Meaning
A judicial injunction that freezes or detains the assets of a respondent before or during litigation to ensure the future enforcement of a judgment. Litigants apply for a preservation order when there is a risk that the opposing party will dissipate or hide property before the court reaches a final decision. The applicant must usually provide a financial guarantee to cover potential losses caused by an erroneous freeze.
Application Process
The petitioner submits a formal request specifying the target assets along with evidence of the underlying debt. Courts evaluate these petitions rapidly, often issuing a decision within forty-eight hours in urgent situations. Immediate execution of the order prevents the respondent from preempting the judicial action.
Guaranty Requirement
Applicants deposit cash or provide a letter of guarantee from a domestic financial institution to secure the application. This deposit protects the respondent from business disruption if the court later determines that the claim lacks merit. The court releases the guarantee only after the litigation concludes or the parties reach a settlement.
Release Condition
The frozen status terminates automatically after a statutory period unless the petitioner requests an extension. A respondent can also secure the release of the assets by providing an equivalent counter-guaranty to the court. This flexibility allows businesses to maintain operations while securing the plaintiff’s financial claims.
