Injunctions are a specific type of court order – normally designed to compel an individual, company or other entity to do something specific, or alternatively stop doing something. Used correctly they can be a very powerful type of court order.
A prohibitory injunction is a type of court order that requires a party to refrain or stop doing a specific act.
- often this type of order is obtain to protect confidential information in commercial relationships and can be crucial in safeguarding critical business secrets.
- other examples include stopping someone breaching their restrictive covenants in a contract of employment or stopping the sale of a property.
When considering whether to grant this type of injunction, the court will look at whether
- there is a serious question to be tried (ie it isn’t a frivolous claim);
- whether damages would be an adequate remedy instead to compensate the victim; and
- whether the application affects the status quo between the parties.
The court will also consider whether there are any other special factors to take in to account.
These types of injunctions actually compel or order a party to actually do something – ie take a positive step or action. Examples of this include actually delivering up goods or making documents available. The courts tend to be more strict about granting these types of injunctions than they do prohibitory injunctions because of the requirement of the defendant to take a specific action.
Considerations taken in to account by the court when granting these include
- whether the applicant will suffer harm if the injunction is not granted;
- will the applicant likely succeed at trial; and
- will the respondent have to incur levels of expenditure which are disproportionate to the likely harm caused to the applicant if it is not granted
Nowadays more commonly referred to as Freezing Orders, these are a very effective method of ensuring that any specific asset (including funds) is frozen and cannot be disposed of until anticipated proceedings have been concluded.
This most commonly is used to prevent the payment out of funds or the transfer of property assets, both of which may be the subject of a proposed claim or which could be used to satisfy the judgment eventually obtained.
A Freezing Injunction is also a very useful way of getting ahead of competing unsecured creditors, who may also be pursuing the same person(s) or company(s). There are various legal requirements to issue a claim for a Freezing order and our other pages deal with this in detail.
Temporary restraining orders and injunctions
Sometimes the Order sought – be that to prevent a specific action or the ongoing use of something subject to a dispute – has two layers. As with the Freezing Order there is the urgent commercially sensitive aspect (which may be causing ongoing commercial damage whilst the underlying litigation dispute is ongoing) and there is also an overall claim for losses and cessation of the wrongdoing.
For example, the wrongdoer could be diverting clients or using your goodwill, and whilst you can dispute these losses during extensive litigation proceedings, in the meantime your business is suffering.
In such circumstances a Temporary Restraining Order can be sought (as with Freezing Orders) at extremely short notice.
Once granted, it acts as a moratorium or breathing space to allow the underlying claim to continue or for the Court to properly consider whether the wrong should be permanently restrained.
Search and seizure orders
A search and seizure order allows a claimant to access a defendant’s premises to seize property, or in some cases retrieve documents. This can be because an item is the subject of a claim in litigation or because a question has arisen in relation to it in the proceedings.
In some cases, the purposes of a search and seizure order is to protect and preserve evidence which will be vital in ongoing litigation. In others it may be to protect property which is the subject of litigation.
- search and seizure orders will only be granted where there is clear evidence of the specific items to be protected and if there is serious potential harm likely to the claimant’s interest.
- a search and seizure order is usually made without notice to the defendant.
A search and seizure order is not a method of forcing an individual to disclose documents or an opportunity to examine what property a respondent might have for enforcement purposes at the end of a successful claim.
In a similar manner to freezing orders, it is usual for these applications to be made at the beginning of a court action, and before proceedings against a respondent begin, although an undertaking will need to be given by the claimant to issue the court proceedings as soon as possible thereafter.
Once granted a search and seizure order will set out a fixed date and time for a second hearing (a return date). At the return date both parties will usually attend a hearing to update the court as to what happened during the search.
If you are served with a search and seizure order, then it is crucial that you immediately get legal advice before the order is executed. Not to comply with the order will be a contempt of Court whereas with legal assistance you may be able to identify a basis to prevent or seek a dismissal of the application for such an order, or to seek damages for losses arising from an order improperly obtained (perhaps based on false information).
Where proceedings are issued overseas, it is possible to seeking injunctive relief to protect against enforcement of the overseas claim (if it is successful). There are however very strict criterion to taking such steps and achieving any such outcome.
In the alternative, where proceedings are issued in the UK, injunctive relief may be sought in another country. For proceedings issued prior to 1 January 2021 this is straightforward within the EU. However, for all proceedings issued since, and for international proceedings generally, the ability to seeking injunctive relief depends on the Country where such relief is sought and any existing bi-lateral agreement between the UK and that country.
Injunctions: an overview
Commercial litigation proceedings are perfect for resolving commercial disputes where no other agreed form of dispute resolution is possible. Of course, if you are seeking to claim a sum of money or seek a non-monetary remedy from a party, and that party is open and engaged in the process, then options such as arbitration and mediation remain the perfect solutions to settle such disputes at a lower cost and over a shorter timeframe.
The strength of commercial litigation rests in the trust that both parties will comply with the legal requirements of the Civil Procedure Rules 1998 (as amended) (“the CPR”). For example, such obligations refer to
- disclosing any information which may assist your opponent,
- coming to the Court with “clean hands” (being open and honest) and
- only filing evidence which is true to that party’s own knowledge and belief.
For Defendants, their interest lies in ensuring that any claimant who (they think) wrongly issues proceedings against them can actually pay the defendant’s wasted legal costs and taking steps to protect their position by way of a security for costs application.
For Claimants, the risk of proceedings often depends on your opponent’s ability to pay a debt or provide a monetary remedy in damages, or even safeguarding the valuable asset which you are seeking the return of. If your opponent has no value, or has put their assets beyond the reach of the Court’s jurisdiction, then incurring the cost of a litigation claim will be worthless if the judgment cannot be enforced.
In reality not everyone plays by the rules. This is when it may be necessary to seek some sort of injunctive relief, to avoid a circumstance where the litigation process effectively becomes a waste of time.
At Francis Wilks & Jones we can assist you with all such problems and respond quickly. We fully understand the commercial need to protect your position before any litigation proceedings are issued. Should you require assistance then please do not hesitate to contact us.
I was delighted by the work done by the team at FWJ and cannot recommend them highly enough. Their legal and tactical knowledge was spot on. I can now continue to grow my business free from the worry.A company director
Acting in a $20m trade finance and invoice finance fraud involving a worldwide freezing injunction and claims against defendants based in England and abroad
Our client, a trade and invoice finance company which was part of a wider group of companies, had discovered a $20m hole in its...