TerraLex Cross-Border Guide to Guide to Tracing Assets Around the World

There is no formal legal process for tracing assets in civil matters. The courts are empowered to grant temporary injunctions and attachment orders for the preservation and protection of any identified assets located within their jurisdiction. In certain cases, the courts may examine the wrongdoer or a third party to identify any assets belonging to the wrongdoer. However, these powers may only be exercised where the substantive proceedings are pending in Pakistan.

The courts are not expressly empowered to issue freezing orders/Mareva injunctions. Some superior Pakistani courts have observed that in certain circumstances a freezing order may be issued by the court under its inherent powers. In practice, however, freezing orders are rarely issued by the courts.

There are administrative processes for tracing assets in Pakistan belonging to companies. However, it is difficult to trace assets belonging to individuals.

In criminal matters, a recourse may also be made to the Mutual Legal Assistance (Criminal Matters) Act, 2020, for the identification, tracing, freezing, seizure, and/or confiscation of any assets constituting the proceeds of crime.

Generally, information about assets is not publicly available. However, all listed companies are required to publish their quarterly and annual audited accounts/ financial statements on their websites. Likewise, all public companies and certain private companies having issued/paid-up capital exceeding a specified threshold are required to submit copies of their annual audited accounts / financial statements to the Securities and Exchange Commission of Pakistan (“SECP”). The companies are also required to report the creation, modification, and removal of any charge or lien over their assets to SECP. The information about the assets of a company may be obtained by searching these corporate records which are open to inspection upon payment of a prescribed fee.

The wrongdoer If the substantive court proceedings have commenced, it is possible to apply for discovery of documents in the possession or power of the wrongdoer that may help in identifying any assets belonging to the wrongdoer. To obtain an order for the discovery of documents, the applicant must show that the documents relate to a matter in question in the substantive proceedings.

Likewise, during the proceedings for execution of a decree passed by the court, the decree-holder may apply to the executing court for examination of the judgment-debtor about its assets or other means of satisfying the decree and to produce any related document.

The third party

In general, an application for the discovery of documents may not be made against a third party. However, during the execution proceedings, an application may be made to the executing court for examination of a third party to identify any assets owned by the judgment-debtor and to produce any document.

Yes. A temporary injunction may be obtained from the court to protect/preserve any property in dispute from being wasted, damaged, or alienated. A temporary injunction may also be obtained for restraining the wrongdoer from disposing of any property to defraud the creditors. Typically, an ad-interim injunction is granted on an ex-parte basis for a short period that may be further extended. Simultaneously, the court orders for the issuance of notice to the respondent to appear in the court and present its defense. The court decides whether to confirm or to withdraw the ad-interim injunction based on the oral arguments of the parties and review of their pleadings and the material placed by them before the court. If an ad-interim injunction is confirmed, it usually continues to operate until the final disposal of the lawsuit unless the court earlier decides to revisit its order on a party’s request.

The court may also be requested to call upon the wrongdoer to furnish appropriate security for the satisfaction of any decree that may be passed against it and upon its failure to do so, to attach any assets belonging to the wrongdoer. Such assets should be identified by the applicant.

The courts are not expressly empowered to grant freezing orders / Mareva injunctions. However, certain superior Pakistani courts have observed that in appropriate cases the court may exercise its inherent powers and issue a freezing order that prevents a party from disposing of or dealing with its assets pending the outcome of the lawsuit. In practice, however, the courts are extremely reluctant to issue freezing orders.

The above powers may be exercised by the courts provided that the substantive proceedings are pending in Pakistan.

To obtain an interim injunction, the applicant must establish that:

• the applicant has prima facie arguable case i.e., there is a seriously disputed question to be tried in the court and that, on the facts before the court, there is a probability of the applicant being entitled to the relief asked for;

• the applicant will suffer irreparable damage or injury in case the injunction is refused i.e., the court’s interference is necessary to protect the applicant and that irreparable damage or injury is likely to ensue before the legal right is be established at trial; and

• the balance of convenience lies in favor of the applicant i.e., the inconvenience which is likely to cause to the applicant in case the injunction is refused will be greater than that may be caused to the wrongdoer in case the injunction is granted.

To obtain an order of attachment before judgment, the applicant must establish the existence of a prima facie case. Additionally, the court must be satisfied based on the convincing evidence that the wrongdoer is about to leave the court’s jurisdiction or is about to sell or dispose of its assets with intent to obstruct or delay the execution of the decree that may be passed by the court.

The above three essential conditions for obtaining an interim injunction must also exist for getting a freezing order. However, the courts have observed that a freezing order may not be granted merely on the existence of a prima facie case. The applicant must establish through cogent evidence that it is entitled to the relief asked for. In addition, the applicant must establish that the case is fit for the grant of a freezing order i.e., the remedies of temporary injunction or attachment order are either unavailable or inadequate, and that the freezing order is necessary to meet the ends of justice.

Depending on the nature of the claim in the lawsuit, a temporary injunction or a freezing order may be granted in respect of any assets belonging to the wrongdoer that are located within the jurisdiction of the court. A court will not grant a temporary injunction or a freezing order if it will not be able to enforce it. Therefore, it is unlikely that a court will grant a temporary injunction or a freezing order in respect of any asset located outside Pakistan especially where the wrongdoer is not resident within its jurisdiction.

The courts are not vested with the power to issue search orders in civil matters.

No. An interim relief may not be granted by the court in support of substantive proceedings pending abroad.

No. A freezing injunction obtained from a foreign court may not be enforced against assets in Pakistan. An applicant will be required to commence substantive proceedings in Pakistan based on either the original cause of action, the foreign judgment, or the foreign arbitral award and obtain appropriate interim relief from the court in such proceedings. In certain circumstances, the applicant may directly commence proceedings for the execution of a foreign judgment and seek appropriate interim relief from the executing court in such proceedings.