The Cyanamid test

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Introduction Interim (a.k.a. interlocutory) prohibitory injunction is a court order that forbids the person it is addressed to do something. It is an equitable remedy and is awarded at the discretion of the court. The famous guidelines for granting the interim injunctions by the court were introduced by Lord Diplock in the case of American Cyanamid Co v Ethicon Ltd[1] (hereinafter the Cyanamid test). The above case concerned the claimant, a US company marketing synthetic surgical sutures, which was finally granted an injunction by the House of Lords to restrain the defendant, an English company, which invented a similar product, from infringing its patent rights. This work aims to analyse the argument that the Cyanamid test is too rigid prompting the courts to create a number of exceptions. The Cyanamid test Lord Diplock introduced the following elements of the Cyanamid test to be satisfied in order for the court to grant interim prohibitory injunction[2]:
  1. Serious questions to be tried
Firstly, the claimant is required to show to the court that its claim has substance, i.e. that it is “an issue for which there is some supporting material and the outcome of which is uncertain”[3] rather than a frivolous claim[4].
  1. Adequacy of damages
If the first element is satisfied, the court will then look into whether the damages awarded to the claimant or to the defendant, if the latter wins, are adequate to do justice (Garden Cottage Foods Ltd & Milk Marketing Board[5]). Where damage is hard to quantify or in the case of irreparable harm, the injunction is likely to be granted (Allen v Jambo Holdings Ltd[6]).
  1. Balance of convenience
If there are any doubts regarding the adequacy of damages, the balance of convenience will be looked at by the court “balancing” all other issues specific to the case. Subsequent treatment of the Cyanamid test The decision in the Cyanamid case caused some turbulence in the subsequent court decision making. However, before proceeding with analysis of the same, it is essential to note that the Cyanamid test comes into a conflict with earlier Beecham Group Ltd & Bristol Laboratories Pty Ltd[7], where the court emphasised that for the injunction to be granted, firstly, the claimant must establish “prima facie case”, i.e. that the claimant is actually entitled to the right he is claiming and, secondly, the proof of the probability of success was required, which is overall a much tougher test to satisfy than the Cyanamid test. Subsequently, the Cyanamid test was closely followed by the courts in a number of cases, such as Alfred Dunhill Ltd v Sunoptics[8], where Browne LJ stated that Lord Diplock’s decision was binding and that the Cyanamid test should be followed. The court in Thomas Marshall (Exports) Ltd v Guinle[9] followed the Cyanamid test as well, but nonetheless noted that there are some cases where the needs of the parties and justice dictate a more comprehensive hearing with Beecham style test applied. When analyzing the Lord Diplock’s rationale behind the Cyanamid test it appears that he tried to ensure the speedy review of the injunction applications and to prevent the occurrence of unnecessary “mini-trials” burdening the court system (Series 5 Software Ltd v Clarke[10]). Some commentators argue that he went too far in setting out very precise rules on assessing the strength of parties’ cases, the potential harm to the parties despite alternative legal resorts and availability of undertakings in relation to payments of damages, which was limiting the exercise of the court’s discretion to do justice[11]. In order to ensure the equitable treatment of all cases, courts tended either to side-step the Cyanamid test or create exceptions to it. It was distinguished in Bryanston Finance Ltd v de Vries (No 2)[12] by the Court of Appeal, which decided that the Cyanamid test was inapplicable to injunction application to prevent presentation of winding up petition. Keay in his article[13] provides a number of further examples of exceptions, such as cases where fraud is involved (Alfred Dunhill Ltd v Sunoptics[14]) and those relating to the right to publish an article or the transmission of a television programme where time is of the essence (Cambridge Nutrition Ltd v BBC[15]), mandatory injunctions applications (De Falco v Crawley BC[16]) and employment and industrial disputes (Attorney-General v Punch Ltd[17]). Interestingly, one of the exceptions was introduced by Lord Diplock himself in NWL Ltd v Woods[18] where he accepted that the Cyanamid test should not be adhered to if the interim hearing was going to be decisive and final. This is a very important exception as Lord Denning M.R. in Fellowes & Son v Fisher[19] mentioned that “after a decision on an interim injunction application the matter goes no further in 99 out of 100 cases” [20]. Besides the exceptions, it appears that the courts in some cases felt that the “prima facie” test worked better and in Fellowes & Son v Fisher[21] Browne LJ was particularly concerned that it was not possible to consider the balance of convenience fairly and equitably without taking into account the merits of the case[22]. On another note, Meagher argued that it is doubtful that the damages can actually be adequate in cases where the remedy of injunction is sought[23]. Indeed, the injunction is generally applied for in specific, sometimes extreme, cases to prevent the applicant’s potential hardship, undermining of its reputation, loss of its customers’ trust or loss of its business relationships and it is hard to imagine how the damages can be adequate if any of the above happens. Again, this should all be left to the court’s discretion in order to allow it to do what is just and equitable. Recent considerations Since the introduction of the Civil Procedure Rules and the ensuing change of approach towards the case management, it is claimed that the Cyanamid test is not as critical as it once was, mainly because the Rules place, among other things, greater emphasis on identifying and resolving issues likely to go to hearing as early as possible[24]. In addition, following the implementation of the Human Rights Act 1998, the court in Cream Holdings Ltd v Chumki Bannerjee & The Liverpool Daily Post & Echo Ltd[25] held that the Cyanamid test is no longer applicable to injunction application relating to the freedom of expression[26]. Conclusion The Cyanamid test is a good example of the battle happening in the courts on the most equitable methods to be used to decide the interim injunction’s application, which are generally either on the merits of the case (the prima facie case) or on the balance of convenience (the serious question). It was argued that some bits of the Cyanamid test were considered too rigid and limiting the court’s discretion in doing justice. As a result, whilst the Cyanamid test was acknowledged and in some cases followed by the courts, it has been frequently either avoided or subject to various exceptions, altogether with ensuing criticism and academic debate. Following the introduction of the Civil Procedure Rules, the Cyanamid test seem to have lost its edge and the Human Rights Act 1998 disapplied its application to the cases involving freedom of expression. However, at the end of the day, the Cyanamid test should not be treated “as rules but only as guidelines”[27]. As such, they seek to bring more flexibility rather than limit the discretion given to the court by equity (R v Secretary of State for Transport, ex parte Factortame Ltd[28]). Bibliography Meagher R et al, Equity – Doctrines & Remedies, 4th ed., LexisNexis Butterworths, Charswood, 2002 McGhee J, Snell’s Equity, 31st ed., Sweet & Maxwell, London, 2005 Spry I, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages, 7th ed., Sweet & Maxwell, London, 2007 Cumming G, The Use of English Civil Procedure in order to Enforce European Competition Law, Civil Justice Quarterly, 25, 2006, 99-112 Keay A, Whither American Cyanamid?: Interim Injunctions in the 21st Century, Civil Justice Quarterly, 23, 2004, 133-151 1

Footnotes

[1] [1975] AC 396 [2] American Cyanamid Co v Ethicon Ltd [1975] AC 396, at 408, per Lord Diplock [3] Cayne v Global Natural Resources Plc [1984] 1 All ER 225 [4] Meagher R et al, Equity – Doctrines & Remedies, 4th ed., LexisNexis Butterworths, Charswood, 2002, p.779 [5] [1984] AC 130 [6] [1980] 1 WLR 1252 [7] (1968) 118 CLR 618 [8] [1979] F.S.R. 337, at 365 [9] [1979] F.S.R. 208 [10] [1996] 1 All E.R. 853 [11] Spry I, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages, 7th ed., Sweet & Maxwell, London, 2007, p.466 [12] [1976] Ch 63 [13] Keay A, Whither American Cyanamid?: Interim Injunctions in the 21st Century, Civil Justice Quarterly, 23, 2004, 133-151, p.139 [14] [1979] F.S.R. 337 at 363 [15] [1990] 3 All E.R. 523 at 534 [16] [1980] 1 Q.B. 460, CA [17] [2003] 1 A.C. 1046 [18] [1979] 1 W.L.R. 1294 at 1306 [19] [1976] Q.B. 122 [20] ibid, at 133 [21] [1976] QB 122 [22] ibid, p.139 [23] Meagher R et al, Equity – Doctrines & Remedies, 4th ed., LexisNexis Butterworths, Charswood, 2002, p.780 [24] Keay A, Whither American Cyanamid?: Interim Injunctions in the 21st Century, Civil Justice Quarterly, 23, 2004, 133-151, p.151 [25] [2003] 2 All E.R. 318 [26] This is because s.12 of the Human Rights Act 1998, which incorporated the European Convention on Human Rights into English law, provides that no relief, including injunction, restraining the freedom of expression “is to be granted so as to restrain the publication before trial unless the court is satisfied that the applicant is likely to establish that publication should be allowed”. In these circumstances, the Cyanamid test would be unsuitable (Cumming G, The Use of English Civil Procedure in order to Enforce European Competition Law, Civil Justice Quarterly, 25, 2006, 99-112, p.107 ). [27] Cayne v Global Natural Resources plc [1984] 1 All ER 225 at 237 [28] [1991] 1 AC 396
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