The claim is being brought in the UK and funded by a commercial litigation funder. Harbour Underwriting has issued an adverse costs policy covering the claimant’s potential liability to pay the defendants’ legal costs should it lose the case.
Application for freezing injunction
As part of the ongoing claim, the claimant applied for a worldwide freezing injunction over shares held by some of the defendants.
Cross-undertaking in damages
Where a claimant applies for a freezing injunction, the court usually requires the claimant to give a cross-undertaking in damages to compensate defendants for any loss they suffer if the injunction is granted, but a later court hearing finds it to be unmerited.
In this case, the claimants had already provided security for costs by way of insurance and therefore considered similarly using insurance as collateral for the cross-undertaking in damages.
As a result, the claimant’s solicitor approached Harbour Underwriting to issue a policy that would satisfy the requirement to give a cross-undertaking. The approach was made on a Monday morning and the policy was issued within five working days in time for the injunction hearing.
At the hearing, the court ordered a worldwide freezing injunction on the defendants’ shares.
While the court did not have any objection in principle to use of an insurance policy, in the time available there was insufficient time to agree the wording of the policy with the relevant defendants and instead one of the claimants used their own funds to make a payment into court to stand as collateral for the cross undertaking. We understand it is still proposed that the insurance could stand in place of the payment into court subject to the policy wording being agreed.
Underwriting director Rocco Pirozzolo says: “Only a few cross-undertaking in damages policies have been issued in my 22 years in the industry, so to that extent, this policy is unusual. Having said that, I fully expect this type of policy will become requested more often as litigators and litigation funders become aware of its availability.”
He adds: “This product highlights the broad range of cover we offer litigants and the opportunity we provide for them to mitigate much of the risk inherent in conducting litigation or arbitration.”
Note: This case study was amended on 23 April 2022 to correct some factual inaccuracies that appeared in an earlier version.