Business Online Group Plc v MCI Worldcom Ltd

When granting an interim injunction requiring a service provider to continue supplying services during a short transition period, the court may require security for the applicant’s cross-undertaking in damages. The security is not a payment on account. It should be fixed by assessing the highest arguable figure advanced by the defendant, taking into account all the evidence available at the interlocutory stage. The court should determine a reasonable and satisfactory sum rather than attempt to resolve disputed figures finally or engage in bargaining between the parties. The amount may be revisited under a liberty to apply if later evidence shows that it is materially too high or too low.

Business Online Group Plc, an Internet service provider, appealed from Grigson J’s dismissal of its application for an interim injunction. MCI Worldcom Limited had given notice under clause 11.2 of the Master Services Agreement that it would suspend telephone and related services. Business Online sought continued supply while it migrated to another carrier.

Although the parties maintained different positions on whether there was a serious question to be tried, the principal issue in the Court of Appeal was the amount of security required for Business Online’s cross-undertaking in damages. The court also addressed the practical arrangements necessary for the transition.

1. Appeal allowed. The Court of Appeal granted an interim injunction restraining MCI Worldcom Limited from terminating its services, and the services of Uunet, until 4.00 pm on 14 September 2001 or further order.
2. The injunction was conditional on Business Online providing security of £20,000 per day. The security was for the cross-undertaking in damages and was not a payment on account. At the interlocutory stage the court could not finally decide which party’s competing billing figures were correct.
3. In fixing security, the court’s role was to determine a reasonable and satisfactory sum from the evidence. The appropriate approach was to take the highest arguable figure advanced by the defendants, having regard to all the available evidence. The court should not attempt to resolve the underlying accounting dispute or engage in haggling over the figure.
4. The security was to be paid into the defendants’ solicitors’ designated account, at £20,000 by midday on Monday to Thursday and £60,000 by midday on Friday for the weekend. Each party had liberty to apply after two weeks to the judge in chambers if further evidence showed that the figure was too high or too low.
5. MCI Worldcom was also required to provide Business Online with the relevant CD-ROMs and CLIs for services supplied since 1 July 2001 and during the injunction period. Costs of the hearing were reserved to the trial of the action. Clarke LJ agreed with Mummery LJ.

• Court of Appeal (Civil Division) — appeal from Grigson J’s dismissal of the interim-injunction application; appeal allowed and injunction granted.
• Queen’s Bench Division, Administrative Court — Grigson J dismissed Business Online’s application on 3 August 2001.