Cross undertaking in damages is a legal concept that plays a significant role in litigation, particularly in cases where an interim injunction or a freezing order is sought. In such instances, the court may require the party seeking the injunction to provide an undertaking to pay damages to the opposing party if it is later determined that the injunction should not have been granted.

At Annecto Legal, we connect clients with the right injunction solicitors, as well as securing litigation funding and /or cross undertaking in damages insurance for your case, where necessary.

Why is a cross undertaking required?

The purpose of the cross undertaking in damages is to protect the party against whom the injunction is sought from suffering losses or harm as a result of the injunction. It ensures that if the court later determines that the injunction was wrongly granted, the party who obtained the injunction will be responsible for compensating the other party for any losses suffered as a result.

By requiring the party seeking the injunction to provide a cross undertaking in damages, the court aims to mitigate the risk faced by the opposing party and ensure that they are adequately protected. It serves as a safeguard against potential abuse of the injunction process and encourages parties to carefully consider the potential consequences of seeking injunctive relief.

Funding cross undertaking in damages

In the event that a claimant’s case is found to lack merit, the purpose of the undertaking is to reimburse the opponent for the losses they suffered unjustifiably, as their assets or activities should not have been interfered with.

However, when the court perceives a risk that the claimant may be unable to fulfil the compensation obligation, it may demand security for the cross-undertaking. This requirement for security can pose challenges to valid claims if the claimant lacks sufficient funds or liquidity. There will also be instances where it makes commercial sense to use an insurance product to fulfil this requirement, rather than tying up cash in court for extended periods.

To address this issue, cross-undertaking insurance policies can serve as security and provide assurance to the court that the undertaking will be honoured if necessary. By obtaining such insurance coverage, the claimant can meet the court’s requirements and demonstrate their ability to fulfil the compensation obligation associated with the cross-undertaking in damages.

At Annecto Legal, our professional advisors can assist clients by helping them to obtain a sufficient insurance policy to serve as security for cross undertaking in damages.

How can Annecto Legal assist?

At Annecto Legal, we assist claimants in finding the right legal representation and insurance for cross undertaking in damages.

With the right legal team, it is possible to put in place the appropriate litigation funding and insurance to take the case all the way to court, if necessary. Annecto Legal helps clients realise the value of their cases. We work closely with litigation funders, insurers and injunction solicitors.

If you are in the process of cross undertaking in damages, please contact Annecto Legal today. We can help find you the right representation, as well as managing your financial risks and sourcing funding for your legal fees.