A Complete Guide to Court Injunctions and What They Do

To put it in simple words, an injunction is a court order to one or different parties that either refrains the person from doing something or requires him to do certain tasks.

The sole purpose of issuing an injunction is to prohibit a certain party from performing activities that can cause irreparable harm to another party.

Injunctions can be issued at two different points in time, i.e., either at the beginning of the trial or at the end, when the court has released the final judgment. The former type of injunction is known as an interim or interlocutory injunction, which can either expire at a specified date or continue in force as a final injunction, depending on the outcome of the trial.

The latter type is known as a final injunction usually released as a part of the final judgment itself. A final injunction can remain in force up to a specified date or forever.

There’s another type of legal order that can restrict someone from doing something. This type of court order is commonly known as a restraining order. Like the temporary injunction, restraining orders are also issued at the beginning of a court trial, although this is not something that this article shall consider.

Let’s Understand Injunctions With an Example

At this point, you might have a general understanding of injunctions. To help you understand more precisely, let’s discuss a real-life scenario where the claimant may ask the court to issue an injunction.

When a couple, that owns a business, files for a divorce, there is usually a dispute on who owns what equity of the business. In this case, if the husband tries to sell the business or make a substantial decision, the wife has every right to apply for an injunction. The court will then issue an interlocutory injunction restraining the husband from taking any business-related decision until the court reaches a final judgment.

How to Obtain an Injunction?

While an injunction can help a claimant in many ways, it is not an easy process to obtain the injunction itself.

Keep in mind that an injunction is only issued when you are going to suffer irreparable harm without the injunction. To put it in simple words, your injury cannot be compensated with money alone. Let’s say as an example, an entity is using your business trademark to sell its goods (which may or may not be authentic), these sales are damaging your business. Not only are they damaging your bottom line by taking sales away from you, but they also threaten to damage your reputation because the infringing party do not store its goods in the correct way or the products do not match the required quality standards.

In this case, you may seek to obtain an injunction against the infringing party, as an effective remedy against the risk of damage to your reputation.

It will be necessary to prove that an injunction is the only way you can avoid the injury from happening. In many cases, the judge would also consider the likelihood of you winning the case. The judge is most likely to issue an injunction if he/she’s convinced that the success rate of your lawsuit is higher.

What test is applied by the court to decide whether you can get an injunction?

The courts powers to grant an injunction are founded in the Senior Courts Act 1981. The principles upon which the Court approaches the exercise of these powers, and derived from Lord Diplock’s speech in American Cyanamid Co Ltd v Ethicon Ltd [1975] AC 396 as follows:

‘If the Court is satisfied that there is a serious question to be tried, it must go on to consider whether the claimant would be adequately compensated in damages and whether the defendant would be in a financial position to pay them. If the answer to both of those questions is in the affirmative, no injunction should normally be granted. If not the court must consider whether the defendant would be adequately compensated under the claimant’s undertaking as to damages in the event of his succeeding at trial. If the answer to that question is “yes” the fact that the defendant may succeed at trial is no bar to the grant of an injunction. Where there is doubt as to the adequacy of damages for both parties the court must determine where the balance of convenience lies. If matters are evenly balanced it may be wise to take such measures as are calculated to preserve the status quo.’

Whilst the American Cynamid test provides strong  guidance, it must be remebered that it is not legislation in itself. The fundamental principle remains that based on the facts of the case, the court should take whatever course appears to carry the lower risk of injustice if it should tum out to have been the “wrong” course – in the sense that the court either grants an injunction which should have been refused or refuses to grant an injunction that should have been granted (Factortame p 683, approving Hoffman J in Films Review Ltd v. Cannon Film Sales Ltd [1987] 1 WLR 670,680.’).

The American Cyanamid Test:

When considering whether to grant an injunction, the court will consider the merits of the case and ask the following questions:

1. Is there a Serious question to be tried?

The court must first be satisfied that there is a serious question to be tried.

”The court no doubt must be satisfied that the claim is not frivolous or vexatious, in other words, that there is a serious question to be tried. It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial.’ – Per Lord Diplock, American Cyanamid at 407H

2. Are damages an adequate remedy for the Claimant?

The court must consider ‘if damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them’. – per Lord Diplock in American Cyanamid at [408]

Sachs LJ formulated and explained the question of whether damages would be an adequate remedy in Evans Marshall & Co. v Berto/a SA [1973] 1 W.L.R. 349 as follows:
“The standard question in relation to the grant of an injunction, “Are damages an adequate remedy?”, might perhaps, in the light of the authorities of recent years, be rewritten: “Is it just, in all the circumstances, that a plaintiff should be confined to his remedy in damages?””

3. In the alternative, would damages be an adequate remedy for Defendant?

This question looks at whether in the event that the injunctive relief that is sought is granted and it later be found that it should not have been (for example if the Claimant loses at trial), would the Defendant be easily compensated for their losses caused by the injunction by way of damages?

For example, using our business trademark infringement case from above, where a Claimant seeks to prevent an infringing party from selling its goods using the Claimant’s trademark, if an injunction was granted, it would protect the Claimant against the risk that the infringing party causes damage to its reputation. In the event that the Defendant was to win at trial, and it was decided that the Claimant had no right to be granted an injunction, then it would be quite easy for the Defendant to be compensated by damages (i.e. a calculation could be made of the number of likely sales x the amount of time the Defendant was prevented from selling).

On this point, another factor the court will look at is the financial position of the party seeking an injunction, to ensure that in the event that an injunction was found to be wrongly granted, the wronged party could be sure that the Claimant can afford to compensate it for their loss.

4. Should an injunction be granted on the Balance of Convenience?

Require an Injunction?-Ai Law Can Help.

Our dispute resolution team at Ai Law has extensive experience in civil litigation matters. If you have a dispute, contact us today and we can review your matter and let you know your prospects and next steps to take. If irreparable harm has been caused or threatened to be cause by a party Ai Law can consider whether an injunction is an appropriate remedy, in the interim whilst the dispute is resolved, or with a view to obtaining a final injunction.