What is an Appeal Bond?

An appeal bond is a bond which must be posted before a civil case can be appealed. The goal of requiring that people post a bond is to reduce the risk of abuse of process and to make sure that funds for paying the initial settlement will remain available in the event that the appeal fails. The requirements which surround an appeal bond vary, depending on the region and the court. People should make sure to research the requirements before posting the bond to confirm that they are complying.

If a plaintiff wins a civil suit, the court awards damages to the defendant. The defendant has the option of accepting the verdict and paying the damages, or appealing the verdict. If the defendant plans to appeal, the damages do not need to be paid right away, because if the appeal is successful, the damages may be revoked or reduced. For defendants, there is an obvious incentive to appeal, not least because it puts off the payment of damages.

This is one reason why an appeal bond is required. The bond usually needs to be fully collateralized, meaning that the appellant has backed 100% of the sum. This ensures that funds will be available after the appeal to pay damages in the event that the decision of the lower court is upheld, and it dissuades people from using appeals as stalling tactics because they have to be prepared to cover the damages whether or not they appeal. Furthermore, an appeal bond also usually includes a sum to cover the costs of the appeal.

If the appellant loses the appeal and the court upholds the decision, the appeal bond is cashed in to pay the damages to the plaintiff. In cases where the appellant wins the appeal, bond is left uncashed.

There are some clear problems with requiring an appeal bond. One is that if the damages awarded are large, the appellant may not actually be able to raise the sum, and thus would be barred from pursuing the legal right to appeal by the cost of the appeal bond. In some cases, defendants have opted to settle immediately, rather than tying up assets in appeal bond over the course of an appeal. Some nations have attempted to limit damages to make sure that plaintiffs are not awarded unreasonably high damages, and this in turn reduces the risk of having to put up a large appeal bond to access the right to appeal.