceedings usually before proceedings

are issued but also after proceedings

have been issued or judgment given.

• If a freezing order is obtained before

proceedings are issued proceedings

must be commenced within 14 days.

• Usually made without notice to ensure

the element of surprise.

• To obtain a freezing order the claimant

must file a petition with the President

of the Court. The petition

should include:

- the name of the petitioner and the

name of the defendant;

- a clear description of the grounds

upon which the request is based;

- the nature of the assets to be frozen.

If the freezing order is in relation to

real property or moveable property

it is necessary to state that there is

a real risk of dissipation of the

assets if the order is not granted. It

is not necessary to provide evidence

of that risk.

• The application does not have to be

supported by evidence.

• Written notice of the freezing order

must be given to the defendant and

to any third parties affected by the

order, within a number of days after

the arrests have been placed.

• An order only freezes those assets

identified by the President of the Court

which can include:

- assets legally and beneficially

owned by the defendant;

- assets available as at the date the

order was made and/or which will

come into the defendant’s hands

as a result of contracts in existence

at time the order was made.

• It is unclear under Dutch law whether

a claimant can freeze assets out of

the jurisdiction.

• A claimant does not have any

proprietary rights over frozen assets.

• The order will exempt assets which are

necessary to enable the defendant to

provide for his living and expenses but

this exemption does not cover legal fees.

• The claimant does not have to give an

undertaking to the court to pay any

damages that the defendant (or any

other party) may sustain as a result of

the order unless the court attaches

such a condition (this is rare). However,

in the event that the claimant is found

liable, for example if the court finds

that he did not have a good claim, he

must pay damages to the defendant.

This involves the defendant filing

a counterclaim.

• If the claimant becomes aware that

the defendant has acquired further

assets not sequestered under the

order, a new order may be applied for.

If made, this is as an additional order

rather than an amendment to the

original order.

• An order binds third parties holding

the defendant’s frozen assets (for

example banks where the defendant

has an account).

• In civil proceedings the defendant is

not required to disclose any further

assets to the claimant which are not

specified in the order. In some criminal

proceedings the defendant may be

required to provide information as to

his assets.

The Netherlands

• It is a criminal offence punishable by a

fine or up to 4 years’ imprisonment not

to comply with a freezing order. These

penalties equally apply to third parties

bound by the order. In addition the

claimant can seek compensation from

the defendant or a third party who

has failed to comply with the order.

• The District Attorney has the discretion

whether to apply for a search order.

Such an order can only be obtained

from the court.

• Evidence obtained as a result of a

search order in criminal proceedings

can be released to the judge in civil

proceedings. The evidence can also be

released to the claimant if the claimant

notifies the district attorney that he is a

victim of the defendant’s actions and is

then regarded by the district attorney

a victim.

Tracing orders• In civil proceedings it is possible to

pursue a claim (“revindication”)

against a party who has received

assets belonging to the claimant but

who is not directly involved in the

fraud. It is possible to pursue an asset

even though it has been purchased by

a third party unless the third party

acquired the property for value and in

good faith and the property was not

registrable (land, aeroplanes, ships are

all registrable).

• It is not possible either in civil or

criminal proceedings to pursue a

tracing claim against an asset which

has been purchased with the money

from the fraud.

• It is possible, but very difficult, to

pierce the corporate veil in civil

proceedings. In criminal proceedings

the District Attorney has a number of

special provisions to pierce the

corporate veil. In these circumstances,

persons within a company or persons

outside the company but who control

those who committed the crime may

be regarded as the perpetrators.

General• “Gagging orders” have been available

since 1 January 2002. The petitioner files

a request with the court that handles or

has handled the case.

proceedings. The procedure governing

civil and criminal orders is virtually

the same. In civil law they are known

as “interim orders”, and are available

before civil proceedings are issued in

which case proceedings must be filed

within 2 weeks. In criminal proceedings

they are only available after charges

have been filed.

• Application always made without

notice to the defendant.

• A claimant must show that he has a

claim and that a freezing order is

necessary to enable him to enforce

any judgment.

• An order may be conditional on the

claimant giving a deposit to secure

possible claims from the defendant

arising from the freezing order.

• An order must specify the method of

securing the claim, such as:

- seizing debts due to the defendant

(for example salaries) or

other assets;

- granting a charge over the

defendant's property; and

- preventing the defendant from

selling or encumbering property if

such property is not registered.

• A defendant is not permitted to use

monies which are frozen to meet his

living expenses and/or legal fees.

However, assets which are necessary

for the defendant's financial survival

(for example, tools of his trade) are

usually excluded from the order. He is

also permitted to pay employees'

wages from frozen monies, in priority

to other claims.

• An order does not provide the claimant

with any proprietary rights over the

defendant's assets.

• An order only secures assets specifically

identified in the order and up to the

value of the claim. It would not usually

cover assets owned by the defendant

which are outside the jurisdiction

without an order from the relevant

foreign Court.

• An order does not require the defendant

to disclose information regarding his

assets to the claimant.

• An order can bind third parties, for

example banks holding monies which

are subject to the freezing order.

Order will also freeze monies

subsequently paid into the account.

• Search is carried out by the Public

Prosecutor or the Police and may, in

cases of urgency, be conducted without

an order. Before the search commences

the respondent must be informed of

the purpose of the search.

Tracing orders• It is possible to make a claim against

a party not directly linked with the

fraud but who holds/controls the

proceeds of the fraud (a proprietary

claim similar to that in English law),

usually by way of separate proceed-

ings. The claimant must simply show

an infringement of ownership (i.e.

there is no requirement to show

“fault” or “lack of good faith” on the

part of the party in possession of the

asset) – although a defence is available

if a person has held the moveable

asset for three years in good faith.

This type of claim may only be made

when the asset is a tangible one.

Tracing claims cannot be made against

the proceeds of an asset, unless there

has been unjust enrichment.

General• No power to prevent disclosure of any

freezing order to the defendant or

third parties.

• Third parties who fail to comply with

a freezing order are liable to a fine

and/or damages.

• There are no pecuniary sanctions

for non-compliance with a search

order, although in some cases, non-

compliance may constitute a crime.

Poland

proceedings only after proceedings

have been commenced (with the

exception of a landlord's claim for

recovery of rent).

• Generally obtained without notice to

the defendant except for a “judicial

freezing order”, this being an order

obtained by the parties to litigation

(or their creditors) over the goods

forming the subject of the litigation.

• A claimant must show the existence

of a claim and a risk of dissipation of

assets if the order is not granted.

• A claimant must identify as precisely as

possible the assets which are to be

frozen; he may also ask the court to

order public authorities or the defendant

to disclose details of further assets.

• An order does not cover assets necessary

for the defendant and his family to

earn a living. If the defendant is a

corporate entity all its assets are frozen.

• A defendant is permitted to use his

own money to pay living expenses

and/or legal fees.

• A claimant does not obtain proprietary

rights over the frozen assets; usually

at the end of the proceedings the

assets are sold by auction.

• A special type of order can be obtained

which freezes the defendant’s bank

accounts in which case a third party

(the bank) may be obliged to pay the

debt (i.e. monies in the account)

direct to the claimant.

Search orders• Only available in criminal proceedings

in the form of search warrants issued

by the Public Prosecutor (prior to

proceedings) or the Court vested with

the case, and only enforceable by

the Police.

• Only available in serious cases, for

example the enforcement of an

imprisonment warrant or a Court

decision, to prevent danger to a

person’s life, physical integrity or

estate and to protect national security

or public order etc.

• In certain civil cases a judge has a

power to search a relevant site in

order to gain a clearer overview of the

case, in this situation prior notice

must be given to the parties so that

they can be present.

Tracing orders• A claimant can pursue proceedings

against a third party who has received

property belonging to the claimant and

who is not directly involved in the fraud.

• A third party purchaser of goods

cannot raise a defence that he has

acquired the property in good faith if

the property was fraudulently obtained

by the seller.

• The claim can only be to recover the

direct proceeds of the fraud and not

assets purchased with such proceeds.

Such assets can, however, be subject

to special seizure or freezing orders.

• It is often possible to obtain an order

against not only a company but its

members and directors, ie to pierce

the corporate veil.

General• “Gagging orders” are not

generally possible.

• Non-compliance with any criminal or

civil order is a criminal offence and

penalties can include imprisonment

(up to three years) and/or a fine. Such

penalties can be imposed against third

parties bound by the order.

Romania

proceedings until judgment is rendered.

• May be obtained prior to the issue of

court proceedings, though it will

require the deposit with the court of

the equivalent amount of the sum

which is being requested to be “frozen”.

• In civil cases can be used for payment,

proprietary and repossession claims.

• A claimant must show the existence of

the claim and must demonstrate that

his chances to enforce the judgment

(to recover the debt) will diminish

significantly if the order is not granted

or the judgment against the defendant

could not be satisfied without the

freezing order.

• An order does not cover certain assets

of individual defendants and their

families necessary to earn a living. All

assets of a legal entity may be frozen

including tangible, intangible, movable

or immovable property and assets

located abroad. Note, however, the lack

of international treaties dealing with the

mutual recognition of court awards.

• Defendant’s bank accounts and

securities may be garnished.

• Orders are obtained without notice to

the proposed defendant based on

claimant’s motion. Such motions

generally are considered by the court

within one day after the filing.

• A claimant will be liable for any

damages caused by the order to the

defendant and third parties if the

judgment is not in his favour.

• May entitle the claimant to have all

assets of which it is aware attached by

a further court order.

• Attachment does not entitle the

claimant to realise the value of the

assets by way of sale. Realisation will

be by way of a sale at public auction

following a full trial.

• Disclosure not ordered as part of the

award of a preliminary injunction.

• Order will bind third parties.

• Relief available preventing or restricting

sale or disposal of assets by the proposed

defendant or a third party in possession.

Search orders• In civil proceedings, search orders can

only be obtained for the purpose of

enforcing a final judgment or a

preliminary injunction.

• A court may require information from

any third parties (including

governmental authorities) for the

purposes of identifying assets prior

to issuing a preliminary injunction or

after final judgment.

• In criminal proceedings the searching

of residential premises requires a court

order, to conduct the search in other

premises the decision of an authorised

investigator is enough. Evidence

obtained from a search in criminal

proceedings may be used in adjacent

civil proceedings.

Tracing orders• In both civil and criminal proceedings,

a court order will be effective to trace

assets in the hands of third parties.

Disclosure• Available in civil proceedings.

• Each party presents its own evidence to

support its case at trial. At the court’s

Russia

discretion, a party may be required to

give oral testimony at trial.

General• During criminal proceedings, an

application for civil proceedings may

be lodged and the two proceedings

can run concurrently. Moreover,

during/after the criminal proceedings

the Public Prosecutor can be required

to hand over any evidence necessary

for the civil proceedings.

• Company information can be

obtained from the Unified State

Register of Legal Entities: for example,

address, registration number and

place of registration.

• Property information is also available

from the Unified State Register of

Immovable Property and Transactions

with Immovable Property: for example,

the identity of the owner of a particular

item of immovable property (including

land and buildings), whether there are

any outstanding security interests over

the same and a transaction history.

• Information obtained illegally is

not admissible.

• Information held by advocates

is confidential.

• Individuals are not required to

provide any evidence which would

incriminate themselves.

• Spouses and close family may also

refuse to give evidence.

Freezing orders• A pursuer (claimant) in an action for a

payment can seek a freezing order

either in the form of an “arrestment

on the dependence” or an “inhibition

on the dependence”.

• An arrestment on the dependence can

be easily obtained with little risk to

the pursuer if good cause can be

shown. It effectively “freezes” those

of the defender’s moveable assets

(both money and other items) which

are, in the hands of third parties on

whom the order is served who are

subject to the jurisdiction of the

Scottish courts and have a duty to

account to the defender.

• The arrestment operates as valid

security for the sum sued for, the

interest craved thereon and the

expenses of the action.

• An inhibition on the dependence can

be sought to prevent the defender

from dealing with his heritable (real)

property to the pursuer’s prejudice

pending the disposal of an action. For

example, an inhibition will prevent the

defender from selling his real estate

without the consent of the pursuer.

Search orders• An order under Section 1 of the

Administration of Justice (Scotland)

Act 1972 may permit a Commissioner

appointed by the Court to enter

premises for the purposes of preserving,

copying and removing specified items

and documents or categories of items

which are reasonably required in

connection with intended or ongoing

civil litigation. The address of the

premises, and the person who was

believed to hold the items and/or

documents in question must be given

in the application for the order.

Criminal proceedings• Section 10 Law Reform (Miscellaneous

Provisions) Act 1968 - subsisting criminal

convictions will be admissible in civil

proceedings where it is necessary to

prove their existence.

• It is possible to ask the Court to have

civil proceedings sisted (frozen) if there

are criminal proceedings relating to

the same circumstances.

• An order under Section 1 of the

Administration of Justice (Scotland)

Act 1972 must not be served at the

same time as a search warrant granted

in the course of a criminal investigation.

Disclosure• It is possible to obtain disclosure of

documents in the hands of a potential

opponent or a third party prior to

raising proceedings, by applying for an

order under the Administration of Justice

(Scotland) Act 1972 (either before or

after commencement of the action).

• Under such an order, the court may

order the inspection, photographing,

sampling, preservation, custody and

detention of documents and other

property (including land).

• The Court may order any person to

disclose information regarding the

identity of any person who might be a

witness in civil proceedings.

• Before making an order, the Court must

be satisfied that the applicant is already

able to state a prima facie case.

Scotland

• The application may be granted in the

absence of the respondent where the

documents (i) are essential to the

applicant’s case and (ii) are at risk of

destruction or concealment.

• It is open to the court granting the order

to attach such conditions to it as it sees

fit. The order will generally be granted

if a prima facie case is stated subject to

the applicant giving an undertaking in

damages and an undertaking not to use

the evidence recovered for purposes

other than the intended litigation. The

applicant also undertakes to commence

the main litigation within a reasonable

period if he decides to litigate.

• Recovery of documents (from the other

party or from third parties) after the

commencement of an action is obtained

by way of a commission and diligence

for recovery of documents. This is

allowed in order that the court may

be put in possession of documentary

evidence bearing upon the issues of

fact which have to be determined.

• The documents are made available by

order upon the “havers”, who are the

possessors of the documents, whether

party to the cause or not. An additional

procedure allows voluntary compliance

with the order, failing which a

commissioner may be appointed with

authority to require a waiver to appear

before him and to bring with him all

relevant documents in his possession.

• The Court will not grant authority for

the recovery of any document sought

unless it can be demonstrated that the

document has some relevance to the

depending case. The court will not

allow a “fishing expedition”.

• The call for documents must specify the

document or group of documents and

only in very exceptional circumstances

will a general call be allowed.

• Where fraud is an issue, the court

generally admits recovery which may

clear up what is likely to be obscure

or hidden.

• Documents and real evidence must be

lodged in the court at the time when

they are to be founded upon.

• Generally, there is no obligation to

disclose documents to the other party

or to disclose those which assist the

other party’s case in the absence of a

court order.

• There is no rule that the documents

sought to be recovered should be

admissible in evidence, but the question

of their admissibility may be raised

and decided at proof when a party

seeks to use them as evidence.

General• Solicitor/client communications are

privileged. This is superseded only

where fraud or some other illegal act

is alleged against a party and where

his legal adviser has been directly

concerned in the carrying out of the

transaction which is the subject matter

of the inquiry.

• Documents prepared in contemplation

of litigation are generally privileged.

Contemporaneous accident reports

and eyewitness accounts do not fall

within the scope of this privilege and

are generally discloseable.

• Searches of information filed at

Companies House, the Land Register,

the Register of Sasines, the Books

of Council and Session and the

Personal Register are easily

obtained at low cost.

Freezing orders• Available in civil and criminal

proceedings.

• The magistrate may order the retention

of the defendant’s assets during the trial,

to safeguard the efficacy of a future

judgment. In civil proceedings, a petition

from the claimant is necessary, and the

judge may not issue a freezing order

that is more draconian than the one

requested. In criminal proceedings, no

petition is necessary.

• The subject of the order may retain his

necessary clothing, furniture, books, tools

needed for his work, food, and money

needed for his and his family’s livelihood.

There is a scale determining how much of

the defendant’s salary may be retained.

• The claimant has a preferential right

to the assets retained by the court,

except when a judgment establishes

that a third party has a prior right.

Other creditors may proceed against

the remaining assets when the claimant

has been paid off.

Search orders• Not available in civil proceedings.

• Criminal proceedings: if necessary,

the examining magistrate may make

an order allowing entry into private

domiciles and the requisitioning of

private correspondence if necessary.

The magistrate will require very strong

justification for the request before

making an order which breaches an

individual’s right to privacy.

Tracing orders• An action may be brought against the

current owner of assets which were

obtained by fraud, provided that the

owner did not purchase them in good

faith, in which case he will be protected.

Similarly, assets obtained with

fraudulently obtained money may be

the subject of an action, if the buyer

knew that the money was obtained

by fraud.

Disclosure • In civil proceedings any party may

request disclosure from a non-party.

The judge will make an order for

disclosure if it appears relevant to his

decision. The judge may also require

the non-parties to give oral evidence

about the information they hold in

order for the court to decide whether

disclosure is necessary.

• The claimant may request the defendant

to disclose any documents which form

part of the basis of his claim. If the

defendant does not comply with the

request, the claimant may apply for an

order of the court, giving reasons why

the disclosure is necessary. The defendant

has a similar right in a counterclaim.

• In criminal proceedings any person can

be required to disclose documents which

the examining magistrate considers are

important for the case. The magistrate

may order the disclosure of private

correspondence and other documents;

the fundamental right to privacy will

be overridden when he considers that

the information is absolutely necessary

to give judgment.

• Each party must produce all the

documents and other evidence which

support its case. These documents are

filed with the court when the parties

file their claim or defence; the general

practice of exchange with the other side

of all the documents on which a party

intends to rely is not part of Spanish

procedure. However, each party may

request from any of the other parties

the disclosure of documents which are

important to the case. If this is refused,

and the party urgently needs to see a

document held by the other side before

the trial begins, he may request an

injunction from the court.

• If a party is unable to bring a document

to the court, the party must indicate

where the evidence is situated, and

the judge will require it to be produced

by resolution of the court.

General• The Land Register and Companies

Register are public, and anyone with

a legitimate interest may obtain

warrants of their entries. The Land

Register contains details of the

ownership of land, mortgages and so

on, while the Mercantile (Companies)

Register has information on a company’s

constitution, date of incorporation

and management.

• A defendant has the right not to

say anything that would

incriminate himself.

• There are lower punishments for

persons who do not co-operate with

the prosecution of a crime if they are

protecting their close relatives.

• Information held by banks and

lawyers in relation to their clients is

confidential, and the court will only

override the duty to protect

important legal rights, and when

disclosure is the only possible way for

the magistrate to reach a decision.

• Information obtained illegally is

generally void and not admissible.

proceedings.

• Can be obtained at any time including

before proceedings are commenced,

but in civil cases proceedings must be

instituted within 10 days of service of

the freezing order. The usual time

period between filing a request for a

freezing order and the order being

obtained is 1-2 days.

• Is always obtained without notice to

the proposed defendant. It is then

served on the defendant.

• To obtain an order the claimant

must show:

- the existence of a claim;

- one of the following circumstances

(pursuant to Article 271 of the

Swiss Debt Enforcement and

Bankruptcy Law):

(a) the defendant has no fixed

domicile in Switzerland;

(b) the defendant is concealing his

assets, absconding or making

preparations to abscond so

as to evade fulfilment of

his obligations;

(c) the defendant is passing

through or belongs to the

category of persons who visits

fairs and markets, for claims

which by their nature must be

fulfilled at once;

(d) the defendant is not domiciled

in Switzerland, and none of the

other grounds for a freezing

order is fulfilled, provided the

claim has a sufficient connection

with Switzerland or is based on

an enforceable court judgment

or on a recognition of debt.

There is no clear definition of

“sufficient connection with

Switzerland” which is a question

of fact in each case. The mere

fact that the defendant owns

property in Switzerland, however,

would not be sufficient; and

(e) the creditor holds a provisional

or definitive certificate of

shortfall against the debtor.

- the existence of assets owned by

the defendant which are within the

jurisdiction. Details of the assets

must be specified in the order.

• The following assets can be frozen:

- assets legally owned by the defendant;

- assets belonging beneficially to the

defendant but which are held by a

third party, in which case the

defendant’s right as against the

third party is frozen;

- only assets within the jurisdiction.

• Following the making of the order the

defendant can appeal against the order

to “de-block” certain assets which he

requires to cover his living expenses

and/or to carry out his trade. Assets

cannot, however, be released to meet

the defendant’s legal expenses.

• The order does not provide the claimant

with any proprietary rights over the

defendant's assets. If, however, the

claimant succeeds in enforcement

proceedings, the assets are publicly

sold by the debt collection office and

the proceeds used to satisfy the

claimant's judgment.

• The defendant is not required to disclose

any further assets to the claimant which

are not specified in the order.

Switzerland

• Third parties served with the order

must provide precise information on

the existence and extent of the assets

belonging to the defendant and held

by them, provided that the claimant

has established the existence and

location of the assets. It is sufficient if

the claimant indicates the main domicile

of a bank which he believes is holding

the defendant's funds. The bank has

to indicate if the defendant has a bank

account with a branch of the bank, if

served with the order. In practice banks

only provide such information over

the telephone.

Search orders• Only available in criminal proceedings

upon application to the District Attorney.

Tracing orders• No such orders available in

civil proceedings.

• In criminal proceedings, the District

Attorney can freeze assets which were

purchased with the proceeds of fraud

or other criminal activity. This is the

case even if the assets are owned by a

third party unless the third party

acquired the asset in good faith and

for value or if the freezing of the asset

would constitute an undue hardship

on the third party.

• In certain circumstances, such frozen

assets can be used to satisfy the

claims of the victims of the fraud.

General• In criminal matters the District

Attorney frequently orders a bank or

third party served with an order not

to disclose the order’s existence to

the defendant.

• Penalties for non-compliance with

freezing orders include imprisonment

and/or fines. This extends to third

parties served with freezing orders.

• Medical doctors, lawyers and clergymen

in a “confidential relationship” are not

obliged to disclose information and are

under strict secrecy obligations which

will be lifted by the supervisory authority

in exceptional circumstances only.

The summary below reflects the position

in relation to New York law only as each

state has its own procedure and laws.

Freezing orders• Available in civil and criminal

proceedings (known as

“provisional remedies”).

• Order of attachment enables a

claimant to seize the defendant’s

property. Court directs the sheriff to

take constructive (sometimes actual)

possession of the property. Can be

granted prior to proceedings

being commenced.

• To obtain attachment order the

claimant must show:

- an underlying cause of action;

- it is probable that the claimant will

succeed on the merits of its case;

- one or more grounds for attachment

exist. The grounds are as follows:

(i) the defendant is not domiciled

within the State or is a foreign

corporation not qualified to do

business in the State;

(ii) the defendant resides or is

domiciled in the State and

cannot be personally served

despite diligent efforts to do so;

(iii) the defendant, with intent to

defraud his creditors or frustrate

the enforcement of a judgment

that might be made in the

claimant’s favour, has assigned,

disposed of, encumbered or

secreted the property, or removed

it from the State or is about to

do so;

(iv) the cause of action is based on

a judgment or order of a U.S.

Court or any other Court that

is recognised in New York

- the claim exceeds any known

counterclaims by the defendant

against the claimant.

• Preliminary attachment orders are

usually made without notice. However,

in order to make the attachment order

permanent notice must be given within

a prescribed time so that the order can

be confirmed by the Court. If the order

is based on grounds (i) – (iv) the order

must be confirmed within 10 days of

the order being levied by the Sheriff. If

not based on one of these grounds the

order must be confirmed within 5 days.

Failure to comply with these time limits

renders the order void.

• An attachment order must be directed

to the Sheriff of any County, or the

City of New York, where any property

in which the defendant has an interest

is located. It is also possible in some

cases to obtain a general order freezing

all assets up to a certain value, although

such orders are rare.

• A sheriff serves the attachment order

on the holder of the property (includes

third parties holding assets to which

the defendant is entitled e.g. garnishees)

this prevents the third party from

disposing of the defendant’s property

until further order.

• Preliminary injunctions and temporary

restraining orders are also available in

both criminal and civil matters, only

after proceedings have commenced

(although may be obtained at the

commencement of the proceedings).

• A claimant must give an undertaking in

damages in relation to a preliminary

United States(New York)

injunction, in a sum fixed by the Court.

This must usually be supported by a

bond (also applies to attachment orders).

• A preliminary injunction may be

granted where it appears that the

defendant is threatening, or is about

to carry out an act in violation of, the

claimant’s rights in relation to the

subject matter of the action, so as to

make it likely that any judgment will

not be satisfied.

• A preliminary injunction can only be

obtained on notice to the defendant.

• A temporary restraining order may be

granted pending a hearing for a

preliminary injunction when it appears

that immediate and irreparable injury,

loss or damage will result unless the

defendant is restrained before the

hearing can be held. By its nature it

may be granted without notice to

the defendant.

• An attachment order does not attach

to funds held in trust for the defendant

where the trust was created by, or the

funds emanated from, someone other

than the defendant. Also exempt from

the order is 90% of a defendant’s

income earned within sixty days of, or

any time after, the attachment order is

delivered to the Sheriff.

• A claimant does not acquire any rights

over the defendant’s assets until

judgment has been obtained. The

judgment may then be satisfied out of

the attached assets.

• An attachment order can theoretically

apply to assets outside the US. In

relation to other US jurisdictions the

claimant must file the order in a Court

where the property is located so that

the Sheriff in that jurisdiction can

enforce the order.

• Normally, there is no requirement on a

defendant to disclose further assets. In

exceptional circumstances the

claimant can obtain such an order

where proceedings are already on foot.

Search orders• Only available in civil proceedings in

exceptional cases – not generally used.

• In criminal proceedings searches of

property and documents are conducted

by the prosecutor’s office and the

police. In order to obtain a search

order, a prosecutor must show that

there exists probable cause that the

police will find relevant evidence to a

crime within the specified premises.

• The prosecutor may also obtain records,

documents or other evidence from

third parties that are relevant to the

criminal investigation.

• New York law recognises the concept

of constructive trusts.

• Material obtained will first be used in

any criminal proceedings, and in some

cases civil proceedings will be stayed

pending the outcome of the parallel

Tracing orders• It is possible for the claimant to bring a

claim against a person who has received

property from the fraudster if the

transferee has reason to know that the

transfer was made for the purpose of

frustrating the transferor’s creditors.

• It is possible to trace the proceeds of

fraud into assets purchased with such

proceeds, following judgment.

General• It can be contempt of Court to refuse

to comply with any order.

CMS is a major transnational legal and taxservices organisation with 1,800 lawyersand a total staff in excess of 3,500. CMShas been created to offer clients seamlessservices across Europe and is the vehicleto full integration of member firms. Themembers of CMS are:

CMS Adonnino Ascoli en Cavasola ScamoniCMS Bureau Francis LefebvreCMS Cameron McKennaCMS Derks Star BusmannCMS von Erlach Klainguti Stettler WilleCMS Hasche SigleCMS LexcelisCMS Strommer Reich-Rohrwig Karasek Hainz

CMS offices and associated offices worldwide: Berlin, Brussels, London,Paris, Rome, Utrecht, Vienna, Zürich,Aberdeen, Amsterdam, Arnhem, Belgrade, Bristol, Bucharest, Budapest,

Beunos Aires, Casablanca, Chemnitz,Dresden, Düsseldorf, Frankfurt, Hamburg,Hilversum, Hong Kong, Leipzig, Lyon,Madrid, Milan, Montevideo, Moscow,Munich, New York, Prague, Rio de Janeiro,

Stuttgart, Toronto, Warsaw andWashington DC.

www.cmslegal.com

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