Contractual Clause that Damages are Not an Adequate Remedy

The Federal Court in the AV Asia v MEASAT decision (Grounds of Judgment dated 20 January 2014) dealt with the issue on the existence of a contractual clause providing that “monetary damages will not be sufficient … and that injunctive relief would be appropriate to prevent any actual or threatened use of disclosure of such Confidential Information …”

Would such a clause bind the Court in holding that damages are not an adequate remedy for the purpose of granting an injunction?

The Federal Court agreed with both the High Court and the Court of Appeal in finding that the Court would not be bound by this contractual term. The Federal Court referred to two Canadian and American authorities. Those authorities held that where a clause stipulates that damages may not be adequate and that injunctive relief may or shall be the appropriate remedy, that does not mean that such relief will be granted as of right. The party seeking to secure equitable relief must still satisfy the Court that the pre-requisites for granting injunctive relief are prevalent.

 

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