Meaning
Temporary injunctions and relief orders issued by a court or arbitral tribunal secure the disputed property or funds of a counterparty during the pendency of a legal dispute. These asset preservation interim measures prevent a respondent from dissipating assets, transferring intellectual property or emptying bank accounts before a final judgment can be enforced. The boundary of these measures is limited to maintaining the status quo and they do not decide the underlying merits of the dispute.
Procedural Execution
Urgent applications for freezing orders are often filed ex parte to prevent the respondent from moving assets upon learning of the legal action. Once the court grants these asset preservation interim measures, the applicant must usually provide a financial undertaking to cover any damages the respondent might suffer if the claim ultimately fails. This balance of convenience test protects the respondent from abusive or speculative claims.
Strategic Protection
Securement of physical plant or intellectual property during a corporate exit depends heavily on the speed of obtaining these orders. When a joint venture partner attempts to unauthorizedly exploit proprietary technology, the asset preservation interim measures act as a shield to halt the transfer. This protection ensures that the value of the investment remains intact throughout the multi-year litigation process.
Jurisdictional Reach
Enforcement of these measures across borders requires coordination with local courts where the physical assets reside.
