Converting Emergency Arbitral Interim Orders into Enforceable Share Freeze Injunctions
Emergency arbitral orders require formal domestic court leave to convert into enforceable share freeze injunctions binding registries and transfer agents.
Cross Undertaking as to Damages
Meaning
Legally binding promise given to a court by a party seeking an interim injunction to compensate the restrained party if the order is later found to be unjustified. The cross undertaking as to damages acts as a financial safeguard for a defendant whose business operations may be disrupted by a temporary freezing order. It ensures that the applicant carries the risk of the legal action.
Financial Indemnity
Applicants must demonstrate the ability to pay if the undertaking is called upon by the court. A cross undertaking as to damages may require the provision of a bond or a payment into an escrow account. The court refuses to grant relief if the promise of indemnity is not supported by liquid assets.
Judicial Discretion
Discretion determines the appropriate level of security required to support the promise. The court may require a bank guarantee if the financial standing of the applicant is in doubt. A cross undertaking as to damages remains in force until the final determination of the case or until a further order is made.
This liability includes the legal costs incurred by the defendant in seeking to discharge the injunction.
Liability Calculation
Calculation of the loss occurs at a separate hearing after the main dispute is resolved. If the cross undertaking as to damages is triggered, the court assesses the actual financial harm caused by the restraint. This requirement prevents the abuse of interlocutory power by parties with limited financial resources.