Asset Freezing to Secure Payment

If you believe you have a legitimate claim for payment from another party but need to initiate legal proceedings before you can enforce the debt through attachment of earnings or assets, you can request the freezing of the debtor's assets to secure the claim until a court judgment is made. Asset freezing ensures that the person in question cannot dispose of certain assets until a court has ruled on the matter.

Conditions for Asset Freezing

• Justification that the claimant has a legitimate claim for money from the other party.

• Justification that it is likely the ability to collect on the claim would be compromised if the assets are not frozen.

Process

Request

A written request must be submitted to the District Commissioner in the jurisdiction where the person whose assets are being targeted for freezing resides, is located, conducts business, or owns assets. The request is usually prepared by a lawyer. It must include:

• Who is requesting the freezing of assets.

• Against whom the freezing is directed.

• Justification for the claim.

• Justification for why asset freezing is necessary to protect interests while awaiting the court’s decision.

Asset freezing requests are processed as quickly as possible, typically within a few days. The District Commissioner either approves or denies the request. If the request is denied, it is returned with a brief justification for the decision.

Security

The District Commissioner determines a provisional security amount, which must be deposited into the District Commissioner's account before the case is handled. The final amount of security is determined during the course of the case. This security covers all legal costs and potential damages if the lawsuit for confirming the asset freezing is lost. The security is refunded if certain conditions are met, such as if the asset freeze is upheld by the courts.

Hearing at the District Commissioner

The District Commissioner summons both parties to a meeting to discuss the case. At the meeting, both parties can present their arguments. It is necessary to attend the meeting or send a representative with authorization.

During the hearing, the party against whom the asset freeze is requested must disclose what assets or bank accounts they own. It is recommended that you research the assets of the other party in advance and decide which assets you want to target in case the other party does not attend the hearing or does not disclose their assets.

The District Commissioner will decide on the asset freeze during the meeting. A denial of the asset freeze request can be appealed to the district court.

If it is clear that there is an urgent threat to the claimant’s interests, such as funds in a bank account, the District Commissioner may decide on the asset freeze without summoning the opposing party to a meeting.

Asset Freezing and Lawsuit

Once the District Commissioner has decided on the asset freeze, you must file a lawsuit to confirm the asset freeze within one week; otherwise, the asset freeze will be void.

Costs

The fee for asset freezing is 13,000 ISK.

The fee is charged for each person whose assets are being targeted for freezing.
The fee is non-refundable, even if the request is withdrawn or not executed for other reasons.

No fee is charged for asset freezing in the following cases:

• Cases related to wage collection.

• Legal aid cases (the person receiving legal aid does not pay the fee).

• Cases related to fines and costs in criminal cases.

The fee must be paid into the bank account of the relevant District Commissioner’s office.