Two key decisions of the Supreme Court and Court of Appeal in Merck, Sharp & Dohme v Clonmel Healthcare Limited and Betty Martin Financial Services Limited v EBS DAC have significantly refined the well-settled principles to be applied in applications for injunctive relief. The test for granting preliminary injunctions in Ireland was originally set down by the Supreme Court in Campus Oil v Minister for Industry and Energy (No.2) and the Courts have, until now, strictly adhered to it. An overview of the Campus Oil test was set out in a previous Dillon Eustace briefing which may be accessed here.
The Merck Judgment
This case concerned the application by Merck for a preliminary injunction against Clonmel, to restrain them from producing a generic drug in contravention of Merck’s intellectual property rights.
In considering the principles to be applied to the granting of the injunction, the Supreme Court moved away from a strict application of the Campus Oil test and introduced a degree of flexibility. Whilst emphasising that this was not to be treated as a strict test, the Court set out the following eight factors which might be followed in determining whether or not an interlocutory injunction should be granted:
1. If the plaintiff were to succeed at the trial, is a permanent injunction likely to be granted? If not it is very unlikely that an interlocutory injunction should be granted;
2. Has it been established that there is a fair question to be tried, including a consideration of whether the case is likely to go to trial? The question of whether there is a fair question to be tried is already well-established since Campus Oil. However, the Supreme Court has introduced a refinement here on the basis that even where there is a good case, matters often do not proceed to trial and the granting, or failure to grant an interlocutory injunction could confer a tactical benefit which should be factored into the Courts’ consideration;
3. If there is a fair issue to be tried and it is considered likely that the matter will proceed to trial, do the balance of convenience and balance of justice lie in favour of granting the injunction? This means that the Court will look at the relief requested by the applicant in the context of the potential harm it would do to the other party, and decide on that basis if it is fair and necessary in all of the circumstances.
It is worth noting in this context that recent case law has established that a party applying for a mandator injunction (i.e. an order which requires the defendant to take some action before trial, rather than restraining the defendant from doing something) must demonstrate to the Court that it has a strong case that it is likely to succeed at trial. This is a higher threshold than the “fair issue” test referred to here, which applies to prohibitory injunctions.
4. The most important element in determining where the balance of convenience lies is whether damages would be an adequate remedy. Previously, the Campus Oil test required the adequacy of damages to be considered as a separate hurdle to the balance of convenience. However, one of the most significant refinements to that test made in Merck is including a consideration of the adequacy of damages as a remedy as the most important element in determining where the balance of convenience lies between the parties;
5. The Courts should be “robustly sceptical” of a claim that damages are not an adequate remedy in a commercial claim for breach of contract;
6. Even if damages are available as a remedy, the balance of justice may still lie in favour of granting an injunction if difficulties calculating and assessing the damages mean it is no longer a precise or perfect remedy;
7. Whilst adequacy of damages in the most important factor in determining the balance of convenience, every case will turn on its own particular circumstances and a number of other factors may need to be considered; and
8. Whilst acknowledging that set criteria can be useful when considering applications for preliminary injunctions, the Supreme Court emphasised that there must be flexibility in the application of the remedy to ensure justice is maintained in circumstances where the issues have yet to be determined at trial.
The Betty Martin Judgment
It was unclear following the Merck judgment whether or not the new principles would be applied in other commercial disputes or if they were to be confined to intellectual property disputes only. Of particular interest was the suggestion that the Courts should be “robustly sceptical” of an application for injunctive relief involving a contractual dispute. However, the recent decision of the Court of Appeal, in Betty Martin has clarified the position.
The High Court initially heard the Betty Martin matter prior to the Supreme Court decision in Merckand, applying the Campus Oil principles, allowed the interlocutory injunction application which restrained EBS from terminating Tied Agency Agreements between the parties pending trial. The matter was appealed following the Supreme Court judgment in Merck, and the Court of Appeal (Collins J.) noted that Merck represented a more flexible approach to applications for interlocutory relief. Collins J essentially allowed the matter to be re-heard in the Court of Appeal, emphasising that the role of the Court in these matters is to determine the issues before it fairly and in such a way that should “minimise injustice” between the parties.
In Betty Martin, the Court acknowledged that damages could have been calculated given the contractual nature of the dispute between the parties. However, Collins J decided that, as the plaintiff was a family business, their interests in this matter extended beyond a mere financial interest and included their business reputation. On that basis, the Court of Appeal held that such a calculation as to damages would have been too difficult and that damages were therefore an inadequate remedy. The decision in the High Court to grant the injunction was upheld.
These cases mark a move away from the principles traditionally applied in applications for injunctions in advance of trial. In particular, there is a greater emphasis on the flexibility of the remedy available and that the Court should consider as its overall principle the minimising of injustice between the parties. As with many disputes before the Courts, it may not be possible to have a perfect remedy but the Court should use its discretion to reach as fair a solution as possible between the parties.