A limited undertaking

The Court of Appeal has held that where the Financial Services Authority seeks an injunction as part of a law enforcement process, it should only undertake to pay the costs of a third party (such as a bank) in complying with the order, rather than any damages that the third party may incur as a result of the order. Charles Thomson of Baker & McKenzie examines the decision.

Charles Thomson (+44 (0) 20 7919 1879, charles. thomson@bakermckenzie.com) is a senior associate in the Dispute Resolution Department at Baker & McKenzie.

In SEC v Manterfield [2009] EWCA Civ 27, the Court of Appeal held that it can exercise its discretion to dispense with the need for a cross-undertaking in damages against the defendant. Since the US Securities & Exchange Commission (SEC) had no power to give an unlimited cross-undertaking in damages, the judge was correct to dispense with it in that case. In essence, the Court’s overriding priority was to combat international crime.