How to file an injunction against a business

When faced with a dispute with another business, you may need to consider whether obtaining an injunction against them is a viable course of action, depending on the circumstances. There are multiple considerations to be aware of before seeking this kind of relief. This guide will take you through the key details you need to know to help you determine whether taking injunctive action is right for your company.

Note: the scope of this article covers domestic disputes only, although it is possible to obtain an injunction in certain circumstances against a company based in another jurisdiction.

A note on Covid-19 and injunctions

In light of the situation with Covid-19, it is vital that you seek legal advice about the effect this may have on any application for an injunction prior to taking action as the courts are, at the date of this note, dealing with urgent work only as a result of running a limited service.

What is an injunction?

An injunction is an order of the court which requires you to do or refrain from doing a specific act. The former is termed a mandatory injunction, and the latter is known as a prohibitory injunction. It is a discretionary remedy, and the court’s inherent powers to grant injunctions arises from section 37 of the Senior Courts Act 1981 'in all cases where it appears to the court to be just and convenient to do so' in relation to High Court litigation. The relevant part of the Civil Procedure Rules (‘CPR’) relating to injunctions is CPR 25.1.

If any of the terms of an injunction are breached, it is potentially punishable as contempt of court and imprisonment: this fact alone demonstrates the seriousness of resorting to obtaining an injunction against another business.

When would an injunction be required?

There are a multitude of situations where you may wish to consider obtaining an injunction. Examples of such situations include where you need to safeguard your company’s interests, assets or reputation – you may wish to prevent another company from acting in a way that would cause your business harm or financial detriment, or compel them to do something. As previously stated, the court has a discretion as to whether to grant an injunction and strict criteria is applied, as discussed further along in this guide.

Can you apply for an injunction before court proceedings begin?

It is possible for you to obtain an injunction before the court process formally begins. This is termed an interim injunction. It’s a temporary measure which can be taken at an early stage in the pending litigation or proceedings (including but not limited to pre-action), usually in circumstances of urgency, before a trial and before any final decision is made on the merits of either side’s case. It remains in force until discharged by the court.

A final, or 'perpetual' injunction, is one which is generally made at trial. This type of injunction continues with no limitation of time.

More on interim injunctions

If you are applying for an interim injunction, it’s important to be aware that it can be obtained either by giving notice to the intended recipient (the respondent) of the order ('on notice') or by not giving them any prior notice ('without notice'). It can also be 'ex parte' (whereby only you as the applicant for the injunction has the opportunity to put your case to the court) or 'inter partes' (both you and the respondent have the chance to make your respective arguments).

'Without notice' applications

In order to persuade the court to hear your application for an injunction without notice being given to the respondent as to the time and place of the hearing, you would need to have compelling evidence and good reasons for not notifying the respondent; for example, due to urgency, or a real risk of them imminently moving or dissipating assets.

'Ex parte' applications

For you to have prospects of success in obtaining the court’s permission to proceed with an 'ex-parte' application, you would have to argue a strong case in favour of justifying such a measure. Usually, in circumstances where the court allows this in the first instance and grants an interim injunction in your favour, it would fix a return date for both parties to attend. At that stage, both parties would be able to present arguments as to whether the interim injunction ought to remain in force until a later date, such as trial, or be discharged.

A cross-undertaking as to damages

You should be prepared to give the respondent a 'cross-undertaking as to damages' if you apply for an injunction against them, as this is something that the court generally expects. What this means in practice is if the court grants the injunction and then it becomes apparent at a later stage that the injunction should never have been granted, or it should be discharged, you will then be liable to financially compensate the respondent. This is a serious consideration and one which should not be taken lightly in the overall decision as to whether you should apply for injunctive relief, because any damages awarded in these circumstances could potentially be significant.

You may also be asked to demonstrate your financial means due to the above, as the court will take that factor into account when deciding whether to grant the injunction. As a final point, it is worth being aware of the fact that breaching a cross-undertaking as to damages constitutes contempt of court.

What are the different types of injunction?

There are several different types of interim injunction that can be applied for, depending on your situation. Whether any of the examples listed below are made final at trial is a matter for the court’s discretion, taking into account several factors which will be discussed later.

Here are some examples of the types of injunctive relief that may be available to your business:

• Freezing Injunction (prohibitory in nature): This is a type of interim order which you would seek to restrain another party from moving assets located within the jurisdiction out of the jurisdiction. You would consider applying for a freezing injunction if you had serious concerns that the business in question (the respondent) was going to dissipate assets so as to prevent you from enforcing any judgment you might obtain against them. Examples of assets that can be frozen are bank accounts, property and vehicles owned by the company.

Given the draconian nature of this type of relief, the court would expect you to demonstrate that you have a substantial cause of action against the respondent, a good arguable case and that there is a real risk of them removing, dissipating or hiding the assets in question.

• Search Order (mandatory in nature): The purpose of this type of injunction is for you to obtain permission for you or your representatives to enter the respondent’s premises in order to search for, seize, take copies of and/or remove copies of information – usually documents or materials, with a view to preserving evidence for the trial. This may be appropriate if you are involved in an intellectual property dispute, or a claim involving fraud.

Again, the threshold for successfully obtaining a search order is high and it is strongly recommended that legal advice is sought from an experienced dispute resolution solicitor urgently if this action is contemplated.

• Privacy injunction (prohibitory in nature): You would consider obtaining a privacy injunction in circumstances where you wanted to prevent the publication of sensitive or confidential material. The notorious 'super injunction' falls within the scope of this type of injunctive relief.

The court will, as a rule, refuse to grant an injunction of this nature before trial unless it is satisfied that the you as the applicant can more likely than not prove that the publication should not be allowed.

• Injunction to restrain unlawful competition by directors and employees (prohibitory in nature).

• Insolvency injunction (prohibitory in nature): You may wish to try and obtain this type of injunction to prevent another company from presenting a winding-up petition against your business.

The above examples are not exhaustive, as the court has a wide discretion beyond the specific orders set out in CPR 25.1. Legal advice should be sought if you are in any doubt as to whether your scenario lends itself to obtaining an injunction.

What general principles apply that ensure an injunction is valid?

Below are the key general principles that the court will take into account when determining whether your application for an injunction will be granted:

• Is there a valid and substantive cause of action? In conjunction with this, you must be able to demonstrate that the respondent has – or is likely to/is threatening to – behave in an unconscionable manner in respect of your legal rights.

• Is it 'just and convenient' to grant the injunction? The court will exercise discretion in relation to this factor, and it is important to be aware that it will be applying the rules of equity here; i.e. any delay in applying for the injunction will likely harm your prospects of success and further, you must have acted properly – the phrase often associated with this is 'with clean hands'.

• Would damages be an adequate remedy? If the answer to this question is yes, that damages would adequately compensate you in your dispute, then the court will not grant an injunction.

What process needs to be followed to file an injunction?

The process for applying an injunction will depend on whether it is being made with or without notice to the intended respondent.

Any application made 'on notice' will require the filing of a formal Application Notice at the court where the proceedings are dealt with. The form itself will vary according to which court you are applying to and the nature of the dispute. The Notice should contain and exhibit to it the following:

• Details of the order you are seeking.
• The reasons why you are seeking the order.
• The time, date, and place of any hearing (if one is due to take place).
• Any evidence in the form of a witness statement or affidavit should be attached. This should contain all material facts and any documents you wish to rely on.
• A draft of the order you are seeking will usually be required by the court.

If you need to apply for a 'without notice' injunction, the court may not require completion of an Application Notice due to the urgency of the situation, for example. But you may well be ordered to complete one as soon as possible after the hearing.

What about the cost of filing an injunction?

The overarching point to bear in mind about the costs associated with applying for injunctive relief is that they can be substantial – it is a notoriously expensive and laborious process.

If you are considering applying for an injunction, it is strongly recommended that you seek legal advice from a dispute resolution specialist, right at the outset. It is apparent that resorting to this relief with often draconian and costly consequences is not to be taken lightly, and there may well be other remedies available that will resolve your dispute in a more timely and cost-effective fashion.