Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd [No 2]

The case of Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd [No 2] involved Clough Engineering Ltd, Oil and Natural Gas Corporation Ltd, and three banks as respondents. The dispute centred on injunctive orders restraining the banks from paying under guarantees given to ONGC. Clough sought to maintain these orders, arguing that discharging them would cause irreparable harm to its business, employees, and contractors. The banks, on the other hand, sought to have the injunctive orders dissolved, arguing that they were obligated to pay under the guarantees and that maintaining the orders could harm their commercial reputation.

The court was required to determine whether the balance of convenience favoured maintaining the injunctive orders against the banks. The court found that the banks' potential exposure to contradictory orders from Indian courts was speculative and that there was no real likelihood that an Indian court would disregard international legal principles. The court also noted that discharging the injunctive orders could cause significant harm to Clough, its shareholders, employees, and contractors, and that damages would not be an adequate remedy. The court concluded that maintaining the status quo was necessary to preserve the efficacy of the injunctive orders against ONGC and to prevent irreparable harm to Clough.

Based on the court's reasoning, it dismissed the banks' motion to dissolve the injunctive orders. The court ordered that the respondents pay Clough's costs of the motion to be taxed. The decision underscores the importance of preserving the status quo in complex international commercial disputes and highlights the potential consequences of disregarding injunctive orders in such cases.