An appeal bond must be issued before appealing a civil case to reduce the risk of abuse of process and ensure funds for settlement remain available. Requirements vary by region and court. The bond must be fully guaranteed and covers damages and appeal costs. If the appeal fails, the bond is forfeited to compensate the plaintiff. However, raising the bond may be difficult for claimants with substantial damages. Some countries limit damages to reduce the risk of a large appeal lien.
An appeal bond is a bond that must be sent before a civil suit can be appealed. The goal of requiring people to issue a bond is to reduce the risk of abuse of process and to ensure that funds for the initial settlement payment remain available in case the appeal fails. The requirements surrounding a recourse bond vary by region and by court. People should make sure they research the requirements before posting the bond to confirm they’re complying.
If a plaintiff wins a civil case, the court awards damages to the defendant. The defendant has the option to accept the sentence and pay damages, or to appeal the sentence. If the defendant intends to appeal, the compensation does not have to be paid immediately, because if the appeal is successful, the damages can be reversed or reduced. For the defendants there is a clear incentive to appeal, also because it postpones the payment of damages.
This is one of the reasons why a recourse bond is required. The bond usually must be fully guaranteed, which means that the claimant has 100% guarantee of the sum. This ensures that funds will be available after appeal to pay damages if the lower court’s decision is upheld, and dissuades people from using appeals as standoff tactics because they need to be prepared to cover damages regardless of the appealed. In addition, an appeal bond usually also includes a sum to cover the costs of the appeal.
If the appellant loses the appeal and the judge upholds the decision, the appellate bond is forfeited to compensate the plaintiff. In cases where the appellant wins the appeal, the bond is not collected.
There are some clear problems with applying for an appeal bond. One is that if the damages awarded are substantial, the claimant may not actually be able to raise the sum, and thus would be barred from pursuing the legal right to contest the cost of the appeal bond. In some cases, defendants have opted for an immediate settlement, rather than placing assets in appellate bond during the course of an appeal. Some countries have attempted damages limitation to ensure that plaintiffs do not receive unreasonably large damages, and this in turn reduces the risk of having to form a large appeal lien to access the right of appeal.
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