French Payment Cap Dispute: Sogexia v R Raphael & Sons - Court Grants Injunctive Relief

Introduction

In the case of Sogexia SARL v R Raphael & Sons Plc [2019] EWHC 2577 (Ch), Mr. Justice Norris presided over a dispute involving complex issues relating to international payment systems, regulatory compliance, contract termination, and injunctive relief. The primary legal contentions centered around a contract for payment services between the two parties and a French regulation imposing a payment cap, with subsequent implications for the provision of services and potential reputational harm.

Key Facts

Sogexia SARL, a French payment solutions company, utilized the payment services of R Raphael & Sons Plc, a UK-based bank, to provide prepaid money card services to its clients. Their relationship was governed by a sponsorship and card services agreement with a scheduled end date in September 2020. Raphael believed that the services provided were subject to a payment cap regulation in France, potentially putting them in breach if not adhered to. Despite disagreement from Sogexia, Raphael planned to terminate the agreement unless the cap was applied.

Legal Principals

The court assessed the application of several legal principles, including the contractual agreement and termination clauses, the interpretation and applicability of French payment regulations, and the test for the grant of injunctive relief.

Injunction Test:

The court applied the standard test for injunctive relief, assessing whether there was a serious issue to be tried, adequacy of damages as a remedy for Sogexia, and the balance of convenience between parties. Justice Norris found a genuine dispute about the applicability of the French regulation and concluded that damages would not adequately compensate Sogexia for the reputational harm and customer losses resulting from premature termination.

Contractual Interpretation:

Contractual clauses were analyzed to ascertain the rights and obligations surrounding termination. It was necessary to interpret Clause 9 of the agreement, determining the circumstances under which Raphael could terminate the agreement and the obligations to existing customers pursuant to the termination plan.

Mandatory vs. Prohibitory Injunctions:

Justice Norris referenced the case of Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1997] UKHL 17 to distinguish between the effects of a mandatory injunction and the injunction sought by Sogexia, which was prohibitory by nature and aimed to prevent Raphael from terminating the agreement.

Outcomes

Justice Norris granted a temporary injunction restraining Raphael from terminating the agreement until a final judgment on the relevance of the French cap regulation. The court granted liberty to Raphael to apply to discharge the injunction in case new information surfaced which would affect the outcome, reflecting the ‘least risk of injustice’ doctrine.

Conclusion

The Sogexia v. Raphael case illustrates the delicate balance courts must strike in dealing with cross-border financial transactions, regulatory frameworks, and contractual relations. It showcases the statutory interpretation considerations between contrasting expert views from different jurisdictions, as well as the careful application of injunctive relief principles when facing the potential for significant business disruption.