Meaning
Court-ordered preservation of property intended to prevent the dissipation of assets before a final judgment or arbitral award. Parties request interim asset protection when there is a concrete risk that the respondent will hide or transfer funds during the litigation. The measure maintains the status quo of the financial position.
Preservation Measure
Property covered by the order includes bank accounts and real estate holdings. An application for interim asset protection requires a detailed list of the specific assets to be targeted by the court. Judges issue a ruling quickly to ensure the effectiveness of the freeze.
Judicial Discretion
Granting of the request depends on the likelihood of the claim succeeding and the urgency of the situation. Under the law governing interim asset protection the court must balance the rights of the claimant with the potential harm to the business operations of the defendant. Mistaken applications lead to liability for damages caused by the freeze.
Security Bond
Provision of a guarantee is mandatory for the applicant to cover the potential losses of the respondent. The value of the bond for interim asset protection often matches the value of the assets being frozen. Cash or a letter of guarantee from a domestic bank satisfy this requirement.
