How ADGM Courts extend freezing relief beyond defendants to uncover beneficial ownership, dismantle asset-shielding structures, and preserve the effectiveness of Worldwide Freezing Orders in complex commercial disputes.
Worldwide Freezing Orders derive their effectiveness not from their urgency alone, but from their ability to reach assets that a defendant can realistically control. In modern commercial disputes, particularly those involving corporate groups, family offices, and cross-border wealth structures, assets are rarely held directly by the defendant. Instead, they are often dispersed across subsidiaries, nominee entities, trusts, or affiliated individuals. Chabra jurisdiction responds to this reality by empowering courts to restrain assets held by third parties where there is credible evidence that those assets are, in substance, under the defendant’s control1.
The ADGM Courts, grounded in English common law, have adopted this doctrine as an essential safeguard against the misuse of corporate and ownership structures to frustrate enforcement. By focusing on economic reality rather than formal ownership, the ADGM ensures that interim relief remains effective even in the most complex asset-holding arrangements.
Meaning of Chabra Jurisdiction in Common Law
Chabra jurisdiction originates from the English Court of Appeal’s decision in TSB Private Bank International SA v Chabra [1992] 1 WLR 231. The court recognised that freezing relief may extend to assets legally held by a third party where there is good reason to believe that such assets are, in truth, the defendant’s assets. Importantly, the jurisdiction does not depend on allegations of fraud or wrongdoing by the third party. Its purpose is preventive, ensuring that defendants cannot place assets beyond reach by interposing intermediaries.
Subsequent English authorities have refined the scope of Chabra jurisdiction by clarifying the evidentiary threshold and safeguards governing its exercise. In JSC BTA Bank v Ablyazov (No 8) [2011] 1 WLR 2996, the court emphasised that freezing relief against third-party-held assets requires “good reason to suppose” that the assets are in truth the defendant’s, whether through beneficial ownership or effective control. This approach was reaffirmed in Lakatamia Shipping Co Ltd v Su [2014] EWCA Civ 636, where the Court of Appeal focused on the substance of control rather than legal title. More recently, in Group Seven Ltd v Notable Services LLP [2019] EWCA Civ 614, the court underscored the preventive nature of Chabra relief while stressing the need for proportionality and procedural fairness to protect innocent third parties.
Several defining features of Chabra jurisdiction emerge from common law jurisprudence:
- the order is interim and protective in nature;
- the third party need not be a defendant to the substantive claim; and
- the applicant must show a strong evidential connection between the defendant and the assets. These principles continue to guide courts exercising Chabra jurisdiction today, including the ADGM Courts.
Common Law Foundations of Chabra Jurisdiction in ADGM
The statutory framework of the ADGM expressly incorporates English common law, equity, and judicial precedent to the extent that they are applicable to the ADGM’s context. This legislative choice allows doctrines such as Chabra jurisdiction to be directly applied without the need for codification. As a result, the ADGM Courts regularly draw upon English authorities when addressing applications for freezing relief, including third-party freezing orders.
In practice, Chabra jurisdiction in ADGM is exercised under the court’s broad power to grant interim remedies where it is just and convenient to do so. This power applies even where the underlying proceedings are seated elsewhere, including foreign litigation and arbitration. In practice, Chabra jurisdiction in the ADGM is exercised under the Court’s broad statutory and procedural power to grant interim remedies where it is just and convenient to do so, a power which may be invoked even where the substantive proceedings are seated outside the ADGM, including in foreign litigation or arbitration. ADGM case law has confirmed that this jurisdiction extends to asset-preservation measures in support of external proceedings, reflecting a purposive and internationally aligned approach to interim relief. Decisions such as A v B (A17/B17) demonstrate the ADGM Courts’ willingness to grant freezing and related orders to prevent frustration of enforcement beyond the jurisdiction, thereby reinforcing the ADGM’s position as a strategic forum for asset preservation in complex cross-border disputes.
How ADGM Courts Assess Third-Party Freezing Applications
Applications seeking to freeze third-party assets are subject to heightened scrutiny in the ADGM. The applicant must first establish a good arguable case2 against the primary defendant. Beyond this, the court requires compelling evidence3 that the assets sought to be frozen are effectively controlled by, or beneficially owned by, the defendant. ADGM Courts commonly examine indicators such as:
- overlapping directors or signatories across group entities;
- informal or undocumented financial control;
- asset transfers lacking commercial justification; and
- timing of transfers coinciding with dispute escalation.
At the same time, the courts are careful to avoid guilt by association4. Mere corporate affiliation or family connection is insufficient without evidence of control. This nuanced approach ensures that third-party rights are not overridden lightly.
Jurisdictional and Procedural Limits on Chabra Relief in the ADGM
While the ADGM Courts possess a broad power to grant Chabra-style freezing relief, its exercise is subject to important jurisdictional and procedural limits. The Court will consider the location of the third-party assets and the practical enforceability of any order sought, particularly where assets are situated outside the ADGM. Further, where freezing relief is sought in support of foreign-seated litigation or arbitration, the applicant must demonstrate a sufficient connecting factor to justify the Court’s intervention. Central to this analysis is the requirement that the grant of relief be just and convenient, a test which operates as a controlling mechanism to ensure proportionality, procedural fairness, and respect for third-party rights. These constraints reflect the ADGM Courts’ cautious and principled approach to extending freezing relief beyond the immediate parties to the dispute.
Use of Chabra Jurisdiction in Corporate Group and Shareholder Disputes
Corporate group disputes frequently present circumstances where Chabra jurisdiction becomes indispensable. Defendants often rely on the legal separateness of group entities to argue that assets lie beyond the reach of freezing relief. ADGM Courts, however, will look beyond formal separateness where the evidence suggests that subsidiaries function merely as asset-holding vehicles without genuine independence.
In shareholder disputes and joint ventures, Chabra orders can prevent controlling shareholders from diverting assets through affiliated entities during the pendency of proceedings. The jurisdiction ensures that interim relief keeps pace with the economic realities of group control and intra-group asset mobility.
In corporate group and shareholder disputes, certain indicators may signal the potential need for Chabra relief. These include overlapping directors or senior management across group entities, suggesting a lack of genuine operational independence; undocumented or poorly documented intra-group transfers, particularly where assets are moved without clear commercial justification; and asset movements occurring in close temporal proximity to the emergence of a dispute or breakdown of a joint venture relationship. When viewed cumulatively, such red flags may support an inference of effective control or beneficial ownership, justifying closer scrutiny under Chabra principles.
Family Offices, Private Wealth, and Heightened Judicial Caution
Family office and private wealth disputes raise additional sensitivities. Assets may be held through trusts, foundations, or nominee structures that involve innocent beneficiaries and fiduciaries. ADGM Courts therefore apply Chabra jurisdiction cautiously in this context, requiring particularly strong evidence of de facto control by the defendant.
Relief in such cases is typically narrowly framed, often coupled with disclosure obligations rather than blanket freezes. The court’s emphasis on proportionality ensures that legitimate wealth planning structures are not unjustifiably disrupted.
In family office and private wealth contexts, potential red flags warranting closer scrutiny may include trust or foundation structures where the defendant retains extensive decision-making powers, nominee arrangements lacking meaningful fiduciary independence, and asset movements or trust variations occurring shortly after the onset of a dispute. At the same time, third parties affected by Chabra relief have distinct procedural options, including challenging the jurisdictional basis for the order, seeking variation or discharge where relief is disproportionate, and engaging in timely and full disclosure to demonstrate independent control and compliance with fiduciary obligations. These mechanisms enable the Court to balance effective asset preservation against the protection of legitimate private wealth structures.
Proportionality, Safeguards, and Risk of Overreach
Because Chabra orders directly affect non-parties, proportionality is central to the ADGM Court’s analysis. Applicants must demonstrate that the relief sought is no broader than necessary to prevent dissipation. The courts also require strict compliance with the duty of full and frank disclosure and insist on meaningful cross-undertakings in damages to protect third parties from wrongful restraint. ADGM Court Procedure Rules 2016, Part 25 (Interim Remedies), read with the common law duty of full and frank disclosure and the requirement of a cross-undertaking in damages, as reflected in DIFC Courts’ RDC Part 25. These safeguards ensure that Chabra jurisdiction remains a carefully controlled mechanism rather than a blunt enforcement tool.
Where a worldwide freezing order is sought or granted under Chabra jurisdiction, additional procedural safeguards arise in relation to service on third parties located outside the ADGM. The ADGM Courts generally require prior permission for service out of the jurisdiction, ensuring that affected third parties receive proper notice and an opportunity to be heard. In practice, orders are often accompanied by carefully framed notification provisions, particularly where banks or financial institutions abroad are involved, limiting disclosure to what is strictly necessary to give effect to the order while avoiding undue interference with third-party operations. These procedural controls reflect the Court’s awareness of the cross-border impact of worldwide relief and operate to prevent overreach, reinforcing the principled and proportionate exercise of Chabra jurisdiction.
Conclusion
Chabra jurisdiction enables the ADGM Courts to meet the realities of modern commercial disputes head-on. By allowing freezing relief to extend beyond named defendants where justified, the courts preserve the effectiveness of Worldwide Freezing Orders without compromising fairness. For practitioners, the jurisdiction offers a powerful but demanding remedy one that rewards meticulous evidence, disciplined drafting, and strategic restraint.
Chabra jurisdiction enables the ADGM Courts to meet the realities of modern commercial disputes head-on. By permitting freezing relief to extend beyond named defendants where properly justified, the Courts preserve the effectiveness of Worldwide Freezing Orders without compromising procedural fairness or third-party rights. For practitioners, the jurisdiction represents a powerful but exacting remedy one that rewards meticulous evidence-gathering, disciplined drafting, and strategic restraint. This discussion forms part of the broader ADGM Worldwide Freezing Orders series and should be read alongside the pillar overview on WFOs in the ADGM (https://atblegal.com/blog/worldwide-freezing-orders-adgm/), as well as the related clusters addressing dissipation risk and enforcement considerations.
