Awbury Technical Solutions LLC v Karson Management (Bermuda) Ltd

On an application for an interim injunction to restrain misuse of confidential commercial information, the ordinary American Cyanamid approach applies unless the relief would engage freedom of expression under section 12 of the Human Rights Act 1998. Confidential communications made to a limited group of commercial counterparties, in confidence and solely to further financial interests, will not ordinarily engage that right.

A contractual term recognising irreparable harm or entitlement to an injunction does not bind the court or determine the applicable threshold. It is evidence relevant to adequacy of damages and a factor in the discretionary balance. A term dispensing with security may, however, carry considerable weight. The injunction must remain sufficiently certain and confined to information derived from the confidential material.

Awbury Technical Solutions LLC sought an interim injunction requiring Karson Management (Bermuda) Ltd to return a confidential transaction summary and restraining Karson from using information derived from it. The parties had entered into a non-disclosure agreement governed by English law, containing confidentiality, use-restriction and remedies provisions.

Karson denied breach and contended that section 12(3) of the Human Rights Act 1998 imposed the higher threshold applicable to prior restraint of publication. It also argued that the contractual remedies clause affected the court’s approach. The central issues were the applicable interim-injunction test, the significance of the contractual clause, and the appropriate scope of any order.

1. Interim injunction granted in principle. The court applied the approach in American Cyanamid v Ethicon [1975] AC 396, as explained in Fellowes & Son v Fisher [1976] 1 QB 122. There was a serious issue to be tried because the claim was not frivolous or vexatious.
2. Section 12 of the Human Rights Act 1998 was not engaged. The proposed communications concerned confidential commercial information, would be made to a limited range of potential counterparties in confidence, and were intended solely to further financial interests. They did not ordinarily engage freedom of expression. The cases concerning advertising, public allegations and disclosure to a foreign court were materially different, including Boehringer Ingelheim v Vetplus Ltd [2007] BusLR 1456, Interflora v Marks & Spencer Plc [2014] EWHC 4168 (Ch), Dar Al Arkan v Al Refai [2012] EWHC 3539 (Comm) and S v A [2018] EWHC 2144 (Ch).
3. Clause 7 of the non-disclosure agreement did not determine whether a breach was likely, did not override section 12(3) if applicable, and did not determine whether damages were an adequate remedy. It was nevertheless relevant evidence. The parties’ acknowledgement that damages would be inadequate justified particular scrutiny, while the provision for an injunction was a factor in the discretion and did not fetter it. The provision dispensing with security could carry considerable weight, particularly where the parties’ circumstances had not materially changed. This was consistent with Warner Brothers Pictures Inc. v Nelson [1937] 1 KB 209 and Quadrant Visual Communications Ltd v Hutchison Telephone (UK) Ltd [1993] BCLC 442.
4. Damages would not be an adequate remedy for Awbury because misuse of the information might enable competition in a limited market and cause losses difficult to quantify. The balance of convenience favoured Awbury, whose business was established, whereas Karson had no existing track record in the relevant asset class. Preservation of the status quo also supported relief.
5. The order should require return or deletion of ordinary electronic and hard copies of the transaction summary and restrain use of confidential information derived from it. It should not extend to information independently known or not derived from the summary, including the identified Cayman Islands corporate structure and administration arrangements. The order should also protect third parties from uncertainty about the precise extent of the confidential information.
6. Costs were reserved to the trial judge. Permission to appeal was refused.

First-instance decision. No prior appellate decision is stated in the judgment.