What are commercial injunctions?
If you wish to take urgent action to protect a business asset such as a commercially sensitive concept, then often the only option is to take out a court order known as an injunction. If you do not act without delay, the company could sustain financial losses which you may not be able to recover.
Protecting assets is always a better situation to be in than trying to recover them at a later date.
You can take out an injunction as part of larger legal action or as a stand alone process.
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Commercial injunctions are never cheap
Taking out a commercial injunction can be pricey, but it is common for companies to apply for an injunction even before any court proceedings have started. Often, being granted an injunction in this way as early stage can effectively stop a court case before it has even started – and can help a company to avoid being dragged though costly and time-consuming legal action.
Commercial injunctions – the implications
Remember though that if you apply for an injunction which is not granted, there can be serious implications.
You also need to consider that if the injunction is granted initially but then removed at a later date, this could encourage the defendant even more and may result in an order for large costs.
Main types of injunction orders
There are broadly two main categories of injunction. Prohibitory injunctions require one of the parties to stop doing something, and mandatory injunctions force a party to carry out a specified act or acts.
The three main types of injunctions granted are:
· Search Orders: these are granted to give permission to search for evidence and seize it when it is found. These orders can cover the search of computers or other electronic storage devices which could be easily disposed of when the party concerned is told of an impending court case.
· Freezing Orders: to stop any money or assets being concealed, taken out of the country or sold. These are often served on financial institutions such as banks as well as the party concerned
· Disclosure Orders: these force a party to make all reasonable attempts to search for documents, and to disclose them.
What kind of cases do injunctions cover?
Injunctions are often the first course of action when you suspect that your business is in serious danger, and where you are pretty sure that you have a strong legal case.
Common reasons for using them include is procedure include the following:
- Infringement of your intellectual property rights e.g. trademark, patent, copyright and passing off disputes
- Company disputes – click here to read more about director disputes, shareholder disputes and business partnership disputes
- To prevent disclosure of sensitive and confidential commercial information (e.g. trade secrets or a client database)
- Claims involving breach of contract
- To prevent breaches of employment law through the use of restrictive covenants
Your commercial injunction – applying on notice or without notice ?
Work with your lawyers to decide whether to apply for an injunction without giving the other party any warning, or whether to give them notice of what you intend to do.
The best course of action will depend on the specifics of your case. If, for example, you have concerns about assets being sold or removed from the country, then the best course of action might be a swift freezing order without notice.
On the other hand, if you are dealing with a breach of restrictive covenant, a better course of action might be to contact the party concerned, demanding that they stop the conduct, give you the items they should not have, or look for legal commitment that they follow a certain path. If that fails you might choose to apply for an injunction and give notice to the other side.
Your injunction order – the court will consider
When looking at whether or not to grant an injunction, the court needs to satisfy itself that you can:
· Demonstrate that the situation is urgent, and that there is a real threat to your business or legal interests.
· Give a commitment as far as costs are concerned. The court has to make sure that the party applying for the injunction can cover the defendant’s legal costs if at a later date it is shown that the injunction was unneeded or didn’t meet the legal criteria.
· Show the court all of the facts and evidence, not just the evidence which supports your application.
Commercial injunctions – the risks?
Any party which goes to court looking for an interim injunction will be asked to give an “undertaking in damages”. This means that if it is shown further down the line that the injunction was wrongly served, you might have to pay compensation to the other party for any loss which they incurred because of the injunction. Often, this can involve considerable sums of money.
A second cost to think about is the legal work involved with putting together any potential injunction application and to advise on the process. Legal costs – for both sides – tend to escalate quickly during this period. As is commonplace with litigation, you are likely to be liable for the other side’s costs as well as your own if any application for an injunction fails.
Remember too that applying for an injunction can quickly eat up large amounts of management and staff time, and dealing with the legal proceedings could distract attention from the day to day running of your business.
Make sure you get good legal advice on your situation as soon as possible, and be sure that you have a strong legal case for an injunction before taking action.
Applying for a commercial injunction? 3 bits of practical advice
If you think you are in the position of applying for an injunction, or indeed defending one, you should:
· Instruct a lawyer without delay
· Make sure you are available at all times to work with your legal representative
· Instruct your lawyers fully, and give them all of the information, even the bits you feel might be unhelpful.
We have been served with an injunction order – what should we do?
When you are served with an injunction, the first thing you have to do is follow it to the letter – even if you disagree with it and start the legal process to have it set aside.
If you do not comply with an injunction order, this could have serious consequences. It is standard practice for injunction orders to come with a penalty order, and breaking this can lead to you ending up in prison.
Remember too that injunction orders are temporary, and usually come with a fairly short return date when you have to go back to court for a judge to decide whether to keep the injunction in place. One option is therefore to wait for this date and use the time to prepare the evidence to show why the injunction should be overturned.
If you have been served with an injunction which you believe is damaging to your business or legal rights and is unwarranted, then start the process to have it set aside.