Principles of Civil Procedure: Governance of Interim Remedies (Injunctions) By- Devaang Savla

The Author, Devaang Savla is currently pursuing his masters in law from University of Oxford,UK.

Introduction

The Indian directive on stay applications and injunctions has its own derivative model in practice, but the development in the United Kingdom can provide certain valuable insights as to governing principles that deal with them; especially the fallacy of Status Quo orders. As Zuckerman[1] explains an interim relief is an order made by the court directing a party (normally defendant) or non-party to do or refrain from doing an act in connection with the litigation claim set up by the plaintiff.

The objective of the interim order is to protect rights of the parties during the pendency of litigation and are granted before commencement of proceedings, not being a final resolution to the matter in dispute. Notwithstanding, interim orders can be granted at any stage of the proceedings, even after the final judgment[2] being orders of freezing injunctions which are passed after the final judgment for its enforcement[3]. They can range from being mere case management orders to interim injunctions and can be classified as ‘process orders’ and ‘protective orders’, respectively.[4] Process orders regulate the litigation process and are relatively simple in nature, for example, an order to carry out inspection of a property, order to obtain evidence and similar directions. The challenging and complex aspect of interim remedies are protective orders or injunctions.

Considering injunctions, the grant of interim relief is based upon three fundamental principles; first, it can be granted for protection of recognizable rights; second, it is a provisional remedy to avoid irreparable harm to parties and third, the ability of the court to grant ‘restorative compensation’ after the final judgment to a party who was prevented from exercising his right during the pendency of litigation.[5] Given these principles, their application in practice is far more complicated as it requires serious balancing of interests and protection of rights.

The Inescapable Dilemma

The right to grant interim injunction has its origin in equity[6], but in most jurisdictions, it has been codified and is a statutory right[7] exercisable at the discretion of the court. So, when a court adjudicates an interim application before the commencement of proceedings it has to strike a balance been the fundamental principle of common law of due process and the need to safeguard rights of litigants during the pendency of litigation from irreparable harm.[8]

The Latin maxim audi alteram partem[9] requires that both/all the parties have a right of hearing and to lead evidence before their rights are subject to restrictions, as part of fair procedure of justice. Unless, the party seeking interim injunction is unable to establish his right, no restrictions shall be placed upon the right of the defendant. On the other hand, if such restrictions are not sanctioned, then the plaintiff may be subject to an irreparable harm.

Further, on grant of injunction if the plaintiff fails to establish his right in the final judgment then the court has harmed the defendant’s right all throughout lis pendens. Alternatively, if the interim injunction is rejected and the plaintiff succeeds to establish a claim in the final judgment then the claimant’s right might have been irreparably harmed. Hence, courts constantly struggle to appropriately place the fulcrum: the inescapable dilemma. Grant of injunctions after commencement of proceedings or after the final judgment might fulfill the requirement of due process of law by providing opportunity of hearing to all parties but the dilemma in concept remains the same as any party[10] can apply for interim injunction after commencement of proceedings. 

Hypothetically, a tree standing in the garden of ‘A’ is blocking sunlight over the adjacent house owned by ‘B’. ‘B’ decides to cut the tree claiming he has easementary right to do so. ‘A’ obviously cannot use force upon ‘B’ and therefore moves an application for interim injunction before the competent court. Now, if the court refuses to grant injunction and ‘B’ takes down the tree, ‘A’ will incur an irreparable harm if he succeeds in the final judgment. It is important to note that damages or compensation cannot replace the aesthetic value of the tree which ‘A’ wants to protect. Alternatively, if the court grants injunction, it has done so without giving an opportunity of hearing to ‘B’ and before ‘A’ has establish his title-right over the tree. Further, if ‘B’ succeeds in the final judgment, the court would have ended up harming his right of taking down the tree during the pendency of litigation. In such a situation, the appropriate approach would be of ‘minimizing harm’[11], to adopt a method which protects and preserves rights rather than harm them. In light of the existing dilemma, various governing principles have developed over time which can provide guidance in deciding interim applications.

Status Quo: A Fallacy                       

A notable principle is of Status-Quo which required parties to maintain things as they are until the final judgment is made. Zuckerman states that this principle is fatally flawed as interim injunction does not deal with physical objects but preservation of rights[12] and barring few exceptions it cannot be generally applied to all cases. Suppose an injunction is being sought against misuse of a patent and an order of status quo has been passed.[13] This order has no functional utility as it neither preserves nor protects the right of the claimant, assuming he is able to establish infringement in the final judgment. Megaw L.J. commented on the ambiguity of the status quo principle, “it is necessary to answer the question: Existing when? Before what point of time?”[14] as it may vary from case to case and how to decide at what juncture status quo should be implemented. Thus, status quo is no blanket solution to all disputes and the idea at the interlocutory stage is to judge whether an injunction will produce a just outcome at the end of litigation.[15]

Governing Principles

Until 1974, interim injunctions were granted if the applicant could show a prima facie case[16] on merits.[17] Thus, if in the mind of the judge the applicant had a fair chance on finally succeeding in the final judgment then normally an injunction would be granted. In context, the initial averments and evidence led by the applicant should carve out an arguable case. Thereafter, without hearing the other side and irrespective of the harm that may be caused to the defendant, an injunction could have been procured.

In English Law, the first case that attempts to devise a principle is American Cyanamid Co. v Ethicon[18] known as ‘the balance of convenience’ or ‘the balance of justice’[19], detaching itself from the general rule of considering case’s merit. This principle acknowledges the aspect that no principle is universal and cannot satisfy all given situations. Further, some harm will be caused to either party by granting or refusing interim injunction and hence the idea is to cause as minimum harm as possible, using the balancing approach. As explained by Lord Diplock the test requires to assess and compare the need of granting protection to the applicant as against the possible injury to the opposite party if he is restricted to exercise some right. If the need of protection to the plaintiff against an irreparable harm outweighs the possible injury to the defendant as a result of restriction by court, an injunction should be granted; otherwise not. This test recognizes that all harm cannot be compensated in damages and therefore courts are required to test and weigh possible outcomes of grant or refusal of injunction and then give its decision which avoids or causes minimum harm.[20] Despite the application of this principle, if the courts are unable to make up their mind then the general rule of case’s merit will be the ‘tie-breaking’ factor.[21]

Building upon the above principle, Megaw L.J. lays emphasis on the importance to consider the chances of success to the magnitude of harm for each party.[22] As Zuckerman illustrates, if the claimant has 75 percent chances of winning and the magnitude of harm is 1000 pounds, if he fails to procure an interim injunction. On the other hand, the defendant has twenty-five percent of success and the magnitude of harm is 100,000 pounds, if an injunction is granted against him. In such a scenario, the harm principle will favour the defendant as the magnitude of loss/harm to the claimant is 750 pounds to 25,000 pounds for the defendant.[23] Undoubtedly, this mathematical approach will not always address all situations and further raises a question: whether an extremely high probability of success be over shadowed by magnitude of harm? Zuckerman considers Hoffmann J.’s views[24] and states that a rational approach to the ‘balance of justice’ demands that courts may be required to discount the magnitude of harm as to the probability of its occurrence. If the chances of harm to the defendant are very oblique, the claimant may be granted an injunction irrespective of the fact that the magnitude of harm is much higher for the defendant.  

After American Cyanamid Co. v Ethicon the role of merits in ‘balance of justice’ stood on a vague stand-point; where notably the probability of success is much dependent upon the merits of the case. Various interpretations have indicated that the applicant had to either make out a good arguable case or a strong prima facie case or good probability for entitlement of relief or a question capable of being tried or having a real prospect of success.[25] Therefore, there was no solid threshold or test to consider interim applications. Criticism of the case included that in some cases it would be difficult to assess harm. For example, if an injunction is granted against a development project of a shopping complex then it would be hard to predict future implications such as labour costs, advent of competition, predictive letting of shops, loss in profits and alike. Further, it will hold no precedential value for defamation proceedings, mandatory injunction applications, matters involving hard point of law, matters of public importance, cases where the merit is supported by clear facts or evidence, freezing injunctions and search orders.[26] These limitations let to creation of many exceptions and diminished the role of the principle itself.[27]

Zuckerman expanding on court’s justification in granting an injunction only where it is necessary to avoid irreparable harm states that an applicant who is not exposed to irreparable harm must await the final judgment.[28] Thus, it is important to sculpt propositions of irreparability. Irreparable harm may be caused due to uncertainty of quantification of compensation as damages. As in Trademark and Passing-Off cases, it would be difficult to assess the loss generated on account of suspension of usage of a brand name. Likewise, disputes involving other intellectual property would fall in the same ambit. Further, a harm may be irreparable due to lack of adequate remedy. If supposedly a person is denied to vote in the elections; there lies no remedy, irrespective of quantum of compensation. Thus, irreparable harm in an important aspect to be considered with respect to ‘balance of justice’ principle.[29]

Commenting upon the state of affairs in the United States of America, Zuckerman notes that all harms, irrespective of their irreparability, are quantified in economic value. Then depending upon their harm probability applied to the quantified irreparable harm, applications of interim injunction are considered. Hence, whichever party is to suffer greater harm, the decision is made in their favour. This approach is not only mathematical but very mechanical as it is arbitrary to comprehend and calculate intangible prospective losses. Zuckerman identifies this as giving considerable freedom of choice to judges as the mathematical formula suffers from a debilitating effect.[30] Conclusively, the concepts revolving around interim injunctions are elastic in nature and leave much room for the courts to exercise its discretion, case to case basis. 

Restraint on Publication

Under the subject of interim remedies, certain tests and general principles have been developed in relation to restraint of publications which provide assistance in deciding interim applications. At the outset, freedom of expression is a protected right under the European Convention on Human Rights. The dilemma in these cases pertain to balancing of the right to freedom of expression and the right to protection against defamation. In Bonnard v Perryman[31], Lord Coleridge recognizes that right to free speech is in the interest of the public and unless the claimant proves that the material is defamatory he could not be granted an interim injunction.

The leading authority governing restraint of publication is Cream Holdings Limited v Banerjee[32]. Zuckerman explains that in the Cream Holdings Threshold test[33] the applicant is required to show that he will probably succeed at trial, which lowers the requirement as set out in Bonnard v Perryman but has a higher threshold that American Cyanamid Co. v Ethicon. In A v B[34], Lord Woolf C.J. emphasizes that although the test in Cream Holdings case has to be observed but it is also to be considered that whether or not the interim injunction is finally disposing off the dispute. It is indeed difficult to balance all aspects of a case, but where the balancing point is unclear, the application for interim injunction is ought to be refused.[35]

Alternatively, when the right of privacy and private family life is affected in conflict with freedom of press, then the question of consideration would be that the publication is in public interest or not. If the applicant is able to show that the publication is gravely intruding onto the right of the individual, he will likely succeed in obtaining an interim injunction. In the Trafigura Case[36] the court not only granted injunction but also protected the disclosure of the order itself, known as Super Injunction[37]. In conclusion of the observations in JIH v Newsgroup Newspapers Ltd[38] it can be inferred that the applicant has to ‘sufficiently’ satisfy the court else it can refuse to encroach upon the right to freedom of another, especially when it is in public interest. This requirement of a high threshold was although explained in the Greene case[39], which was that assessment of defamatory material at a pre-trial stage is difficult as it is dependent upon the credibility of witnesses and requires detailed attention on documents. Further, it records that the claimant can be adequately compensated and the reputation can be vindicated. Thus, courts continue to operate a higher threshold in restraint of publication cases.     

Freezing Injunctions

Any claimant runs a risk that by the time the final judgment is pronounced the defendant could become impecunious. To protect the right of the claimant the Court of Appeal developed the Mareva Injunction in Mareva Compania Naviera SA v International Bulkcarriers SA[40], now commonly known as freezing injunction. It is to protect the claimant’s right against the defendant from dissipating his assets, turning the litigation in to a futile exercise. It is important to note a distinction that proprietary injunctions are concerned with the property/asset in dispute, whereas freezing injunctions deal with restrictions imposed upon the assets of the defendant on which the claimant lays no claim. Hence, freezing injunctions have their own set of governing principles that assist the courts in deciding such interim reliefs.

Drawing from Derby and Co. Ltd. v Weldon[41] where Parker L.J. stressed that the applicant must satisfy that he has a good arguable case in support of his claim, the defendant has substantial assets and there is a risk that if freezing injunction is not granted the defendant will be unable to satisfy the final judgment, assuming it is granted in favour of the claimant. The court also has a corresponding duty to safeguard defendant’s interests while granting freezing injunctions, such as allowance of normal expenses, legal expenses in proprietary claims, proceeds of crime and alike as it can cause serious implications.[42] Thus, the applicant is further required to provide to the court an undertaking in damages as compensation to be granted to the defendant if he fails to obtain a favourable judgment. The claimant also runs a huge risk and therefore has to be sure before applying for a freezing injunction. Finally, there has to be a more than reasonable justification for interference with the assets of the defendant.[43]

Final Comments

There is no universal principle guiding fate of interim applications and no single test will provide a common solution for all cases. Having said that there is enough jurisprudence to assist courts to decide majority of interim applications. For exceptional circumstances, phrases like good arguable case, sufficient cause, highly probable and alike words in the text of tests and general principles provide enough room for courts to exercise their discretion, setting out a new precedent or an exception to existing principles.

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