D R A F T
FOR DISCUSSION ONLY
ASSET
FREEZING ORDERS ACT
___________________________________________________
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
___________________________________________________
November 19 – 20, 2010 Committee Meeting
Draft
Without Prefatory Note or Comments
Copyright © 2010
NATIONAL CONFERENCE OF
COMMISSIONERS
ON UNIFORM STATE LAWS
_____________________________________________________________________________________________
The ideas and conclusions set forth
in this draft, including the proposed statutory language and any comments or
reporter=s notes, have not been
passed upon by the National Conference of Commissioners on Uniform State Laws
or the Drafting Committee. They do not
necessarily reflect the views of the Conference and its Commissioners and the
Drafting Committee and its Members and Reporter. Proposed statutory language may not be used
to ascertain the intent or meaning of any promulgated final statutory proposal.
November 4, 2010
DRAFTING COMMITTEE ON AN ASSET FREEZING ORDERS ACT
The Committee appointed by and representing the National Conference of Commissioners on Uniform State Laws in drafting this Act consists of the following individuals:
MICHAEL B.
GETTY, 430 Cove Towers Dr., #503, Naples, FL 34110. Chair
LEVI J. BENTON, 1001 Texas Ave., Suite 1400, Houston, TX 77002
CAROLINE N. BROWN, University of North Carolina School of Law, CB #3380, Chapel Hill, NC 27599-3380
ROBERT BUTKIN, University of Tulsa College of Law, 3120 E. 4th Pl., Tulsa, OK 74008
SIDNEY S. EAGLES, P.O. Box 27525, Raleigh, NC 27611
BARRY H. EVENCHICK, 5 Becker Farm Rd., Roseland, NJ 07068
DON HOLLADAY, 204 N. Robinson Ave., Suite 1550, Oklahoma City, OK 73102
PETER F. LANGROCK, P.O. Drawer 351, Middlebury, VT 15753-0351
STEVEN N. LEITESS, 10451 Mill Run Cir., Suite 1000, Baltimore, MD 21117
JOHN T. MCGARVEY, 601 W. Main St., Louisville, KY 40202
LANE SHETTERLY, 189 S.W. Academy St., P.O. Box 105, Dallas, OR 97338
JOAN ZELDON, District of Columbia Superior Court, 515 St., N.W., Bldg. A, Room 219, Washington, DC 20001
JOHN L. CARROLL, Cumberland
School of Law, Samford University, 800 Lakeshore Dr., Birmingham, AL 35229, Reporter
ROBERT A. STEIN, University of
Minnesota Law School, 229 19th Avenue S., Minneapolis, MN 55455, President
BRIAN K. FLOWERS, Council of
the District of Columbia, 1350 Pennsylvania Ave., N.W., Suite 4, Washington, DC 20004, Division
Chair
AMERICAN BAR ASSOCIATION ADVISOR
STEVEN M. RICHMAN, P.O. Box
5203, Princeton, NJ 08543-5203, ABA Advisor
JOHN A. SEBERT, 111 N. Wabash
Ave., Suite 1010, Chicago, IL 60602, Executive Director
Copies of this Act may be obtained from:
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
111 N. Wabash Ave., Suite 1010
Chicago, Illinois 60602
312/450-6600
ASSET FREEZING ORDERS ACT
TABLE OF CONTENTS
SECTION 2. STANDARDS FOR ISSUANCE.. 1
SECTION 3. ASSET FREEZING ORDER ISSUED WITHOUT NOTICE. 2
SECTION 4. MOTION FOR AN ASSET FREEZING ORDER TO APPLY
TO ASSETS IN SISTER STATES.2
SECTION 5. MOTION FOR AN ASSET FREEZING ORDER TO APPLY
TO ASSETS OUTSIDE THE UNITED STATES.3
ASSET FREEZING ORDERS ACT
SECTION 1. [DEFINITIONS]. In this [act]:
(1) “Asset” means property of a party but the term does not include:
(i) property to the extent that it is encumbered by a valid lien;
(ii) property to the extent it is generally exempt under nonbankruptcy law; or
(iii) an interest in property held in tenancy by the entireties to the extent it is not subject to process by a creditor holding a claim against only one tenant.
(2) “Foreign state” means any governmental unit other than the United States, or any state, district commonwealth, territory or insular possession thereof.
(3)
“Party” means any entity who brings a suit (action) or against whom a suit
(action) is brought to Freeze Assets, whether or not service has been made or
notice has been given.
SECTION 2. STANDARDS FOR ISSUANCE. A court may issue an order freezing the assets of a party upon motion of another party if the court finds that:
(1) There is a substantial likelihood that the party seeking the asset freezing order will prevail on the merits of the underlying claim.
(2) There is a significant risk that the party against whom the order is sought will dissipate the assets and that the moving party will be unable to receive satisfaction of the underlying claim if the order is not granted.
(3) Any damages the party against whom the order is sought may suffer through having to comply with the order is clearly outweighed by the risk of injustice to the moving party of the order is not issued.
(4) The order if issued would not be adverse to the Public Policy.
(1) An order freezing the assets of a party may be issued without notice but only if the specific facts in an affidavit or a verified complaint offered in support of the motion to freeze assets clearly show that the moving party is entitled to the order under the provisions of Section 2(1)-(4).
(2) Counsel for the moving party, must disclose all material facts in the affidavit or verified complaint presented in support of a motion to have an asset freezing order issued without notice, including any known facts favorable to the non-moving party.
(3) If the asset freezing order is issued without notice, the order will expire at the date set by the court, not to exceed 14 days, unless before that time the court, for good cause, extends it for a like period or the non-moving party consents to a longer extension. The reason for the extension must be entered in the order.
(4) If an asset freezing order is issued without notice, the party against whom the order is issued may appear and move to dissolve or modify the order with two days notice on the party who obtained the order without notice. The court shall then hear and decide the motion as promptly as justice requires.
(5) If the court issues an asset freezing order, the court shall require that the order be served on non-parties who hold assets of the party against whom the order is issued. The party who has obtained the order shall provide the court with a list of all known the non-parties on whom the order is to be served.
(1) A party may move for an asset freezing order to apply to assets located in Sister States.
(2) A party who obtains an order freezing assets in a sister state shall not, without the permission of the court issuing the order, begin proceedings in any other jurisdiction, involving the party against whom the order is issued except as provided in Section 6.
(1) A party may move for an asset freezing order to apply to assets outside of the United States.
(2) A party who obtains an order freezing assets outside of the United States shall not, without the permission of the court issuing the order, begin proceedings in any other jurisdiction, involving the party against whom the order is issued, nor seek to enforce the order in any country outside the United States.
(1) The party on whose behalf an asset freezing order has been entered shall give security in an amount the court considers proper to pay for costs and damages sustained by the party against whom the order has been issued if the order is later found to have been wrongfully issued.
(2) The party on whose behalf an asset freezing order has been issued shall indemnify a non-party for the reasonable costs of compliance with the order or compensate for any loss caused by the order whether or not the motion for the asset freezing order is properly granted.
(1) An asset freezing order issued by a court in a sister state is presumed to be valid and is enforceable and entitled to full faith and credit in the same manner as a judgment of that court.
Alternative 1
(1) An asset freezing order issued by a court in a sister state is presumed to be valid and is enforceable and entitled to full faith and credit in the same manner as a judgment of that court which is entitled to full faith and credit, unless it would violate the public policy of this state.
(2) An asset freezing order issued by a court in a foreign state is presumed valid and is enforceable in the same manner as a judgment of a sister state which is entitled to full faith and credit unless:
(a) the judgment was issued under a system, which does not provide for impartial tribunals or procedures compatible with the requirements of due process of law; or
(b) the foreign court did not have jurisdiction over the subject matter.
Alternative 2
Same language in (a) and (b) but with the addition of:
(c) Enforcement of the order does not violate any principle of public policy.
End of
Alternatives
SECTION 8. This Act does not apply to actions against consumer debtors or in domestic relations cases or other similar matters.