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Orders relating to asset recovery, preservation and confiscation

FCRO Subsection: 
Editorial Staff

Courts have long had the power to make Orders in relation to assets, usually to prevent their disposal and/or destruction. They are known by a variety of names, and sometimes names mean different things in different jurisdictions.

Asset Seizure Orders

This is a Court Order that follows from a Freezing Order although, in practice, they can be made contemporaneously. It is an order that transfers physical possession or legal ownership to the State (or as a Court directs) but it is an interim measure.

Asset Confiscation Orders

A Confiscation Order is a final order made in proceedings by the State. In civil proceedings between two parties, there would be an order for the surrender of property. A Confiscation Order transfers physical, legal and beneficial interests to the State and extinguishes all third party rights in the asset(s). However, such orders are almost invariably made subject to known third party rights e.g. secured lending on a confiscated house, an outstanding hire purchase agreement on a car, a spouse's claim in divorce (even if that divorce was started after the risk of a Confiscation Order was known). A Confiscation Order can relate to assets that are valued at more than the amount due but which must be sold to realise the amount due.

Arrest Notices

Arrest Notices are Orders (which may be Court Orders or may be issued by e.g. a finance company where there is default under a loan agreement. Unlike mortgages, there is often no need for court proceedings for the lender to take the property upon which the loan is secured.

However, there are two special classes of asset to which Arrest Notices are especially relevant: sea-going vessels and aircraft. In these cases, the notice must be affixed to the asset. Prior claims must be honoured and so it is common for those expecting to arrest the ship, etc. to find that someone else is trying to do the same thing. An arrest notice can also be made by Government departments who are attaching a debt to the ship or aircraft.

An Asset Arrest Notice is not an arrest warrant and it is against the asset not against any person.