Following Chadwick LJ’s comments in WWF–World Wide Fund for Nature v. World Wrestling Federation,1 there have been a number of academic responses suggesting that his Lordship’s interpretation of damages awarded “in lieu of an injunction” as compensatory was wholly misguided, and that the only sensible and workable analysis is one following a restitutionary theme.2 However, whilst such damages may not be an award of compensation for loss, it cannot be maintained that there is only one alternative. A third possibility is that these damages are substitutive for the value of the infringement of the right. The Privy Council’s recent decision in Pell Frischmann Engineering Ltd v. Bow Valley Iran Ltd 3 is the latest in a line of cases which illustrates this third alternative. Recognising these damages as substitutive for the value of the infringement of a right is more consistent with the language of the cases and, provided that it is recognised as an exceptional award, is more easily justified.

Pell Frischmann concerned a plan for a joint venture between Pell Frischmann Engineering Ltd (“PFE”) and four companies in a Canadian group engaged in the oil industry: Bow Valley Iran Ltd, Bow Valley Energy Ltd (“BVE”), Bow Valley International (Jersey) Ltd and PT Bakrie Interinvestindo (“Bakrie”). They hoped to conclude a contract with the National Iranian Oil Company (“NIOC”) for the development of the offshore “Balal” oilfield, and signed confidentiality agreements at the outset in 1996. The negotiations between PFE and NIOC eventually collapsed and discussions as to buy-outs between the prospective consortium members commenced. NIOC eventually entered into an agreement with BVE and Bakrie in July 1997.