Businesses involved in commercial disputes sometimes need the courts to intervene quickly to prevent harm. Where financial damages alone would not adequately protect a party’s position, it may be possible to apply to the court for an injunction.
An injunction is a court order requiring a person or business either to stop doing something or to take specific action. In commercial litigation, injunctions are often used to restrain unlawful conduct, protect confidential information, prevent breaches of contract or preserve assets while a dispute is resolved.
This article explains how injunction applications are made in England and Wales and what the courts consider when deciding whether to grant such orders.
When should a business consider applying for an injunction?
Injunctions are typically sought where there is a risk of serious harm that cannot easily be compensated through financial damages.
For example, a business may consider applying for an injunction where
- a former employee is about to disclose confidential information,
- where a competitor is breaching contractual obligations, or
- where company assets are at risk of being moved or dissipated.
In these situations, waiting for a full trial may allow the damage to occur before the court can intervene. An injunction allows the court to preserve the position between the parties until the dispute has been determined.
Because injunctions can have significant consequences for the parties involved, courts will only grant them where they are necessary and justified.
What legal test does the court apply?
The courts in England and Wales generally apply the principles established by the House of Lords in American Cyanamid v Ethicon Ltd [1975] AC 396.
Under this framework, the court first considers whether there is a serious issue to be tried. The claimant does not need to prove the case at this stage, but the claim must have a real prospect of success.
The court will then consider whether damages would be an adequate remedy. If financial compensation would sufficiently address the harm caused, an injunction may not be necessary.
Finally, the court assesses the balance of convenience, weighing the potential harm to each party if the injunction is granted or refused. The court seeks to determine which outcome would cause the least injustice before the dispute is fully resolved.
How is an injunction application made?
Applications for injunctions are usually made within existing legal proceedings, although they can also be made at an early stage if urgent relief is required.
- The application typically involves preparing detailed written evidence explaining the background to the dispute and the reasons why the injunction is necessary.
- This evidence usually takes the form of witness statements supported by relevant documents such as contracts, correspondence or financial records.
The claimant must also prepare a draft order setting out the precise terms of the injunction sought.
Because injunction applications are often urgent, the court may decide the application primarily on the basis of written evidence and legal submissions.
Can injunctions be obtained without notice?
In some circumstances, the court may hear an injunction application without notice to the defendant.
This procedure is usually reserved for situations where giving advance notice would undermine the effectiveness of the order. For example, if a defendant becomes aware of a proposed freezing injunction, they may attempt to move assets before the court can intervene.
However, without notice applications carry strict obligations. The claimant must comply with a duty of full and frank disclosure, meaning that all relevant facts must be presented to the court, including those that may weaken the application.
If this duty is breached, the court may discharge the injunction and impose costs consequences.
What is an undertaking in damages?
A claimant seeking an injunction is normally required to give an undertaking in damages.
This undertaking acts as a safeguard for the defendant. If the court later determines that the injunction should not have been granted, the claimant may be required to compensate the defendant for losses caused by the order.
Before granting an injunction, the court may consider whether the claimant has the financial resources necessary to honour this undertaking.
How quickly can an injunction be obtained?
Injunction applications can often be dealt with quickly, particularly where urgent commercial harm is involved.
The courts recognise that in many commercial disputes the risk of damage may arise suddenly. As a result, urgent applications may sometimes be heard within a matter of days.
In particularly urgent situations, the court may even hear an application outside normal court hours.
However, applicants must act promptly. Delay in seeking an injunction may weaken the argument that urgent relief is necessary.
Why careful preparation is essential
Although injunctions can be obtained quickly, they require careful preparation. The applicant must provide clear evidence explaining why the order is necessary and why damages alone would not provide an adequate remedy.
The court will also consider the commercial consequences of granting the injunction and whether the proposed order is proportionate.
For businesses involved in high-value disputes, early legal advice is often critical to ensure that an injunction application is prepared effectively.
