AMERICAN CYANANMID CASE

Interlocutory (interim) injunction, the jurisdictions related no to the most just method of
protecting establishing rights but to the most convenient method of preserving the status
quo while rights are established. The object of the injunction is the goal of obtaining an
interim injunction is to ensure that the status quo is maintained and that there is no
permanent harm done to the rights of the applicant before the applicant's substantive
action against the respondent can be determined finally by a court hearing.

To this end injunctions are granted to ensure the effective administration of justice,
namely rights that the courts have a duty to protect can be fairly determined and
protected. [FN4] It is necessary, as in any claim for equitable relief, for the applicant to
be able to demonstrate that the awarding of damages at the hearing of the substantive
action will not provide an adequate remedy in the circumstances. The law, as it does
with any interim remedy, seeks to:
"[O]btain a satisfactory balance between, on the one hand, the need to reduce the
risk of harm to lawful rights pending litigation and, on the other hand, the
imperative of impartiality which argues for noninterference prior to final
judgment."
Also to prevent a change in the circumstances that will irredeemably injure the applicant
before the court has time to decide finally on the granting or refusal of permanent relief.

Facts
The plaintiffs, an American company, owned a patent covering certain sterile absorbable
surgical sutures. The defendants, also an American company, manufactured in the United
States and were about to launch on the British market a suture which the plaintiffs
claimed infringed their patent. The defendants contested its validity on divers grounds
and also contended that it did not cover their product. In an action for an injunction
Trial judge held that the plaintiff had made a strong prima facie.
Court of Appeal reversed his decision on the ground that no prima facie case of
infringement had been made out.
House of lords Held, allowing the appeal,
(1) that in all cases, including patent cases, the court must determine the matter on a
balance of convenience, there being no rule that it could not do so unless first satisfied
that, if the case went to trial on no other evidence than that available at the hearing of the
application, the plaintiff would be entitled to a permanent injunction in the terms of the
interlocutory injunction sought; where there was a doubt as to the parties' respective
remedies in damages being adequate to compensate them for loss occasioned by any
restraint imposed on them, it would be prudent to preserve the status quo.
(2) That in the present case there was no ground for interfering with the judge's
assessment of the balance of convenience or his exercise of discretion and the injunction
should be granted accordingly.

The law before Cyanamid

Cases before 1975 tended to focus on different issues.

J. T. Stratford & Son Ltd v Lindley(1975),
This case establishes that the pl “must establish a prima facie case” of some breach of
duty by the defendant to him that his right had been infringed. In establishing the prima
facie case I is more likely that the pl will be successful at trial.
it appears to be a well-established view and regarded as a practically sensible approach,
for if the conclusion was reached that the defendant was likely to win at the final hearing
then normally it would be unjust to place some restraint on the defendant up to the point
of the trial, even if an undertaking as to damages was given by the plaintiff. The focus
on the relative strengths of the cases of the parties led, in many cases, to a virtual trial
within a trial. The practice tended to mean that interim injunction hearings became a
speedy and inexpensive way of testing the strengths of the parties.

The effect was, as Lord Denning M.R. had said in Fellowes & Son v Fisher, that in “99
out of 100 cases the judge's decision at the interim hearing is accepted or the case settles
and no final hearing is necessary.”
Hoffman-La Roche (F) & Co. v Secretary of State for Trade & Industry (1975)
Where the House of Lords where Lord Diplock himself said that in order to succeed in
an application for an injunction, the plaintiff must establish that he or she had “a strong
prima facie case that he will be entitled to a final order.”
As the case was heard only a little while after their Lordships had delivered a strong
view on interim injunctions in Hoffman-La Roche, one could have been forgiven for
expecting their Lordships to say more or less the same things that had been said in
Hoffman-La Roche. But that was not the case. American Cyanamid represents what
might be seen as a "sea-change" in the courts' approach to the granting of interim
injunctions.

The new law by

American Cyanamid altered the previous practice holding that the Pl seeking an
injunction need no longer establish a prima facie case, but only that there was a serious
question to be tried, in which case the grant or refusal will be governed by the balance of
convenience.

The speech of Lord Diplock has invariably been cited in judgments delivered on
applications for interim injunctions. Some hailed the speech as revolutionary, while
others have seen it as circumscribing the discretion of judges. The speech was intended
to bring some order to the ad hoc decision-making that had been going on with
applications for injunctions for many years prior to 1975.

Lord Diplock was concerned that any decision at the interim stage was based,
necessarily, on affidavit evidence alone and was not tested by oral cross-examination.
Taking the approach of the Court of Appeal would mean, according to his Lordship, that
the court's discretion would be clogged by a technical rule, i.e., the need to prove a
prima facie case.
His Lordship opined that all a plaintiff had to establish before a court considered the
balance of convenience was that the claim was not frivolous or vexatious, namely that
there was a serious question to be tried.
Lord Diplock said that it was not the court's function to resolve conflicts in the evidence
or decide difficult questions of law that involved detailed argument and considerable
deliberation. Once a plaintiff could establish that there was a serious question to be tried,
the court had to move on to examine whether, if the plaintiff were to succeed ultimately,
he or she would be adequately compensated by an award of damages.
If the answer was in the affirmative, and the defendant was in a financial position to pay
the damages' award, the plaintiff would not be granted an injunction. However, where
the answer to the damages' question was in the negative, the court was to consider, if the
defendant were to succeed ultimately, whether he or she would be adequately
compensated under the plaintiff’s undertaking to pay damages. If the defendant could be
compensated and the plaintiff was in a financial position to pay, the court had no reason
to refrain from granting an injunction.
It is where there is doubt as to the adequacy of damages to either of the parties in the
scheme of things outlined in the last paragraph, that a court must consider the balance of
convenience.
Clearly, the central issue for Lord Diplock was the balance of convenience. This was not
a new concept in injunction applications.
For example, in 1965 in J. T. Stratford & Son Ltd v Lindley, the House had
recognised its relevance. In the Court of Appeal in American Cyanamid it was said that
the balance of convenience should be taken into account if the plaintiff can prove that he
or she had a prima facie case. The C.O.A. did not think that a prima facie case had been
made out; therefore there was no requirement to look at the balance of convenience.

The position expounded by Lord Diplock is certainly consistent with the policy behind
interim proceedings, namely not to determine who is in the right and who should
succeed, but to maintain a balance so that there is a matter to be tried at a later date, but
many have questioned whether it was a practicable position to take.

Lord Diplock laid down the principles:

(1) The court must establish that the pl case is not frivolous or vexatious and that there is
a serious question to be tried.
(2) If so, the governing consideration is the balance of convenience
(3) A significant factor in a assessing the balance of convenience is the inadequacy of
damages to each party
(4) If the balance of convenience does not clearly favour either party the preservation of
the status quo will be decisive
(5) Only as a last resort should the relative strength of each party’s case is taken into
account in tipping the balance.
(6) Other special factors may be considered in individual cases.

The principles will be categorized into tree categories

Claim is not frivolous or vexatious
This was to removes cases of the claimant harassing the defendant for anything. The cl
had to show a serious question to be tried, means that he must have a good arguable case,
real prospect of success.
Balance of convenience
This was not new to us. But now it is the governing principle.
The inadequacy of damages is a sufficient factor in assessing the balance of convenience.
The court must first consider the adequacy of damages, which is whether damages will
cover the claimant for his loss prior to the trial.
If the claimant fails at the trial, the loss caused to the defendant by the grant of the
injunction should be compensated.
While damages is most significant there are other factors affecting the balance e.g.
Where the dispute between the parties is a political one, the damages may not be
calculable in monetary terms. All the circumstances must be considered including
difficulties in compliance or enforcement and the principle that the court should be
reluctant to interfere in industrial disputes.
Smith v. Inner London Education Authority (1978); where the defendant was a public
body, the balance of convenience must be looked at more widely; the court must
consider the interests of the general public.
If the balance of convenience does not favour either party, the deciding factor will be the
preservation of the status quo (circumstances prevailing when the defendant interfered
with the claimant rights).
Ex parte Factortame; an injunction should not be granted unless there is a firm ground
for the challenge, and that the public interest must be considered in assessing the balance
of convenience.

It should be noted that the relative strength of each party’s case is a factor to be
considered as a last resort, and only then if the strength of one’s party’s case is
disproportionate to that of the other. In Fellowes v. Fisher, it was felt that the relative
strength of the parties must be a factor in assessing the balance of convenience and that
sometimes the court could not do justice without considering the merits.
“Other special factors”
The question is whether these special factors are an aspect of the balance of convenience
or whether it is a return to the previous practice of requiring a prima facie case.

In Fellowes v. Fisher the court here had reservations about American Cyanamid;
nevertheless they applied the principles, and refused to grant the injunction because the
balance of convenience did not favour such a grant. Lord Denning nevertheless refused
to grant the injunction, b/c there was no prima facie case. His reasons being (1) this case
was one which fell in to Diplock’s individual cases, (2) the strength of the parties should
be considered, where the court found their was little difference. He said “it has perplexed
the profession,”
He went on to say, “I find it impossible to reconcile (lord Diplock’s judgment) with
Stratford, could it then be a per incuriam.” His comment was “in 99 out of a 100 cases,
the matter goes no further.”
In Hubbard v. Pitt [1976], held that special factors were merely matters which could
affect the balance of convenience and could never justify a return to the prima facie case.
The facts are that certain members of the public disapproved of the extensive
development, the picketed an held placards, impeding access to the premises and
deterring potential claimants. There was a serious question to be tried and the balance
favored the grant, and damages would not have compensated. Lord Denning dissenting
said that special factors allowed the court to require a prima facie case instead of relying
on American Cyanamid.
Denning comments in these two cases paved way for the exceptions to American
Cyanamid. It is clear though that the special factors were merely referring to factors
relevant to the assessment of the balance of convenience.
In Cyanamid the fact that it could not insist on a permanent injunction since it would
have destroyed its goodwill and sale of their other products, this clearly seems as a
special factor, not having required establishing a prima facie case.
In Brayanston Finance Ltd. v. De Vires, the court seems to regard the precedence of a
special factor as justifying a return to the prima facie approach. The pl sought an
interlocutory injunction to restrain the presentation of a winding up petition on the basis
that it was an abuse of process. It was regarded as a special factor; such an injunction
will not be granted without a prima facie case of abuse of process. This case could really
be considered under exceptions rather than an illustration of a special factor illustrating
the balance of convenience.
In smith the better view is that the special factor is merely an aspect of the balance of
convenience.

Impact of Cyanamid
American Cyanamid case has emphatically rejected the prima facie test and replaced it
with a far less exacting standard that the material before the court need not show no more
than their was a serious question to be tried.
The balance of convenience now becomes the most important question for determination
on an application for an interlocutory injunction.
One of the primary criticisms of American Cyanamid has been that the danger in not
considering the merits of the cases of the parties is that a court might well give relief to a
party who has no rightful claim.

The aftermath of American Cyanamid

There has been considerable criticism of the approach propounded by Lord Diplock.
Some judges, such as

Sir John Pennycuick in Fellowes & Son v Fisher, [FN46] clearly stated that they felt
that the old approach had worked well, and others, such as

Megaw L.J. in Alfred Dunhill Ltd v Sunoptics, expressed some difficulty in applying
the new approach, particularly where there was a large volume of affidavit evidence.
There have been several different kinds of responses to the case. Many judges, such as
Roskill and Browne [Link]. in Alfred Dunhill, have clearly indicated that they are bound
by what Lord Diplock said, and have applied the process outlined by his Lordship in
determining the case.

Other courts, while not denying the principles in American Cyanamid, have indicated
that there are some cases where justice and the needs of the parties dictate a fuller
hearing consistent with the practice pre-American Cyanamid.

Some judges and Lord Denning in particular, have sought to continue to consider the
merits of a case by, in effect, side-stepping American Cyanamid. They have done this by
relying upon the fact that Lord Diplock said that there might be "many other special
factors to be taken into consideration in the particular circumstances of individual
cases." Lord Denning saw "special factors" as constituting an issue that was separate
from the balance of convenience issue, and so he felt that he was able to take into
account the strength of the parties' cases in coming to his decision, as it was a special
factor.
But Stamp L.J. in Hubbard v Vosper did not approve of this approach as he felt that
Lord Diplock was referring to special factors that affected the balance of convenience
issue and not to special factors that permitted a court to ignore the principles that his
Lordship had laid down. However, even given the interpretation of Stamp L.J., which
appears to be correct.

Browne L.J. in Fellowes & Son v Fisher expressed the view that he did not know how a
court could fairly or reasonably consider the balance of convenience without taking some
account of the relative strength of the parties' cases.

Exceptions to American Cyanamid

This is where Cyanamid is inapplicable and that he cl must show a prima facie case.
Where the trial is unlikely
Justice will not be served where in applying Cyanamid it s unlikely that the matter would
proceed beyond the interlocutory stage.
If the balance of convenience favoured the plaintiff he could get an injunction without
ever having to establish more than an arguable case.
In N.W.L. Ltd. v. Woods [1979]; where the House of Lords recognised that
determination at the interim level would be decisive and the matter would not go to a
final hearing. It is notable that Lord Diplock himself appeared in that case to recognise
the limits of what he had pronounced in American Cyanamid, for he indicated that where
an interim hearing was going to be decisive, the criteria that he had set out in American
Cyanamid was not appropriate. He said “the degree of likelihood that the pl would have
succeeded in establishing his right to an injunction if the action had gone to the trial, is a
factor to be brought into the balance,” this was mere lip-service to Cyanamid (see
factortame). It is clear that he plaintiff will not succeed without a prima facie case, but it
is dressed up in the balance of convenience.
In other cases the courts have sought to avoid the application of the American Cyanamid
principles by interpreting them in a way that permits a judge to consider the merits of the
case. In R v Secretary of State for Transport, ex p. Factortame, the House of Lords
heard an application to restrain the enforcement of the Merchant Shipping Act 1988
because it was argued to be incompatible with European Union law. Lord Jauncey
specifically stated that the Cyanamid requirement of establishing a serious question to be
tried was not appropriate in the case before the House, a case that only involved a
question of law. His Lordship said that a strong prima facie case needed to be
established, but his Lordship emphasised that he was not being critical of the Lord
Diplock approach.
In Cayne v. Global natural resources plc [1984]; Cyanamid did not apply where the
interlocutory injunction would effectively end the action. In such cases the court should
approach the matter on a broad principle; what can the court do to in t its best endeavor
to avoid injustice. Kerr, L.J. said that Cyanamid was confined to cases where the plaintiff
was concerned to pursue a claim to trial and sought the injunction as a holding operation.
The case did not use the prima facie approach, b/c it would be unjust to preclude the
defendant fro having his rights determined in a full trial.
In Cambridge Nutrition Ltd. v. British broadcasting Corp. [1990]
The pl, the manufacturer of a low calorie diet sought to prevent the broadcast of a
documentary until after the government report of such diets. The documentary would
only be important before the report. No injunction should be granted even if their was an
arguable case and balance of convenience. Kerr L.J. said Cyanamid contained “no
principles of universal application.” The pl case was weak therefore no prima facie case
was established, other members paid lip service to Cyanamid, by saying the case would
have been the same if those principles were taken into consideration.
Where the trial is likely to be delayed
Waiting time for the trial will be considered. It will be wrong to grant an injunction on
the strength of a mere arguable case that the covenant is not void under the restraint of
trade doctrine where the likelihood is that the trial will not take place until the period of
the restraint has expired.
In Lansing Linde Ltd. v. Kerr[1991]; where the period of restraint was one year and
the trial would not come for at least 9 months. In such circumstances the employer would
have to have a prima facie case and not merely an arguable one, the effect would have
been that the defendant would have benefited.
Where there is no arguable defence
If the Pl had a strong case that his chances of success at the trial are overwhelming, an
interlocutory injunction will be granted. Where the defendant has no arguable defence, it
will not be necessary to consider the balance of convenience.
In David Lawrence ltd. v. Ashton [1991]; Balcombe L.J. said, “Clearly if there is a no
serious issue to be tried because the case is an open and shut one then it is a case where
an interlocutory injunction should be granted.”
This element is designed to eliminate hopeless cases where this requirement cannot is not
satisfied. E.g. of its application is in clear cases of trespass and breaches of negative
contracts.
Trade disputes.
American Cyanamid is modified in trade dispute cases by the opportunity for the
defendant to prove a prima facie defence under the labour relations legislation.
The reason fro this is that these applications rarely went pass the interlocutory stage and
the balance of convenience would invariably favour the employer, thus denying the trade
unions their power to pressurize employers.
Injunctions to restrain the presentation of a winding up Petition
Bryanston as mentioned above, a prima facie case is required in these instances.
Mandatory interlocutory injunctions
Cyanamid concerned a negative injunction, Lord Diplock talks in terms of restraining a
defendant of doing acts, not of ordering him to do acts. Mandatory injunctions do not
require the pl to have an arguable case, nor a prima facie case. The general test is that the
court must feel “a high degree of assurance’ that the pl will succeed at the trial, in other
words the pl must show a strong prima facie case.
Anton Piller Order and Mareva Injunction
Anton Piller is used to require the pl to enter and search his premises and to remove
evidence, which may be destroyed, such orders are obtained ex parte and are usually
draconian in effect, it is partly mandatory. Ormrod L.J. “an extremely strong prima facie
case is an essential pre-condition. It is an exceptional cases b/c it goes without notice an
is draconian.
Mareva injunctions are designed to prevent the defendant from removing assets so as to
be unable to satisfy judgment should the claimant be successful. It is said that Cyanamid
principles could be applied, since the pl must have an arguable case and the balance must
favour the grant. But still may other conditions have to be satisfied.
In Derby v. Weldon [1990] Parker L.J. the difference between mareva and other
injunctions, the latter require a serious question to be tried, while mareva required an
arguable case. This does not affect the application of Cyanamid.
In Polly Pect International v. Nadir No. 2 [1992] Lord Donaldson M.R. said that
American Cyanamid had “no application to the grant or refusal of Mareva injunctions
which proceeded on principles which are different to those applicable to other
interlocutory injunctions.
There is still considerable evidence to show that these two are regarded as exceptions to
American Cyanamid.

Kerr L.J. said in Cambridge Nutrition, American Cyanamid principles “must never be
used as a rule of thumb, let alone as a straightjacket.” The list of exceptions will never
end, since it is constantly growing. In Factortame the court claims to be applying the
principles, but in fact subverts it by holding that a pl without a prima facie case will fail
at the balance of convenience stage.