English Court of Appeal clarifies threshold for freezing orders: how does this compare with Switzerland?

The English Court of Appeal clarified the meaning of “good arguable case” in applications for freezing orders (FOs) in Dos Santos v Unitel SA [2024], and held this should be replaced with “serious issue to be tried” going forward. 

English law 

The legal test for FOs in English law is: 

1. The applicant has a “good arguable case” on the merits; 
2. There is a real risk of dissipation of assets; and 
3. It is just and convenient in the circumstances to grant.

For worldwide FOs (WFOs), it must also be shown there are insufficient assets within the jurisdiction and there are grounds for believing that assets exist outside the jurisdiction. 

An English FO usually consists of an order for financial disclosure and an order not to dissipate assets as set out in the order. For WFOs, the order would not be limited to domestic assets. 

In Dos Santos, Unitel argued the applicable (lower) threshold is namely “a case which is more than barely capable of serious argument” but “not necessarily one which the judge believes to have a better than 50% chance of success” (The Niedersachsen [1983]).  

Conversely, Ms Dos Santos argued that the correct (higher) threshold was that the applicant must show they have the “better of the argument” compared to the respondent (Lakatima [2019]). This is the meaning of “good arguable case” in the merits test for determining jurisdiction. 

The Court of Appeal held:

1. The threshold established in Niedersachsen is the correct one. Following Lakatima would result in “mini trials”, which should be avoided; 
2. The phrase “good arguable case” should be confined to the merits test for jurisdiction gateways to avoid confusion; and 
3. The wording “serious issue to be tried” should be used for the merits test for FOs/WFOs.   

Swiss law 

Only domestic FOs (not WFOs) are an available remedy in Switzerland. The test is similar to the English “serious issue to be tried” test, if not with a slightly higher threshold:  

1. The creditor must allege and substantiate all facts justifying the freezing; and 
2. The debtor must allege and substantiate facts cancelling or preventing the order.

Relevant facts include evidence supporting the underlying claim, and the risk of assets being dissipated.  

A fact is deemed credible if the judge considers it probable following a plausible explanation and/or gains the impression from what is presented that the alleged facts actually exist, without having to rule out other possibilities – thereby avoiding “mini trials” as in the English test. 

Unlike an English FO, Swiss orders freeze an asset at source, e.g., blocking activity in a bank account, similar to a ‘proprietary order’ in England. However, an English FO may indirectly take this effect if an asset holder is notified of the FO – to do so would be assisting contempt of court, which is a criminal offence. 

A Swiss court is unlikely to enforce an English WFO, which may either prevent the order from being obtained in the first place or limit its practical effect if the targeted assets are located in Switzerland.