Timeline between Discovery of Corporate Misappropriation and Securing of Asset Freezing Orders

19 Assoc Prof Jamus Jerome Lim asked the Minister for Law (a) what is the average duration between discovery of corporate misappropriation exceeding $5 million and the securing of worldwide freezing orders; (b) whether the Government is concerned that the current civil procedure timeline allows sophisticated actors to dissipate assets; (c) what specific measures have been implemented to expedite ex-parte freezing applications involving cross-border transactions; and (d) whether the Ministry will introduce legislative amendments to lower the evidentiary threshold for proprietary injunctions in cases involving prima facie financial fraud.

Mr K Shanmugam: The question relates to civil disputes, usually between two commercial parties. The Courts have the power to grant injunctions prohibiting the disposal of assets, also referred to as freezing orders or Mareva injunctions. The Courts have described it as one of the law's "nuclear" weapons. The Government does not track the statistics on the average duration to secure a freezing order. These are within the remit of the Courts.

The grant of freezing orders is the subject of extensive and established case law developed over several decades in Singapore and elsewhere. As with many aspects of civil procedure, the case law has been developed by the Courts based on commercial needs and also takes reference from international jurisprudence.

The current civil procedure framework allows applicants to obtain an injunction ex parte, and quickly in urgent cases. The ability to obtain an order to freeze a party's assets around the world, based on limited evidence, can be abused. The Courts have developed a framework, including requiring appropriate evidence, before such freezing orders are given, to try and reduce the scope for abuse. An abuse of the process can have serious implications on legitimate businesses. Hence, the Courts seek to strike the right balance between providing for expediency in obtaining the order and ensuring that the Court is satisfied that such an order should be given – the Court has to be satisfied that there is basis for such an order to be given and with suitable safeguards in place. This is reflected in the law and procedural rules developed by the Courts in Singapore and across many jurisdictions.

While the current civil procedure framework does provide a process for parties to obtain a freezing order quickly, it may still be possible for unscrupulous persons to try and spirit assets away either before or even after a freezing order has been given. This is due to the differences in the laws of different countries, the nature of assets, which may vary and be in different places; and difficulties that applicants may have in establishing where a party's assets may be.

Implicit in the Member's question is the suggestion that the evidentiary threshold for obtaining such orders should be lowered. The Member can, perhaps, explain which aspects of the evidentiary threshold should be lowered and why he thinks the current balance the Courts have arrived at are wrong, so that we can better consider his suggestion. In any such exercise, it must be borne in mind that lowering the threshold may also widen the scope for abuse by applicants. This can cause legitimate businesses to be unable to access their assets, local and overseas, and payments until the order can be set aside.