Artcrafts International SpA v Mou Limited

On an interim injunction application in a commercial contractual dispute, the court must consider whether there is a serious issue to be tried, whether damages would be an adequate remedy, and where the balance of risk and injustice lies. A dispute concerned with money may still justify interim relief where breach threatens wider reputational damage. If an injunction is granted, its terms must go no further than the minimum necessary to protect the claimant’s legitimate contractual rights temporarily. The court may preserve the status quo where the evidence and preparation time do not permit a final determination of disputed contractual obligations.

The claimant held exclusive and non-exclusive rights under a licence agreement concerning the commercial exploitation of the defendant’s footwear brand. It alleged that the defendant had breached the agreement by supplying purchasers outside the relevant territory for onward sale within it and by facilitating unauthorised sales through its website.

The claimant applied on notice for an interim injunction shortly before the hearing. The defendant sought an adjournment because of the timing of service and the Christmas and New Year holidays. The central issues were whether interim relief was justified and whether the proposed terms properly reflected the defendant’s obligations under clauses 2.1.1 and 7.1.1 of the Licence Agreement.

1. Adjournment. The request to adjourn was refused. Although earlier notice would have been better practice, the defendant was able to address the issues and the court proceeded on the limited evidence and preparation available.
2. Serious issue to be tried. The claimant’s witness statement and documents established a dispute requiring judicial determination concerning the facts and the scope of the defendant’s contractual obligations.
3. Adequacy of damages. Damages might not be an adequate remedy. Although the dispute was commercial and concerned the claimant’s ability to earn money, alleged failure to honour exclusive distribution rights could cause reputational damage extending beyond lost profits from the particular brand.
4. Balance of risk and injustice. The court’s function on the limited material and at a short hearing was substantially to hold the ring and maintain the status quo. The balance favoured an injunction in principle, but the terms required rigorous scrutiny because losses arising from a possible sale of the brand might also be difficult for the defendant to quantify.
5. Scope of relief. The court accepted proposed clause 3.1, which prevented the defendant from directly or indirectly manufacturing, distributing, selling, advertising or promoting the product in the territory, including the USA for the purposes of the hearing. Proposed clauses 3.2 and 3.3 were refused because they appeared wider than the defendant’s obligations under clause 7.1.1 and the claimant had not shown why the defendant’s website modifications were insufficient.
6. The defendant was instead required to comply with clause 7.1.1 of the Licence Agreement. The court recognised that this order lacked specificity, but considered it the appropriate temporary measure given the limited time available. An early return date was directed so that the matter could receive fuller consideration.

The judgment records earlier proceedings between the parties in 2022, in which Freedman J granted an interim injunction on 7 December 2022. Those proceedings were resolved by settlement and concerned different relief. The present application was considered separately.