Among the most powerful tools in English civil litigation, freezing injunctions allow parties to restrict the use of assets in order to prevent dissipation and preserve them pending enforcement.
Two recent Court of Appeal decisions—Lakatamia Shipping Co Ltd v Su [2025] EWCA Civ 1389 and Mold Investments Ltd v Holloway & Others [2025] EWCA Civ 986—offer critical guidance on the extraterritorial application of freezing injunctions, and the remit of the court’s case management powers. Respectively, they clarify:
- The liability of foreign third parties who assist in the breach of a freezing order, and
- The correct procedural approach for applications to discharge such injunctions, in particular whether cross-examination should be permitted pre-trial.
This article analyses these judgments and their implications.
- Liability for Assisting Breaches of Freezing Orders
Background
In Lakatamia, the claimant had spent nearly a decade attempting to enforce English High Court judgments totalling over US$60 million against Mr Su. Despite repeated enforcement efforts, the judgment debt remained largely unpaid. Mr Su had already been committed to prison for multiple breaches of a worldwide freezing order, including failing to disclose assets and dissipating proceeds from the sale of two Monaco villas.
As well as against Mr Su, this claim was brought against third parties alleged to have assisted in dissipating the proceeds of the property sales, including on the basis of unlawful means conspiracy. This included a Monegasque lawyer, Mr Zabaldano, who transferred nearly €27 million from his firm’s client account on instructions from Mr Chang, a director of the holding company, Cresta, which owned the villas. Importantly, Mr Zabaldano accepted he had seen the freezing order and was aware of the English judgments, but argued that he was protected by the “Babanaft proviso” (derived from Babanaft International Co SA v Bassatne [1990] Ch 13 and set out at paragraph 20(1) of the Model Order for Freezing Injunctions), which states that (subject to certain exceptions) “the terms of this order do not affect or concern anyone outside the jurisdiction of this court.”
A claim was also brought against Mr Zabaldano for inducing a breach of judgment (the so-called Marex tort, derived from Marex Financial Ltd v Sevilleja Garcia [2017] EWHC 918 (Comm) [2017] 4 WLR 105). This was dismissed at first instance on the basis that Mr Zabaldano honestly believed that he was entitled and obliged to transfer the funds in question. However, although appealed, this was not addressed by the Court of Appeal given its other findings, as set out below.
High Court decision
The High Court (Simon Colton KC, sitting as a Deputy High Court judge) found that Mr Zabaldano knew that Cresta was beneficially owned by Mr Su and therefore that the sale of the properties would be dealing with the frozen assets. However, relying upon the Babanaft proviso, the Court found he was not liable for unlawful means conspiracy.
Court of Appeal decision
The Court of Appeal (Males LJ, with whom Sir Julian Flaux and Falk LJ agreed) unanimously overturned the High Court’s ruling and held Mr Zabaldano liable for unlawful means conspiracy, holding that the Babanaft proviso does not shield foreign parties from civil liability for assisting breaches of freezing orders. While the proviso limits contempt proceedings, it does not prevent claims for damages arising from unlawful means conspiracy.
The Court emphasised that anyone with notice of an English freezing order risks liability—even if acting abroad and in compliance with local law. It applied the Court of Appeal and Supreme Court decisions in JSC BTA Bank v Khrapunov ([2017] EWCA Civ 40; [2018] UKSC 19) and held that the High Court had been wrong to distinguish this case from those leading authorities.
Legal analysis
The Court reaffirmed the elements of unlawful means conspiracy as summarised by Cockerill J in FM Capital Partners Ltd v Marino [2018] EWHC 1768 (Comm), including:
- A combination or understanding between two or more parties;
- An intent to injure, which need not be the sole or predominant purpose and can be inferred;
- Concerted action using unlawful means; and
- Loss caused to the subject of the conspiracy.
Mr Zabaldano argued that he had acted lawfully under Monegasque law, but the Court found he was nevertheless liable for unlawful means conspiracy. The overall scheme of procuring the transfer of funds in breach of the freezing order involved unlawful conduct under English law, and Mr Zabaldano had assisted Mr Su in that breach.
The Court also took the unusual step of overturning a factual finding of the High Court in fixing Mr Chang with knowledge of the judgment debt and the freezing order. It noted that turning a blind eye to obvious facts—such as the existence of a freezing order—can satisfy the knowledge requirement.
Permission to appeal to the Supreme Court was denied on 17 December 2025 on the basis that the application did not raise an arguable point of law or a point of law of general public importance.
Key takeaways
- Lawyers, fiduciaries, and intermediaries outside England and Wales must exercise extreme caution when handling assets subject to English freezing orders, particularly when they are on notice of it.
- Neither acting in accordance with client instructions nor local law will be a valid defence for a professional adviser facing a claim for unlawful means conspiracy.
- Discharging Freezing Injunctions: When Can Facts Be Tested Pre-Trial?
Background
In Mold Investments Ltd v Holloway & Others, the claimant (“Mold”), operates a quarry in North Wales. Mold alleged that two former directors (the Defendants) permitted illegal waste dumping, exposing the company to fines exceeding £50 million. After initially suing the former directors, Mold added further defendants accused of dishonestly assisting in these breaches.
Mold obtained a freezing order in August 2023, supported by an affidavit from Mr Hazlehurst. Mr Hazlehurst’s affidavit stated that he knew the Defendants and had participated in the unlawful dumping in the past. Upon learning of Mold’s intention to sue the Defendants, Mr Hazlehurst claimed to have tipped off the defendants by Whatsapp and exhibited messages which suggested (in some colourful language) that they intended to dissipate their assets. The Defendants denied knowing Mr Hazlehurst or sending the alleged messages which they claimed were forged, and accused Mold of conspiring to pervert the course of justice.
Both Defendants applied to discharge the freezing order on the basis that the evidence in support was false. They sought cross-examination of the allegedly dishonest witnesses and experts.
High Court decision
In an oral judgment, the High Court (Richard Smith J) ordered a five-day interim hearing (plus one day’s judicial pre-reading) to determine the discharge applications. This included directions for the cross-examination of 12 factual witnesses and four expert witnesses. The Judge concluded that, although cross-examination on interim applications is reserved for very exceptional cases, this was one such case because (i) the evidential basis for the freezing order was certain Whatsapp messages, the authenticity of which had been disputed from the start of the case, and (ii) the claimant’s allegations in this particular case were exceptional and had also been disputed from the outset, culminating in allegations of fraud on the court. He also opined that the allegations were “straightforward and discrete” and with “limited overlap with the substantive issues”.
Court of Appeal decision
Mold’s appeal was based on three grounds:
- The Judge erred in law in ordering the set-aside application to be determined by means of a hearing with oral evidence in advance of trial because this is contrary to the established practice of the court.
- Even if it was open to the judge to order such a satellite trial, he was wrong to do so on the facts of this case given the overlap between the issues arising on the satellite and substantive trials, the undesirability of trying relevant issues of fact in advance of the substantive trial, the absence of exceptional circumstances, and the impact on third parties. In so doing he failed to take into account all relevant considerations and took into account irrelevant matters, thereby coming to a decision that no reasonable tribunal could properly reach.
- The judge erred in law in failing to give due regard to the procedural unfairness that would arise from the absence of statements of case or disclosure, and the lack of restrictions on the specific topics on which cross-examination would be permitted.
The Court of Appeal (Arnold LJ, Nugee LJ and Snowden LJ) allowed the appeal on ground 2 but not ground 1. Ground 3 was not considered separately, although the issues it raises were considered under ground 2.
Generally, it noted that the test to be applied by the court was essentially based on the Judge’s case management discretion, quoting Lewison LJ in Broughton v Kop Football (Cayman) Ltd [2012] EWCA Civ 1743 at [51] (cited with approval by Lord Neuberger in Global Torch Ltd v Apex Global Management Ltd (No 2) [2014] UKSC 64, [2014] 1 WLR 4495 at [13]):
“Case management decisions are discretionary decisions. They often involve an attempt to find the least worst solution where parties have diametrically opposed interests. The discretion involved is entrusted to the first instance judge. An appellate court does not exercise the discretion for itself. It can interfere with the exercise of the discretion by a first instance judge where he has misdirected himself in law, has failed to take relevant factors into account, has taken into account irrelevant factors or has come to a decision that is plainly wrong in the sense of being outside the generous ambit where reasonable decision makers may disagree. So the question is not whether we would have made the same decisions as the judge. The question is whether the judge’s decision was wrong in the sense that I have explained.”
On ground 1, the Lord Justices dismissed it for different reasons:
- Arnold LJ and Snowden LJ held that, although there was a general principle (drawn from key cases including Derby & Co Ltd v Weldon [1990] Ch 48 and Kazakhstan Kagazy plc v Arip [2014] EWCA Civ 381) that the appropriate way to determine disputed factual issues is at trial, not at an interlocutory hearing, this was not absolute or inflexible. There may be cases in which, even if a fact critical to the obtaining of a freezing order or other interim relief is disputed so as to require cross-examination, it can be determined in advance of trial in a manner which is both proportionate and avoids the risks of taking that course.
- Nugee LJ held that it was not part of the Court’s function on an application for a freezing injunction to seek to resolve disputed issues of fact, whether they go to the merits of the substantive claim or to the risk of dissipation. However, (i) this case is not governed by that principle, given it is effectively an application to discharge the freezing order for material non-disclosure or deceiving the court, and (ii) in cases where written evidence is not sufficient to decide where the truth lies, the Court can only safely do so by hearing oral evidence and cross-examination – but that is subject to the question of whether that should happen at the interim stage or at trial, which in turn is likely to hinge on the overlap with the issues for trial.
On ground 2, the Court found that the Judge erred in (i) failing to address Mold’s argument that there should be one trial rather than two, (ii) ordering the satellite trial before further particulars of allegations against Mold had been particularised, (iii) failing to give reasons for his judgment that there was limited overlap between the issues to be addressed in the satellite trial and the substantive issues, and (iv) making a decision inconsistent with an earlier judgment that a mini-trial was inappropriate, where there had been no new developments between the two judgments.
- Conclusions
These Judgments highlight the complex and evolving issues freezing orders give rise to, both substantive and procedural, and reinforce the English courts’ commitment to preserving assets and ensuring procedural fairness. Specifically (i) non-parties or respondents based abroad can face civil liability for assisting in the breach of an English freezing order, even if acting in compliance with local law; and (ii) there is no principle absolutely preventing interim cross-examination of witnesses and experts, but it will only be ordered in exceptional circumstances. Practitioners acting for any party in a multi-jurisdictional fraud dispute battle must add these precedents to the already long list of strategic considerations and potential tools in their armouries.
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