What do I do if...I need an interim injunction in England?

00:00:05 David Lee, Host

Hello and welcome to ‘Podcasts by Brodies’. I'm David Lee and in this series we take an in depth look at some common and not so common questions and scenarios that Brodies lawyers have faced over the years, specifically relating, in this series, to English law.

In each episode we talk to Brodies' legal experts to discover the insights and experiences that allow them to take the right approach when they’re asked, ‘What do I do if...?’.

In this particular episode, I'm joined by two Brodies experts, partner, Jared Oyston and senior associate, Will Payne to examine the question ‘What do I do if... I need an interim injunction in England?’. We look at the need-to-know information about the law, the procedure, and the costs surrounding interim injunctions.

Jared, first of all, this is potentially quite a complex topic, so let's start with the basics. In simple terms, what is an interim injunction?

00:01:08 Jared Oyston, Partner

An interim injunction is an order that a party can obtain from the English Court in the context of a dispute, that requires another party - whether that's an individual or a company - to do something, or to not do something, pending a full trial of the dispute between them.

For those who may be more familiar with conducting disputes before the Scottish courts, an interim injunction is essentially the English equivalent of an interim interdict in Scotland.

So interim injunctions are distinct from more traditional litigation in which a party sues another party for damages, which can take months or years. Whereas a damages claim is intended to compensate a party monetarily for harm that is already suffered - for example, due to a breach of contract or negligence - the purpose of an interim injunction is to prevent harm from occurring, or to prevent further harm from occurring, particularly where that harm might be irreparable and not capable of being compensated in due course by an award of damages at trial.

An interim injunction is also distinct from a final injunction. So it's also possible for courts to grant what are called "final injunctions" at trial. So it may be that a court following a trial might grant an award of damages in relation to losses that have been caused by a party's conduct. But if there's a possibility that that conduct is ongoing, they might also make what's called a "final injunction," preventing them from ever continuing that course of conduct. But what we're talking about today is interim injunctions, which are given at a much earlier stage in the dispute and long before you have that sort of full trial of the rights and wrongs of the dispute.

So in summary, it's an order of the court which parties have to comply with, and a party which fails to comply with an injunction will be in contempt, of course, with possible consequences, including fines and even imprisonment. So it's a very powerful tool for achieving parties objectives in in certain circumstances.

00:03:08 David Lee, Host

Thanks Jared. Could you give us some for instances or, in what circumstances might an interim injunction be used?

00:03:19 Jared Oyston, Partner

There's a very wide range of circumstances in which a party might seek an interim injunction, but it's fair to say that they will almost always contain certain similar features. Where interim injunctions are used is where in the context of a dispute, one party can't afford to sit on its hands and just allow the other party to continue with a course of action, or an inaction, wait and see if that causes them loss and then hope to recover damages in due course. So really the key element is the possibility of a party suffering irreparable harm ahead of trial and judgement.

So in terms of examples, a party to a dispute may have reason to believe that its opponent is seeking to take steps to move assets out of the jurisdiction, so as to ensure that whenever it may be that the judgment is obtained, the claimant isn't able to enforce a judgement against those assets. In that situation, obviously the claimant can't just wait and see whether the defendant does that, because if they do by that point the assets have gone, and there may be nothing left against which to enforce. So in that situation, the claimantmight seek what's called a freezing injunction over their opponent's assets to preserve them pending trial and judgement.

To take a different example, let's imagine that a producer of a product enters into a contract with a distributor and the parties get into a dispute about exactly what geographical territories are covered by the distribution agreement. The producer in that situation might consider that the distributor is seeking to sell products in a territory it's not entitled to, and they might sue for breach of the distributorship agreement. But it might also seek an interim injunction to stop the distributor from marketing products in those territories if that cause of conduct might cause it irreparable harm in the meantime. So for example, if the distributor's conduct might put the producer in breach of other distribution agreements it has with third parties, or if it might put it in breach of regulatory requirements or licences.

So an intervention can be used in a very wide range of contexts, but the circumstances will almost always involve the possibility of a party suffering irremediable harm if action isn't taken quickly.

00:05:28 David Lee, Host

Thanks very much, finally Jared, before we bring Will in, there are some different types of interim injunction, can you just tell us briefly what they are?

00:05:40 Jared Oyston, Partner

Yes, so there are a number of different ways of ategorizing injunctions, but in broad terms there are really 2 main types.

The first is what we call a mandatory injunction, which is an injunction requiring a party to actually do something, so to take positive steps. A good example of a mandatory injunction is what we refer to as a "search and seizure order" and this is where a party is able to convince the court that there's a real risk of their opponent in a dispute taking steps in relation to documents that, essentially, they're not entitled to take them, which will cause them harm. For example, they may have reason to believe that their opponent is in possession of documents they're not entitled to, perhaps containing trade secrets, or they may have reason to believe that their opponent is intending to destroy documents relevant to the dispute ahead of it getting to trial. In those cases, the court might make a search and seizure order that requires the party holding the documents to allow the claimants and its advisers to attend their premises and, within certain protections, retrieve those documents.

The other main type is what's called a prohibitory injunction. This is an injunction which requires a party not to do something, or to stop doing something. A good example of this is what we referred to before, a freezing order - this is where the party is able to convince the court that there's a real risk of their opponent in a dispute, seeking to dissipate assets. In that scenario, the court may be willing to essentially freeze that party's assets - again with certain guardrails in place - to preserve those assets ahead of trial.

Very often though, an interim injunction will include both mandatory and prohibitory elements. So to give a brief example, we recently acted for a client which had leased some quite sophisticated high value equipment to a ship operator, and the ship operator has, over an extended period of time, failed to pay its bills for the equipment and failed to return the equipment when required under the contract. In that case we were able to persuade the court that our client faced irreparable harm if the equipment wasn't returned immediately. So without the equipment being returned, the client would suffer losses in not being able to fulfill contracts to other customers, in circumstances where the defendant haven't been paying its bills, our client could have no confidence that the defendant would be able to pay, or willing to pay damages in due course, and our client also had a narrow window of opportunity while the vessel was in port and the evidence suggested that the defendant was preparing to send the vessel back out to sea and indeed, out of the jurisdiction for an extended period of time with the equipment still on board. And for those reasons, the court was willing to grant an injunction which required the defendant to allow our client access to the vessel in the port by a particular date in order to recover its equipment, and also prevented the defendant from putting the vessel back to sea in the meantime.

So that's an example of an interim injunction which had both mandatory and prohibitory elements.

00:08:30 David Lee, Host

Great example. Thank you Jared and Will, let's talk a little bit about the nuts and bolts of what you actually need to do.

If you believe that you need an injunction in some of the circumstances that Jared outlined, how do you go about applying for it?

00:08:45 Will Payne, Senior Associate

The first point to note really is that an interim injunction isn't an interim remedy, so you need to have an underlying cause of action to achieve a final result at trial. An interim injunction isn't a freestanding form of relief. That said, you can issue an injunction if you don't have existing proceedings ongoing, as long as you issue a claim at the same time or in certain really urgent cases, provide to the court and undertaking that you will file a claim form in due course.

In terms of the documents required, you really need three things. The first is an application notice which sets out the basis of the application, what you want and why you want it. You need a draft of the order, which sets out in precise terms, exactly what you require. And it's important that that's drafted with a lot of precision, because if the respondent doesn't comply, it's contempt of court, so you need to make sure that you've come thought long and hard about exactly what it is that you want the respondent either to do or not to do.

The third thing is your evidence in support of the application, and this typically takes the form of a witness statement to which you'd exhibit all of the underlying documents that support your case.

Once you've got all that and there are different procedures depending on the nature and the urgency of the application. So in the ordinary course, you would file your documents at court, the court would then set a hearing date. You would then file of your documents - so the application notice, the draft order and the evidence - and serve that on the other side, who then have a chance to respond to that. Then eventually you'd have the hearing, at which it would be decided whether or not to grant the injunction.

As Jared mentioned, there are cases where tipping off the other side that you're going to be doing this would completely defeat the whole purpose of the injunction. So if you're looking to freeze assets or clear a search order, tipping them off would be completely counter to the whole point of the injunction. In that case you can apply without giving the other side any notice at all. In that case you give a document to the court, the court then sets a hearing date which you attend on your own without the other side being there, the court then hopefully makes the order and you then serve it on the other side, there will be a return date hearing at which the other side participate and get the chance to argue their case.

The most important thing, and the thing that sometimes surprises clients, is if you're doing that without notice procedure, you have a very onerous duty of frank disclosure. What that means is you need to set out in your evidence all of the points that you think the other side could make in their defence if they had had notice and had been given the chance to argue their case, and also points out all of the pieces of your evidence which perhaps don't help your case. That's a really onerous duty, and I've certainly had cases in the past where the other side, thankfully not us, have been found not to comply with that duty and not only do the lawyers get a real kicking in the judgement, in the case that we had, we won the substantive action, but the judge said at the end, even if you hadn't won it, then the other side wouldn't been entitled to injunction because it had failed to compile this duty of full and frank disclosure.

00:12:20 David Lee, Host

How common is that? Will, to go ahead and make that decision, as you say, and take that onerous path if you like, is that common or quite uncommon?

00:12:31 Will Payne, Senior Associate

Well if you want to get an injunction, such as a freezing injunction or a search order, well aware there's no option, but to go without notice, then there's no option. What can happen sometimes is if you have an application which is very urgent, so perhaps you don't have time to serve the other side, again, you you've got to do it.

00:13:00 David Lee, Host

Let's look at the circumstances in which an injunction might be granted by a court, Will.

What circumstances might a court grant the injunction that you're going for?

00:13:14 Will Payne, Senior Associate

Again, we've mentioned it a few times, but the interim nature of these remedies means it isn't a full trial of all the issues, there's no cross examination of witnesses, there's no expert evidence, it's not considered to be a full trial of the merits of the application they granted on interim basis to hold the ring and so the tests and the circumstances reflect that interim nature.

The key tests were set out in a case the American Cyanamid, and there's two prongs to it. The first hurdle is he has to prove that there's a serious issue to be tried, that's a fairly low bar, it just means that you've got a case that can be supported and has a slight uncertainty about the outcome.

The second aspect of it is usually where the arguments lie, and that's known as the balance of convenience test . Essentially, what that involves is the court evaluating who would be the most harmed if an incorrect decision was made. So in other words, if an interim injunction were to be granted now, but it was held at trial later that should not have been granted, what would the harm to the respondent be? And conversely, if an interim injunction were not to be granted, and it was found at a full trial that it should have been, what harm would have been caused to the applicant? So it's a balanced test as to who would suffer the most if the injunction were or were not to be granted.

The third point that's important to bear in mind, is that an applicant will need to give what's called a "cross undertaking in damages" if they want to obtain an injunction. Essentially that's the applicant saying, ‘I will compensate you, the respondent, for any losses that you suffer if this injunction is granted and actually it's turned out that it shouldn't have been granted.' So you're applying for this remedy on interim, kind of short term urgent basis, you get it and sometimes that can be very onerous on the respondent, they've got to comply with this order, and if it turns out that actually this order had never been granted, it's incumbent upon the applicant to compensate the respondent for any losses that they suffer as a result.

00:15:25 David Lee, Host

Thanks very much Will, and coming back to you Jared, those of us, like me, who don't know much about injunctions, occasionally read in the paper or see on their favourite news website that there's been some kind of urgent legal move involving a high profile case with a celebrity.

There's always this sense of urgency, so how common is it for injunctions to be deployed urgently, and how quickly can they be deployed in that case?

00:15:54 Jared Oyston, Partner

It's very common for injunctions to be deployed urgently, and in fact delay to an injunction application will often in itself be fatal. You might have otherwise a good case, but if the court can see that actually you sat for six months wondering whether or not you ought to bring this application, that in itself may be fatal, because obviously an interim injunction will have potentially quite intrusive and onerous impacts on a defendant who hasn't yet had the opportunity to have a full day in court to present their case. So the court is very wary of granting these kind of injunctions without due cause and the mere fact that you've sat on your hands for six months while you make your mind up, might be enough to convince the court that actually you can wait another year or two years, or whatever it may be, to have a full trial and hopefully seek damages. So they are almost always very urgent and interim injunctions can be obtained very quickly. So by their very nature they will always move much faster than an ordinary court claim for damages.

The court essentially employs a much more streamlined process in terms of the evidence, albeit with appropriate protections for the defendant. So in a case where an interim injunction is sourced, it will usually either be obtained or refused in a matter of days essentially, and in the most urgent cases they can be dealt with on an almost same day basis, duty judges are available overnight and at weekends to deal with the really tight, pressing cases where a delay of even a day or two might cause irreparable harm to the to the claimant.

00:17:40 David Lee, Host

What are the cost implications of that, Jared, if you're applying for an injunction at pace, does that cost a lot more?

00:17:50 Jared Oyston, Partner

Inevitably, seeking an interim injunction is a costly process.

As you'll appreciate from what Will’s outlined in terms of the procedure, the process of obtaining an injunction places a quite considerable onus on the claimant, essentially has to get over some relatively onerous hurdles in a very short space of time.

It has to provide comprehensive evidence as to how the parties have reached the point they've reached, what's likely to happen next if the order isn't granted in terms of the defendants conduct and its impact on them, that obviously includes satisfying the duty of full and frank disclosure, setting out the other side's position. Counsel will need to be instructed, often on short notice to get ready for a hearing in short order, and all of that means that interim injunctions are inevitably expensive. So there's always a cost implication for conducting what is really a mini piece of litigation condensed into a very short period of time.

00:18:45 David Lee, Host

Thanks very much, and Will let's move forward a step.

If an injunction is granted, what happens next?

00:18:54 Will Payne, Senior Associate

The first thing to do is that you need to arrange for the order to be served personally on the respondent because injunctions carry strict penalties for breaches. It's not sufficient simply to send them by post or to send them to the solicitors, there's a requirement to physically serve the order upon the respondent. The breach of an injunction is contempt of court and so potentially a criminal offence to breach it.

Once you've served it, it really depends on what the nature of the injunction is. There are some cases where an interim injunction will effectively dispose of the whole disputes between the parties, although there needs to be an underlying cause of action, often the injunction itself is really where the battleground is and once you've got that, or not got that, the underlying case falls away. In others, the underlying case will proceed to a full trial, at which it will be determined whether or not the injunction was appropriate to have been granted or not.

The other matter to deal with is costs. Again, the court has the power to award costs of the interim injunction at the hearing, and sometimes they're reserved until the final trial to see what the position is at that trial.

00:20:19 David Lee, Host

What if you decide that an interim injunction isn't the way forward?

What other alternatives do you have without, if you like, pressing the expensive nuclear button?

00:20:30 Will Payne, Senior Associate

So as with all litigation it's always a good idea to assess properly at the start before you commence the action, what the alternatives are. In this case of injunctions, the step that should be considered before making application, if time allows, is whether or not you can extract undertakings from your opponent. What this effectively is, is that you would write to your opponent and ask them to give you an undertaking either to do, or not to do, the thing that you would consider applying for an injunction for. This can be done just in letters and correspondence and in some situations, parties may be content to rely on that. There are situations where you're dealing with someone who you don't trust, where you might want to get the other side to give those undertakings to the court directly, which means they carry with them the sanctions that I outlined previously. So it's always worth exploring in pre-action correspondence, the possibility of retaining undertakings which would you know. I mean, you don't need to go through the whole process of getting an injunction.

In terms of other options you can sit back and wait for the breach to occur, and then consider a claim for damages at the end, as part of a final trial. Equally you can decide just to go for a final injunction and not stop with the wrong in an interim basis. Sometimes that occurs when parties are worried about giving across undertaking, or they're worried for some other reason about going for an interim case. Of course, there's always things, such as mediation and alternative dispute resolution, if that’s appropriate.

00:22:26 David Lee, Host

Jared, can you just summarise, what is your advice to clients who might need an interim injunction and might need it quickly?

00:22:38 Jared Oyston, Partner

First of all, when a party is suffering, or is concerned that they're going to suffer loss as a result of the action or inaction of another party, then interim injunction should always be considered. They are very powerful tools for preventing harm from occurring pending trial. I think one of the things that will also come across from this discussion is that they can also have quite draconian effects, which the courts are reluctant to impose unless there's a really compelling case which justifies the intrusive effects that interim injunctions can have on a defendant and it's business.

Therefore whilst they are a powerful tool, and they are often the absolutely right answer for a client, they should never be undertaken lightly.

An interim injunction application has to clear a number of fairly high hurdles in a short time frame that makes them expensive, and there can be real consequences for parties who are found to have sought an injunction without proper justification.

Just to go back to something that Will said, it can sometimes be difficult for parties who are looking at a possible injunction who are in the heat of a situation about trying to stop a particular thing from happening, it can often be slightly confusing for them as to why they're having to jump through some of the hoops they're having to jump through. You can have a client who might be there at 11 o’clock at night, scratching their head as to why they're signing off on a witness statement, which includes 3 or 4 pages explaining what we think the other side's position is going to be. They can find it difficult to accept why they are having to give an undertaking in damages, when from their perspective, they're not the bad guy. But those are all about providing a basic level of protection to the to the defendant, who will only have a limited opportunity to put their case forward.

So what all of that means is that a party considering an interim injunction will have to be ready today to devote significant resource over a short intense period. That includes obviously legal costs, but it includes access to witnesses, it includes access to key decision makers in the business over a short timeframe. So it's a significant commitment for a party to embark upon. Parties considering seeking an interim injunction should always seek legal advice as early as possible, not only as to the strength of their case, but also to help guide them through what is, it's fair to say, quite an intense and onerous process.

00:25:05 David Lee, Host

Thanks very much to Jared and Will for their insights today.

So interim injunctions, a powerful tool but can be, definitely the word of the day, onerous. There's a very high bar to reach, they're not cheap, you've got to be sure that you want to go down this route, but if you do decide to go down it - be quick, because if you snooze you might lose.

So thanks again, Jared and Will, for their brilliant insights on ‘Podcasts by Brodies’.

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