After a three-day hearing in late November 2015, the Court dismissed Lebara’s application for an interim injunction to prevent Lyca blocking its own customers from accessing Lebara services. Lebara’s delay in bringing the application was one of the key determining factors against the granting of the injunction.

What?

In February 2015, Lebara launched a new product, known as Lebara Talk. Customers could download an app which allowed them to make or receive VoIP calls to or from other Lebara Talk users free of charge. Lyca became aware and wanted to stop their customers using Lyca SIM cards to activate and use Lebara Talk. Accordingly, Lyca initiated a technical block which did just that and more as it blocked its customers from accessing Lebara’s websites and other products too. Lyca did not inform its customers about the block.

Lebara discovered the block in March 2015 but it was not until September 2015 that it made its application for an interim injunction. By the time of the hearing of the application, the block had been voluntarily reduced in scope, to not block access to Lebara websites or other apps. The Court therefore considered the ‘modified block’.

Given the impending EU Regulation 2015/2120 concerning open internet access and amending Directive 2002/22/EC (universal service and rights relating to communications networks and services) and Regulation 531/2012 (network roaming), the parties agreed that whatever the outcome of the hearing the modified block would not continue in its present form after April 2016. However, Lyca left open the possibility that it would seek to impose some other similar measure which was consistent with the draft Regulation.

In arriving at its decision, the Court considered the usual approach set out in American Cyanamid Co. v Ethicon Ltd. [1975] A.C. 396. To succeed in its application, Lebara would have to show that there was a serious issue to be tried, that damages would not be an adequate remedy and that the balance of convenience favoured granting the injunction.

(i) Serious issue to be tried

The Court confirmed that the test as to whether or not there is a serious issue to be tried is a low one. It found that there were serious issues to be tried concerning allegations of conspiracy to injure (Lebara Talk was the only VoIP product which Lyca (and its group) blocked, whereas Skype, WhatsApp and Viber were not blocked) and interference with its business by unlawful means (whether, for instance, the block was a breach of Lyca’s contracts with its UK customers). Lyca chose not to disclose any documents or serve any witness evidence about the decision to implement the block.

(ii) Whether damages adequate

The Court confirmed that if damages would be an adequate remedy for the claimant, and the defendant would be in a position to pay them, then no interim injunction should be granted, however strong the claimant’s claim appeared to be at that stage. In addition, if damages were not an adequate remedy for the claimant, the Court would then consider if the defendant succeeded whether it would be adequately compensated in damages under the claimant’s undertaking as to damages for the loss suffered between the application being made and the trial. If damages would be adequate and the claimant was in a position to pay them then an interim injunction would be granted.

No question was raised about either party’s ability to pay damages. Lebara and Lyca both argued that damages would not be adequate because their losses would be substantial and difficult to quantify. The Court was doubtful as to whether losses would be substantial but it agreed that losses would be difficult to quantify. Ultimately, it was not prepared to dismiss the application simply on the basis that damages could be an adequate remedy for Lebara or Lyca.

(iii) Balance of convenience

Again, the Court confirmed that where there is a doubt about the adequacy of the respective remedies in damages available to either party or both, then the question of balance of convenience arises. The Court then considered the factors mentioned in National Commercial Bank of Jamaica v Olint Corpn [2009] 1 WLR 1405, at paragraph 18, as well as the issue of delay, and finally the status quo. The factors in Olint did not take the Court much further in its assessment. As all factors were evenly balanced at that point, the issues of delay and the status quo became the key determining factors.

(a) Balance of convenience - delay

Lebara knew of the block from 1 March 2015. It then sought to investigate its extent and to work around it (to no avail) until the end of July. It then instructed its solicitors to prepare the application. It did not seek to investigate and write to Lyca in parallel, which was something that the Court considered should have been done and resulted in a 1-2 month delay in making the application to the Court. This delay counted against Lebara.

(b) Balance of convenience – preserving the status quo

Where the various factors are evenly balanced the Court will likely take the course that preserves the status quo – the Court described it as a ‘tie-breaker’. As the block was already in place and had been for a number of months (in part because of the delay), the Court was inclined to preserve the status quo and decline to grant the injunction.

So What?

The case is another example of the Court’s adherence to the three-stage test provided in American Cyanamid – whether there is a serious issues to be tried, whether damages are an adequate remedy for either party and where the balance of convenience lies.

In this case, the Court was not minded to dismiss the application on the basis that damages might be adequate. This is a common theme. One reason is because in such a short and summary procedure, it is often difficult for the defendant to demonstrate overwhelmingly that damages would be an adequate remedy for the applicant.

This case also underlines the Court’s willingness to dismiss an application where the applicant has unreasonably delayed and to preserve the status quo. For the applicant, speed of decision-making and action are clearly critical but the threshold for delay varies from case to case and is very fact dependent. For the defendant, speed of action is also important, to establish its favoured ‘status quo’ as quickly as possible and before action is taken to prevent it.