Classic court report: American Cyanamid Co (No 1) v Ethicon Ltd (1975)

9 June 2011 | Allan Donovan

How does a court decide if an injunction is appropriate?

This landmark case deserves to be revisited in light of a number of public sector procurement court judgements in 2010. The case set out the principles to be applied when considering applications for interim injunctions. It concerned the anticipated infringement of a patent held by Cyanamid and it reached the House of Lords (as was).

The “Cyanamid principles” establish that courts must look first at whether there is a serious issue to be tried; second, would damages provide an adequate remedy (should the party being refused the injunction succeed on final judgement); and third, where does the balance of convenience lie? This last criterion has subsequently been embellished so that the courts also look at the course of action that would cause “the least irremediable prejudice”.

The Public Contract Regulations 2006 introduced a “standstill” period so that the public body may not enter into the contract for a minimum of 10 days following the decision. The Public Contracts (Amendment) Regulations 2009 introduced significant amendments to the 2006 regulations. Notably, where an unsuccessful bidder issues a challenge to the award decision within the “standstill period”, regulation 47G imposes an automatic suspension prohibiting the public body from entering into the contract.

One year after these amendments were introduced the first cases began to arrive in the courts. Indigo Services (UK) Limited v The Colchester Institute Corporation was closely followed by Exel Europe Limited v University Hospitals Coventry and Warwickshire NHS Trust and Halo Trust v The Secretary of State for International Development.

All three cases interpreted the 2009 regulations as compatible with the continued application of the Cyanamid principles. The automatic suspensions were lifted and the public bodies completed the deals. Not only are the same principles once used for the application of interim injunctions now being used to lift suspensions, but it is difficult to envisage a scenario where the application of Cyanamid would not result in the lifting of a suspension.

Allan Donovan is a legal consultant at Allandon Services

law court reports 2011

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