My gut feeling: Germany is a jurisdiction where it is notoriously difficult to get a freezing order even in fraud cases. I do not have any empirical data to back this up, and can not think about a methodology to test my hypothesis. But it appears to be supported by a recent case in the Frankfurt Court of Appeals (Oberlandesgericht).
In the Frankfurt case, an employer was seeking to freeze assets of a former fraudulent employee. The employee had accepted bribes and caused substantial damage to his employer. The applicant employer established the facts by presenting transcripts of police interrogations. The court did not question the facts, and agreed that the employer did have a good case to claim damages. Therefore, the first requirement that a party has to show in order to get a freezing order, namely the existence of a claim (Arrestanspruch) was satisfied.
Nevertheless, the freezing order was denied. In the court’s opinion, the second requirement, namely a risk that a subsequent judgment could not be enforced because assets had in the meantime been dissipated with or other actions have been taken to make enforcement difficult or impossible (Arrestgrund) was not established.
The court held that the criminal act which had caused the damages was not enough in itself to satisfy the Arrestgrund requirement. The applicant was not able to show any additional facts that suggested, in the court’s mind, a real risk to future enforcement. The former employee and his family resided abroad and apparently in a country where reciprocity with Germany does not exist. In addition, the applicant had, according to his own statements to the police, most of his assets outside the jurisdiction. – By the way: The names of the countries involved have been edited out in the published version of the judgment; overzealous data protection, in my view …
Still, this was not enough to persuade the court to grant a freezing order. With respect to assets outside Germany, the court held that all assets which the former employee purported to have were located in jurisdictions where the reciprocity test was met (Sec. 917 para.2 ZPO). With respect to the place of residence, the applicant had not shown that enforcement in that jurisdiction was necessary.
So what, as Miles Davis famously asked? If you consider seeking a freezing order in a fraud related matter, not only the facts but also the “forward looking statements” regarding future risks must be very carefully researched, established and supported by evidence, as the threshold that must be met is quite high. In the alternative, one might consider making the application in a jurisdiction more favourable to freezing orders. In a second step, one could then seek recognition of the foreign freezing order in Germany– of which more in a future post.
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