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Malaysia: Court of Appeal Dismissed Appellant’s Appliation for an Injunction Order

14th March, 2014

In the case of AV Asia Sdn. Bhd. v MEASAT Broadcast Network Systems Sdn. Bhd., the Malaysian Court of Appeal affirmed the High Court’s decision in dismissing the Appellant’s application for an injunction.

AV Asia Sdn. Bhd. (hereinafter referred to as ‘the Appellant’) is in the business of providing television support equipment such as satellite. MEASAT Broadcast Network Systems Sdn. Bhd. (hereinafter referred to as ‘the Respondent’) is the operator of the Malaysian direct broadcast satellite pay television service known as ASTRO.

The Respondent sought the Appellant’s expertise to reduce interruption in its satellite transmission during inclement weather, a phenomenon called ‘rain fade’ which was a defect inherent in the Respondent’s satellite dishes. Rain fade refers to the absorption of satellite or radio signals by rain or snow. On 1st August 2008, the Appellant and Respondent entered into a Mutual Non-Disclosure Agreement (hereinafter referred to as ‘the MNDA’).

Under Clause 4 of the MNDA, the Respondent is prohibited from disclosing confidential information disclosed to it by the Appellant in the course of the dealings between the parties. It is the Appellant’s case that the parties considered the possibility of the MNDA being breached, and for that reason had included Clause 15 of the MNDA which states that the receiving part agrees that monetary damages would not be sufficient to compensate for unauthorized disclosure of confidential information and that an injunctive relief would be appropriate remedy to prevent disclosure of confidential information.

The Appellant contended and relying on the application of Clause 15 of the MNDA and that the Respondent had breached the confidential provision and had sought an interim injunction to prevent the Respondent from supplying satellite dishes to its customers that relied on such confidential information to manufacture satellite dishes. The Respondent denied this, resulting in the Appellant instituting proceedings against the respondent in the High Court.

In the High Court, the Judge dismissed the Appellant’s application for the injunctive relief as Clause 15 of the MNDA could not be relied on to fetter the discretion of the High Court in determining the interim injunction application.

The Court of Appeal affirmed the decision of the High Court. The Court of Appeal held that the learned trial Judge of the High Court had not misapprehended the nature of the Clause 15 of the MNDA. The Court of Appeal also held that the learned trial Judge had rightly considered the principles and guidelines in the granting of an interim injunction as laid down in the case of American Cyanamid.

Under American Cyanamid case, the test for a Plaintiff is to establish as follows:-

  1. Serious case;
  2. Refusal to grant it could not be compensated by damages if the Plaintiff were to succeed;
  3. If damages would not afford an adequate remedy, the defendant would be satisfied by the plaintiff’s ‘undertaking as to damages’ if the interlocutory injunction were to be granted, but a permanent one to be refused after the trial;
  4. The measure must preserve the status quo, not change it; and
  5. The relative strength of the parties’ prima facia case has to be considered.

The Appellant must satisfy all requirements set out in the American Cyanamid case. The Court of Appeal further held that the alleged breached of the confidential information as contended by the Appellant had not yet been established.

The Court of Appeal held that the mere existence of Clause 15 of the MNDA to the effect that damages may not be an adequate remedy to grant an interim injunction to the Appellant and that Clause 15 of the MNDA does not provide that the parties have agreed or consented to the fact that the granting of an injunction is automatic and as of right.

Subsequently, the Court of Appeal affirmed the High Court decision and dismissed the Appellant’s application with costs.