Commercial Injunction - American Cyanamid Principles for Interim Injunctions (Collatory Case)

In Yodel Delivery Network Ltd v Corlett [2025] EWCA Civ 1108 ('Yodel Delivery'), the Court of Appeal (Moylan LJ; Newey LJ; Males LJ) considered the well-known American Cyanamid principles, applicable when the court is being asked to grant a commercial injunction on an interim basis. Under the heading 'Legal Principles', Newey LJ (with whom Moylan LJ and Males LJ agreed) said, at paragraphs 23 to 28:

'23. As is very well known, the House of Lords examined the principles to be applied in relation to the grant of interim (or "interlocutory") injunctions in American Cyanamid Co v Ethicon Ltd [1975] AC 396 ("American Cyanamid"). Lord Diplock, with whom Viscount Dilhorne and Lords Cross, Salmon and Edmund-Davies agreed, said this about the function of such an injunction at 406:

"The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff's need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff's undertaking in damages if the uncertainty were resolved in the defendant's favour at the trial. The court must weigh one need against another and determine where 'the balance of convenience' lies."

24. Expanding on that at 408, Lord Diplock said:

"[T]he governing principle is that the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant's continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff's claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the plaintiff's undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction."

25. "It is where there is doubt as to the adequacy of the respective remedies available to either party or to both", Lord Diplock said at 408, "that the question of balance of convenience arises". "Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo", Lord Diplock commented at 408, going on to explain:

"If the defendant is enjoined temporarily from doing something that he has not done before, the only effect of the interlocutory injunction in the event of his succeeding at the trial is to postpone the date at which he is able to embark upon a course of action which he has not previously found it necessary to undertake; whereas to interrupt him in the conduct of an established enterprise would cause much greater inconvenience to him since he would have to start again to establish it in the event of his succeeding at the trial."

At 409, Lord Diplock observed that "[t]he extent to which the disadvantages to each party would be incapable of being compensated in damages in the event of his succeeding at the trial is always a significant factor in assessing where the balance of convenience lies".

26. When assessing whether a successful defendant "would be adequately compensated under the [claimant's] undertaking as to damages", it is relevant to ask whether the claimant would be able to meet any liability which might arise under the undertaking. In Morning Star Co-operative Society Ltd v Express Newspapers Ltd [1979] FSR 113, Foster J said at 118, "where the damage cannot be quantified and it is clear that the plaintiff is unlikely to be able to pay any appreciable damages, no interlocutory relief should be given". In National Commercial Bank Jamaica Ltd v Olint Corpn Ltd [2009] UKPC 16, [2009] 1 WLR 1405 ("Olint"), Lord Hoffmann, delivering the opinion of the Privy Council, identified "the extent to which [the claimant or defendant] may be compensated by an award of damages or enforcement of the cross-undertaking" and "the likelihood of either party being able to satisfy such an award" (emphasis added) as amongst the matters which the Court may take into account when deciding whether to grant an interim injunction.

27. The fact that an applicant would not have the means to discharge an award on the cross-undertaking is not invariably fatal to an application for an interim injunction, however. In Allen v Jambo Holdings Ltd [1980] 1 WLR 1252, Lord Denning MR said at 1257:

"I do not see why a poor plaintiff should be denied a Mareva injunction just because he is poor, whereas a rich plaintiff would get it. One has to look at these matters broadly."

In Belize Alliance of Conservation Non-Governmental Organisations v Department of the Environment of Belize [2003] UKPC 63, [2003] 1 WLR 2839, Lord Walker, delivering the judgment of the Privy Council, noted at paragraph 39 that the decision in Allen v Jambo Holdings Ltd had "had the result that in England a very large class of litigants (that is, legally assisted persons) are as a matter of course excepted from the need to give a cross-undertaking in damages" and explained that "their Lordships … do not think that it can be taken too far", but expressly did so "without casting any doubt on the practice initiated by that case". "The court is never exempted from the duty to do its best, on interlocutory applications with far-reaching financial implications, to minimise the risk of injustice", Lord Walker said. In Olint, Lord Hoffmann had pointed out in paragraph 17 that "[t]he basic principle is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other".

28. Where the enforceability of a cross-undertaking is open to doubt, the Court may require the applicant to fortify its undertaking by providing security. Calver J said this about such fortification in PJSC National Trust Bank v Mints [2021] EWHC 1089 (Comm):

"26. It was common ground between the parties that it is a matter for the Court's discretion as to whether or not to order fortification of an undertaking given by a claimant as the price for it obtaining freezing injunctive relief. In exercising that discretion, the Court will have regard to the principles set out in Energy Venture Partners Ltd v Malabu Oil & Gas Ltd [2015] 1 WLR 2309 (CA) at [52][54] ('Malabu Oil') as follows:

i. The applicant for fortification must show a good arguable case for it, and does not have to prove the need for fortification on a balance of probabilities (Malabu Oil at [52]-[53]).

ii. In considering whether to exercise its discretion to order fortification, the Court will take the three criteria - which are inextricably linked factors - into account (Malabu Oil at [53], applied in Phoenix Group Foundation v Cochrane [2018] EWHC 2179 (Comm) at [14] ('Phoenix Group')):

(a) Can the applicant show a sufficient level of risk of loss to require (further) fortification, which involves showing a good arguable case to that effect?

(b) Can the applicant show, to the standard of a good arguable case, that the loss has been or is likely to be caused by the granting of the injunction?

(c) Is there sufficient evidence to allow an intelligent estimate of the quantum of the losses to be made?

27. As for the correct approach in relation to the three criteria:

Can the applicant show a sufficient level of risk of loss?

i. In showing a sufficient level of risk of loss, the mere assertion of risk is insufficient. As Gee on Commercial Injunctions (7th Ed.) puts it, 'there must be some real evidence, which objectively establishes that risk' (paragraph 11-029), citing JSC Mezhdunarodniy v Pugachev [2015] EWCA Civ 139 at [98]-[99], to which I would add Popplewell J in Phoenix Group at [18] and Mr. Briggs QC in Harley Street Capital Limited v Tchigirinski [2005] EWHC 2471 (Ch) at [33] ('Harley Street Capital'). I consider that there does indeed have to be a solid, credible evidential foundation that the claimed loss has been or will be suffered, particularly where the loss is said to be that of a third party.

Is the loss caused by the grant of the injunction?

ii. In relation to the causation element:

(a) It is for the party seeking to enforce the undertaking to show that the damage he has sustained would not have been sustained but for the order/injunction ….

(b) In order to show that the loss would not have been suffered 'but for' the injunction, the applicant must show that the freezing order and the undertakings were an effective cause of the third party's loss: [SCF Tankers Ltd v Privalov [2017] EWCA Civ 1877] at [42 ] ….

(c) It is only loss which is caused or would have been caused by the preventative or, as the case may be, coercive effect of the injunction that is recoverable under the cross-undertaking: Harley Street Capital at [22] ….

(d) If the loss would have been suffered regardless of the granting of the injunction, for example because of the bringing of the proceedings, then that is not covered by the undertaking ….

Is there sufficient evidence to allow an intelligent estimate of the quantum of the losses to be made?

iii. Again, in my judgment, there must be some solid, credible evidence of future losses (or of losses having been suffered). I would adopt the general approach to this issue of Popplewell J in Phoenix Group at [18]. The claim to have suffered loss ought ordinarily to be supported by some underlying material and ought not to be speculative. Without documentary evidence, a mere generalised assertion of loss will be scrutinised carefully by the Court and is unlikely to be sufficient."' [1] (the wording underlined above, is in italics in original quote in Yodel Delivery).

Court's Power - unusual type of injunction sought

The type of injunction sought as not a standard injunction, in the sense (for instance) of: (a) a freezing injunction; or (b) one to restrain allegedly wrongful conduct. The injunction was to prevent a company ('Yodal'), a loss making company, from initiating/putting into effect, a 'transformation plan' with its (apparently) largest shareholder. The applicants, who claimed to entitled, under a warrant instrument, to a very large proportion of the shares in Yodal: (a) did not claim the 'transformation plan' was itself unlawful in any way; but (b) wanted to take Yodal off in a different direction, if they were given the shares which the applicants said they were entitled to (paragraph 29). Relevant is that: (a) the applications were made pursuant to s.37(1) of the Senior Courts Act 1981, and (b) Yodal's counsel, resisting the applications, '...did not go so far as to dispute that the [first instance judge] had jurisdiction to accede to [the applicants] applications.' (paragraph 30). In other words, it was accepted (not contested) that the Court has jurisdiction to accede to applications for interim injunctions of this type (and that the American Cyanamid principles applied to such applications)

On the facts

On the facts (not set out here), the applicants' appeal in the Court of Appeal, was dismissed. Newey LJ said '...the Judge was not only entitled, but correct, to decline to grant an injunction. It seems to me that that was the course which was "likely to cause the least irremediable prejudice to one party or the other" (to use the words of Lord Hoffmann in Olint).' (paragraph 54). 

Update

(1) In Nordic Power Partners P/S v Rio Alto Energia, Empreendimentos E Participações Ltda [2025] EWHC 2875 (Comm), on 5.10.25, under the heading 'The American Cyanamid Principles', Lionel Persey KC (sitting as a Judge of The High Court) said, at paragraphs 22 and 23:

'The relevant principles are as follows: 

(1) The Court must be satisfied that there is a “serious issue to be tried”. If so, then the fundamental question is whether granting or withholding an injunction is more likely to produce a just result: National Commercial Bank Jamaica Ltd v Olint Corp [2009] 1 WLR 1405 at [16]. 

(2) In answering that question, the Court should consider (i) whether, if the injunction is refused, damages would be an adequate remedy for the applicant; and (ii) whether, if the injunction is granted, damages would be an adequate remedy for the respondent. 

(3) Where there is doubt as to the adequacy of damages for either party, the Court should determine where balance of convenience lies. The “basic principle is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other”: National Commercial Bank v Olint at [17]. 

(4) If the risk of irremediable prejudice does not differ widely, it may be appropriate to take into account the relative strength of the parties' cases: American Cyanamid Co v Ethicon Ltd [1975] AC 396, per Lord Diplock at 409, and the further authorities cited at paragraph 39 below. 

(5) Where the factors are evenly balanced, it may be a counsel of prudence to preserve the status quo: American Cyanamid, per Lord Diplock at 408. 

23. The relief sought against the [the Respondents] is mandatory insofar as it requires [the Respondent] to take positive steps to facilitate the payment of the Disputed Proceeds into escrow. It has been said that the Court should only grant mandatory relief where it has a high degree of assurance that the injunction will be found to have been properly granted. It is, however, now well-established that mandatory injunctions are not governed by different principles, and that to the extent that the test of “high degree of assurance” has any continuing relevance, its rationale is that a mandatory order usually carries a greater of risk injustice than a prohibitory order which maintains the status quo. In the present case, however, a mandatory order merely facilitates the payment of the Disputed Proceeds into escrow and thereby maintains the status quo. Its effect is therefore more akin to a prohibitory order.'

At paragraph 39, under the heading 'Balance of Convenience and other factors' and subheading 'Relative strength of parties’ cases,' the deputy Judge said:

'A further important factor is the relative strength of the parties' cases, to the extent that it is possible to form a view as to the merits at the interlocutory stage: American Cyanamid, per Lord Diplock at 409; Series 5 Software Ltd v Clarke [1996] CLC 631, per Laddie J at 640-641; Quick Draw LLP v Global Live Events LLP [2012] EWHC 233 (Ch) per Nicholas Strauss QC at [6], citing the unreported judgment of the Court of Appeal in Guardian Media Group v Associated Newspapers Ltd (20 January 2000); and Sportsdirect.Com Retail Limited v Newcastle United Football Club Limited [2024] EWCA Civ 532, [2024] 1 WLR 4324, per Sir Geoffrey Vos MR at [17] and [41].'

There are numerous cases on the application of the American Cyanamid principles, some recent ones are set out in a footnote[2].

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[1] In Yodel Delivery Network Ltd v Corlett [2025] EWCA Civ 1108, Newey LJ also considered the test for appealing a refusal to make an interim commercial injunction. At paragraph 31, Newey LJ said:

'It was common ground between the parties that the circumstances in which this Court will interfere with a decision by a judge, in the exercise of his discretion, to grant or refuse an interim injunction are limited. In that connection, [counsel for the injunction applicants/appellants] referred us to A.E.I. Rediffusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507, where Lord Woolf MR said at 1523 that the "conventional approach" to challenges had been "conveniently summarised" by Stuart-Smith LJ in Roache v News Group Newspapers Ltd [1998] EMLR 161, at 172, in these terms:

"Before the court can interfere it must be shown that the judge has either erred in principle in his approach, or has left out of account, or taken into account, some feature that he should, or should not, have considered, or that his decision is wholly wrong because the court is forced to the conclusion that he has not balanced the various factors fairly in the scale."

For his part, [counsel for the injunction respondents/appeal respondents] cited Hadmor Productions Ltd v Hamilton [1983] 1 AC 191, where Lord Diplock, with whom Lords Fraser, Scarman, Bridge and Brandon agreed, said at 220:

"An interlocutory injunction is a discretionary relief and the discretion whether or not to grant it is vested in the High Court judge by whom the application for it is heard. Upon an appeal from the judge's grant or refusal of an interlocutory injunction the function of an appellate court, whether it be the Court of Appeal or your Lordships' House, is not to exercise an independent discretion of its own. It must defer to the judge's exercise of his discretion and must not interfere with it merely upon the ground that the members of the appellate court would have exercised the discretion differently. The function of the appellate court is initially one of review only. It may set aside the judge's exercise of his discretion on the ground that it was based upon a misunderstanding of the law or of the evidence before him or upon an inference that particular facts existed or did not exist, which, although it was one that might legitimately have been drawn upon the evidence that was before the judge, can be demonstrated to be wrong by further evidence that has become available by the time of the appeal; or upon the ground that there has been a change of circumstances after the judge made his order that would have justified his acceding to an application to vary it. Since reasons given by judges for granting or refusing interlocutory injunctions may sometimes be sketchy, there may also be occasional cases where even though no erroneous assumption of law or fact can be identified the judge's decision to grant or refuse the injunction is so aberrant that it must be set aside upon the ground that no reasonable judge regardful of his duty to act judicially could have reached it. It is only if and after the appellate court has reached the conclusion that the judge's exercise of his discretion must be set aside for one or other of these reasons, that it becomes entitled to exercise an original discretion of its own."'

[2] For instance:

(1) in Dr Reddy's Laboratories (UK) Ltd v Boehringer Ingelheim International GmbH [2025] EWHC 2834 (Pat), on 5.11.25, Michael Tappin KC (sitting as a Deputy High Court Judge), under the heading 'The applicable principles' said, at paragraphs 20 to 30 (DR is the claimant (to a patent revocation claim)/respondent to the application for an injunction; BI DE is the defendant to the claim/applicant for an interim injunction; DR had started producing a generic product, during the currency of the claim, where the claim was listed for trial October 2026; SSHSC - Secretary of State for Health and Social Care were granted permission to intervene)

'It was, of course, common ground that I should approach the application for an interim injunction applying the guidelines laid down by Lord Diplock in American Cyanamid v Ethicon [1975] AC 396. They were stated as follows by Arnold LJ in Dapa II CA at [18]:

(1) Is there a serious question to be tried (or, in current terminology, does the claimant have a real prospect of success)? If not, no injunction should be granted.

(2) Would damages be an adequate remedy for the claimant for the loss sustained pending trial as a result of the defendant continuing the acts complained of if the claimant were to succeed at trial in establishing its right to a permanent injunction? If they would, and the defendant would be in a financial position to pay those damages, then no injunction should normally be granted.

(3) If not, would damages on the claimant's cross-undertaking be an adequate remedy for the defendant if the defendant were to succeed at trial in establishing its right to do acts which had been enjoined? If they would, and the claimant would be in a financial position to pay those damages, then an injunction should normally be granted.

(4) Where there is doubt as to whether damages would be an adequate remedy for either side or both, where does the balance of convenience lie? This depends on all the circumstances of the case. Where other factors appear to be evenly balanced, it is a counsel of prudence to preserve the status quo. There may be special factors which need to be taken into account.

In relation to (2) and (3), DR emphasised what Floyd LJ said in Neurim v Mylan [2020] EWCA Civ 793 at [16]:

"As the judge noted, when Lord Diplock spoke of damages being an "adequate" remedy, he was not suggesting that damages must provide a perfect remedy. As the judge also observed, there comes a point where "damages as a remedy falls so far short of the perfect, that the remedy can no longer be described as adequate." I agree with this. The boundary between the adequate and the inadequate is not a precise one. It is a matter for judicial evaluation on the evidence in any given case whether or not the boundary is crossed. If it is not crossed in relation to the claimant's loss then, normally, an injunction will not be granted."

The difficulty in ascertaining whether the boundary between the adequate and the inadequate has been crossed is illustrated by the judgments of the Court of Appeal at a later stage in the Neurim v Mylan litigation: [2022] EWCA Civ 370, referred to in Dapa II CA at [28]-[31]. Arnold LJ held that there had been no material change of circumstances and so damages would be an adequate remedy for the claimants, whereas Birss and Newey LJJ held that they would not (but the fact that damages would not be an adequate remedy for the defendants and the preservation of the status quo meant that the injunction should be refused). Birss LJ emphasised that just because a court can conduct a damages enquiry and arrive at a figure it regards as just does not mean that damages are an adequate remedy if the uncertainties are significant.

DR pointed out that in American Cyanamid at p.408, when speaking of preserving the status quo, Lord Diplock said (DR's emphasis):

"Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo. If the defendant is enjoined temporarily from doing something that he has not done before, the only effect of the interlocutory injunction in the event of his succeeding at the trial is to postpone the date at which he is able to embark upon a course of action which he has not previously found it necessary to undertake…"

DR's submission...was that Lord Diplock's words mean that this approach only applies in cases where all relevant matters will remain the same until judgment after trial if an interim injunction is granted, and that if relevant matters will change before judgment after trial even if an interim injunction is granted it is no longer "a counsel of prudence" to grant an interim injunction if "other factors appear evenly balanced". However, DR did not cite any authority in support of such a proposition, and the preservation of the status quo is often taken into account even in cases in which relevant matters will have changed by the time of judgment after trial.

In Dapa II CA at [20] Arnold LJ cited the observation of Lord Hoffmann in National Commercial Bank of Jamaica v Olint [2009] UKPC 16 at [17]:

"In practice, however, it is often hard to tell whether either damages or the cross-undertaking will be an adequate remedy and the court has to engage in trying to predict whether granting or withholding an injunction is more or less likely to cause irremediable prejudice (and to what extent) if it turns out that the injunction should not have been granted or withheld, as the case may be. The basic principle is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other. This is an assessment in which, as Lord Diplock said in the American Cyanamid case [1975] AC 396, 408:

'It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be given to them.'"

I have had that well in mind, along with what Lord Hoffmann said in the Olint case at [16]:

"The purpose of such an injunction is to improve the chances of the court being able to do justice after a determination of the merits at the trial. At the interlocutory stage, the court must therefore assess whether granting or withholding an injunction is more likely to produce a just result."

BI referred me to what Arnold LJ said in Dapa II CA at [22]-[26]:

"22. Over the last quarter of a century, a considerable number of interim injunctions have been granted in cases where a generic pharmaceutical company has launched a product at risk of patent infringement. This class of cases is distinguished by three factors in particular.

First, the entry of one generic company into a market which has hitherto been monopolised by the patentee is often (but not always) followed by the entry of one or more additional generic companies into that market. This is liable to lead to price-cutting by all the suppliers in order to build or maintain market share, and a resultant downward price spiral. The effect of this on the patentee is liable to be exacerbated, if it continues, by recategorisation of the product under the NHS Business Services Authority ("NHSBSA") Drug Tariff, which affects the reimbursement price of pharmaceuticals dispensed against prescriptions which do not specify a brand.

Secondly, the practical ability of the patentee to restore its previous price if successful at trial is generally constrained by NHS resistance to such price rises. Although in theory there is little to stop patentees raising their prices, at least in the absence of recategorisation, this would lead to a loss of goodwill which is generally regarded by patentees as unacceptable. So far as I am aware, there are very few, if any, cases in which a patentee, having cut its prices due to generic competition following the refusal of an interim injunction before trial, has successfully raised its prices back to where they were after having prevailed at trial. …

The first two factors can lead to the conclusion that damages will not be an adequate remedy for the claimant because of the uncertainty involved. It is usually the case that damages will not be an adequate remedy for the defendant either, however, because it will have no track record of selling the product in question to enable its lost sales to be quantified. Moreover, establishing the relevant counterfactual can be particularly difficult if it is either known or probable that other generic companies would have entered the market in the meantime, because then there will be uncertainty as to the extent to which the defendant would have benefitted from being the first generic entrant (e.g. by establishing relationships with customers for the product in question).

This leads to the third factor, which is that a generic company intending to launch a product at risk must first obtain an MA in order lawfully to be able to market its product and must have a source of supply of a product which has obtained all necessary regulatory approvals. This must be planned some time in advance. Furthermore, the generic company will usually be well aware of the risk of infringement. Typically, it will only launch at risk if it thinks it has a sufficiently strong case that the patent (or SPC) is invalid. In such circumstances the decision of this Court in SmithKline Beech[am] plc v Apotex Europe Ltd [2003] EWCA Civ 132, [2003] FSR 31 establishes that it is proper for a court to take into account, when considering the balance of the risk of injustice and deciding to preserve the status quo, that the generic company could have "cleared the path" for its launch by bringing proceedings for revocation of the patent sufficiently far in advance."

However, the question is whether those factors are present in this case. I agree with the submission of [counsel for] SSHSC that one should not proceed on the basis of rebuttable presumptions, but on the evidence before the court in each case.

Carrying out the exercise required by American Cyanamid in pharmaceutical patent cases can be difficult because it involves assessing the likelihood of events happening in the future on each hypothesis that needs to be considered (injunction 'wrongly' granted and injunction 'wrongly' withheld). However, in many cases the period that needs to be considered is relatively short (often because it is common ground that the trial should be expedited regardless of whether an injunction is granted), and the market is a relatively stable one and will continue to be so in the absence of generic entry.

30. This case is very different. DR has now decided to launch its generic empagliflozin product at a time when the market for empagliflozin is likely to be about to change significantly in a manner which is unpredictable, even without generic entry. Moreover, it has done so having just agreed to a trial date in October 2026, meaning that it is necessary to consider what will happen during and after a period of about 14-15 months until the form of order hearing following judgment after the trial. That means that the uncertainties involved, and the difficulty in assessing whether granting or withholding an injunction is more likely to produce a just result, are increased.'

(2) see FCMB Bank (UK) Ltd v Collins [2025] 11 WLUK 78, Edmund Burge KC sitting as a Deputy High Court Judge on 7.11.25 (only Westlaw Case Digest currently available);

(3) in International SOS Assistance UK Ltd v Secretary of State for Defence [2025] EWHC 2634 (TCC), an unsuccessful tenderer for a MOD contract, commenced proceedings against the defendant, alleging breaches of the Public Contracts Regulations 2015 ("the Regulations"). Pursuant to regulation 95, those proceedings triggered the automatic suspension of the Defendant's power to award the contract. Eyre J on 20.10.25, under the heading 'The Approach to be taken', said, at paragraphs 27 to 36:

'27. Regulation 96(2) provides that when deciding whether to lift the automatic suspension the court must consider whether it would have granted an interim injunction preventing the relevant public body from entering into the contract if regulation 95 (imposing the automatic suspension) had not been applicable. O'Farrell J explained the approach to be taken thus in Camelot UK Lotteries Ltd v Gambling Commission [2022] EWHC 1644 (TCC) (2022) 202 Con LR 89 at [47] and [48]:

[47] "The applicable principles for determining such an application are set out in American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504 at 509–510, [1975] AC 396 at 407–408 per Lord Diplock; National Commercial Bank Jamaica Ltd v Olint Corp Ltd [2009] UKPC 16, [2009] 5 LRC 370, [2009] 1 WLR 1405 per Lord Hoffmann at [17]–[18]; Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC), (2013) 151 ConLR 146 per Coulson J (as he then was) at [34], [48]; and summarised in Alstom Transport UK Ltd v Network Rail Infrastructure Ltd [2019] EWHC 3585 (TCC), [2020] BLR 95, at [29].

[48] The relevant questions for the court, when determining an application to lift the automatic suspension in a procurement challenge case, are as follows:

(i) Is there a serious issue to be tried?

(ii) If so, would damages be an adequate remedy for the claimant(s) if the suspension were lifted and they succeeded at trial; is it just in all the circumstances that the claimant(s) should be confined to a remedy of damages?

(iii) If not, would damages be an adequate remedy for the defendant if the suspension remained in place and it succeeded at trial?

(iv) Where there is doubt as to the adequacy of damages for either of the parties, which course of action is likely to carry the least risk of injustice if it transpires that it was wrong; that is, where does the balance of convenience lie?"

28. The courts have considered sundry circumstances in which it has been said that damages would not be an adequate remedy for a claimant and where it has been said that it would not be just to confine the claimant to a damages remedy. That issue is to be addressed by reference to the circumstances of the particular case and there is no general rule that damages either always will be or will never be an adequate remedy in a particular category of case.

29. There will be cases where the difficulties in the calculation of the damages are such that the court cannot be confident that it will be able to quantify the claimant's loss properly and fairly. In such cases the prospect that the court will not be able properly to reflect the claimant's loss in a damages award can mean that it is unjust to confine the claimant to its damages remedy. This can be the position where the court would have to take account not only of the lost chance of a tenderer being successful in a fair tender process but also the lost chance of it then being called upon to perform services under a framework contract (see Lettings International Ltd v London Borough of Newham [2007] EWCA Civ 1522 at [33] – [35]). It can also be the position where the allegation is that the tenders were evaluated by reference to undisclosed criteria (see Morrison Facilities Services Ltd v Norwich City Council [2010] EWHC 487 (Ch), at [31] – [34) and NATS (Services) Ltd v Gatwick Airport Ltd [2014] EWHC 3133 (TCC), [2015] PTSR 566 at [80] – [83]). Another example is that of a case where it is said that a tenderer was materially misled and where it would be necessary to analyse whether different responses in communications would have made a difference to the bid (see Covanta Energy Ltd v Merseyside Waste Disposal Authority (No 2) [2013] EWHC 2922 (TCC) at [53]).

30. Care is needed before the court can conclude that difficulties in the evaluation exercise mean that damages will not be an adequate remedy (see Openview Security Solutions Ltd v London Borough of Merton [2015] EWHC 2694 (TCC) at [28] [32] and Medequip Assertive Technology Ltd v Royal Borough of Kensington and Chelsea [2022] EWHC 3293 (TCC) at [41] – [43]). It is to be remembered that the courts are well-used to determining damages by assessing the value of a lost chance and to doing so on the basis of incomplete information. It is relevant to note the high level of difficulty which has to be shown before the court will accept that damages will not be an adequate remedy. In Morrison Facilities and Covanta the court was concerned with circumstances in which the fair and proper assessment of the damages would have been "virtually impossible". In Lettings International the court accepted that the proper quantification of the damages would be "very problematical". In NATS Services Ltd there would have been "great difficulty in estimating the damages".

31. The fact that the loss of the contract in question would harm a claimant's prospect of obtaining other contracts and would cause a loss which would be difficult to identify can be a factor meaning that damages would not be an adequate remedy and that it would be unjust to confine the claimant to its damages remedy. However, caution is needed before the court can conclude that the loss of the contract will have such an impact. The fact that a tenderer fails to obtain a contract will not have that consequence without more even if the tenderer was the incumbent under the contract which is being replaced. Nor is it sufficient either that the lost contract was prestigious or that there is said to be an impact to the claimant's reputation. What is required is cogent evidence demonstrating the prospect that financial loss will be suffered in circumstances where that loss will not be recoverable in damages. See NATS Services Ltd at [84] – [85]; Openview Security Solutions Ltd at [35] and following; Bombardier Transportation UK Ltd v London Underground [2018] EWHC 2926 (TCC) at [57] and following; Draeger Safety UK Ltd v London Fire Commissioner [2021] EWHC 2221 (TCC) at [35] and [41]; Kellogg Brown & Root Ltd v Mayor's Office for Policing [2021] EWHC 3321 (TCC) at [76] and following; Camelot at [98]; and One Medicare v NHS Northamptonshire Integrated Care Board [2025] EWHC 63 (TCC) at [45].

32. There will be cases where the loss of a tender will cause the collapse of a business or of a substantial part of a business. The prospect of such an outcome can be a matter which makes it unjust to confine a claimant to its remedy in damages. However, such cases will be rare and the court will require detailed and cogent evidence as to the effect of the loss of the contract before accepting that a particular case was in that category (see TES Group Ltd v Northern Ireland Water Board [2020] NIQB 62 at [31] and [32]).

33. There will be rare cases in which a procurement claim succeeds but where the court is precluded from awarding damages because the relevant breach is not sufficiently serious to warrant such an award (see Braceurself Ltd v NHS England [2024] EWCA Civ 39, [2024] KB 913). In such a case there is scope for the argument that damages would not be an adequate remedy for a claimant which might succeed in its procurement claim but then receive no compensation. Such cases are rare and I will address below the approach to be taken in respect of that argument in the circumstances of this case.

34. If a serious issue has been shown and the court is not satisfied that damages will be an adequate remedy it must turn to consider the balance of convenience. The approach to be taken was summarized thus by O'Farrell J in Camelot at [126]:

"The balance of convenience test requires the court to consider all the circumstances of the case to determine which course of action is likely to carry the least risk of injustice to either party if it is subsequently established to be wrong. When determining where the balance of convenience lies:

(i) the court should consider how long the suspension might have to be kept in force if an expedited trial could be ordered: DWF LLP v Secretary of State for Business, Innovation and Skills [2014] EWCA Civ 900 per Sir Robin Jacob at [50];

(ii) the court may have regard to the public interest: Alstom Transport v Eurostar [2010] EWHC 2747 (Ch) at [80];

(iii) the court should consider the interests of the successful bidder, alongside the interests of the other parties: OpenView [2015] BLR 727 at [14];

(iv) if the factors relevant to the balance of convenience do not point in favour of one side or the other, then the prudent course will usually be to preserve the status quo (or, perhaps more accurately, the status quo ante), that is to say to lift the suspension and allow the contract to be entered into: Circle Nottingham Ltd v NHS Rushcliffe Clinical Commissioning Group [2019] EWHC 1315 (TCC), (2019) 185 ConLR 139, at [16]."

35. There is a public interest in the award of public contracts being made in a lawful and transparent manner but there is also a public interest in public authorities being able to obtain the benefits which they believe flow from the contract in question (see Draeger at [49]). There will often be differing views as to the extent to which new arrangements are in fact different from those already existing and as to the extent of any benefit flowing from the changes. A mere assertion of benefit by a public body cannot close down consideration of the point but the court must proceed on the basis that the public bodies are better placed than the court to determine whether changes will be beneficial (see Medequip at [109] – [110]).

36. As O'Farrell J explained it is necessary to consider whether it would be possible for the trial to be expedited and to have regard to how long the suspension would last if there were to be expedition. I set out my understanding of the approach in somewhat stark terms in Medequip at [59] and the position is rather more nuanced than my language there might suggest. It is nonetheless necessary to have regard to the scope for expedition. In doing so the court must consider the extent to which expedition with retention of the suspension protecting the interests of a claimant would be practicable and would reduce the risk of injustice being caused to the public by the retention of the suspension.'

(4) in Safe Transport Ltd v Pallet Network Ltd [2025] EWHC 396 (Ch), Stuart Isaacs KC (sitting as a deputy High Court Judge), the Court had before it an application for a commercial interim injunction: 

(a) as to the general test, the Judge said, at paragraph 23:

'The outcome of the present application turns (as is common ground between the parties) on how the well-known American Cyanamid principles are to be applied, namely whether there is a serious issue to be tried, whether damages would be an adequate remedy and whether the balance of convenience (or, perhaps more correctly put, the balance of the risk of doing an injustice) lies in favour of or against the grant of an injunction. As stated by Lord Hoffmann, giving the opinion of the Board, in National Commercial Bank Jamaica Ltd v Olint Corp Ltd [2009] 1 WLR 1405 at [17], the court “has to engage in trying to predict whether granting or withholding an injunction is more or less likely to cause irremediable prejudice (and to what extent) if it turns out that the injunction should not have been granted or withheld, as the case may be. The basic principle is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other”. The principle applies whether the injunction is prohibitory or mandatory; and arguments over whether the injunction should be classified as prohibitive or mandatory are barren although, as a generalisation, the features which ordinarily justify describing an injunction as mandatory are often more likely to cause irremediable prejudice than in cases in which a defendant is merely prevented from taking or continuing with some course of action, see Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670, 680 cited in Olint at [19].'

(b) after dealing with 'serious issue to be tried', then 'adequacy of damages' and then balance of convenience', the Judge came to 'the inadequacy of a cross-undertaking'. Here the Judge went into detail, about the law here (intermixed with some evaluation of the facts in the case before him). At paragraphs 48 to 57, the Judge said:

'48. With regard to the inadequacy of a cross-undertaking, it is trite that one will usually be required as the price of the grant of an injunction but, as stated in Gee at paragraph 11-024, the court has a discretion in the matter: the court may “still decide to grant the relief sought, accepting the risk that the undertaking may not be honoured if called upon” albeit that this is “in rare cases where the merits are strongly in favour of the applicant”.

49. As Lord Hoffmann said in Olint at [19]:

“What is required in each case is to examine what on the particular facts of the case the consequences of granting or withholding of the injunction is [sic] likely to be. If it appears that the injunction is likely to cause irremediable prejudice to the defendant, a court may be reluctant to grant it unless satisfied that the chances that it will turn out to have been wrongly granted are low; that is to say, that the court will feel, as Megarry J said in Shepherd Homes Ltd v Sandham [1971] Ch 340, 351, ‘a high degree of assurance that at the trial it will appear that the injunction was rightly granted’.”

50. The claimant relies on the Court of Appeal’s decision in Fleming Fabrications Ltd v Albion Cylinders [1989] RPC 47 where, even though the court considered it probable that the plaintiff would be unable to meet or meet in full any liability on its crossundertaking in damages, an injunction was granted because of the risk of injustice if it were not.

51. In Fleming Fabrications, the plaintiffs were respectively the registered proprietor of and exclusive licensee under a patent relating to a self-priming device for hot-water systems. The inventor of the device, a director of the licensee, and its general manger subsequently went to work for the defendant. The plaintiffs learned that the defendant intended to market a similar device and succeeded in obtaining an interlocutory injunction pending trial of infringement proceedings even though the plaintiffs would in all probability be unable to meet any liability on a cross-undertaking in damages due to the risk of the plaintiffs otherwise being driven out of business by the defendant. An important consideration for the court was that the reason the plaintiffs might have been driven out of business was the activities of the second plaintiff’s former employees who acted against the interests of the plaintiffs around the time they left the licensee’s employment in decrying the plaintiffs’ position to the plaintiffs’ suppliers and customers and deliberately creating as much financial difficulty for the plaintiffs as they could; and who now were working for the defendant.

52. The defendant draws attention to a passage in the judgment of May LJ in that case where he said, at page 53:

“In my judgment, having read the learned judge’s judgment more than once, it seems to me that he took the view that not only did the respondents have an arguable case, but that it was a strong arguable case, and the defences raised against it were not in themselves very strong, although there was one point of law which was not decided. Having concluded that there was an arguable case on the respondents’ side, he then of course turned to the question of the balance of convenience.”

53. Also, at page 57, May LJ said that:

“I fully appreciate that if one simply does the damages exercise, to which reference is so often made when American Cyanamid is quoted, the result might seem to be that no interlocutory injunction should go in the circumstances of the instant case. On the other hand, when one bears in mind that that is only part of the balance of the risk of doing an injustice and looks at all the other considerations – to which I have referred and which are also in my mind but which I have not gone into in detail which are clear on the papers – I think that the balance in the circumstances of the instant case does require the grant of an interlocutory injunction against the appellants.”

54. Similarly, in Allen v Jambo Holdings Ltd [1980] 1 WLR 1252 (referred to in Dillon LJ’s concurring judgment in Fleming Fabrications at page 58) – a negligence and fatal accidents claim – the Court of Appeal held that the plaintiff should not be deprived of a freezing order to which she was otherwise entitled on the ground that her cross-undertaking in damages was of limited value. The plaintiff was the widow of a person who had been killed in an accident involving an aircraft owned by the defendant. At 1257H, Shaw LJ said that “If one applies the principle that the proper order is one which would result in a due balance of justice and convenience, it would follow that in the circumstances of this case the course to be taken is that which would involve the least risk of ultimate injustice having regard to the actual and potential rights and liabilities of the parties on both sides.”

55. Unsurprisingly, neither Fleming Fabrications nor Allen is on all fours with the present case. It is correct to say, as does the defendant, that in Fleming Fabrications the court was influenced by the fact that it was the conduct of the plaintiff’s former employees then working for the defendant being the cause of the risk of the plaintiff being driven out of business. The claimant, while accepting that the facts of that case are different, argues that the conduct of not only Mr Kendall but also of Mr Shotton concerning the acquisition of premises and staff recruitment was the cause of its financial situation.

56. The defendant draws attention to Goldtrail Travel Ltd (in liquidation) v Onur Air Taşimacilik AŞ [2017] UKSC 57, which is not a case concerning a party’s ability to meet any liability under a cross-undertaking in damages but concerned the imposition of a condition on the grant of permission to appeal. In that case, the Supreme Court held that a condition which would have the effect of stifling the appeal should not be imposed. In that context, where the appellant was a company which appeared to have no assets of its own and the respondent alleged that the company had access to the resources of others, the court had to determine whether the company had established on the balance of probabilities that no such funds would be made available to it. The court ought not to take at face value any refutation by the company that the funds necessary to meet the condition would be made available to it but had to judge the probable availability of funds by reference to the underlying realities of the company’s financial position: see in particular at [23] per Lord Wilson JSC.

57. In the present case, it is the defendant's own position that the claimant itself is not financially able to meet any liability on a cross-undertaking in damages. The defendant has not alleged that the claimant has access to other resources. While the defendant points to the absence of evidence that external funds are not available to sustain the business, unlike in Goldtrail Travel, the defendant does not affirmatively allege that the claimant does have access to the resources of others.'

The Judge then added, at paragraph 58:

'In the end, the question comes down to which course seems likely to cause the least irremediable prejudice or the least risk of injustice to one party or the other. Despite the forceful submissions of the defendant and the differences between the reported cases to which I have been referred and the present case, I consider, on the evidence, that the grant of an injunction seems likely to cause the least risk of irremediable prejudice in view of the respective financial positions of the parties and the other matters referred to above. To the extent that Gee is suggesting that there is a hard and fast rule that the merits need to be strongly in the claimant’s favour where a cross-undertaking in damages may be inadequate, I respectfully disagree. In all the circumstances of the present case, therefore, in my judgment the appropriate course, in the exercise of my discretion, is to grant the application...'