Quite often cross undertakings in damages are not given serious consideration when provided. Indeed, they have been seen as a mere formality before gaining injunctive relief against an opponent.
This case is a reminder to us all that careful consideration must be given to the scope of injunctive relief sought, otherwise there could be serious financial consequences if later down the line the Court finds that the injunctive relief (in this present case a freezing order) was improperly obtained.
In the case of Fiona Trust & Holding Corporation v Yuri Privalov & Others the Court held that a freezing order had been improperly obtained because the "orders obtained by the claimants had the effect of freezing assets far in excess of the sums for which the [defendants] were ultimately held liable". As a result the defendants were entitled to damages.
We have looked before at the decision in Fiona Trust & Holding Corporation -v- Yuri Privalov & others . An applicant for a freezing order was found to have obtained the order wrongly. Consequently they were ordered to pay damages that stretched to tens of millions of dollars. That decision was considered by the Court of Appeal in SCF Tankers Ltd & Ors v Privalov & Ors  EWCA Civ 1877. The Court upheld the judge’s finding on causation and that the defendant had suffered substantial losses. This is one decision that must be borne in mind whenever a party is applying for a freezing injunction. It is not the only case where an applicant has had to pay substantial damages on the basis of the undertaking for damages.