Lloyd's Maritime and Commercial Law Quarterly
The undertaking in damages
Steven Gee *
Interim injunctions and other interlocutory orders can cause loss or expense to non parties and others which in fairness the applicants ought to pay. The undertaking required under the CPR for any injunction has been ignored, is too restrictive and is unclear. Recent decisions in the Chancery Division have held that the court has been left with no jurisdiction to grant relief to non parties, because the necessary undertakings have not been required, and have endorsed, on historical grounds which appear to be less than satisfactory, a practice which seems less than just. This article examines the history, the current practice and the case for reform
.
Introduction
The High Court of Chancery had no general jurisdiction to award compensation against a plaintiff who had obtained an interlocutory injunction but then failed in his substantive claim or was shown to be not entitled to the order. There might have been statutory reform to give the court that power, and it can be questioned whether it would be simpler, and involve less risk of unfairness, to have a statutory jurisdiction to award compensation for unjustified orders.1
However, the solution has been one designed by the judges; to take undertakings to the court which would result in proper payments being made, and which, if broken, expose the undertaker to being held in contempt. If undertakings are to perform this purpose, they must protect those liable to be damaged, be in sufficiently wide terms, and be stipulated for by the court whilst the applicant still needs his order. With the development of the Mareva
jurisdiction it has been recognized that the granting of an injunction, or other discretionary interim order, can significantly affect persons who are not defendants in the case. A number of decisions recognize that the interests of these non parties may make it unjust to grant an injunction and that, if an order is to be made, the interests of the non parties should be protected. However, although the undertakings which are required in freezing order cases, including those protecting non parties, are almost universally insisted upon, there is uncertainty about what is or should be the proper practice for other orders. The position under the CPR in the High Court is regulated by the Practice Direction-Interim Injunctions
which supplements CPR Part 25. Paragraph 5.1 provides that for any “injunction” there must be an undertaking in damages by the applicant to the court covering “ … any damages which the respondent(s) (or any other
* QC. I would like to acknowledge the assistance I received about French practice from Professor Emmanuel Gaillard of Shearman Sterling, Paris, and about practice in the Federal Court of Australia from Noel Russell, a barrister from Victoria.
1. A Zuckerman, Civil Procedure
, 2nd edn (2003), 317.
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