frozen assets

Freezing your assets: domain names

Keep your hands off our domain names

Not so long ago, a Member of Parliament asked a question in the House. Actually, it was a written question and received a written answer from the Minister of State at the Home Office. Or was it the Ministry of Justice? (Both, actually – the Minister in question holds posts in both departments. Go figure).

It was a multi-part question, boiling down to whether a company’s domain name can be frozen along with other company assets in a criminal investigation; and if so, what happens next?

The answer was, to say the least, technical.

It contained the statement that the Proceeds of Crime Act 2002 “…defines realisable property as any free property held by the defendant including any intangible or incorporeal property…”, and then asserted that a domain name could fall within the definition, could be included within the scope of a restraint order, and could also be excepted from the terms of a restraint order.

When is an asset not an asset?

Now we all know that a business’s domain name is becoming more and more important to the reputation, marketing, reach, distinctiveness and even the identity of that business. And while we at Simplify the Law think that the Minister’s answer is no doubt excellent and accurate, we didn’t think it was all that helpful. It needs to be, well, Simplified. Which is what we’re good at.

We’re not that surprised that the answer was careful rather than fulsome. Any lawyer will be able to tell you that if you put the word “property” into a sentence the complexity increases immediately. Sticking the word “incorporeal” in front of it does not ease the situation.

What the Act says in relation to domain names is – nothing. Nothing explicit, anyway. It relies on a wide interpretation of the idea of property. (The “incorporeal” and “intangible” aspects of it basically mean that the property does not have to be a physical thing.)

That interpretation – which seems pretty fair to us – is that a domain name is an asset of the business. And like other assets, it can be frozen during a criminal investigation. That means that a person can be prohibited from dealing with it. It isn’t clear exactly what “dealing with it” covers, but it is intended to be a wide power to prevent someone benefitting from it or disposing of it. (There are further powers that enable officers to seize assets, but we don’t think you can actually seize a domain name.)

So what if I have frozen assets?

So far so good. These freezing orders – known properly as restraint orders – can be made subject to exceptions allowing a person the use of property which they need in order to carry on a legitimate occupation. And that, said the Minister, might well include domain names.

Nothing is certain unless a judge or Parliament says explicitly that domain names can be frozen. But the European Court of Human Rights – has expressly included domain names in the definition of possessions in the context of a case about the protection of property. English law is not technically bound by that decision in the context of freezing assets, but it seems quite a persuasive argument to make. The Minister could probably have afforded to be more decisive in his answer.

So, in a nutshell: if a business is the subject of an investigation into the benefits of crime, its assets could be frozen by the court. That includes the domain name. But if the business needs it to carry on legitimate trading the court can exempt the domain name (and other property) from the restraint order.

Simple, really.

Simplify the Law

And even simpler if we all behave ourselves…

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