Supersedeas bond

Type of surety bond

A supersedeas bond (often shortened to supersedeas), also known as a defendant's appeal bond, is a type of surety bond that a court requires from an appellant who wants to delay payment of a judgment until an appeal is over. This is a feature of common law, and in particular the American legal system. In most European countries an appeal leads to an automatic stay of execution, unless the judge expressly ordered immediate execution.

After litigation and a civil court ruling, the losing party can appeal against the judgment. At this point, both the plaintiff and defendant could have similar concerns. An appeal takes time – in some cases many years. After the case is finally decided, whichever party wins will perhaps be more "out of pocket" from its costs. Also time will have passed, and the losing party may be bankrupt or have used the time to hide assets or otherwise frustrate efforts to collect on the judgment if they lose their appeal. Therefore, it is often either a requirement of the law, or an order of the court, that prior to commencing its appeal processes, the losing party must provide a surety bond – money it pays to the court or a third party, to demonstrate its good faith and commitment to paying judgment if it loses, and in some cases to show that their appeal is not frivolous or merely a tactic to delay or avoid payment. This is known as a supersedeas (or "appeal") bond, and shows that they can and will cover the damages or fees awarded – including any additional costs of the appeal. The bond may not be – and often is not – the exact value of the ruling. In some cases it is significantly larger since it is intended to cover interest or other costs which may arise on appeal. A supersedeas bond is often paid in full – and may be handled via insurance or underwriting in some cases.

Obtaining a supersedeas bond may appear to be judicial red tape; however, it serves the best interest of the defendant and plaintiff. The appellant uses a supersedeas bond to stay the execution of the judgment, meaning the appellant does not have to pay the full amount of the judgment until the appellate court makes a ruling and then only if the ruling is to affirm the judgment. A surety bond also replaces the need for collateral. The plaintiff, or party to whom the money judgment is awarded, is fully protected by the bond and ensured payment, that is if the appealing party can afford the bond.