Review of Lakatamia and freezing orders
The Court of Appeal’s decision in Lakatamia Shipping Co Ltd v Su reinforces how English courts approach the enforcement of freezing orders, particularly in cross-border fraud cases.
While the foundational principles governing such orders remain unchanged, what has shifted is the function of these orders in practice. Rather than merely preserving assets, they now serve as central tools in proactive enforcement strategies. Once granted, they trigger investigative efforts into asset structures and place pressure on a wider network of actors—banks, advisers, intermediaries, and corporate entities—connected to those assets.
The Lakatamia case arose from long-running proceedings involving a worldwide freezing order and an unsatisfied judgment exceeding USD 60 million. Enforcement efforts uncovered substantial assets, including Monaco real estate beneficially owned by the defendant. Following sale, proceeds exceeding €65 million were realised. Despite knowledge of the freezing order and the judgment, a significant portion of the funds were transferred through a Monaco lawyer to another entity within the defendant’s network, placing them beyond reach prior to the English judgment being recognised locally. The key legal question was whether foreign third parties not directly bound by the order could nevertheless be civilly liable for participating in its breach. The Court of Appeal held that they could. It rejected earlier findings that the intermediary lacked sufficient knowledge and clarified that the Babanaft proviso—designed to limit contempt jurisdiction over foreign parties—does not shield them from civil liability.
The court drew a clear distinction between contempt and civil liability. While contempt is coercive and jurisdictionally limited, civil liability (e.g. for unlawful means conspiracy) arises where a third party knowingly assists in breaching the order. Knowledge of the order and the effect of the transaction was sufficient to establish liability, regardless of location or professional status.
The decision reinforces that freezing orders are especially effective if courts impose consequences for their evasion. It also signals that intermediaries can no longer rely on jurisdictional distance or formal non-party status to avoid exposure. For practitioners, the case underscores the need for careful drafting, strategic service on third parties, and consideration of civil claims as enforcement tools. Overall, Lakatamia strengthens the role of freezing orders as powerful mechanisms for real-world asset recovery in complex international disputes.
