A new authority to regulate the financial services sector should be given the power to seek orders freezing the assets of companies or individuals suspected of fraud, a leading solicitor has said.

The orders, known as Mareva injunctions, can be obtained in the High Court. They grant the applicant an order which prevents the defendant from disposing of his assets or moving them outside the State, usually up to a specified amount.

Mr Tom Courtney, a solicitor, who has just written the first book on Mareva injunctions from an Irish perspective, said a new regulatory authority should be able to seek such injunctions on behalf of people who may have been defrauded.

He said at present individuals or groups of people who wanted to prevent companies from disposing of their assets, because they are owed money, have to seek the injunctions individually. This can be a costly process, he added.

Mr Courtney said it would be better if the proposed new regulatory authority was given that power when it is established. This is similar to what happened when the previous government set up the Criminal Assets Bureau (CAB). At the time, the Garda did not have the power to seek Mareva injunctions so it was necessary to give them specific statutory power to seek to freeze assets. Mr Courtney said to be granted such an injunction the plaintiff must have a legitimate reason for taking the action. "In many cases the regulatory body itself may not have a cause of action," he added.

The legislation was used by individuals in the case of Dublin-based broker Mark Synnott whose business collapsed in 1991. Investors had given him £2.3 million. He was convicted in 1996 of fraudulent trading and was sentenced to four years imprisonment.

Mr Courtney is a member of the McDowell Working Group on Company Law Enforcement and Compliance, which is examining the effectiveness of existing enforcement mechanisms, first introduced in the 1990 Companies Act.

"It is very important that any regulatory bodies which arise from these working groups have the power to apply for asset freezing orders, whether they are regulating company directors or wayward brokers," he said. "Without that power it would be difficult to enforce the laws."

Mr Courtney is head of legal services with ACC Bank and a practising solicitor as well as being the author of a book on private company law in Ireland. He said the Irish courts grant around 100 Mareva injunctions each year.

He said the injunction is an immediate and powerful remedy. It can be obtained within a matter of hours. However, the applicant must show evidence of an intention to frustrate a future court order or to evade the (defendant's) obligations to the plaintiff.

He said this can be done in a variety of ways, such as proving you were defrauded by the defendant.

Mareva injunctions originated in Britain in 1976. They came about because the law could then offer no redress to a plaintiff with a good cause of action, but who found that there were no assets to meet his claim. The plaintiff would also suffer the double blow of having pursued his case through expensive litigation, with no compensation at the end.

Mr Courtney said the injunction "has the capacity to be draconian" and the circumstances are considered carefully by the courts before it is granted.

Once granted, the applicant can seek an asset disclosure order if he/she does not know where the defendant's assets are held.

The applicant can then proceed in the normal way to seek judgment and will be able to satisfy that judgment through the disposal of the defendant's assets.

Worldwide Mareva injunctions are also becoming a feature of the legal system. One such injunction was granted in the High Court, directing former Bula chief executive, Mr Jim Stanley, not to reduce his assets either within or outside Ireland.

Mr Courtney, who has been researching the book for four years, said the Mareva injunctions place an onus on third parties such as banks and other financial institutions. If they do not co-operate with the injunction they can be attached to the action as third parties.

The book, Mareva Injunctions and Related Interlocutory Orders, is published by Butterworth. It deals with civil freezing orders and criminal freezing orders and provides guidance on issues such as how to enforce a Mareva or other injunctions and how they affect third parties.