What do I do when my company is served an injunction?

Posted by: Marcin Durlak
Posted in: Dispute resolution
Date published: 11/10/2022

An injunction is an emergency order granted by a court to prohibit a company from undertaking particular activities or ordering it to take specified actions. There are different types of injunctions for which the courts have adopted strict tests. If the criteria are not met, then an application is unlikely to succeed.

If a company or individual applies for an injunction and cannot demonstrate their legal interests require immediate protection from an injunction, it is unlikely to be granted.

Courts always grant injunctions temporarily. In many company disputes, applications for injunctions are made before substantive court proceedings are begun. Parties served with injunctions will have the opportunity to apply to the court to have it set aside or varied.

The type of situation where injunctions may be suitable include:

Wrongful use of company data or trade secrets
Breach of restrictive covenants in employment disputes
Infringement of intellectual property rights
Shareholder disputes
Fraud or unlawful movement, hiding assets such as money, documents or media

The types of injunction order

The type of order a court can make depends on the facts of each case at hand. The most commonplace are:

Freezing orders

This tends to be used in relation to bank accounts and prevents a defendant from dissipating or disposing of assets in a fashion that leaves a final judgment unfulfilled. As well as being served on a defendant, freezing orders are also served on any third parties or banks where the defendant has an interest or assets held on the defendant’s behalf.

Search orders

This is an order that requires the claimant’s legal representative to enter the defendant’s premises to search for, copy, and remove information, documents, or material. Items that can be taken include, but are not limited to, computers or other devices where information is stored. Search orders are particularly useful if the claimant believes that the defendant will either destroy or attempt to destroy evidence when proceedings begin.

Disclosure orders

This injunction requires a party to make a ‘reasonable search’ for specified documents, which must then be disclosed.

Deliver up order

This injunction orders a third party to give up specific documents, property, or evidence.

Interim injunctions

Interim injunctions are made at the courts discretion, so it is not granted as of right. Before granting an interim injunction, the court will consider, amongst other things, the following factors:

Any delay that has been caused by the claimant
Whether the injunction can be written in such a way that it can be adequately implemented and enforced, if required.
The claimant’s behaviour. This is often referred to in legal terms as ‘clean hands’ and clarifies whether the claimant has acted unlawfully in respect of the claim or if there has been any misconduct affecting their rights to obtain the injunction from the court.

Defending an injunction

To be successful, a claimant must prove the ‘balance of convenience’ is on their side. In other words, the court will consider whether the likely damage and inconvenience caused to the claimant outweighs the cost for the defendant. Generally, this issue is solved by the claimant undertaking (promising) to cover any losses the defendant could suffer as a result of their application being incorrect. Additionally, if damages are sufficient to cover any inconvenience the claimant has suffered, then the injunction will not be ordered by the court. Damages will not be sufficient in cases where:

The defendant is unlikely to be able to pay for damage that arises
Compensation is difficult to assess, e.g. damage to someone’s reputation, for example
If the effect of the injustice is beyond repair

If the defendant has not been given notice of the injunction application, and it has been successful, then they will need to apply to the court to have the injunction set aside. If, at a hearing, the injunction to set aside is successful, the claimant has a duty to compensate the defendant for any loss incurred for the period the injunction was in operation.

If an injunction is obtained by the claimant without notice (that is without the defendant’s knowledge), the defendant must comply with it, even if they completely disagree or they subsequently plan to apply to have it set it aside.

Injunctions typically include a penal notice. This means that if the defendant breaches the injunction, they can be sent to prison. If an injunction is obtained without notifying the defendant, then the court will set a date for a hearing to determine whether the injunction should remain in force.

Contact IMD Corporate Lawyers

At IMD Corporate, we understand how being served an injunction can impact you and your business, and how it can be a stressful time. We offer a wide range of services, which can either be purchased individually for a fixed cost or accessed in full by joining our employer-protect scheme, which makes us affordable for all. For more information, please contact Marcin Durlak on 0330 107 0106 or email us at business@imd.co.uk.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.