Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
Find up-to-date guidance on points of law and then easily pull up sources to support your advice with Lexis PSL
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
On 9 October 2014, the Court of Appeal confirmed, for the first time at appellate level, the test that the court will apply when determining whether or not the fortification of a cross-undertaking in damages should be provided.
The appeal was against a freezing order made by Hamblen J in the Commercial Court on 13 January 2012 requiring the appellant to provide additional fortification of its cross-undertaking in damages.
The Court of Appeal has provided welcome clarity regarding the test that the court will apply when determining whether or not fortification of a cross-undertaking in damages should be ordered in a particular case. The decision reflects a common sense and principled approach to the issues.
In order to obtain a freezing injunction it is well-established that a claimant must show (inter alia) that it has a ‘good arguable case’ against the defendant in its substantive cause of action. The Court of Appeal confirmed that a symmetrical test should apply when a defendant seeks fortification of a claimant’s cross-undertaking in damages, ie the defendant must show that it too has a ‘good arguable case’ that it will suffer loss in consequence of the making of the freezing order.
In confirming the test, the court dismissed any suggestion that a defendant has to prove loss on the balance of probabilities because, in the court’s view, this would encourage wasteful satellite litigation.
Tomlinson LJ, who gave the leading judgment, approved Briggs J’s summary in Jirehouse ( EWHC 725 (Ch)) of the three principles relevant to satisfying this test (which the judge set out whilst sitting as a Deputy Judge in Tchigirinski ( EWHC 2471 (Ch)):
‘Broadly speaking, they require  an intelligent estimate to be made of the likely amount of any loss which may be suffered by the applicant for fortification (here the defendants) by reason of the making of an interim order. They require  the court to ascertain whether there is a sufficient level of risk of loss to require fortification. They require  that the loss has been or is likely to be caused by the granting of the injunction’ (numbers added)
His Lord Justice considered that Briggs J’s three requirements are ‘inextricably linked’ and could equally be summarised as a requirement that the applicant for fortification must show a good arguable case for it. Tomlinson LJ continued that, in the interlocutory context, showing a sufficient level of risk of loss to require fortification is synonymous with showing a good arguable case to that effect.
It was recognised that in some cases the assessment of loss at the interlocutory stage may be difficult and in such cases an ’intelligent estimate’ will be required. Tomlinson LJ stated that an ‘intelligent estimate’ will be ‘informed and realistic although it may not be entirely scientific’.
As to the question of causation, the Court of Appeal confirmed that at the stage of considering whether fortification of the undertaking is required the court has to be satisfied that the making of the order is, or was, a cause without which the relevant loss would not be, or would not have been, suffered. The court stated that it is open to respondents (claimants) to demonstrate that defendant applicants have not surmounted this hurdle by demonstrating that there is no causal link between the granting of the injunction and the loss in question. However, the court was clear that if disproving the causal link requires the ‘deployment of extensive contentious evidence and argument’ then such an exercise cannot be attempted at the interlocutory stage.
The appeal from the judgment of Hamblen J ( EWHC 79 (Comm)) was heard by Tomlinson and McFarlane LLJ and Sir David Keene on 17 July 2014. Judgment was handed down on 9 October 2014. Tomlinson LJ gave the lead judgment with which the other judges agreed.
Free trials are only available to individuals based in the UK
* denotes a required field
**Trials are provided to all LexisPSL and LexisLibrary content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial. See our full terms here.
Access this article and thousands of others like it free by subscribing to our blog.
Read full article
Already a subscriber? Login
Barry specialises in international arbitration and commercial litigation. He trained and practised at Jones Day before joining Pinsent Masons. At LexisNexis, Barry is Head of Arbitration and Head of the Lexis®PSL Dispute Resolution Group.
In practice, Barry’s work included commercial, aviation and technology arbitrations pursuant to international arbitral rules, involving UK and international clients. He also has a background in general commercial, civil fraud and IT litigation, including experience before the High Court. While in private practice, Barry worked with a broad range of clients from the private and public sectors.
At LexisNexis, when not focused on the strategic development and operational requirements of the Dispute Resolution Group, Barry’s content work focuses on the law and practice of international commercial arbitration and investment treaty arbitration. In addition to his work for Lexis®PSL, Barry contributes to the LexisNexis Dispute Resolution Blog and New Law Journal on litigation and arbitration matters
0330 161 1234