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26 April 2017

A reminder of the limits of injunctions

A recent decision confirms that there must be deliberate wrongdoing by a 'discloser' in order for an injunction to be granted - injunctions are not intended to restrain inadvertent or accidental wrongs.

The case in question - Rafael Advanced Defence Systems Ltd v Mectron Engenharia, Industria C Comercio SA [2017] EWHC 597 (Comm) - involved an Israeli IT developer ("Rafael"), who entered into a contract, and a non-disclosure agreement, with a Brazilian company ("Mectron") for the provision of a communication system.

The facts of the case are complicated by several corporate acquisitions and commercial assignments. Simply put, Rafael was concerned that Mectron, which became a subsidiary of a competitor of Rafael, would disclose confidential information owned by Rafael in its dealings with the Brazilian Air Force ("BAF").

On this basis, Rafael was awarded a 'without notice' injunction restraining Mectron from dealing further with the BAF, and the court was required to decide whether to allow the continuation of such injunction.

Because Rafael was asking for a Quia Timet injunction, to prevent wrong that had not yet been done, there was a need to show that there was a real risk that Mectron intended to breach the NDA and transfer Rafael's confidential information to a competitor. As Buckley J said in Bridlington v Yorkshire Electricity:

'it would be wrong for this court in quia timet proceedings to compel this defendant to do something which it appears to be willing to do without the imposition of an order of this court'

Rafael argued that the injunction should be granted because:

  1. Mectron could not complete any contracts with the BAF without disclosing the confidential information; and
  2. Mectron was not taking adequate measures to protect the information.

However the judge found no evidence supporting either argument, not least because Mectron had repeatedly assured Rafael that it had no intention of breaching its obligations. The judge was not persuaded that inadvertent loss or leakage of the information was likely, nor was it pertinent to the case, as an injunction was not an appropriate method of restraining accidental or inadvertent wrongdoing.

Comment

It is interesting to see that the English Courts are still being used and trusted by foreign parties to handle complex international disputes. This demonstrates a high degree of confidence in our legal system and in the profession as a whole, even at a time when the UK's position in the world is being called into question.

It is important to remember that quia timet injunctions will only be granted where a party can prove that the potential wrongdoing would be deliberate. It is not enough that it would make commercial sense to breach an obligation, or that there is a high chance of accidental or inadvertent breach.

In order to obtain an injunction, there is therefore an extremely high hurdle to jump and it should only be considered in the most serious circumstances.


This article was written by Peter Byrd. For more information, please contact Peter on +44 (0)1483 252527 or peter.byrd@crsblaw.com.

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