The Undertaking in Damages—Substantive and Procedural Dimensions

Abstract

It is well established that a party seeking an interlocutory or a Mareva injunction is required to give a cross-undertaking in damages as a condition of being granted the order sought. Equally settled is the principle that the undertaking in damages may be invoked in two situations. First, when the injunction is discharged before trial on the ground that it should never have been granted and, secondly, if at the end of the trial the party enjoined obtains a favourable judgment vindicating his claims in the action. Yet the principles governing a decision whether to enforce the undertaking are inadequately articulated. Two reasons have combined to contribute to this state of affairs: the fact that the award of damages is considered to be discretionary and the small number of instances in which the courts have been asked topronounce on the subject. However, the great rise in applications for interlocutory relief, whether by way of interim or Mareva injunctions or Anton Piller orders, has commensurably increased the importance of this subject. A number of recent decisions stand witness to this tendency and underscore the need for a thorough treatment of the topic.