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Chabra Injunctions – Freezing Orders To Recover Assets Held by Third Parties

Sep 3, 2025
Chabra injunctions are freezing orders against assets held by a person “A”, against whom a claimant has no cause of action, on the basis that such assets may be ultimately available through court process to satisfy a judgment which the claimant may obtain against a defendant. Chabra injunctions can prevent a defendant from using a third party which it controls to hide or dissipate assets that could satisfy a judgment against the defendant. Courts may grant Chabra injunctions where there is good reason to believe that the assets held by A are, in truth, the assets of the defendant.

This article is part of a series of articles on asset recovery. Other articles in this series deal with Mareva injunctions and Norwich Pharmacal orders.

If you would like to find out more Chabra injunctions, please contact one of our dispute resolution lawyers.
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September 3 2025
By Timothy Loh
 

Claimants in litigation sometimes fear that defendants may take steps to judgment proof themselves. In these cases, a Chabra injunction provides a means to freeze the assets held by a person, other than the person against whom the claimant has a cause of action (i.e. a third party to the proceedings), where there is good reason to believe that the third party may be liable to the defendant to account for assets. A Chabra injunction freezes the status quo, allowing the court to determine claims in proceedings without the risk of the defendant working with these third parties to render the court’s judgment unenforceable.

A Chabra injunction is a type of Mareva injunction and, like Mareva injunctions, is an exceptional remedy. Courts exercise caution when granting them as they can cause oppression and prejudice to innocent third parties whose assets may be frozen if it turns out there is no merit to the claim that these third parties must account for those assets to the defendant.


Scope of Third Parties Amenable to Chabra Jurisdiction

A Chabra injunction was originally granted where there was good reason to suppose that assets in the name of a third party were in truth the assets of a defendant.

However, Chabra jurisdiction may now be exercised in a broader range of circumstances, namely:

  • whenever the third party holds, is using, or exercises a power of disposition over assets of the defendant; or

  • whenever some process, ultimately enforceable by the courts, may be available to the judgment creditor as a consequence of a judgment against the defendant by which the third party may be obliged to disgorge the property or otherwise contribute to the funds of the judgment debtor to help satisfy the judgment against the defendant.

In theory, the latter jurisdiction is very broad and, whilst jurisdiction may be established where the defendant exercises substantial control over the third party, such control is not a pre-requisite. Indeed, court have observed that, in theory, this jurisdiction can extend to third parties who may have obligations to account to the defendant for any asset upon the insolvency of the defendant. As the enforcement of a judgment against a defendant may result in the insolvency of the defendant, it follows that any debtor of the defendant against whom the liquidator or trustee in bankruptcy may pursue a claim may potentially fall within the scope of a Chabra injunction. However, the courts have at the same time observed the need to be cautious in safeguarding the interests of third parties who are neither substantive defendants nor obvious actors seeking to frustrate the administration of justice.


Jurisdiction for Chabra Injunctions

Under the Rules of the High Court, a third party may be added as a co-defendant to proceedings even though the claimant has no cause of action against the third party if either:

  • the addition of the third party is necessary to ensure that all matters in the dispute may be effectually and completely determined and adjudicated upon, or

  • there may exist a question arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which would be just and convenient to determine as between the claimant and the third party as well as between the defendant to the cause or matter.

Once a third party has been added as a co-defendant, a court may grant a Chabra injunction against the third party under the High Court Ordinance, s. 21L. This section provides that the Court of First Instance may grant an injunction in all cases in which it appears to be “just and convenient” to do so.

Good Arguable Case

Both for the purposes of adding a third party as a co-defendant and for establishing whether it is just and convenient to grant an injunction, a claimant must establish a good arguable case either that:

  • the third party holds, is using, or exercises a power of disposition over assets of the defendant; or

  • the assets of the third party would be amenable to some process, ultimately enforceable by the courts, by which the assets would be available to satisfy a judgment against a defendant whom the claimant asserts to be liable on his substantive claim.

This will necessarily require not only the claimant to demonstrate a good arguable case on its substantive claim against the defendant but also a good arguable case that the assets of or held by the third party would be available to satisfy that claim through the courts. In this regard, a good arguable case is one which is more than barely capable of serious argument but not yet one which a judge might believe has a better than 50% chance of success.

Courts have acceded to the addition of a third party and have granted Chabra injunctions where the evidence established a good arguable case that a third party held assets which beneficially belonged to the defendant or that a third party was the alter ego of the defendant so that at least some of its assets might have been available to meet the claims against the defendant.

Real Risk of Dissipation of Assets

Again, as with any Mareva injunction, in applying for a Chabra injunction, a claimant must demonstrate based on objective evidence a real risk that a judgment against a defendant may go unsatisfied. A mere assertion that assets may be dissipated is insufficient. The evidence must enable a court to infer that the defendant and the third party are likely to dissipate assets.

For the purposes of a Chabra injunction, in the context of a corporate group, the courts may look at the actions of the ultimate beneficial owners of the group as well as conduct between a holding company and a subsidiary.

As one court noted:

The straightforward reason for this is that if there is solid evidence that the owners or controllers of company A have dissipated its assets, that is highly material to the question of whether there is a risk of dissipation of the assets of company B which is within the same ownership or control.

A failure to comply with a court order to disclose assets may be evidence of a risk of dissipation. However, a risk of dissipation cannot be inferred merely from the fact that a defendant who can pay chooses not to pay.

Balance of Convenience

As with any interlocutory injunction, a court will only grant a Chabra injunction where the balance of convenience favours the granting of the injunction. In this regard, the court considers whether the claimant can be compensated in damages for any loss caused in the absence of any injunction. If damages are inadequate to compensate the claimant, the court considers whether the third party who is subject of the injunction can be adequately compensated by damages if the injunction were wrongly granted.

Courts bear in mind that the Chabra jurisdiction is exceptional and should be exercised with caution, taking care that it should not operate oppressively to innocent third parties who are neither substantive defendants nor actors frustrating the administration of justice.

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