Mehboob & Others v Pakistan International Airline Corporation
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 31 October 2012 |
| Neutral Citation | [2012] EWHC 4364 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 31 October 2012 |
| Docket Number | Claim No: 2012-1411 |
[2012] EWHC 4364 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand,
London WC2A 2LL
Mr Justice Eder
Claim No: 2012-1411
Mr Shepherd QC appeared on behalf of the Claimants
Mr Lawson QC appeared on behalf of the Defendant
Approved Judgment
Wednesday, 31 October 2012
There is before the court an application for interim relief against the defendant, Pakistan International Airlines Corporation ("PIAC"). The action is brought by some 30 claimants. They are all small family-run travel agency businesses providing services to Pakistani communities in various cities in the United Kingdom. The claimants are seeking an injunction against the defendant on the following terms:
(i) to restrain the defendant from carrying out its threatened withdrawal with effect from 1 November 2012 [i.e. tomorrow] on the claimants' recognition as agents or consolidators in relation to the defendant's flights with the effect of terminating immediately their ability to take bookings and issue tickets for such flights; and
(ii) to restrain the defendant from continuing to impose on the claimants the new 'quotas' introduced on 16 October 2012 with the effect of drastically reducing the number of flights that each of the claimants may sell per fortnight.
I set out briefly an outline of the relevant events. For present purposes, the background to the proceedings can be summarised as follows, although I should make plain that, since these are interlocutory proceedings, I make no findings of fact and that the following summary is based simply upon what seems to me the relevant background to the application as it appears at this stage from the evidence before the court.
PIAC is the state-owned national airline of Pakistan and is a major provider of flights between the United Kingdom and Pakistan, although it is important to note that if and to the extent to which PIAC holds a dominant position in this market is a point of dispute between the parties. On the instruction of PIAC, the Association of Pakistani Travel Agents (now known as "APTA UK") was formed in 1972 in order to introduce and promote PIAC's ticket sales within the United Kingdom. The claimants are all members of APTA UK and the accredited agents of PIAC, and have operated as such for between 10 and 40 years. The claimants say that this has been on an exclusive basis, although again it is important to note that the defendant disputes that this exclusivity has been a condition of the agency agreements since at least 2005.
The agency agreements between the claimants and the defendant appear to have been broadly on the following terms. Each claimant would provide a bank guarantee to the defendant. In return, PIAC would provide each of the claimants with a quota of PIAC tickets on a fortnightly basis relevant to the level of the bank guarantee. Accordingly, the ticket quota of each claimant varied according to the amount of the bank guarantee provided. The details of this system are not entirely clear to me, but, in the event, it is unnecessary to consider this further. What I can say is that, more recently, it is apparent that the defendant allowed some or all of the claimants to exceed their quotas, allotting a greater number of tickets by value than the underlying guarantees. In return for the tickets sold by the claimants, it was agreed, at least originally, that each claimant would be entitled to receive a commission of some 9 percent on all of its tickets sold (referred to as the "Basic Commission"). In addition, since approximately 1994, the defendant agreed with APTA UK that it would pay an additional "Overriding Commission" of 2 percent over and above the Basic Commission of 9 percent to all members of APTA UK who secured ticket sales over £250,000 per annum. In or around 1999 the threshold for the Overriding Commission was increased to £500,000 per annum. In or around 2005 the defendant introduced a so-called fuel surcharge (otherwise known as the "YQ fare") over and above the usual price of its tickets. It appears that the defendant initially continued to pay the agreed commission rates on the full price of the tickets sold by the claimants, i.e. including the YQ fare. However, in around May 2006 the defendant stopped payments of commission to the claimants in respect of the YQ proportion of the ticket price. The claimants argue that, in the light of recent authority, the YQ fare forms part of the price of airline tickets and that consequently the commission is due and payable on all such sums charged as YQ fares.
In that context, in particular, the claimants rely upon a decision of the Court of Appeal in Association of British Travel Agents Ltd v British Airways plc [1999] All ER (D) 1335. In addition, the claimants rely on a more recent decision of The Federal Court in Australia in Lionie's Travel Pty Ltd v Qantas Airways Ltd [2010] FCAFC 37. Indeed, it is the claimants' case that so far as that element of commission relating to the YQ is concerned, the position is absolutely plain, and that they are or would be entitled to summary judgment in respect of that part of their claim. In terms of money, I have been shown a schedule which indicates that the commission claims in relation to the YQ fare amount to approximately £7 million.
It appears that this argument, i.e. the argument that the claimants are entitled to commission on the YQ portion of the ticket price, was first put to the defendant in or around May 2010, and I understand that this issue is the subject of an application for summary judgment in separate proceedings in the Queen's Bench Division between two other agents, i.e. Global Services Travel Agents UK Limited and Raison Travel Limited and the defendant. That application for summary judgment is due to be heard, as I understand it, on 11 December 2012.
By way of background, I should explain that some, perhaps all, of the present claimants in these proceedings in the Commercial Court were apparently previously represented as claimants in the proceedings in the Queen's Bench Division. However, in the event, as I understand, by order of the court, it was decided that those other proceedings were not to proceed by way of representative proceedings and, in effect, the present claimants are no longer part of those proceedings in the Queen's Bench Division.
In or around July 2008 the then management of the defendant in the United Kingdom suspended payment of the Overriding Commission to each of the claimants. The defendant accepted in these proceedings that it has not operated the Overriding Commission scheme since this date. It appears that some or all of the claimants have continued to submit invoices for the payment of the Overriding Commission to the defendant since 2008, although I make no findings as to whether or not the claimants were entitled to such commission. The claimants further assert that the defendant has not paid the 9 percent Basic Commission since 16 October 2010 and that they have not received any remuneration for the ticket sales that they have made on behalf of PIAC since this date. This is disputed by the defendant, which argues that, although it did not pay the Basic Commission, it provided a different remuneration system in the form of discounted tickets. It is unnecessary for me to examine the basis or extent of the claimants' claims for commission, save to say that they will form part of the claimants' claim at trial. I will therefore refer to them collectively as "the Commission Claims". The only additional point I would mention is that the total claims advanced are of the order of £23 million on behalf of all of the claimants, as set out in Schedule 1 to the Particulars of Claim. As there set out, that is only an estimate of the present claim and, as I have said, of that sum approximately £7 million relates to the claim for commissions in relation to the YQ fares.
I should perhaps emphasise that, with regard to the balance, i.e. the approximately £60 million of claims in Schedule 1, it is the defendant's case that there is no sum payable, because, in effect, the claimants have been remunerated by the alternative scheme that I have already referred to.
The defendant disputes the entirety of the claims, and in due course the matter may have to be considered by the court.
On 14 July 2012 PIAC served a Notice of Termination ("NOT") upon two of the agents, namely Global Travel and Raison Travel, stating that their respective agencies would come to an end on 31 August 2012. This notice was, however, subsequently withdrawn. More recently, on 14 September 2012, PIAC issued fresh Notices of Termination to all members of ABTA UK except Global Travel and Raison Travel, requiring the claimants (1) to withdraw their claims against the defendant; and (2) to agree to new terms and conditions by accepting and signing a new agreement (the "New Agreement") by 31 October 2012, or their agencies would be terminated from that date. I should say that in the course of the hearing Mr Lawson QC on behalf of PIAC has extended that deadline until 5 p.m on 7 November 2012. In the New Agreement there is an important clause 6. I will not read that in full, but in part it provides:
" The Claimants release and discharge the Defendant from any and all claims, costs, liabilities or actions or any nature whatsoever and howsoever arising."
In effect, therefore, by entering into the New Agreement, it would...
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