Sogexia SARL v R Raphael & Sons Plc

For an interim injunction, the court must determine whether there is a serious issue to be tried, whether damages would adequately compensate the applicant, and where the balance of convenience lies. Loss of customers, inability to recruit new customers and reputational damage may make damages inadequate where the resulting loss is difficult to calculate. Regulatory risk to the respondent remains relevant but must be weighed against the applicant’s threatened harm. Restraining termination of a services agreement is not necessarily a mandatory order requiring the respondent to carry on business, particularly where it does not compel the respondent to remain open after it would otherwise close down.

Sogexia SARL obtained payment and card services from R Raphael & Sons Plc under a sponsorship and card services agreement. Raphael considered that French payment regulations imposed a €3,000 cap on certain business transfers and served notice terminating the agreement when Sogexia declined to implement the cap.

Sogexia sought an interim injunction restraining termination pending final determination of whether the French regulation applied. The application was heard on short notice. The central issues were whether there was a serious issue to be tried, whether damages were an adequate remedy, and where the balance of convenience lay.

1. The application for an interim injunction was granted until 14 October 2019, with Raphael given liberty to apply to discharge the order if further material emerged.

2. There was a serious issue to be tried. The French law evidence disclosed a genuine dispute over whether the relevant regulation applied to the payment services and whether the business cap applied in the cross-border contractual context. Sogexia’s position was more than merely arguable, although the view was provisional and based on limited material.

3. Damages would not be an adequate remedy for Sogexia. Notice of the proposed cap and termination could cause customers to leave and prevent the acquisition of new customers. The evidence indicated that a substantial part of Sogexia’s turnover depended on payments above the cap. The resulting financial and reputational loss would be difficult to quantify.

4. Raphael’s regulatory risk could not be ignored. However, Raphael would continue to be remunerated for services supplied under the agreement, and the injunction would have a limited practical duration because Sogexia was arranging alternative payment services.

5. Restraining the termination notice was not equivalent to compelling Raphael to carry on business in the sense considered in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1997] UKHL 17. The order would oblige Raphael to accept new customers during the injunction, but would not require it to continue trading where it would otherwise close down.

6. The balance of convenience favoured the injunction. Customers were likely to react immediately to notice of the proposed changes, rather than waiting for the contractual termination process to expire. Restraining the notice was therefore least likely to cause injustice pending determination of the French regulatory issue.