What is an injunction and how can they help my business?

Businesses and individuals in a legal dispute can apply to the courts for an injunction to make the other side do something, or to prevent them from doing something, on a temporary basis. The aim is normally to uphold the status quo so that neither side is disadvantaged awaiting settlement of a dispute. Often, you can apply for an injunction before the trial of the main dispute – especially if it will give you a tactical advantage if an injunction is granted.

In an emergency, you can sometimes apply for an injunction without notifying the other side – for example, where it would greatly increase the damage to your business if there was a delay, or where the other side is likely to do something to damage your case if they are given notice of the application.

Freezing Inunction

This stops the other side disposing of, or dealing with, its assets until the main dispute is resolved. ‘Assets’ could include bank accounts, bonds and other financial instruments, even if the other side is holding them on trust for a third party.

Freezing injunctions can also be used to prevent the other side from discarding of any such products that are likely to be needed as evidence. A freezing order can also be made against the other side’s bank if it can be shown that there is a risk that the other side will try to hide or dissipate funds to avoid paying compensation if they lose.

The court will only grant a freezing injunction if it is ‘just and convenient’ to do so. You must show you have an arguable case, but do not have to prove that you will win the main dispute. It is vital that you give the court all the facts, and not just those that support your application. The court then balances your likely loss or damage if the injunction is not granted against the other side’s likely loss or damage if it is.

In making its judgment, the court considers whether money would be adequate compensation for you – if it would, you are less likely to get an injunction. There must also be a ‘real risk’ of the disposal or use of the assets. You will usually have to agree that you will compensate the other side (and sometimes third parties who will be affected) if it later turns out that the injunction should not have been granted.

Search Order Injunction

This goes further than a freezing injunction as it allows you to enter the other side’s premises to search for and take away documents, computers and other materials. For example, if you think there is a risk they will destroy computer records or documents which could be evidence in, say, a shareholders’ dispute between you, a search order allows you to take them away so you can keep them safe. It is extremely difficult to get a search order – you need very strong evidence.

When are injunctions used?

Injunctions are often used in employment disputes. For example, to stop employees (or, more often, ex-employees)

• Breaching non-compete clauses in their employment contracts by setting up a rival business.

• Soliciting former clients or customers (or clients), or their former colleagues in their new job.

• Using or disclosing their (ex-)employer’s confidential information and trade secrets, such as customer or pricing details.

• Shareholders looking to force companies to count their vote at a shareholder meeting.

• Landowners who want to stop ongoing activities that amount to a nuisance

• Individuals who wish to prevent the publication of defamatory and untrue comments.

Sometimes an injunction will include a clause stopping the other side from even disclosing that the injunction has been obtained against them, or by whom. These are known as ‘super-injunctions’.

Next steps 

If you want to find out anything further about this topic then please feel free to call me on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com.

This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.