Counterbalance valves are used to prevent oil from leaving a cylinder that is holding a load. Without the counterbalance valve, the load would move in an uncontrollable manner if oil pressure is lost for some reason. In a sense, they act as adjustable pressure relief valves and are often used where line pressures can spike. Essentially, in the counterbalance valve, a relief valve sets up a back-pressure in the hydraulic circuit.
Counterbalance valves have adjustable springs and should be set at least 30% over the maximum induced load pressure to allow the valve to reseat properly, i.e. 1.3 times the load-induced pressure. Setting up a counterbalance valve should be performed by trained hydraulic personnel.