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Competition Litigation - UK Practice and Procedure, 2nd Edition edited by Brealey QC, Mark; George, Kyla (11th July 2019)

17 Final Orders

Mark Brealey, Kyla George

From: Competition Litigation: UK Practice and Procedure (2nd Edition)

Edited By: Mark Brealey QC, Kyla George

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved. Subscriber: null; date: 02 July 2020

Subject(s):
Appeals — Damages — Judicial remedies

(p. 489) 17  Final Orders

Scope of chapter

An order that is final will be the culmination of proceedings; the order will reflect the outcome. In addition to ordering a payment of damages (see Chapter 16) the court may grant declaratory relief that an agreement is void. Whether or not the restriction renders the whole agreement void will depend on whether the restriction can be severed from the rest of the otherwise non-restrictive agreement. Further, the court may in addition enjoin future behaviour by means of a final injunction.

Section A considers when and how an unlawful part of a contract can be severed, and the effect of severability on an agreement. Section B examines the factors considered by the High Court in the exercise of its inherent jurisdiction to grant declaratory relief. Finally, Section C discusses final injunctions, specifically the different types of injunctions and the circumstances in which they may be granted.

A.  Severance

1.  Severance and restrictive agreements

Voidness

17.01  Where a contract contains terms that are illegal or contrary to public policy or prohibited by statute, no action can be pursued upon the basis of those contract terms. The unlawful terms are commonly described as being ‘void’ or ‘unenforceable’. A contractual provision that infringes section 2(1) of the Competition Act 1998 is void by virtue of section 2(4). A contractual provision that infringes Article 10(1) is void by virtue of Article 10(2). Such restrictive provisions are therefore unlawful, unenforceable, and void as between the contractual parties.

Provision not the contract

(p. 490) 17.02  Where the entire contract is affected by the illegality, the contract is void and unenforceable. However, where the illegality does not cover the entirety of the agreement, the question arises whether the unlawful parts can be severed so as to leave an extant, enforceable agreement. In competition law, the voidness only attaches to the contractual provision found to be restrictive of competition, as the CJEU stated in Delimitis v HenningerBrau:1

It is only those aspects of the agreement which are prohibited by Article [81(1)] that are void. The agreement as a whole is void only if those parts of the agreement are not severable from the agreement itself (judgment in Case 56/65 Société Technique Minière v Maschinenbau Ulm [1966] ECR 235).

Consequently, in every case in which an unlawful contractual provision is void, it is necessary to determine the effect of that provision on the remaining terms of the contract. This turns on whether the unlawful term is ‘severable’ from the remainder of the contract. If it is not, then the invalidity of the term will result in the entire contract being held to be void or unenforceable. If it is, then the term will simply be excised from the contract, the remainder of which will carry on as before.

Severance is governed by the proper law of the contract

17.03  The severability of an unlawful term is governed by the proper law of the contract. In Article 101 and 102 TFEU cases, it has been held that severability falls to be determined by the national courts.2

The test for severability under English law

17.04  The circumstances in which an unenforceable term will be severed from the remainder of the agreement were considered in Beckett Investment Management Group Ltd v Hall,3 where the Court of Appeal approved the following broad threefold test:

[A] contract which contains an unenforceable provision nevertheless remains effective after the removal or severance of that provision if the following conditions are satisfied.

  1. 1.  The unenforceable provision is capable of being removed without the necessity of adding to or modifying the wording of what remains.

  2. 2.  The remaining terms continue to be supported by adequate consideration.

  3. (p. 491) 3.  The removal of the unenforceable provision does not so change the character of the contract that it becomes ‘not the sort of contract that the parties entered into at all’.

In Byrne v Inntrepreneur Beer Supply Co Ltd,4 the question that arose was whether the invalidity of the beer tie in the lease of a tied public house resulted in the entire lease (with an option to renew) becoming invalid. The Court of Appeal held that it did, concluding:

In our view, the nature and terms of the present option leads to a wider view of the substance of the conditions imposed, and a condition of due performance of the tie and minimum purchasing requirements must be viewed as at least one integral aspect of the substance of the consideration, without which it would amount as a whole to something quite different …

In these circumstances, we consider that if … the tie and minimum purchasing requirement are invalid under Article [81](1) and (2), it follows that the option ceases also to have any validity.

In reaching its decision, the Court of Appeal conducted a review of the previous authorities and identified a number of different tests that had been applied to determine whether a contractual provision was severable, without deciding that any one test was more valid than another.

Cooke J summarized the Court of Appeal’s review of the relevant test to be applied in McCabe Ltd v Scottish Courage Ltd.5 Cooke J identified a number of different strands to the test, as follows:

A number of different formulations have been made of the test, of which the following are commonly used in relation to the effect of excision of the relevant offending clause:

  1. i)  Can the contract be said to fail for lack of consideration or on any other ground?

  2. ii)  Would the contract be so changed in its character as not to be the sort of contract that the parties intended to enter into at all?

  3. iii)  Is the offending clause part of the main purpose and substance of the agreement?

  4. iv)  Does the deletion alter entirely the scope and intention of the agreement?

  5. v)  Does the deletion leave the rest of the instrument a reasonable arrangement between the parties?

  6. vi)  Does the invalid restraint form the real consideration or the main consideration or the whole or substantially the whole consideration for the promise?

  7. vii)  Is the contract in question a contract for an invalid restraint or a contract which merely includes an invalid restraint?

(p. 492) The agreement appointed McCabe as the exclusive distributor of Miller beer, and contained a term prohibiting McCabe from marketing any other North American beers. McCabe argued that the prohibition on marketing other beers was an illegal restraint of trade. This was met with the response that, if the prohibition on marketing was removed, the entire agreement would be rendered void or unenforceable. Cooke J agreed and held that the prohibition on marketing was ‘part and parcel of the exclusive right’ given to McCabe to market Miller beer and ‘cannot be severed from the sole distributorship and the mutual obligations of loyalty without damaging the fundamental nature of the Agreement in its amended form’.6

In Raleigh UK Ltd v Mail Order Cycles Ltd7 it was alleged that a contract term setting out a recommended retail price was an unlawful attempt at resale price maintenance, contrary to Article 101 TFEU. Norris J held that the clause was valid (on the grounds that it did not impose an obligation to charge the recommended price) but went on to hold that if the clause had been invalid it would have been severable. The removal of the reference to a RRP did not alter the character of the contract. The result was that the dealer could not escape his obligation to pay for the bicycles of which he had taken delivery.

In Agent’s Mutual Ltd v Gascoigne Halman Ltd8 the claimant, Agents Mutual, was an association of estate agents created to establish a new online property portal. A membership rule allowed members to list their properties with only one other competing portal. The CAT rejected the defendant’s contention that the ‘one other portal’ rule restricted competition, contrary to the Chapter I prohibition. The CAT further concluded obiter that the Rule could not have been severed from the rest of the arrangements:

We consider that even though the deletion of the One Other Portal Rule is mechanically and technically possible, its deletion fundamentally alters the nature of the arrangements on which Members and Agents’ Mutual contracted. Accordingly, had we found that the One Other Portal Rule infringed the Chapter I prohibition, we would have held that the rule could not be severed and that the entirety of the arrangements were tainted by illegality.

In substance, despite their apparent unwillingness to commit to any particular test, the conclusions reached by the Court of Appeal in Byrne and Cooke J in McCabe are consistent with the broader threefold test applied in Beckett. The (p. 493) precise working out of this broad formulation is guided by posing and answering the evidential questions identified in Byrne and in McCabe.

Date of assessment for severance

17.05  An important question arises as to how the usual test is to be applied in a case in which important contract terms are anti-competitive at some times, but not at others. It may arise because of changes in the market which have the effect, for example, of making an agreement no longer restrictive in its effect, or of making an undertaking no longer dominant. The question arises whether the voidness which is imposed by Article 101 TFEU or the prohibition imposed by Article 102 is once and for all and operates ab initio, or whether it is temporal.

The temporal effect of a void contract was addressed by the Court of Appeal in Passmore v Morland.9 The case concerned the sale of a package of pubs, all of which were subject to tied house leases whereby the pub tenant had to purchase its beer and other drinks requirements from a designated supplier. The hypothesis was that because of the size of the seller and the number of exclusive pubs in its network, Article 101(1) TFEU was capable of applying to that network to render the purchasing ties in the leases void. By contrast, in the hands of the purchaser, the leases might be valid because the purchaser was a small company with a small network of leases which would fall outside the scope of Article 101(1) TFEU. If the tying clauses in the leases in the hands of the vendor were void ab initio and incapable of being resurrected, then the tie in the leases was equally ineffective in the hands of the purchaser: the ties in the leases which were being sold were simply void for all time. The purchaser had therefore acquired a package of leases with no ties contained in them. Conversely, if the ties in the leases stopped being void on the sale because of the change in market circumstances which applied to the various parties (seller and purchaser), then the ties resurrected and the purchaser could exploit them even though the seller could not. The case came before the Court of Appeal at a time when there were a large number of transactions being effected in the marketplace between brewers and pub companies under which very large packages of pubs were changing hands.

The Court of Appeal held that, because the application of Article 101 was sensitive to changes to market circumstances, an agreement which was at one point in time within Article 101 could fall outside the prohibition at some later point in time. It was held that the application of Article 101 therefore fell to be determined ‘at the time or times in respect of which the question fell to be decided’. It therefore follows that issues of severance which are a necessary consequence of a finding that Article 101(1) applies must also be determined as of the point in time at which the questions arise.

Consistency with block exemptions

(p. 494) 17.06  In Delimitis10 the Court of Justice ruled that if the conditions laid down in a block exemption are not met then the exemption contained therein ceases to be applicable in its entirety. However, the Court added that, if the block exemption does not apply, this means only that the agreement has to be considered under the normal rules of the Treaty appertaining to Article 101(1) and (3) TFEU. Failure to comply with a block exemption only means that the agreement is not automatically exempt. It does not mean that the contractual provisions are null and void.

This approach was applied by the Court of Appeal in Byrne v Inntrepreneur Supply Co Ltd.11 The Court of Appeal considered whether a pub tie lease which contained clauses restrictive of competition, but which were not covered by the block exemption for exclusive purchasing agreements, could nonetheless benefit from block exemption. The suggestion was that the court should first examine the agreement to see whether it fell within Article 101 TFEU and then sever any clauses which were inconsistent with the block exemption. In essence, the suggested severance under consideration was to separate block exempted restrictions from non-block exempted restrictions. The court rejected this approach and held that EU authority

demonstrates clearly that compliance with the block exemption is a matter which must be assessed looking at the particular agreement as a whole, and that (unless, perhaps, there is specific contractual provision for severance in such circumstances), once an agreement is found to contain any restriction beyond those provided, the block exemption ceases to apply and the focus reverts to Article [81(1)].

2.  Severability and abuse of dominance

Application of the relevant test

17.07  While section 18 of the Competition Act 1998 and Article 102 TFEU do not contain an equivalent voidness clause as in section 2 or Article 101, the same result applies. Thus, where a provision in a contract to which a dominant undertaking is a party has been held to involve an abuse by that undertaking of its dominant position, neither the dominant undertaking nor the contractual counterparty can enforce the provision without causing the dominant undertaking to commit an unlawful act. The result is that the offending provision is unenforceable and void.

The application of the test for severability in the context of a breach of Article 102 TFEU arose in English Welsh and Scottish Railway Ltd (EWS) v E. On UK plc.12 The contract was for the long-term provisions of haulage of coal by rail. (p. 495) An investigation by the Office of Rail Regulation (ORR)13 concluded that EWS was in a dominant position in the market for coal haulage by rail, and that it had abused that position contrary to Article 102 TFEU by maintaining exclusive distribution agreements in its agreements with (among others) E. On. The ORR ordered that the terms containing the exclusive distribution obligations be removed from the agreement. It was common ground between the parties that the rates for haulage contained in the agreement were low, and the issue that arose was as to whether the agreement survived such that E. On could require EWS to continue to provide haulage at those rates in the absence of the exclusive distribution provisions. By the time of trial, it was also agreed between the parties that the removal of the exclusive distribution obligations would render the agreement fundamentally different from that which the parties had entered into. E. On nevertheless argued that because the relevant breach was of Article 102 rather than Article 101, it was the conduct of EWS that caused the problem rather than the terms themselves, so that the terms should remain enforceable by the innocent party, E. On. Field J rejected this argument and held that the agreement as a whole was unenforceable or void as a result of the excision of the exclusive distribution provisions. The effect of the ORR’s decision was that the terms in the agreement were illegal and had been from inception. This meant that the agreement should be treated as though it did not contain those terms, which meant that the agreement was fundamentally different from that which the parties had agreed and was, therefore, void.

National severance rules apply

17.08  As a matter of EU competition law the enforceability of a contractual provision which is held to be abusive is a matter for national law. In Ahmed SaeedFlugreisen v ZentralezurBekampfungunlauterenWettbewerbs14 the Court of Justice held that a multilateral tariff agreement between air carriers relating to international scheduled flights would in principle infringe Article 102 TFEU as well as Article 101 TFEU. The Court of Justice addressed the consequences of a finding of abuse in such a case as follows:

If it is found that an undertaking has abused its dominant position on the market and that trade between Member States may be affected, the conduct of the undertaking concerned falls under the prohibition laid down in Article [82]. In the absence of action by the Commission, pursuant to its powers under the Treaty and the rules implementing the Treaty, to put an end to the infringement or impose sanctions, the competent national administrative or judicial authorities must draw the inferences from the applicability of the prohibition and, where appropriate, rule that the agreement in question is void on the basis, in the absence of relevant Community rules, of their national legislation.

(p. 496) 3.  Severance and renegotiation clauses

Courts will not rewrite a contract

17.09  A limitation upon the ability of a court to sever the good from the bad in a contract is the rule that the courts will not rewrite contracts for the parties. This means that severance is possible only when it is possible to delete the offending clauses so that the residue can be assessed. If the residue fails the tests referred to earlier then the contract as a whole will fail. It cannot be saved by the court rewriting the agreement.15 In Littlewoods Organisation Ltd v Harris16 Megaw LJ thus stated (in the context of a covenant to protect confidential information in an employment contract):

I would have no hesitation in saying that if, in order to prevent the covenant from being too wide, it would be necessary that it be re-written, so as to give it a different meaning from the meaning which attaches to it on its proper construction, that is something which the court may not and will not do. So here if, on the true construction of this clause, it could only be rendered a reasonable protection by the writing in of words or by the deleting of words (other than in accordance with what is sometimes known as the ‘blue pencil test’) the clause could not stand.

Furthermore, the courts will not imply a term into a contract such as an obligation upon the parties that they should negotiate in good faith until agreement is reached. An agreement to agree is generally too vague to be enforceable.17

Renegotiation clauses

17.10  Where the application of the test for severance results in the conclusion that the agreement is invalid, the position is generally not affected by the fact that the agreement includes a ‘severance’ clause, by which it is stipulated that the agreement should continue in being, despite one or more provisions thereof being held to be illegal. However, severance clauses are commonplace, and they generally provide that if one or more of the clauses of the agreement are found by a court or competent authority to be invalid, unenforceable, or prohibited, then they shall be treated as being excised from the agreement and the remainder of the agreement shall subsist. They are also often accompanied by a further provision whereby the parties are in such circumstances to come together to agree on amendments to the clause which nearest achieve the same goal as the offending clauses but which meet the test of legality. There are many permutations of and variations on this theme.

  • •  In the case of Richard Cound Ltd v BMW (GB) Ltd18 the claimant alleged that a notice given by the defendant terminating an exclusive supply agreement (p. 497) was anti-competitive and void under Article 101 TFEU. It was held that if the notice was anti-competitive then so were a number of other provisions, the removal of which entirely altered the scope and intention of the agreement, with the result that the entire agreement was invalid. The claimant argued that this result could be avoided by reference to a severance clause which provided: ‘In the event that any of the provisions of this agreement shall be void or unenforceable by reason of any provision of applicable law, it shall be deleted and the remaining provisions hereof shall continue in full force and in effect.’ The judge at first instance (HHJ Lee QC sitting as a Deputy) dismissed this argument:

    In my judgment, by the severance clause in this agreement, the parties did not intend and cannot have intended that the effect of the severance clause would be that the contract, with its void or unenforceable provisions deleted, should continue if the resulting contract would not be the sort of contract the parties intended to enter into at all or if the effect of severance was to alter entirely the scope and intention of the agreement.

    For that result to be achieved very much clearer words would be needed than those at present constituting cl.13.2 and I cannot conceive, as a matter of commercial reality, that the parties would be willing to enter into a contract with such a far-reaching severance clause, permitting the excision of void terms to have the result of entirely altering the scope and intention of the agreement.

  • •  His Honour Judge Lee QC in Cound adopted the reasoning of Lord Coulsfield in Living Design (Home Improvements) Ltd v Davidson.19 That case involved a restraint of trade clause that was held to be unenforceable. The question arose as to whether the agreement could continue in the absence of the restraint, by reference to a clause providing that unenforceable terms should be severed. The Outer House of the Court of Session held that the severance clause did not have the effect that the agreement could continue when its scope and intention had been changed. Lord Coulsfield said:

    It seems to me, however, to be doubtful whether a [severance clause] really enables the court to do anything which it could not do in any case. It is recognised that even in the absence of such a clause the court can sever the unreasonable part of a restriction, where that can be done simply by deletion of the offending part, without in consequence rewriting the contract or altering its scope; and I do not think that [the severance clause] contains anything which can be construed as entitling the court to rewrite the contract. Accordingly, the limits within which severance has been held to be acceptable in previous cases seem to me to be equally applicable to the exercise of any power under [the severance clause]. If so, the court should not strike out words where to do so would alter the scope and intention of the agreement.20

    (p. 498)

  • •  The Court of Appeal in the subsequent case of Byrne21 also struck down the entire agreement, notwithstanding the presence in the agreement of a severance clause.

Consequently, it remains theoretically possible for parties to construct a severance clause in terms that make it clear that the agreement is to persist even if terms are removed that render the agreement fundamentally different from that which the parties entered into. However, such a clause is unlikely to arise in practice.

B.  Declaratory Relief

Jurisdiction to make a declaration

17.11  A declaration is a remedy in its own right. The High Court has an inherent jurisdiction to grant declaratory relief and will do so when there is utility in the grant of such a remedy. It may do so whether or not there are other remedies, for example damages or an injunction, being sought. It is, in this sense, a free-standing remedy. This is made clear by CPR rule 40.20, which provides: ‘The court may make binding declarations whether or not any other remedy is claimed.’ This does not confer the right on the court to grant a declaration but simply confirms that it is a jurisdiction which can be exercised in the absence of any other form of relief being sought.

The CAT, being a creature of statute, has no inherent jurisdiction to grant declaratory relief and section 47A Competition Act 1998 does not bestow one. However, where a claim for declaratory relief (e.g. that an agreement is restrictive of competition) is transferred from the High Court to the CAT, the CAT assumes the power to grant the declaration.22

Power to make negative declarations

17.12  Consistent with the fact that the power is broad and unfettered, it can, in an appropriate case, be exercised to make negative declarations. In Messier Dowty v Sabena SA23 Lord Woolf held:

The deployment of negative declarations should be scrutinised and their use rejected where it would serve no useful purpose. However, where a negative declaration would help to ensure that the aims of justice are achieved, the courts should not be reluctant to grant such declarations. They can and do assist in achieving justice.

Exercise of jurisdiction and factors considered

(p. 499) 17.13  Where the jurisdiction arises, it is still a discretionary power. In broad terms, the court has the power to grant a declaration where there is a lis between the parties and there is utility in the grant of relief.24 A lis does not only mean a cause of action but is more broadly understood to refer to some form of justiciable dispute. The power to make a declaration can be exercised as between the parties to a claim as to their rights and obligations. It can be exercised as to the existence of a fact or as to a principle of law. In Financial Services Authority v John Edward Rourke25 Neuberger J commented that the power to grant a declaration was unfettered, stating:

It seems to me that, when considering whether to grant a declaration or not, the court should take into account justice to the claimant, justice to the defendant, whether the declaration would serve a useful purpose and whether there are other special reasons why or why not the court should grant the declaration.

Although declarations will not often be used to declare the law generally or to give hypothetical statements,26 a competition authority or regulator may obtain a declaration which benefits the wider public. Such bodies exist primarily to benefit consumers and a declaration that benefits a wider category of person may be perceived to be useful and not unfair to the parties themselves. Thus, in OFT v Foxtons Ltd27 the Court of Appeal, applying the considerations advanced by Neuberger J, granted a declaration that certain of the estate agent’s terms and conditions were unfair. Waller LJ stated:

where a regulatory body at least is bringing the proceedings, the court is not prevented from granting a declaration simply because it might have an effect on the rights of parties not joined in the action. If it is just and useful that a declaration should be granted, the court will grant one.

In cases such as the present it seems to me very likely to be useful and just to both parties to grant a declaration in that, if unfairness is found, it will be important to identify which terms and what aspect of it is unfair, and it will be better to have that in declaration form rather than forcing persons to analyse the judgment in order to assess precisely what it decided.

In Mercury Communications Ltd v Director General of Telecommunications,28 Mercury Communications sought a declaration as to the meaning of the term ‘fully allocated costs’ in civil proceedings (i.e. not by way of judicial review). The House of Lords held that the court had the power to make declarations as to the meaning of such terms. Lord Slynn, giving the leading speech, rejected the (p. 500) contention that the declarations were inappropriate in that they related to the future, were academic, or were hypothetical. On the facts of the case the regulator had already expressed a view as to the meaning of these concepts in the past and it was ‘unreal’ to expect the regulator to have a change of mind. Lord Slynn stated that ‘it makes a good deal of sense’ for the courts to make the declaration.

Nonetheless, the courts remain circumspect when asked to make declarations in broad terms, particularly those that could affect parties who are not before the court and who have not had an opportunity to make submissions. Thus, in Football Association Premier League Ltd and others v QC Leisure29 the Premier League brought copyright infringement proceedings arising out of the broadcasting in public houses of live Premier League football. The Premier League had granted an exclusive licence to Sky to broadcast the matches in the UK and had granted similar exclusive licences to others in other member states. Certain of the defendants had purchased viewing decoder cards in Greece and imported them, contrary to the foreign licence, into the UK for resale to other defendants (publicans), who then used them to broadcast the football matches in their pubs. They did this without making any payment to Sky. On a preliminary reference, the CJEU ruled that the broadcasting in the public houses infringed copyright, but also that the territorial restrictions in the licences infringed Article 101(1). When the matter returned to the High Court an issue arose as to how to give effect to the ruling of the Court of Justice. In relation to the claim for copyright infringement, the Premier League contended that the Court should make a wide declaration simply declaring that the defendants were in breach of the claimants’ copyright ‘in some or all of the various works upon which the claim is based’. The defendants contended to the contrary that the Court should make a precise declaration which was limited to the particular categories of work in respect of which infringement had been established. In respect of the competition claim, the Premier League argued against any declaration on the basis that not all the parties to the foreign licences were before the court and had not made submissions on the lawfulness of the licence. Kitchin J, applying Neuberger J’s criteria, steered in favour of more narrow declarations. The judge held that the copyright declarations should be precisely framed, and in relation to the competition law issues, the judge granted declarations that the relevant obligations in the agreements in issue constituted a prohibited restriction of competition insofar as they prevented the sale of decoder cards by the particular distributor involved in the case before him.

In Sainsbury’s Supermarkets v MasterCard Incorporated30 the Court of Appeal held that the interchange fee agreements (MIFs) concluded between MasterCard and its member banks (and Visa and its member banks) restricted competition. (p. 501) Although the issue of exemption was remitted to the CAT, the Court of Appeal nevertheless made a declaration to the effect that the MIFs were contrary to the prohibitions contained in Article 101(1) and Chapter I.

Declarations and arbitrations

17.14  Competition issues arise increasingly in arbitral proceedings.31 The question arises as to the power of arbitrators to make declarations and as to the subsequent powers of the courts to enforce such declaratory relief. The position in England and Wales is governed by the Arbitration Act 1996. Section 48 of the Act provides that an arbitral tribunal may make a declaration as to any matter to be determined in the proceedings. Section 58 provides that unless otherwise agreed by the parties, an award made by the tribunal pursuant to an arbitration agreement is final and binding both on the parties and on any persons claiming through or under them. In such circumstances, it will be rare that there is any need for a court to enter judgment in the form of a declaration from an arbitral tribunal. However, under section 66(1) of the Act, ‘[a]n award made by the tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect’. Under section 66(2), ‘[w]here leave is so given, judgment may be entered in terms of the award’.

The power of the courts to enforce declarations given in arbitrations was addressed by the Court of Appeal in West Tankers Inc v Allianz SPA & Anor.32 The issue was whether the Court had a power to order judgment to be entered in the terms of an arbitral award in a case where the award was declaratory in form (and took the form of a negative declaration). The Court of Appeal held that there was jurisdiction on the part of the courts to order judgment in the terms of a declaration by an arbitral tribunal and that this extended to negative declaratory relief. It had been argued that the word ‘enforced’ in section 66 meant that the arbitral award must be coercive in nature before enforcement could occur, and that since a declaration was not coercive it was therefore incapable of being ‘enforced’.33 The Court rejected this analysis, although it emphasized that section 66 conferred discretion; it did not involve ‘an administrative rubber-stamping exercise’ and the Court would enforce a declaration where it was ‘appropriate’ so to do.34

C.  Final Injunctions

Jurisdiction to grant final relief

17.15  Injunctions may be used as a form of final relief, that is, relief ordered following the final hearing of the claim.35 Both the High (p. 502) Court and the Competition Appeal Tribunal (CAT) have the power to grant final injunctions. By virtue of section 47A(3)(c) of the Competition Act 1998, the CAT has jurisdiction to grant final injunctions in respect of claims for loss and damages suffered as a result of the infringement of the competition rules. An injunction granted by the CAT has the same effect as an injunction granted by the High Court and is enforceable as if it were an injunction granted by the High Court.36

Prohibitory and mandatory injunctions

17.16  A distinction is drawn between prohibitory and mandatory injunctions. A prohibitory injunction is an order requiring the defendant to refrain from doing something, whereas a mandatory injunction requires a defendant to take positive steps to do something. In practice, the distinction between the two types of injunction is difficult to draw, and courts are more likely to award a prohibitory injunction rather than one requiring a party to adopt some positive step which then needs to be policed. Thus, in Purple Parking v Heathrow Airport37 the claimant operated valet parking services at Heathrow Airport from the forecourts. Heathrow Airport (‘HAL’) also operated its own valet parking service from the forecourts, and when HAL required the claimant to operate from the car parks rather than at the forecourt the claimant succeeded in a claim that its exclusion was discriminatory contrary to section 18 of the 1998 Competition Act. On the issue of final injunctive relief, HAL argued that there were inherent difficulties which made it inappropriate to grant such relief. It was argued that re-admittance to the forecourt would involve unspecified negotiation between the parties, for example, as to remuneration for the length of waiting time, and generally what the terms of any licence might be. Mann J considered that the objection to the final injunction was misplaced. The judge made a simple prohibitory order preventing exclusion from the forecourt, leaving the parties to negotiate the precise terms. Mann J stated:

I shall make an order which forbids the anti-competitive conduct, namely the exclusion from the forecourt. What happens thereafter is up to the parties and particularly HAL. They may negotiate a solution. HAL may impose a solution which does not contravene competition law. There may be other outcomes. They will not feature in my order.

Damages in lieu of an injunction

17.17  Injunctions are equitable remedies and are accordingly granted at the discretion of the court. However, the circumstances are limited in which the court will refuse to issue a final injunction which does no more than require a party in the future not to engage in conduct which has been held to be unlawful. There is no ‘balance of convenience’ test—a contract breaker cannot resist an injunction requiring him not to continue breaching his (p. 503) contract merely on the basis that complying with his contract is onerous to him.38 Similarly, it is unlikely that an undertaking in a dominant position could resist a prohibitory injunction requiring it to refrain from abusive conduct in the future on the basis that the balance of convenience would suggest that it should be allowed to continue its abuse.

The court may, however, refuse to grant an injunction and award damages in lieu in ‘exceptional circumstances’,39 and in particular in cases in which to award an injunction would be ‘oppressive’, provided that the claimant’s injury can be adequately compensated in damages. Thus in Jaggard v Sawyer40 the defendants had wrongfully erected a house on land that could only be accessed by trespassing on the claimant’s property. The claimant sought an injunction preventing future trespass on his land. This was refused, on the basis that it would render the house inaccessible and worthless, which was both wasteful and oppressive to the defendants. The claimant was instead awarded damages on the Wrotham Park41 basis, being a ‘reasonable sum’ for the right of access over his land.42 As mandatory injunctions are generally recognized as having a greater impact on defendants (because they require the defendant to take positive steps rather than merely refrain from doing wrong in future), the circumstances in which a claim for a mandatory order will be refused, and damages awarded instead, are broader than those in which a claim for a prohibitory order will be refused.43

Footnotes:

1  Case C-234/89 Delimitis v HenningerBrau AG [1991] ECR I-935; ECLI:EU:C:1991:91, at para 40. See also Case 56/65 Société Technique Minière v Maschinenbau Ulm [1966] ECR 235; ECLI:EU:C:1966:38.

2  See Case 319/82 Société des vente de ciments et bétons de l’Est SA v Kerpen & Kerpen GmbH und Co KG [1983] ECR 4173; ECLI:EU:C:1983:374, paras 11–12.

3  [2007] EWCA Civ 613; [2007] ICR 1539: the third limb of the test derives from the judgment of Buckley LJ in Chemidus Wavin Ltd v STERI SA [1978] 3 CMLR 514, 520, which was itself an early competition law decision. See also Duarte v Black and Decker Corp [2007] EWHC 2720 (QB); [2008] 1 All ER (Comm) 401, paras 112–113, per Field J.

4  [1999] UKCLR 110; [1999] Eu LR 834, at paras 166–168.

5  [2006] EWHC 538 (Comm); [2006] All ER (D) 409 (Mar), at para 51.

6  Ibid, paras 63–66: the judge was asked to proceed on the basis that the clause was a restriction. For a case in which the application of the test has led to the conclusion that the agreement is not fundamentally affected by the excision of the offending terms, see Inntrepreneur Estates Ltd v Mason [1993] 2 CMLR 293; Inntrepreneur Estates (CPC) Ltd v Boyes [1993] 2 EGLR 112.

7  [2011] EWHC 883 (Ch).

8  [2017] CAT 15, at 281: two other rules could have been severed as they would not have involved rewriting the agreement or fundamentally altering the scope and intention of the arrangements.

9  [1999] 1 CMLR 1129, para 25.

10  Case C-234/89 Delimitis v HenningerBrau AG [1991] ECR I-935; ECLI:EU:C:1991:91, paras 38–42.

11  Byrne v Inntrepreneur Beer Supply Co Ltd [1999] UKCLR 110; [1999] Eu LR 834, para 154.

12  [2007] EWHC 599 (Comm); [2007] Eu LR 633.

13  As of 1 April 2015 the ORR became known as the Office of Road and Rail, following the introduction of the Infrastructure Act 2015, when it became responsible for monitoring highways.

14  Case 66/86, Ahmed Saeed Flugreisen v Zentrale zur Bekampfung [1989] ECR 803; ECLI:EU:1989:140, at para 45.

15  See Chitty on Contracts Vol 1, 33rd edn, Sweet & Maxwell (2018), para 16-239.

16  [1977] 1 WLR 1472 at 1486, citing with approval Mills v Dunham [1891] 1 Ch 576, 580, per Chitty J.

17  Walford v Miles [1992] 2 AC 128; Courtney & Fairbairn Ltd v Tolaini Bros (Hotels) Ltd [1975] 1 WLR 297, 301; although see Little v Courage [1995] CLC 164; (1995) 70 P & CR 469 (CA), where it was held that a party was at least obliged to make an offer that was capable of being accepted.

18  [1997] Eu LR 277 (QB), at para 294. The decision of the first instance judge in Cound was approved by the Court of Appeal: [1997] Eu LR 301. Balcombe LJ expressed himself to be ‘in complete agreement with the judge’s conclusion’ (at [310]). See also Frazer (Willow-Lane) Ltd v Nissan Motors (GB) Ltd [2003] EWHC 3157 (Ch); [2003] All ER (D) 201 (Dec), para 52.

19  1994 SLT 753, upheld in Dundee City Council and Others v D Geddes (Contractors) Ltd [2014] CSOH 164.

20  Ibid, at para 71.

21  Byrne v Inntrepreneur Beer Supply Co Ltd [1999] UKCLR 110; [1999] Eu LR 834, at 895–900, and see the terms of the agreement set out at para 116 of the judgment, in particular clause 21. This approach was followed in McCabe Ltd v Scottish Courage Ltd [2006] EWHC 538 (Comm); [2006] All ER (D) 409 (Mar).

22  For example, in Agents’ Mutual Limited v Gascoigne Halman Limited [2017] CAT 15, at para 282, the CAT made several declarations (‘determinations’) that the estate agents’ non-compete rule did not infringe the Chapter I prohibition.

23  [2000] 1 WLR 2040, at para 41.

24  See generally Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438, commented upon by the Supreme Court in Mercury Communications Ltd v DGT [1996] 1 WLR 48. See also Rolls Royce Plc v Unite the Union [2009] EWCA Civ 387.

25  [2002] CP Rep 14.

26  Gouriet v Union of Post Office Workers [1978] AC 435; [1977] UKHL 5.

27  [2009] EWCA Civ 288, at paras 60–61 on appeal from [2008] EWHC 1662 (Ch).

28  [1995] UKHL 12 [1996] 1 WLR 48, at para [59]. See also English Welsh & Scottish Railway Ltd v E.O.N UK plc [2007] EWHC 599 (Comm); [2007] Eu LR 633.

29  [2012] EWHC 108 (Ch), paras 88–99.

30  [2018] EWCA 1536 (Civ).

31  See generally Chapter 21, Arbitration.

32  [2012] EWCA Civ 27.

33  West Tankers Inc v Allianz SPA & Anor [2012] EWCA Civ 27, para 19.

34  Ibid, para 38.

35  See Chapter 8, Interim Remedies.

36  Section 47D(1) of the Competition Act 1998. The power does not extend to Scotland, where any application must be made to the Court of Session.

37  [2011] EWHC 987 (Ch), at paras 241–243.

38  Doherty v Allman (1878) 3 App Cas 709, at 720; Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287; WWF-World Wide Fund for Nature (formerly World Wildlife Fund) and anor v World Wrestling Federation Entertainment Inc [2001] EWHC Ch 482; [2002] FSR 32, paras 50–53. See also the Court of Appeal’s judgment in the same case, [2002] EWCA Civ 196; [2002] UKCLR 388; [2002] FSR 33.

39  Regan v Paul Properties Ltd [2006] EWCA Civ 1391; [2007] Ch 135.

40  [1995] 1 WLR 269.

41  Wrotham Park Estates v Parkside Homes Ltd [1974] 1 WLR 798.

42  See also Midtown Ltd v City of London Real Property Ltd [2005] EWHC 33 (Ch); [2005] 1 EGLR 65.

43  Shepherd Homes Ltd v Sandham (No 1) [1971] Ch 340.