Boris Ignachkov Legal Principles and Key Points:
- In the case of Lauritzencool AB v Lady Navigation Inc [2005] EWCA Civ 579, Warren v Mendy [1989] 1 WLR 853 was distinguished. Here, it was established that there is nothing prohibiting an injunction being granted for service contracts if the effect compels performance.
Facts of Lauritzencool AB v Lady Navigation Inc [2005] EWCA Civ 579
- D owners chartered 2 vessels to the C charterers
- These ships would operate as part as a shipping pool
- Ds alleged Cs breached a variety of duties owed, and informed them they wanted the ships out of the pool before expiration of the charters
- Cs commenced arbitration proceedings, they also sought an injunction to stop the Ds from withdrawing the vessels whilst pending the outcome of said proceedings
- D argued against this
Issues in Lauritzencool AB v Lady Navigation Inc [2005] EWCA Civ 579
- Could an injunction be granted to prevent the potential breach of contract whilst awaiting the outcome of an arbitration proceeding?
Held by the Court of Appeal
Appeal dismissed. The injunction was denied.
Lord Justice Mance
Injunctive relief compelling performance [19-22]:
- “there is a general principle that injunctive relief will not be given in respect of contract for services if the practical effect would be to compel performance”
- “Even if one is considering a contract for services far more easily described as personal in nature than the present, there is no inflexible principle precluding negative injunctive relief which prevents activity outside the contract contrary to its terms.”
- Warren v Mendy [1989] concerned “the problem that can arise even in relation to such injunctions where ‘the human necessity’ of maintaining ‘some special skill or talent, whose continued display is essential to the psychological and material, and sometimes to the physical, well-being of the servant’ may ‘practically bind the servant to the contract, compelling him to perform’”
- “wherever the practical effect of negative injunctive relief would be to bind any party to any contract for services to the contract, compelling him to perform it, the court will or should refuse such relief.”
However, Warren v Mendy [1989] “bears no similarity on the facts to the present” and Mance LJ doubted Nourse LJ from that case had the present type of contract in mind, “when speaking of a contract for personal services”. The present one is “very far from the particular sub-category of contract for personal services involving very special personal skills, talent and other features” of Warren v Mendy [1989].
In the present case [33]:
- “neither the fact that the contracts involved were for services in the form of a time charter nor the existence under such contracts of a fiduciary relationship of mutual trust and confidence represents in law any necessary or general objection in principle to the grant of injunctive relief”
- It does not raise objection “to the grant of such relief that the only realistic commercial course which it left to the appellants was … to continue to provide the vessels to the pool and to perform the charters”
