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Tactical injunctions on the wane, IRLI webinar hears

Speaking at the recent Irish Rule of Law International commercial law conference, senior counsel Rossa Fanning said that a recent judgment has brought to light the fact that, very often, interlocutory injunctions are effectively a trial.

“This fiction of treating the injunction as a purely interlocutory hearing, on the basis that there will be another day at the trial, is statistically very often not true,” Fanning said.

Re-assess

Mr Justice O’Donnell of the Supreme Court, in his important 2019 decision Merck Sharp and Dohme Corp vs Clonmel Healthcare, re-assesses the circumstances in which the Irish courts should grant an interlocutory injunction

Barrister Rossa Fanning was speaking at the IRLI conference on ‘Merck Sharp & Dohme v Clonmel Healthcare Limited [2019] IESC 65; the new Campus Oil?’, a paper by Anthony Slein BL.

In July 2019, the Supreme Court overturned the decision of the Court of Appeal in relation to the refusal of an injunction.

Mr Justice O'Donnell for the Supreme Court held that the adequacy of damages should be considered as part of the "balance of convenience" assessment rather than a hurdle prior to that assessment. 

In commercial breach of contract cases, a "robust scepticism" that damages would not be adequate should be the approach to be taken, the judge said.

Nuanced approach

However, a court must look at all the factors at play, and adequacy of damages is one of them. A flexible, nuanced approach must be taken, he said.

“In other cases, the court should consider the question of the appropriateness of injunctive relief with an awareness that the case may not go to trial,” Rossa Fanning told the webinar on 9 October. 

“If an injunction is of significant tactical benefit to the parties, that would appear to caution courts that in many cases, treating an injunction on the basis of the ‘fiction’ that it’s only a holding pattern, is just that, a fiction.

“And the corollary to that is that if the court forms the view that the injunction is likely to be the real hearing, and there never will be a trial, then a different test must be applied.”

Rossa Fanning continued that in employment law cases, injunctions are prolific but trials are rare.

'Low standard of arguable case' 

The long-term significance of the Merck judgment is that a different test will be applied in interlocutory injunctions, where that injunction will determine the issue.

“That means that people who got injunctions on a fairly low standard of an arguable case may find it more difficult to obtain injunctions in the future, if the court believes that the injunction is likely to determine the case,” he said.

Where adequacy of damages does not conclusively lean in favour of one party, and neither party would be adequately compensated by damages, other factors may tip the balance.

“In those cases, it may not be improper for the court to consider the strength of each party’s case, as revealed by the affidavit evidence,” Rossa Fanning said.

Large development

This is a very large development, he concluded, if a court goes on to consider the legal issue and the merits of the case. 

It opens up the possibility, in a finely-balanced case where neither side will be adequately compensated by damages, to allowing a legal hearing.

Merck is the most important recent decision on injunctions, Rossa Fanning said, and it will likely assume totemic importance in our legal system.