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Orders relating to asset recovery, preservation and confiscation

FCRO Subsection: 
Editorial Staff

Courts have long had the power to make Orders in relation to assets, usually to prevent their disposal and/or destruction. They are known by a variety of names, and sometimes names mean different things in different jurisdictions.

Asset Protection

- this term is most often used to refer to measures by the owner of assets to put them beyond the reach of courts or governments. For example, by placing legal ownership in a trust in another jurisdiction created by lawyers and with lawyers as trustees. There has long been an entire industry of lawyers, accountants, bankers and others who have created legal structures for the specific purpose of putting assets out of easy sight and reach of, for example, spouses in a divorce, commercial creditor and, of course, tax authorities.

However, the term "asset protection order" is sometimes used to refer to an Order made by a Court or a "competent authority" (which means a government department or agency with power to make Administrative Orders) to protect assets against disposal. This type of Order is more usually known as a "freezing order."

Asset Recovery Orders

This is a generic term that covers all the various types of Order made here. In fact, the Order is rarely about "recovery" of assets. The term is functionally inaccurate. It is used to mean any order by which a person (who may or may not be a party to the Action) is Ordered to surrender property in what is actually an Order for confiscation. The surrender may be the physical surrender or surrender of legal rights. The terms appears to be a contortion of the expression "to recover a debt."

Freezing Orders

In civil litigation

A Freezing Order is a user-friendly name for what used to be known as a "Mareva Injunction" after the name of a case in the English High Court. ( Mareva Compania Naviera SA v International Bulkcarriers 1975 ) It is a Court Order that assets which are specified or which are members of an asset class defined in the Order must not be disposed of (physically or legally) or any action taken to hide them or to diminish their value.

In some countries, some government departments or agencies have authority to make an administrative (i.e. non-judicial) Order that assets be frozen.

In criminal proceedings

A government department or agency ("the state") may obtain, during criminal proceedings, an Order that is similar to the Freezing Order made in civil courts. When such an order is made, the burden of proof on prosecutors is the same as that in civil proceedings.

In the case of a freezing order, both physical and legal ownership remain with the Respondent or other party named in the Order.