The powerful Mareva or freezing injunction prevents a party from removing, spending, or dissipating funds in the course of litigation. It is issued to prevent a party (usually a prima facie fraudster) from depriving a creditor of the benefits of a final judgment. A claimant obtaining a freezing order enforces it primarily by serving it on persons and institutions that hold funds for the enjoined party: most commonly, banks, credit unions, and other financial institutions. A recent decision of the English Court of Appeal, Commissioners of Customs and Excise v. Barclays Bank Plc [2004] E.W.C.A. Civ. 1555, imposes potential liability on financial institutions that fail to freeze funds upon receipt of a freezing order issued against one of its customers.

type Financial Services Alert - March 2005