Interlocutory Mandatory Injunctions and “Keep Open” Clauses: No Compulsion to Trade at a Loss Absent Exceptional Circumstances

1) Introduction

In Tesco Ireland Ltd v Multi-Home Retail Ltd [Trading as Choice Stores] (Approved) [2026] IEHC 276, the High Court (Bolger J) refused an application for interlocutory injunctive relief that would, in substance, compel a retail licensee to continue operating and actively trading from a “designated area” within the plaintiff’s supermarket premises until the contractual break option date in 2028.

The dispute arose from a 10-year licence (April 2024) under which the defendant operated a homeware store in approximately half of the plaintiff’s premises, later varied by a side letter (August 2024) granting a break option at year five subject to three months’ notice (“time is of the essence”). The licence also contained “keep open” obligations (to “actively trade” during operating hours), merchandising/stock presentation requirements, and signage/security provisions. The defendant sought to exit early, citing sustained losses and alleging (at least at affidavit stage) repudiatory conduct by the plaintiff connected to signage, security, and tenant mix/quality.

The central legal issues were:

  • whether there was a fair issue to be tried as to breach and repudiation;
  • whether the court could properly grant an interlocutory order tantamount to mandatory specific performance of “keep open” obligations;
  • how the balance of justice (including adequacy of damages and public interest) should be assessed in a commercial “keep open” setting.

2) Summary of the Judgment

The court refused the interlocutory injunction.

Bolger J held, in summary:

  • Fair issue to be tried: The plaintiff raised a fair question that the defendant was in breach of the licence. At this interlocutory stage, the defendant’s complaints about signage, security, and other tenants did not meet the “substantial deprivation” threshold required to establish repudiation.
  • Mandatory relief / strong-case requirement: Because the relief sought was mandatory (compelling ongoing trading and operational standards), the plaintiff had to establish a strong case that a permanent injunction might be granted at trial. The plaintiff did not meet that standard.
  • Public interest and supervision concerns: Persuasive authority (especially Co- Operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1) and Irish application (Thomas Thompson Holdings Ltd v Musgrave Group Plc [2016] IEHC 28) supported a general reluctance to force a business to trade at a loss and highlighted impracticality/continuous supervision and contempt risks.
  • Adequacy of damages: Damages were considered adequate and quantifiable in principle for the plaintiff’s alleged losses, including reputational/footfall effects, relying on the court’s earlier reasoning in Somnus GMC Waterford Limited & Anor v Flynn & Anor [2025] IEHC 676 and distinguishing Betty Martin Financial Services Ltd v EBS DAC [2019] IECA 327.
  • Status quo: Preserving the status quo did not justify compelling loss-making trading pending trial.
  • Costs (indicative view): The judge indicated a provisional view that the defendant should recover costs, rather than reserving, because the adequacy-of-damages issue would not be revisited at trial (with reference to McLoughlin & Anor v Fennell & Ors [2024] IEHC 178), while also noting the reserving-costs approach in Yoplait Ireland Ltd v Nutricia Ireland Ltd [2025] IECA 210.

3) Analysis

3.1 Precedents Cited and Their Influence

(a) The modern Irish framework for interlocutory injunctions

The court structured its approach around the Supreme Court guidance in Merck Sharp & Dohme, emphasising that the court should first ask whether, if the plaintiff succeeded at trial, a permanent injunction might be granted. If not, an interlocutory injunction for the same relief will be “extremely unlikely”.

The judgment also cited Gary Keville Transport Ltd v MSC (Mediterranean shipping Company) Ltd [2022] IEHC 130 for the proposition that, where other factors are equal, the court may seek to preserve the status quo.

(b) Mandatory vs prohibitory relief: “strong case” threshold

The defendant argued that the “strong case” standard applied (mandatory relief). Bolger J adopted the reasoning in Thomas Thompson Holdings Ltd v Musgrave Group Plc [2016] IEHC 28, which in turn relies on Maha Lingham v. HSE [2006] 17 ELR 137 (and the Supreme Court reference in the judgment, Maha Lingam v Health Services Executive [2005] IESC 89), to distinguish:

  • Prohibitory injunctions: require only a fair/serious/bona fide question to be tried;
  • Mandatory injunctions: require a strong case likely to succeed, with the court examining substance.

Here, the practical effect of the order sought was mandatory: compelling “active trading”, stock/merchandising standards, and continued operation until 2028. That categorisation drove the outcome.

(c) “Keep open” clauses, specific performance, and the Argyll line of authority

The judgment treated Co- Operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 as persuasive and factually close. Bolger J accepted that Argyll’s concerns aligned with Irish interlocutory principles:

  • continuous supervision and the impracticality of policing compliance with trading-quality obligations;
  • the “sword of Damocles” effect of contempt risk on business decisions;
  • the risk of wasteful compliance litigation;
  • public interest against compelling trading at a loss where compensation is plausibly available.

The court located Irish support for this approach in Thomas Thompson Holdings Ltd v Musgrave Group Plc [2016] IEHC 28, where Hedigan J applied Argyll and refused relief even though closure was said to threaten the shopping centre’s viability.

The plaintiff relied on Wanze Properties (Ireland) Ltd v Five Star Supermarket & Tesco (Ireland) Ltd [1997] JILL-HC 102401 as suggesting a different approach. Bolger J rejected that reading, emphasising that Costello P treated Argyll as indicating a rule to be applied save in exceptional circumstances. The exceptional feature in Wanze was that the business was not loss-making and closure formed part of a deliberate commercial relocation strategy.

This case therefore reinforces a structured distinction:

  • Loss-making closure: strong judicial reluctance to compel continued trading by mandatory order (Argyll/Thompson).
  • Non-loss-making closure for strategic reasons: potential for “exceptional circumstances” (Wanze) to justify a different outcome.

(d) Repudiation and “substantial deprivation” in a “keep open” context

On repudiation, the court drew on Parol Ltd & Caroll Village (Retail) Management Services Ltd v Friends First Pension Funds Ltd & Superquinn [2010] IEHC 498. Clarke J’s analysis was treated as legally applicable even if factual comparability was disputed. The key test stated at para. 4.7 of Parol—actions that “substantially deprive the tenant of the benefit of the lease”—was traced to the authorities Clarke J relied upon, including Chartered Trust Plc v Davies [1997] 2 EGLR 83 and Moulton Buildings Ltd v Westminster [1975] 30 P&CR 182.

Bolger J held that, on the evidence at interlocutory stage, repeated complaints about signage/security/tenant mix did not yet meet that “substantial deprivation” threshold—leaving repudiation for trial while still recognising a fair issue as to breach by the defendant.

(e) Adequacy of damages and reputational harm in commercial premises disputes

The plaintiff argued reputational damage and impairment of tenant-attraction were not precisely quantifiable, invoking Betty Martin Financial Services Ltd v EBS DAC [2019] IECA 327. Bolger J distinguished it (as previously done in Somnus GMC Waterford Limited & Anor v Flynn & Anor [2025] IEHC 676) and reiterated that, in retail-operation contexts, losses can be quantified by reference to turnover, outgoings, profits, and comparative “before/after” periods.

The judgment also applied the scepticism towards “damages are inadequate” assertions in commercial breach cases, as identified in Merck Sharp & Dohme.

(f) Costs: reserve or award?

On costs, Bolger J acknowledged the possibility of reserving costs where the picture may change at trial, referencing Yoplait Ireland Ltd v Nutricia Ireland Ltd [2025] IECA 210. However, she identified a discrete issue—adequacy of damages—that would not be revisited, aligning with McLoughlin & Anor v Fennell & Ors [2024] IEHC 178 (Simons J). This supported an indicative view that the defendant should recover costs (subject to further submissions), consistent with the court’s approach in Somnus GMC Waterford Limited & Anor v Flynn & Anor [2025] IEHC 60 (as cited on costs).

3.2 Legal Reasoning: How the Court Reached Its Decision

  1. Identify the nature of the relief: Although styled as interlocutory relief to restrain closure/breach, the practical effect was to compel continuing performance of an ongoing trading operation. That is mandatory relief.
  2. Apply Merck’s “permanent injunction might be granted” gateway: The court treated this as a threshold inquiry. If final specific performance is unlikely (particularly for a “keep open” obligation), interlocutory specific performance is correspondingly unlikely.
  3. Apply the “strong case” standard: The plaintiff did not establish a strong likelihood of obtaining specific performance of the licence/side letter—especially given (i) the nature of the obligations, (ii) the limited jurisdiction compelling “keep open” performance, and (iii) the plaintiff’s own pleadings seeking damages in lieu/alternatively.
  4. Public interest and practicality considerations: The court accepted that compelling loss-making trading is generally against public interest and commercial standards, and creates serious supervision/enforcement difficulties.
  5. Balance of justice/adequacy of damages: Even if the court were wrong on the “strong case” analysis, damages were considered adequate and capable of quantification (including reputational/footfall effects).
  6. Status quo: The court declined to treat status quo as requiring compelled trading pending trial, preferring the Argyll/Thompson view that such compulsion is unwise and contrary to public interest.

3.3 Impact: Why This Decision Matters

  • Reinforcement of high hurdles for interlocutory enforcement of “keep open” clauses: The decision confirms that where the practical effect is to force ongoing trading, Irish courts will treat the relief as mandatory and require a strong case that final specific performance is realistically available.
  • Public-interest lens in commercial injunctions: The judgment consolidates (through Argyll and Thompson) an explicit public-interest aversion to compelling loss-making operations pending trial, even where a contract appears to require trading.
  • Repudiation remains a high evidential bar: Complaints about trading conditions (signage/security/tenant mix) must plausibly show “substantial deprivation” of the bargain to justify termination in the face of “keep open” obligations.
  • Damages and “reputation” in retail premises disputes: The court’s quantification approach signals that retail operators/licensors may face scepticism if asserting reputational harm as inherently unquantifiable, absent a special context akin to that in Betty Martin.
  • Drafting and risk allocation: Parties negotiating “keep open” obligations may increasingly rely on (i) clearer break clauses, (ii) liquidated damages or agreed compensation mechanisms, (iii) security/tenant-mix covenants expressly stated (not left to informal correspondence), and (iv) careful treatment of entire agreement clauses.

4) Complex Concepts Simplified

Interlocutory injunction
A temporary court order pending trial, intended to manage risk until final determination.
Mandatory vs prohibitory injunction
A prohibitory injunction stops an act (e.g., “do not terminate”); a mandatory injunction compels action (e.g., “keep trading, maintain stock, operate to specified standards”). Mandatory relief usually demands a higher threshold.
Specific performance
A remedy requiring performance of contractual obligations rather than paying damages. Courts are cautious where performance requires ongoing supervision.
“Keep open” clause
A term requiring a tenant/licensee to keep premises open and trading, often aimed at maintaining footfall and centre vitality.
Repudiation
Conduct by one party that so undermines the contract that the other may treat it as terminated. In this context, the alleged wrongdoing must “substantially deprive” the other party of the contract’s benefit.
Adequacy of damages
If money compensation can adequately address the harm, courts are less willing to grant injunctions—especially mandatory ones.
Status quo
The court sometimes tries to preserve the existing state of affairs pending trial, but it will not do so where it would be unfair, impractical, or contrary to public interest.

5) Conclusion

[2026] IEHC 276 is a significant High Court treatment of interlocutory relief aimed at enforcing “keep open” obligations. Bolger J held that compelling a business to continue trading—particularly at a loss—falls within mandatory relief demanding a strong case that final specific performance is realistically obtainable. Guided by Merck Sharp & Dohme, and persuaded by Co- Operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 as applied in Thomas Thompson Holdings Ltd v Musgrave Group Plc [2016] IEHC 28, the court declined to impose a court-supervised trading relationship and treated damages as an adequate remedy in principle for a retail licensor’s claimed losses (including reputational effects).

The decision leaves repudiation and final remedies to trial but sets a clear interlocutory signal: absent exceptional circumstances, Irish courts are unlikely to force continued loss-making trade through mandatory injunctions to enforce “keep open” clauses.