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Cross undertakings as to damages: guidance on the calculation of loss

8 September 2016

A Defendant was awarded significant damages after demonstrating that he had suffered a loss following the court’s ruling that the Claimant had obtained freezing injunctions to which it was not entitled.

The case of Fiona Trust & Holding Corporation (C) v Yuri Privalov & Others [2016] EWHC 2163 (Comm) involved a claim against the first defendant businessman (D) and companies controlled by him, for damages involving allegations of bribery, corruption and diversion of assets. 

C obtained two freezing injunctions in 2005 and 2007 in respect of D’s assets valued in excess of $577 million, giving cross-undertakings in damages to the Court. 

D argued that he had suffered a loss as the funds secured in the 2005 and 2007 orders would have been invested, earning substantial returns. C argued that these losses were speculative and not recoverable.

The Court held that D would have successfully invested funds and had therefore incurred losses and was entitled to damages of half the resale profit, amounting to US $94.36 million, plus an amount that would have been earned by investing the resale proceeds, less the amounts actually earned of $33.5 million and $29.7 million. It ruled that a liberal assessment should be adopted and in situations such as these, the assessment of damages would tend to be imprecise. This does not mean that a defendant does not have to prove its loss, but it does recognise that sometimes the calculations will be somewhat speculative.

The case demonstrates that in the event a freezing injunction is set aside, significant damages may follow for losses which appear to be on the face of it speculative.

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