Managing Sovereign Immunity Risks in State Owned Enterprise Supply Contracts
Neutral confirmed letters of credit and express waivers of execution immunity eliminate state enterprise default risks before cargo transit.
Prejudgment Attachment
Meaning
Procedural remedy secures assets of a defendant during the pendency of a lawsuit to ensure future satisfaction of a judgment. A plaintiff seeks prejudgment attachment when there is a risk that the defendant will hide or dissipate property before the trial ends. The court orders the freezing of bank accounts or the physical seizure of equipment until the case is resolved.
Security Interest
Creation of a temporary lien on the property prevents the owner from selling it to a third party. While the case proceeds, prejudgment attachment holds the value of the assets in a state of suspension for the benefit of the claimant. This tactical move increases the pressure on the defendant to reach a settlement.
Procedural Step
Application for this order requires a showing of a high probability of success on the merits of the case. The applicant must prove that the lack of prejudgment attachment would make a final judgment impossible to collect. Evidence of fraudulent intent or the imminent relocation of the assets is typically required to satisfy the judge.
Surety Bond
Protection for the defendant comes in the form of a financial guarantee posted by the plaintiff. To obtain the prejudgment attachment, the claimant must provide funds to cover any damages the defendant suffers if the lawsuit is eventually lost. This requirement ensures that the remedy is not used as a tool for harassment or unfair leverage in a commercial dispute.
The bond stays in place until the court discharges the order or the final verdict is delivered.