How to Apply for an Interim Injunction in a Commercial Dispute

In commercial disputes, waiting for a final court judgment can sometimes allow serious harm to occur before the case is resolved. For example, a competitor may misuse confidential information, a former employee may breach restrictive covenants, or a business partner may threaten to dispose of valuable assets. In these situations, the courts in England and Wales can grant interim injunctions to preserve the status quo until the dispute is fully decided.

An interim injunction is a temporary court order requiring a party either to do a specific act or refrain from doing something while the underlying case proceeds through the courts. These orders are governed primarily by the Civil Procedure Rules (CPR), particularly Part 25, which deals with interim remedies in civil litigation.

This guide explains what interim injunctions are, when they can be used in commercial disputes, the legal test applied by the courts, and the steps involved in making an application.

What Is an Interim Injunction?

An interim injunction is a temporary order issued by a court before the final trial of a case. It is designed to prevent harm or unfair advantage while the dispute is still being resolved.

In commercial disputes, injunctions commonly require a party to:

• Stop breaching a contract
• Avoid using confidential information
• Cease dealing with certain customers or suppliers
• Preserve documents or evidence
• Prevent the transfer or disposal of assets

An interim injunction remains in force until the court either varies the order, lifts it, or replaces it with a final order after the trial.

Interim injunctions are part of the wider category of interim remedies, which courts may grant during ongoing litigation to protect the parties' rights until a final judgment is reached.

Types of Interim Injunctions in Commercial Cases

Several different forms of injunction may be used depending on the nature of the dispute.

Prohibitory Injunctions

A prohibitory injunction prevents a party from doing something. These are the most common form of interim injunction in commercial disputes.

Examples include orders preventing:

• Disclosure of confidential business information
• Soliciting customers in breach of restrictive covenants
• Infringing intellectual property rights

Mandatory Injunctions

A mandatory injunction requires a party to take a specific action.

Examples may include:

• Returning confidential documents
• Removing infringing materials
• Restoring property or data to its original state

Mandatory injunctions are usually harder to obtain because they compel a positive act rather than merely preventing behaviour.

Freezing Injunctions

A freezing injunction prevents a party from disposing of or transferring assets. These orders are often used in cases involving suspected fraud or attempts to move assets beyond the court's reach.

Quia Timet Injunctions

A quia timet injunction is granted when harm has not yet occurred but is clearly threatened. The purpose is to prevent damage before it happens.

When an Interim Injunction Can Be Requested

An interim injunction can normally be sought after court proceedings have begun. However, in urgent situations the court may grant one before a claim has formally been issued, provided the claimant undertakes to start proceedings promptly.

Examples of urgent circumstances include:

• Risk of confidential information being disclosed
• Potential destruction of evidence
• Imminent breach of a restrictive covenant
• A business about to launch a competing product in breach of contract

In urgent cases, applications may be made without notice, meaning the opposing party is not informed beforehand. However, this procedure is only used when notifying the other party would defeat the purpose of the injunction.

The Legal Test for Granting an Interim Injunction

Courts decide whether to grant interim injunctions using principles established in the case of American Cyanamid Co v Ethicon Ltd [1975].

The court considers several key factors.

1. Is There a Serious Issue to Be Tried?

The applicant must show that the claim is not frivolous or speculative and raises a genuine legal dispute.

The court does not decide the case fully at this stage but ensures there is a legitimate issue requiring trial.

2. Would Damages Be an Adequate Remedy?

The court assesses whether financial compensation would adequately compensate the claimant if the injunction is refused.

If damages would not adequately repair the harm-for example, damage to reputation or loss of confidential information-the case for an injunction becomes stronger.

3. Balance of Convenience

The court considers which party would suffer greater harm from granting or refusing the injunction.

The judge compares:

• The potential harm to the claimant if the injunction is denied
• The harm to the defendant if the injunction is wrongly granted

4. Preservation of the Status Quo

Courts often favour maintaining the existing situation until the trial. This prevents either party gaining an unfair advantage before the dispute is resolved.

The Requirement for a Cross-Undertaking in Damages

A key feature of interim injunctions is the cross-undertaking in damages.

This means the applicant must promise to compensate the defendant if the court later determines that the injunction should not have been granted.

For example, if an injunction prevents a company from trading and the claimant later loses the case, the defendant may be entitled to compensation for financial losses caused by the order.

This requirement helps protect defendants from unfair harm while allowing courts to grant urgent relief where appropriate.

Step-by-Step Process for Applying for an Interim Injunction

Applying for an interim injunction involves a structured procedure under the Civil Procedure Rules.

Step 1: Prepare the Claim

In most cases, a claimant must first start court proceedings by issuing a claim form. The claim outlines the legal basis of the dispute.

If the injunction is urgently required before proceedings begin, the court will usually require the claim to be issued shortly afterwards.

Step 2: Prepare the Application Notice

The party seeking the injunction must submit an application notice to the court requesting interim relief.

This document sets out:

• The order being sought
• The legal basis for the application
• The urgency of the matter
• The evidence supporting the request

Step 3: Prepare Supporting Evidence

Evidence is typically provided through witness statements or affidavits.

These documents explain:

• The facts of the dispute
• The harm likely to occur without the injunction
• Why damages would not provide an adequate remedy

Supporting evidence may include contracts, emails, financial records, or technical reports.

Step 4: Notify the Other Party

In most cases, the application must be served on the defendant so they have an opportunity to respond.

However, in urgent cases the court may allow a without-notice application, where the defendant is informed only after the order is granted.

Step 5: Attend the Court Hearing

The court will schedule a hearing where both parties can present legal arguments and evidence.

The judge will consider the American Cyanamid principles and decide whether to grant the injunction.

What Happens After an Interim Injunction Is Granted?

If the court grants the injunction, it will issue an order specifying:

• The conduct that must stop or occur
• The duration of the order
• Any reporting or compliance requirements

The order remains in force until:

• The trial concludes
• The court varies or discharges the injunction
• The parties reach a settlement

Failure to comply with an injunction is a serious matter and may amount to contempt of court, which can result in fines, asset seizure, or imprisonment.

Risks and Practical Considerations

Applying for an interim injunction carries several legal and financial risks.

Key considerations include:

• Legal costs associated with urgent court applications
• Potential liability under the cross-undertaking in damages
• The possibility that the court may refuse the application
• Strategic consequences if the case proceeds to trial

Because injunction applications often require urgent preparation and detailed evidence, many businesses seek advice from solicitors experienced in commercial litigation.

Common Questions About Interim Injunctions

How quickly can an interim injunction be granted?

In urgent cases, courts can hear applications within hours or days, particularly where significant commercial harm is imminent.

Can a business apply for an injunction without notifying the other party?

Yes, in exceptional circumstances. However, the applicant must explain why notice could undermine the purpose of the injunction.

Does an injunction decide the case?

No. An interim injunction is temporary and only preserves the situation until the court determines the dispute at trial.

What happens if an injunction is breached?

Breaching an injunction may lead to contempt of court proceedings, which can result in fines, asset seizure, or imprisonment.

Key Takeaways

Interim injunctions are powerful legal tools that allow courts in England and Wales to prevent harm during ongoing commercial disputes. These temporary orders can stop parties from breaching contracts, misusing confidential information, or disposing of assets while litigation proceeds.

Courts apply the principles established in American Cyanamid when deciding whether to grant such orders. These include assessing whether there is a serious issue to be tried, whether damages would be an adequate remedy, and where the balance of convenience lies.

Applying for an interim injunction involves issuing a claim, submitting an application supported by evidence, and attending a court hearing. Because the remedy carries significant legal consequences and potential financial risks, careful preparation and a clear understanding of the legal requirements are essential.