[COURT OF APPEAL]

BRITISH AIRWAYS BOARD v. LAKER AIRWAYS LTD. AND OTHERS

[1983 B. No. 342]

BRITISH CALEDONIAN AIRWAYS LTD. v. LAKER AIRWAYS LTD. AND OTHERS

[1983 B. No. 377]

REGINA v. SECRETARY OF STATE FOR TRADE AND INDUSTRY, Ex parte LAKER AIRWAYS LTD. AND ANOTHER

Injunction - Jurisdiction to grant - Restraint of foreign proceedings - United Kingdom airline's antitrust action in United States - No alternative English forum - Secretary of State's intervention - Compliance with United States court's orders prevented - Whether injunction necessary to avoid injustice - Whether "measures ... under the law" includes statutory provisions - Protection of Trading Interests Act 1980 (c.11), ss.1(1)(2)(3), 2(1)(2)(3)(5), 5, 6 - Protection of Trading Interests (U.S. Antitrust Measures) Order 1983 (S.I. 1983 No. 900)

Aircraft - International agreements - Bermuda Agreement between U.K and U.S. Governments - Antitrust action in United States between United Kingdom designated airlines - Whether restrainable in England - Protection of Trading Interests (U.S. Antitrust Measures) Order 1983

From 1977 the rights of British and American airlines to operate transatlantic air services between the United Kingdom and the United States were regulated and controlled by a treaty between the two governments known as Bermuda 2 under which each country had the right to designate airlines of its own nationality to fly particular routes. British airlines were subject to control by the United Kingdom Civil Aviation Authority (C.A.A.) which regulated their fares. The corresponding body for United States airlines was the United States Civil Aviation Board (C.A.B.). Article 12 of Bermuda 2 provided for the fixing of the tariffs of designated airlines which were to be subject to the approval of the C.A.A. and C.A.B., who had to try to ensure that the designated airlines conformed to the agreed tariffs.

Both the plaintiffs, B.A. and B.C., and the defendants, Lakers, were United Kingdom designated airlines licensed on terms that they charged fares approved by the C.A.A. and only authorised to fly into United States airspace if those fares were approved by the C.A.B. In 1977 Lakers obtained permission to operate a Skytrain, which was a low cost scheduled transatlantic service. Lakers later encountered financial difficulties and went into liquidation.

In a civil action in the United States District Court for the District of Columbia, Lakers, by a complaint indorsed "jury trial demanded," claimed against B.A. and B.C. and other defendant airlines that its collapse in February 1982 was caused by a conspiracy between the defendants to restrain and to monopolise United States foreign trade and commerce in air transportation between the United States and the United Kingdom and Europe in violation of the United States Sherman Act with the object of eliminating Lakers as an independent competitive force in trade and commerce between the United States and foreign nations (an "antitrust claim") which caused damages to Lakers exceeding U.S.$350,000,000. If the claim was established, Lakers would be entitled to triple damages under the United States Clayton Act. A further count in respect of "intentional tort" included a claim for "punitive damages of $700,000,000." The complaint was accompanied by very extensive requests for production of documents and for answers to interrogatories of a far-reaching nature.

B.A. and B.C. brought actions against Lakers in the Queen's Bench Division and applied for injunctions to restrain Lakers from continuing the American action against them. Parker J. on May 20, 1983, said, inter alia, that the essential question was whether it would be an injustice to B.A. and B.C. to allow the action against them to proceed and dismissed the applications. An interim InJunction restraining Lakers from taking further steps in the American action was extended pending an appeal.

B.A. and B.C. appealed. Before the appeal came on for hearing the Secretary of State for Trade and Industry on June 23, 1983, made the Protection of Trading Interests (U.S. Antitrust Measures) Order 1983¹ under section 1(1) of the Protection of Trading Interests Act 1980² and gave two directions under sections 1(3) and 2 respectively of the Act. The direction under section 1 of the Act of 1980 prevented B.A. and B.C. from complying with any judgment in the United States action in so far as it was given pursuant to the Sherman and Clayton Acts. The direction under section 2 prevented B.A. and B.C. from furnishing any of the relevant documentation which was in the United Kingdom or any relevant information wherever situate in so far as B.A. and B.C. had been required to furnish it by the interrogatories.

At the hearing of their appeals B.A. and B.C. relied upon the Order and directions by the Secretary of State under the Act of 1980. Lakers stated that they wished to challenge the validity of the Order and directions and applied to Woolf J. for leave to apply for judicial review. The refusal of such leave was followed by a renewal of the application to the Court of Appeal which was heard concurrently with B.A.'s and B.C.'s appeals.

On Lakers' application for judicial review:-

Held, dismissing the application, that "measures" was a wide term of generic description and "measures ... taken by or under

1 Protection of Trading Interests (U.S. Antitrust Measures) Order 1983: see post, p. 195B-G.

2 Protection of Trading Interests Act 1980, s. 1. (1) (2) (3): see post, pp. 195H - 196A, G-H.

S. 2 (1): "If it appears to the Secretary of State - (a) that a requirement has been or may be imposed on a person or persons in the United Kingdom to produce to any court ... of an overseas country any commercial document which is not within the territorial jurisdiction of that country or to furnish any commercial information to any such court ... the Secretary of State may, if it appears to him that the requirement is inadmissible by virtue of subsection (2) or (3) below, give directions for prohibiting compliance with the requirement".

S. 2 (2) (3): see post, pp. 161B-C, 198B-D.

the law of any overseas country" in section 1(1)(a) of the Protection of Trading Interests 1980 was intended to include foreign statutory provisions as well as things done under the authority of those provisions (post, p. 196B-C); that by seeking to prevent international trade being conducted on the basis of agreements designed to minimise or eliminate competition the Sherman and Clayton Acts were "regulating or controlling international trade" within the meaning of section 1(1)(a) (post, p. 196D-E); that subsections (2) and (3) of section 1 of the Act of 1980 were independent of each other and the Secretary of State had power to make a direction under section 1(3) of the Act regarding "any such requirement or prohibition as aforesaid" without first giving a direction for notification under section 1(2) (post, p. 197B); that in the absence of challenge to his good faith or establishing that he had misdirected himself in law, the Secretary of State, by the use of the words "if it appears" to him in section 2(1) of the Act of 1980, was enabled to state that the specified pre-conditions appeared to him to exist without stating why it had appeared to him that they existed (post, p. 197C-D); that further the evidence justified the Secretary of State's view that inadmissible requirements within the meaning of section 2 of the Act might be made (post, p. 198E); and that the terms of the Order and of the two directions were not too wide or general and, accordingly, they were valid and not ultra vires (post, p. 198G-H).

On B.A.'s and B.C.'s appeals:-

Held, allowing the appeals, (1) that the court had jurisdiction, which should be exercised with extreme caution, to enjoin a party over whom it had personal jurisdiction from pursuing litigation before a foreign tribunal; and that the absence of an alternative English forum was not of itself fatal to a claim for such relief the right to which depended upon whether it was appropriate in all the circumstances for it to be granted in order to avoid injustice (post, pp. 186A-B, H - 187A, 188B-C).

Castanho v. Brown & Root (U.K) Ltd. [1981] A.C. 557, H.L.(E.) applied.

(2) That the Secretary of State's direction under section 1 of the Act of 1980, which prevented B.A. and B.C. from complying with any judgment of the United States court in so far as it was given pursuant to the Sherman and Clayton Acts, and the direction under section 2, which prevented B.A. and B.C. from furnishing any relevant documentation or information which they were required to give by the wide scope of the discovery and interrogatories administered by Lakers, had produced a wholly different situation from that which was before Parker J.; that they had rendered the issues raised by Lakers in the United States action wholly untriable and that in the circumstances it would amount to a total denial of justice to B.A. and B.C. to allow Lakers to proceed with their claim and appropriate injunctions would be granted accordingly (post, pp. 184E, 202A-D, G-H).

Per curiam. (i) As a matter of public policy the courts and the executive should not speak with different voices in relation to foreign affairs (post, p. 193C-D).

Dicta of Lord Wilberforce and Lord Fraser of Tullybelton in In re Westinghouse Electric Corporation Uranium Contract Litigation M.D.L. Docket No. 235 (Nos. 1 and 2) [1978] A.C. 547, 617, 650-651, H.L.(E.) applied.

(ii) Both Lakers and B.A. and B.C. were designated as United Kingdom carriers under the Bermuda 2 Treaty; and B.A and B.C. are entitled to place reliance upon the public policy consideration that acceptance by the United States of the United Kingdom's view of the effect of that treaty on the United States would render Lakers' claim unsustainable (post, p. 201A).

Decision of Parker J., post, pp. 147G et seq., reversed on different grounds.

The following cases are referred to in the judgment of the Court of Appeal:

Atlantic Star, The [1974] A.C. 436; [1973] 2 W.L.R. 795; [1973] 2 All E.R. 175, H.L.(E.).

Castanho v. Brown & Root (U.K.) Ltd. [1981] A.C. 557; [1980] 3 W.L.R. 991; [1981] 1 All E.R. 143, H.L.(E.).

Laker Airways Ltd. v. Department of Trade [1977] Q.B. 643; [1977] 2 W.L.R. 234; [1977] 2 All E.R. 182, C.A.

Practice Direction (Judicial Review: Appeals) [1982] 1 W.L.R. 1375; [1982] 3 All E.R. 800.

Secretary of State for Employment v. ASLEF (No 2) [1972] 2 Q.B. 455; [1972] 2 W.L.R. 1370; [1972] 2 All E.R. 949, C A.

Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A. [1979] A.C. 210; [1977] 3 W.L.R. 818; [1977] 3 All E.R. 803, H.L.(E.).

Westinghouse Electric Corporation Uranium Contract Litigation M.D.L. Docket No. 235 (Nos. 1 and 2), In re [1978] A.C. 547; [1978] 2 W.L.R. 81; [1978] 1 All E.R. 434 H.L.(E.).

The following additional cases were cited in argument in the Court of Appeal:

Adams v. Adams (Attorney-General intervening) [1971] P. 188; [1970] 3 W.L.R. 934; [1970] 3 All E.R. 572.

Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G. [1975] A.C. 591; [1975] 2 W.L.R. 513; [1975] 1 All E.R. 810, H.L.(E.).

Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation Ltd. [1981] A.C. 909; [1981] 2 W.L.R. 141; [1981] 1 All E.R. 289, H.L.(E.).

British Nylon Spinners Ltd. v. Imperial Chemical Industries Ltd. [1953] Ch. 19; [1952] 2 All E.R. 780, C.A.

Chief Constable of Kent v. V. [1983] Q.B. 34; [1982] 3 W.L.R. 462; [1982] 3 All E.R. 36, C.A.

Dyson v. Attorney-General [1911] 1 K.B. 410, C.A.

Fender v. St. John-Mildmay [1938] A.C. 1; [1937] 3 All E.R. 402, H.L.(E.)

Flintkote Co. v. Lysfjord (1957) 246 F. 2d 368.

Gorthon Invest AB v. Ford Motor Co. Ltd. [1976] 2 Lloyd's Rep 720.

Gouriet v.Union of Post Office Workers [1978] A.C. 435; [1977] 3 W.L.R. 300; [1977] 3 All E.R. 70, H.L.(E.).

Hadmor Productions Ltd. v. Hamilton [1983] 1 A.C. 191; [1982] 2 W.L.R. 322; [1982] 1 All E.R. 1042, H.L.(E.).

Hoani Te Heuheu Tukino v. Aotea District Maori Land Board [1941] A.C. 308; [1941] 2 All E.R. 93, P.C.

Industrial Investment Development Corporation v. Mitsui & Co. Ltd. (1982) 671 F. 2d 867.

McEldowney v. Forde [1971] A.C. 632; [1969] 3 W L R 179; [1969] 2 All E.R. 1039, H.L.(N.I.).

MacShannon v. Rockware Glass Ltd. [1978] A.C. 795; [1978] 2 W.L.R. 362; [1978] 1 All E.R. 625, H.L.(E.).

Midland Bank P.L.C. v. Laker Airways Ltd., The Times, February 8, 1983, Parker J.

Padfield v. Minister of Agriculture, Fisheries and Food [1968] A.C. 997; [1968] 2 W.L.R. 924; [1968] 1 All E.R. 694, H.L.(E.).

Pan-American World Airways Inc. v. Department of Trade [1976] 1 Lloyd's Rep. 257, C.A.

Reg. v. Industrial Injuries Commissioner, Ex parte Amalgamated Engineering Union [1966] 2 Q.B. 21; [1966] 2 W.L.R. 91; [1966] 1 All E.R. 97, C.A.

Secretary of State for Education and Science v. Tameside Metropolitan Borough Council [1977] A.C. 1014; [1976] 3 W.L.R. 641; [1976] 3 All E.R. 665, C.A. and H.L.(E.).

Smith Kline & French Laboratories Ltd. v. Bloch [1983] 1 W.L.R. 730; [1983] 2 All E.R. 72, C.A.

Walker v. Baird [1892] A.C. 491, P.C.

The following cases are referred to in the judgment of Parker J.:

Adams v. Adams (Attorney-General intervening) [1971] P. 188; [1970] 3 W.L.R. 934; [1970] 3 All E.R. 572.

Atlantic Star, The [1974] A.C. 436; [1973] 2 W.L.R. 795; [1973] 2 All E.R. 175, H.L.(E.).

Castanho v. Brown & Root (U.K.) Ltd. [1980] 1 W.L.R. 833; [1980] 3 All E.R. 72, C.A.; [1981] A.C. 557; [1980] 3 W.L.R. 991; [1981] 1 All E.R. 143, H.L.(E.).

MacShannon v. Rockware Glass Ltd. [1978] A.C. 795; [1978] 2 W.L.R. 362; [1978] 1 All E.R. 625, H.L.(E.).

St. Pierre v. South American Stores (Gath & Chaves) Ltd. [1936] 1 K.B. 382, C.A.

Smith Kline & French Laboratories Ltd. v. Bloch [1983] 1 W.L.R. 730; [1983] 2 All E.R. 72, C.A.

Westinghouse Electric Corporation Uranium Contract Litigation M.D.L. Docket No. 235 (Nos. 1 and 2), In re [1978] A.C. 547; [1977] 3 W.L.R. 430; [1977] 3 All E.R. 703, C.A; [1978] A.C. 547; [1978] 2 W.L.R. 81; [1978] 1 All E.R. 434, H.L.(E.).

The following additional cases were cited in argument before Parker J.:

Boys v. Chaplin [1968] 2 Q.B. 1; [1968] 2 W.L.R. 328; [1968] 1 All E.R. 283, C.A.

Chief Constable of Kent v. V. [1983] Q.B. 34; [1982] 3 W.L.R. 462; [1982] 3 All E.R. 36, C.A.

Dyson v. Attorney-General [1911] 1 K.B. 410, C.A.; [1912] 1 Ch. 158, C.A.

Fender v. St. John-Mildmay [1938] A.C. 1; [1937] 3 All E.R. 402, H.L.(E.).

Flintkote Co. v. Lysfjord (1957) 246 F. 2d 368.

Gorthon Invest AB v. Ford Motor Car Co. Ltd. [1976] 2 Lloyd's Rep. 720.

Gouriet v. Union of Post Office Workers [1978] A.C. 435; [1977] 3 W.L.R. 300; [1977] 3 All E.R. 70, H.L.(E.).

Guaranty Trust Co. of New York v. Hannay & Co. [1915] 2 K.B. 536, C.A.

Halley, The (1868) L.R. 2 P.C. 193, P.C.

Jones v. Jones (1889) 22 Q.B.D. 425, D.C.

Malone v. Metropolitan Police Commissioner [1979] Ch. 344; [1979] 2 W.L.R. 700; [1979] 2 All E.R. 620.

Mareva Compania Naviera S.A. v. International Bulkcarriers S.A. [1975] 2 Lloyd's Rep. 509; [1980] 1 All E.R. 213n., C.A.

Midland Bank P.L.C. v. Laker Airways Ltd. The Times, February 8, 1983, Parker J.

North London Railway Co. v. Great Northern Railway Co. (1883) 11 Q.B.D. 30. C.A.

Pan American World Airways Inc. v. Department of Trade [1976] 1 Lloyd's Rep. 257, C.A.

Piper Aircraft Co. v. Reyno (1981) 454 U.S. 235.

S.A. Consortium General Textiles v. Sun and Sand Agencies Ltd. [1978] Q.B. 279; [1978] 2 W.L.R. 1; [1978] 2 All E.R. 339, Parker J. and C.A.

Simpson v. Fogo (1862) 1 H. & M. 195.

Siskina (Owners of cargo lately taken on board) v. Distos Compania Naviera S.A. [1979] A.C. 210; [1977] 3 W.L.R. 818; [1977] 3 All E.R. 803, H.L.(E.).

Star Sea Transport Corporation v. Slater [1979] 1 Lloyd's Rep. 26, C.A.

Trendtex Trading Corporation v. Credit Suisse [1980] Q.B. 629; [1980] 3 W.L.R. 367; [1980] 3 All E.R. 721, C.A.

ACTIONS

By writ of January 21, 1983, the plaintiffs, British Airways Board ("B.A.") claimed against the defendants, Laker Airways Ltd., Nigel James Hamilton, Christopher Morris, Laker Air Services Ltd. and Laker Airways (International) Ltd., ("Lakers"), declarations that they had not unlawfully engaged in any unlawful combination or conspiracy unreasonably to restrain or monopolise trade and commerce in air transportation between the United States and the United Kingdom or intentionally or unlawfully caused injury to Laker Airways and an order that Lakers be restrained, inter alia, from causing or permitting to be continued against B.A. Civil Action 82-3362 in the United States District Court for the District of Columbia between Laker Airways Ltd. and Pan American World Airways Inc. and others.

By writ of January 24, 1983, the plaintiffs, British Caledonian Airways Ltd., claimed a similar injunction and declaration again the defendants, Lakers, but excluding Nigel James Hamilton.

Applications by B.A. and B.C. and cross-applications by Lakers were heard by Parker J.

The facts are stated in the judgments of Parker J. and the Court of Appeal.

Richard Scott Q.C. and Jonathan Sumption for British Airways.

Colin Ross-Munro Q.C. and David Donaldson for British Caledonian.

David Johnson Q.C., Michael Crystal and Richard Hacker for Lakers.

Peter Scott Q.C. and Nicholas Bratza for the Attorney-General.

May 20. PARKER J. read the following judgment. There are before the court for decision applications by the plaintiffs and cross-applications by the defendants in two actions commenced respectively by British Airways Board ("B.A.") on January 21, 1983, and by British Caledonian Airways Ltd. ("B.C.") on January 24, 1983. In both actions the first and real defendant is Laker Airways Ltd. ("Lakers"), a Jersey company now

in liquidation, but formerly the operator of the well-known transatlantic Skytrain service, whose principal place of business was at all material times in London. The other defendants need no separate mention. They are added for the purpose only of ensuring that if the plaintiffs are granted the relief which they seek against Lakers that relief may be fully effective.

Both actions are the direct result of the fact that on November 24, 1982, Lakers commenced proceedings in the United States District Court for the District of Columbia (the American action) against eight defendants, of which two are the present applicants, B.A. and B.C., and the other six are two American airlines, Pan American and T.W.A.; two European airlines, Lufthansa and Swissair; the American aircraft manufacturers, McDonnell Douglas Corporation, and, finally, the last-mentioned corporation's subsidiary, McDonnell Douglas finance Corporation. In that action Lakers claim against the eight defendants that their collapse in February 1982 was brought about by a conspiracy between the eight defendants and others or by intentional and unlawful injury caused by the eight defendants jointly and severally. Under both heads the damages claimed exceed U.S.$1 billion, albeit the damage allegedly suffered by Lakers is, in both cases, presently estimated at some $350,000,000.

The conspiracy claim, to which I shall refer as "the antitrust claim," alleges a conspiracy unreasonably to restrain and to monopolise United States foreign trade and commerce in air transportation between the United States and the United Kingdom and other European countries in violation of sections 1 and 2 of the United States Sherman Act of 1890, as amended, with the object of eliminating Lakers as an independent competitive force in trade and commerce between the United States and foreign nations. If the claim is established, Lakers are, under section 4 of the United States Clayton Act 1914, as amended, entitled to triple damages. Hence the difference between the damage allegedly suffered and the damages claimed in the action. Under the alternative head that difference is accounted for by a claim for punitive damages in the amount of $700,000,000.

By their writs B.A. and B.C. claim declarations that they are under no liability to Lakers and injunctions to restrain them from continuing the American action as against them. Each of them, at the time of commencement of their respective actions, applied for and obtained ex parte interlocutory injunctions restraining Lakers, pending the determination of a summons for wider relief or further order, from seeking in the American action injunctions or any order which would prevent them from proceeding further with the actions which they had respectively launched in this court, whilst leaving Lakers otherwise free to pursue that action without restraint. On March 2, 1983, however, both of them applied for and obtained further ex parte interlocutory relief for the like period preventing Lakers from taking any steps as against them in the American action save as to any applications already in being at the date of notification of the order granting such additional relief.

At that time the hearing of the summonses for further relief was fixed for March 21, some 19 days ahead. The duration of the restraint upon Lakers in their conduct, as against the present plaintiffs, of the American action was therefore of short duration and affected no applications then

already pending. Furthermore, the order granting the relief specifically included, as is usual, liberty to Lakers to apply on short notice at any time to discharge or vary the order granting the relief. No such application was made. I mention these matters for it is important that they should be fully understood by the judge seized of the American proceedings. As in America so here, it is and always has been regarded as of great importance that a conflict, or even an apparent conflict, between the courts of one country and another should be avoided if at all possible. However, the courts both in America and here recognise that there may be occasions when it will be necessary for them, by orders in personam, to restrain the pursuit of proceedings in another country. Given that such occasions may exist our procedure enables temporary relief to be granted to hold the position pending full argument and evidence, in order that, if the plaintiff in the end establishes that it is such an occasion, he may not, in the meantime, have suffered irreparable damage. The granting of such relief, when fully understood, involves neither actual nor apparent conflict.

B.A.'s and B.C.'s applications for the wider relief of an injunction restraining Lakers from pursuing the American action at all and the Lakers' cross-applications, which are to dismiss the actions here, were, save as to two matters, argued and a mass of evidence was tendered on March 22, 23, 24, 25, 28 and 29, 1983. On the conclusion of the argument there was no dispute but that the original ex parte injunction should continue until after judgment. B.A. and B.C. submitted that the wider relief afforded by the orders of March 2 should also be continued for a like period, but such continuation was resisted by Lakers. Being then not satisfied that there was good ground for continuation of such wider relief no matter what might be the decision on B.A.'s and B.C.'s applications, I discharged such orders but granted a short stay in order to enable B.A. and B.C. to seek from the Court of Appeal a reversal of the order of discharge or, possibly, a longer stay to enable the appeal to be fully argued.

On March 30 Sir John Donaldson M.R., sitting alone, restored the order of March 2 pending the hearing of the appeal from its discharge, reserving to Lakers, as had been done when the injunction was originally granted, liberty to apply in the meantime for discharge or variation of the order.

The two matters which, on March 29, remained outstanding were any submissions which the parties might wish to make as a result of, first, a reserved judgment of Judge Greene on an application in the American action for which I considered it desirable if possible to wait before giving judgment myself and, secondly, a statement on behalf of the Attorney-General as to executive policy which, in the light of the submissions made on these applications and what had been said in the House of Lords in In re Westinghouse Electric Corporation Uranium Contract Litigation M.D.L. Docket No. 235 (Nos. 1 and 2) [1978] A.C. 547 it appeared to me proper to invite. Such statement was made on behalf of the Attorney-General by Mr. Peter Scott on May 6. Submissions with regard to this and Judge Greene's judgment, which was by then available, were made on the same day.

Before considering the background to the issues which arise I should mention certain additional matters. First, B.C., but not B.A., amended their summons to include an application for a mandatory order upon Lakers to discontinue their American action as against them. Secondly, although the applications by both B.A. and B.C. were originally for injunctions restraining pursuit of the American proceedings until trial or further order it was common ground between the parties that I should determine B.A.'s and B.C.'s entitlement to such relief finally.

The crux of the dispute between the parties is Lakers' antitrust claim in the American action. It is a claim which can only be pursued in a district court in America. Accordingly, if prevented from pursuing it there Lakers cannot pursue it in this country or, indeed, anywhere else. The relief claimed by B.A. and B.C. is not, therefore, sought on the usual basis that the opposing party can equally well litigate here. Furthermore, since B.A. and B.C. have places of business in the United States and conduct part of their operations in, and in the airspace of, the United States it is not suggested that B.A. and B.C. were not properly served in the United States or that the district court lacks jurisdiction to try the claim. The applications are, therefore, at the least unusual. Indeed, they are probably unique.

Both B.A. and B.C. submit, however, that they are entitled to or should be granted the relief which they seek on the grounds, first that it would be an injustice to them to allow the American action to proceed against them and, secondly, that it would be contrary to public policy to allow it to do so. B.C. advance a further ground, namely, that the claim against them is frivolous and vexatious.

With that preliminary I can now turn to consider the background to B.A.'s and B.C.'s claim for relief. From 1977 B.A., B.C., Lakers and the two American airline defendants in the American action all derived their right to operate scheduled transatlantic air services between the United States and this country from the fact that they were designated respectively by the governments of this country and the United States under the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America concerning Air Services (1977) (Cmnd. 7016) made or done in Bermuda on July 23, 1977, to which I shall hereafter refer as "Bermuda 2." That agreement replaced an earlier agreement made in 1946 but although Lakers' conspiracy allegations in its antitrust claim go back beyond 1977 it is unnecessary for present purposes to make further reference to such earlier agreement.

By article 2(2) of Bermuda 2 each government grants to the other the rights specified in the agreement for the purpose of operating scheduled international air services on routes specified therein. By article 3(1)(a) each government has the right to designate an airline or airlines for the purpose of operating the agreed services on each of the specified routes, and by article 3(6) it is provided that on receipt of such a designation and on receipt of an application from the designated airline for operating authorisations and technical permissions the other government shall grant the appropriate authorisations and permissions provided certain conditions are satisfied. Once so designated and authorised it is provided that an

airline shall be entitled to operate the relevant agreed services on the specified routes provided it complies with the applicable provisions of the agreement.

These are the basic conditions upon which each government permits an airline of the other to fly in its airspace and land on its territory. An airline will, however, have also to obtain from the appropriate authorities of its own country whatever licences or authorisations the law of that country requires.

Article 11 of Bermuda 2 provides for the designated airline or airlines of one country to have a fair and equal opportunity to compete with the designated airline or airlines of the other, but makes no provision as to competition between the airlines of one country, inter se, a matter which is internal to each country. Some reliance was placed on this article by B.A. and B.C.

In the American action Lakers contend, at any rate by implication, that Pan Am and T.W.A. did not afford Lakers a fair opportunity to compete but this takes the matter no further. It may give the government of this country cause for complaint. It may even, if proved, justify the government of this country in withdrawing authorisations for Pan Am and T.W.A. to fly into its airspace and land on its territory, but it does not appear to me to affect matters which presently fall for decision.

The article principally relied on by B.A. and B.C. is, however, article 12, which provides for the fixing of the tariffs of the designated airlines. Its importance lies in the fact that one of Lakers' principal allegations in the antitrust claim is that the airlines combined to charge predatory fares, i.e. fares which were deliberately and uneconomically low in order to damage Lakers and cause their collapse.

Article 12(1) provides that the tariffs shall be established in accordance with the procedures set out in the article, and article 12(2) that such tariffs shall be established at the lowest level consistent with a high standard of safety and an adequate return to efficient airlines operating on the agreed routes.

Article 12(2) further provides that each tariff shall, to the extent feasible, be based on the cost of providing the service in question assuming reasonable load factors and that, amongst other factors to be taken into account, will be the need of an airline to meet competition from scheduled or charter air services taking into account differences in cost and quality of service and the prevention of unjust discrimination and undue preferences or advantages. Finally this sub-article provides that individual airlines should be encouraged to initiate innovative cost-based tariffs.

There are in the article two basic procedures with regard to the establishment of tariffs. First, by article 12(4) any tariff agreement concluded as a result of inter-carrier discussions, including those held under the traffic conference procedures of the International Air Transport Association (I.A.T.A.) and involving the airlines of the contracting parties, is to be subject to the approval of the aeronautical authorities of both the contracting parties and may be disapproved at any time.

It is provided that such agreements shall be submitted for approval to both aeronautical authorities at least 105 days before the proposed date of effectiveness (unless shorter notice is permitted) accompanied by such

justification as each contracting party may require of its own designated airlines. The submission of such an agreement for approval is, however, not the filing of a tariff under article 12(5), which provides the second procedure for the establishment of tariffs. Under it any designated airline may file a tariff with the aeronautical authorities of the other contracting party at least 75 days before the proposed effective date (again unless shorter notice is permitted). It will then become effective unless action is taken to continue the existing tariff in force under article 12(7). Since the designated airlines of both countries require tariff approval from their own authorities it follows that all charges in fact made must have received express or tacit approval from the aeronautical authorities of both countries before they are put into effect. Hence all the fares of which Lakers complain had to be, and it is common ground were, in receipt of such approval before they were put into effect, such approval being given in America by the Civil Aeronautics Board (C.A.B.), and in this country by the Civil Aviation Authority (C.A.A.). Furthermore, before such fares were approved Lakers were given by the respective authorities the opportunity, of which they took advantage, to object to the introduction of such fares.

Article 12 ends with two provisions of some importance. First, the aeronautical authorities of each government are to use their best endeavours to ensure that the designated airlines conform to the agreed tariffs filed with the aeronautical authorities of the two governments and that no airline rebates any portion of such tariffs by any means, directly or indirectly. Secondly, article 12(9) provides that in order to avoid tariff disputes as far as possible: (i) a tariff working group shall be established in accordance with annex 3; (ii) the aeronautical authorities of the two countries shall keep each other informed of such guidance as they may give to their own airlines in advance of or during I.A.T.A. conferences; (iii) during the time when the civil aeronautical authorities of either government have under consideration agreements pursuant to article 12(4), the two governments may exchange views and recommendations which shall, if requested by either government, be presented to the aeronautical authorities of the other who will take them into account in reaching their decision.

It is thus clear that both governments were to be closely involved in the fixing of tariffs and that it was contemplated that all tariff agreements would be placed before the aeronautical authorities of both countries, which authorities would take into account government views before reaching a decision.

So much for Bermuda 2. It is now necessary to refer shortly to the Sherman Act, the Clayton Act, and the Federal Aviation Act of 1958 of the United States.

By section 1 of the Sherman Act every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade between the several states or with foreign nations, is declared illegal and any person who makes any such contract, combination or conspiracy is guilty of a criminal offence. By section 2 every person who monopolises, or attempts to monopolise, or combines or conspires with any other person

or persons to monopolise any part of such trade or commerce is also guilty of a criminal offence.

Section 4 of the Clayton Act provides:

"any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws" which include the Sherman Act "may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee."

These three sections are the foundation of Lakers' antitrust claim. The breaches of sections 1 and 2 of the Sherman Act alleged go back many years, but for present purposes I need mention only events occurring shortly before Lakers' final collapse. By the late summer of 1981 Lakers were, and were known to be, in grave financial trouble, and if they were to survive required massive financial assistance. The substance of what is alleged by Lakers is that B.A. and B.C. and other defendants in the American action, in pursuit of a combination between them to drive Lakers out of business, then did two things. First when Lakers, in order to improve failing business on the Skytrain service, or at least to stop further deterioration in their position, had introduced a fare known as a Regency fare (offering better facilities than the normal Skytrain fare, but lesser facilities than those offered by B.A. and B.C. and other airline defendants), Pan Am, T.W.A. and B.A. dropped their fares for better facilities to match Lakers' fares although it was wholly uneconomic so to do, and thus further damaged Lakers' business and increased their financial difficulties. Next, having done this B.C. and others, in pursuit of the combination, exerted pressure on McDonnell Douglas to prevent them from putting into effect an essential part of a financial rescue operation being negotiated, with the result that it did not reach fruition and Lakers could no longer continue in business. I shall return to these matters hereafter.

I now consider two sections of the Federal Aviation Act 1958. Under section 412 as it stood up to 1978 every United States air carrier was obliged to file with C.A.B. a true copy or, if oral, a true and complete memorandum of every contract or agreement affecting air transport between it and any other air carrier, foreign air carrier or other carrier, inter alia, relating to the establishment of fares or controlling, regulating, preventing or otherwise eliminating destructive, oppressive or wasteful competition. C.A.B. was then obliged by order to disapprove any such contract or agreement that it found to be adverse to the public interest and to approve any such contract or agreement that it did not find to be adverse to the public interest or in violation of the Act. Under section 414 any person affected by an order made under section 412 was exempted from the operation of the antitrust laws in so far as might be necessary to enable him to do anything approved by such order.

In 1978 section 412 was amended, inter alia, so as to make the filing of any such agreement optional and to make it possible to apply for authority to discuss possible cooperative working arrangements. and in

1980 it was further amended so as to enable not only a United States air carrier but also a foreign air carrier to file an agreement or request for authority to discuss and thus obtain antitrust exemption.

In summary form the position with regard to exemption may therefore be stated as follows. (1) At the time of Bermuda 2 an American airline was obliged to file any tariff agreement whether with another American airline or a foreign airline, but a foreign airline was under no such obligation. Hence there was no provision under which a British airline, making an agreement only with another British airline, could of its own motion or otherwise obtain antitrust exemption. If, however, an American airline was a party to such an agreement antitrust exemption could be obtained provided that the American airline complied with its obligations under section 412. (2) From 1978 to 1980 the position changed in that a British airline could only obtain exemption if an American airline was a party, and that airline exercised the option to file the agreement. (3) From 1980 onwards a British airline could also obtain exemption by obtaining of its own motion an order of the C.A.B. under section 412.

It was in this state of affairs that, at the end of 1980, the matter of antitrust legislation was raised between the two governments in connection with, and at the same time as, an annex 5 to Bermuda 2 providing for air cargo operations was entered into between them. The government of this country was concerned to obtain protection from antitrust laws for agreements between United Kingdom cargo airlines. By letters dated December 4, the same day upon which the annex (annex 5) was added, (a) the United States Government gave no assurances as to exemption but pointed out that under section 412, as recently amended, exemption could be obtained. (b) An Under-Secretary of the Department of Trade, in reply, stated:

"As you know my government does not accept the jurisdiction which the U.S. claims in respect of these laws, nor their appropriateness in some circumstances to international air service operations. 'It is only fair to advise you that if, after consultation, H.M.G. indicates that it sees no objection to the arrangements proposed but nevertheless antitrust action is brought against the U.K. airlines concerned, then we might consider such action as a reason for seeking modification and if necessary termination, of the cargo agreement as provided for in part 5 of [the annex]."'

It is to be noted that the specific matters under consideration at the time were agreements (i) between U.K. airlines only, (ii) agreements to which the government of this country saw no objection, (iii) agreements to enable small United Kingdom cargo airlines better to compete with the larger and more experienced American cargo airlines.

No antitrust question with regard to scheduled passenger services was raised or mentioned either in Bermuda 2 itself or in exchanges between governments at the time it was entered into or thereafter.

To complete the background to the antitrust claim so far as is required for present purposes, it is necessary only to mention that both B.A. and B.C. are United Kingdom companies, the former being statutory and having statutory functions to fulfil, that both have their principal places of

business here, that like Lakers they also have, and at all material times had, places of business in the United States from which they conduct and conducted the United States end of the transatlantic air services which they were and are designated under Bermuda 2 to operate and that Lakers, although a Jersey company, not only have, as already mentioned, their principal place of business in London but were also owned and controlled by a United Kingdom company.

I now turn to those features of the antitrust action itself which are of importance. First it is an action in which triple damages are awarded as of right. Secondly, Lakers, although in liquidation, can institute and pursue it without affording any defendant any security for costs should it in the end fail. Thirdly, if in the end Lakers do fail a successful defendant will not, save in exceptional circumstances, be entitled to recover any costs against them. Fourthly, Lakers will have the advantage of pre-trial procedures for depositions, interrogatories and discovery of documents of a very wide ranging nature which are far more extensive and costly than any procedures known in this country and which would be regarded as onerous or oppressive in this country. Fifthly, save possibly as against B.A., Lakers will be entitled to trial by jury. Sixthly and lastly, but of great importance, there is no right of contribution as between defendants, so that Lakers would be entitled, if successful, to enforce any judgment against, for example, B.A. alone, who would then be unable to recover from any other defendant also held liable.

So much for the background to B.A.'s and B.C.'s claim. It is next necessary to consider the law applicable where a party seeks an order restraining an opposite party from taking or pursuing proceedings in another country. The principal authorities on this matter are The Atlantic Star [1974] A.C. 436; MacShannon v. Rockware Glass Ltd. [1978] A.C. 795; Castanho v. Brown & Root (U.K.) Ltd. [1981] A.C. 557 and Smith Kline & French Laboratories Ltd. v. Bloch [1983] 1 W.L.R. 730.

The Atlantic Star [1974] A.C. 436 was a case in which Dutch owners of a barge had initiated actions both in this country and in Belgium against the Dutch owners of the Atlantic Star in respect of a collision in the River Schelde. The owners of the Atlantic Star applied for a stay of the English proceedings. This was refused both at first instance and in the Court of Appeal, but was granted by the House of Lords by a majority. The case is of importance in that the earlier authorities were examined, an attempt to introduce the forum non conveniens principle was rejected and there was a broadening of, albeit adherence to, the long-established principle enunciated by Scott L.J. in St. Pierre v. South American Stores (Gath & Chaves) Ltd. [1936] 1 K.B. 382, to which I shall later revert. For present purposes, however, its principal importance lies in two observations, one by Lord Reid and one by Lord Simon of Glaisdale. Lord Reid said, at p. 453:

"It is a function of this House to try, so far as possible, to keep the development of the common law in line with the policy of Parliament and the movement of public opinion ..."

and Lord Simon of Glaisdale said, at pp. 471-472:

"English courts are normally confined to examining the statutes giving effect to a treaty or international convention, and precluded from scrutinising the treaty itself. But where public policy and international comity are invoked ... it is permissible (indeed, incumbent) to examine our formal international obligations. As Lord Atkin said in The Arantzazu Mendi [1939] A.C. 256, 264: 'Our state cannot speak with two voices ... the judiciary saying one thing, the executive another.' (Though Lord Atkin was speaking of recognition of foreign sovereignty his observations must be of general application in a unitary state in cases such as the present: see Adams v. Adams (Attorney-General intervening) [1937] P. 188, 198C)".

Similar observations are to be found in the Westinghouse case [1978] A.C. 547.

MacShannon v. Rockware Glass Ltd. [1978] A.C. 795 was also a case where what was sought was a stay of English proceedings, but in that case no other proceedings were pending. Four Scotsmen living and working in Scotland, brought actions against English companies in respect of industrial accidents in Scotland. In two of the actions Robert Goff J. refused the defendants' application for a stay of the English actions and his decision was affirmed by the Court of Appeal. In the other two cases, which fell for consideration after the decision of the Court of Appeal Griffiths J., considering himself bound by that decision, also refused a stay. On appeal to the House of Lords (in the latter two cases in pursuance of the "leap frog" procedure) a stay was granted, and the plaintiffs were left to pursue their remedy in Scotland.

The case is of great importance to a decision in the instant case and it is necessary to quote certain passages. In reference to The Atlantic Star Lord Diplock said, at pp. 811-812:

"the gist of the three speeches of Lord Reid, Lord Wilberforce and Lord Kilbrandon, in my opinion, enables the second part of [Scott L.J.'s statement in the St. Pierre case [1936] 1 K.B. 382] to be restated thus: '(2) In order to justify a stay two conditions must be satisfied, one positive and the other negative: (a) the defendant must satisfy the court that there is another forum to whose jurisdiction he is amenable in which justice can be done between the parties at substantially less inconvenience or expense, and (b) the stay must not deprive the plaintiff of a legitimate personal or juridical advantage which would be available to him if he invoked the jurisdiction of the English court' ..."

The above formulation removed the requirement originally contained that the defendant must show that the continuance of the action would work an injustice to him "because it would be oppressive or vexatious to him or would be an abuse of the process of the court in some other way." Both Lord Salmon and Lord Fraser of Tullybelton also expressly negatived any such requirement: see pp. 819B and 822H-823A. Lord Salmon expressed the matter on a very broad basis as follows, at pp. 818-819:

"the question as to whether it should be stayed depends upon whether the defendants can establish that to refuse a stay would produce

injustice. ... To my mind, the real test of stay or no stay depends upon what the court in its discretion considers that justice demands."

This approach was also adopted by Lord Russell of Killowen and Lord Keith of Kinkel.

Before leaving this case it is necessary to mention that on behalf of Lakers Mr. Johnson relied on certain passages which were said to indicate that questions of public policy must be considered irrelevant in applications such as were then and are here under consideration. These passages appear in the speeches of Lord Salmon at p. 822C-E, Lord Fraser of Tullybelton at p. 822H, Lord Russell of Killowen at p. 823G and Lord Keith of Kinkel at p. 833D. In my judgment the "public policy" which was there canvassed was of a very different nature to that which is advanced here. What was argued was that the courts should, as a matter of policy, discourage the bringing of proceedings in England in respect of industrial accidents in Scotland. This argument was rejected, the House expressing the clear view that the question to be determined was in each individual case whether, as between an individual defendant and an individual plaintiff, justice demanded a stay.

Both the foregoing cases involved the question of a stay of English proceedings, but in Castanho v. Brown & Root (U.K) Ltd. [1981] A.C. 557, the question of a stay of foreign proceedings was considered. The opinion of the House is to be found in the speech of Lord Scarman, with which the four other members of the Judicial Committee of the House concurred. When considering that case it is important to bear in mind that the plaintiff had instituted an action in this country and also in the United States. He desired to discontinue here and pursue his action in the United States. The defendant sought to obtain an injunction to restrain him from proceeding further in the United States. There was thus no question of the plaintiff being deprived of a remedy if the injunction was granted. He could obtain justice here. The stay was, however, refused.

Having affirmed the existence of the jurisdiction to restrain foreign proceedings, albeit the necessity to exercise that jurisdiction with caution, Lord Scarman referred to a submission that the jurisdiction had only been exercised in two classes of case, namely (1) to prevent harassment by two actions and (2) where there is a right justiciable in England which the court seeks to protect. He then said, at p. 573:

"No doubt, in practice, most cases fall within one or other of these two classes. But the width and flexibility of equity are not to be undermined by categorisation. Caution in the exercise of the jurisdiction is certainly needed: but the way in which the judges have expressed themselves from 1821 onwards amply supports the view for which the defendants contend that the injunction can be granted against a party properly before the court, where it is appropriate to avoid injustice."

By "properly before the court" Lord Scarman was, it appears, referring to the question whether the party suing abroad had sufficient connection with England to justify the granting of an injunction at all: see p. 574. In the instant case there is no question about this. As a designated airline under Bermuda 2 with a principal place of business in London, owned

and controlled by an English company, in turn owned and controlled by Sir Freddie Laker, Laker Airways Ltd. clearly had the closest connections with England. Although no longer carrying on business it still has, for its liquidator is an English chartered accountant carrying on his profession in London.

Next Lord Scarman considered the criteria which should govern the exercise of the discretion. "The principle is the same," he said at p. 574, whether the remedy sought is a stay of English proceedings or a restraint upon foreign proceedings." He then referred to Lord Diplock's formulation of the principle in MacShannon v. Rockware Glass Ltd. [1978] A.C. 795, 812, and said, at p. 575:

"Transposed into the context of the present case, this formulation means that to Justify the grant of an injunction the defendants must show: (a) that the English court is a forum to whose jurisdiction they are amenable in which Justice can be done at substantially less inConvenience and expense, and (b) the injunction must not deprive the plaintiff of a legitimate personal or juridical advantage which would be available to him if he invoked the American jurisdiction."

This formulation, like that propounded by Lord Diplock in the MacShannon case, has, as an element, the existence of another forum in which, as between the plaintiff and the defendant, justice can be done but this requirement, if regarded as being of universal application, would it seems to me, undermine the flexibility of equity by categorisation, for it would mean either (a) that justice could never demand a stay of foreign proceedings unless the plaintiff in those proceedings could pursue his remedy here or elsewhere or (b) that even if justice clearly did demand a stay in a particular case the courts were prohibited from doing justice. In the light of Lord Scarman's very general statement I cannot accept that the House was intending to lay down either of these two rules.

Suppose, for example, that two United Kingdom companies, neither of which traded in or to America, openly made a price agreement lawful in this country but that the purchasers of their goods in this country exported them to the United States. Suppose further that some time later both United Kingdom companies appointed agents in the United States and thus enabled United States proceedings to be served upon them and t at a United Kingdom company, with a place of business in the United States who had purchased the goods, launched an antitrust action. In such circumstances it appears to me that justice might well demand that the plaintiff be prevented from pursuing an action in respect of acts performed wholly in this country and wholly lawful here even though, if so prevented the plaintiff would be left without a remedy. To allow such an action to proceed at the suit of a United Kingdom company would involve exposing United Kingdom defendants to an action based on what is regarded here as an exorbitant assertion of extra-territoriality.

No doubt, where there is no alternative forum, the jurisdiction to restrain should be exercised with even greater caution than is required when there is such a forum, but I am not prepared, unless compelled by precedent, to hold that the courts of this country are powerless to protect residents of this country from being pursued abroad by other residents of

this country in respect of acts which are lawful in this country and wholly committed in this country. Such protection may well be necessary to avoid injustice at least in some circumstances.

The last of the four cases principally relied on by the plaintiffs is Smith Kline & French Laboratories Ltd. v. Bloch [1983] 1 W.L.R. 730, where an injunction staying proceedings in the United States was granted and the plaintiff in the action there was left to pursue any claim which he might have either by way of counterclaim in the pending English action in which the plaintiffs here were seeking a declaration of non-liability or by way of separate proceedings. That case, in my judgment, takes matters no further. The general principles must be taken to be those culled from the three cases in the House of Lords.

Those principles, so far as immediately relevant, appear to me to be as follows: (1) the jurisdiction to stay proceedings in this country is a general equitable jurisdiction which can be exercised whenever its exercise is necessary to prevent injustice. (2) Although the cases may show specific categories in which the jurisdiction has been exercised in the past and although the formula enunciated by Lord Diplock in MacShannon v. Rockware Glass Ltd. [1978] A.C. 795, will or may cover most cases the flexibility of equity is not to be limited or undermined by either categorisation or formula. (3) In exercising the jurisdiction general considerations as to the desirability or otherwise of the type of proceedings sought to be stayed or restrained are irrelevant, the question in each case being what, as between the two parties, justice requires. (4) Nevertheless, in exercising the discretion, it is legitimate in some cases to take into account specific matters of policy be it judicially recognised public policy as revealed by the cases, parliamentary, as revealed by legislation, or governmental, as revealed by treaty or convention to which the government is a party. (5) The same principles apply where it is sought to restrain a party properly before the court from instituting or pursuing proceedings abroad. (6) Both jurisdictions must be exercised with caution, but more caution is required in exercising the jurisdiction to restrain the pursuit of proceedings abroad than to stay proceedings here (see, as to this, per Brandon L.J. in Castanho v. Brown & Root (U.K) Ltd. in the Court of Appeal [1980] 1 W.L.R. 833, 869 and more caution still where the result of any restraint will leave the party restrained without a remedy.

It appears to me also to follow from Adams v. Adams (Attorney-General intervening) [1971] P. 188; The Atlantic Star [1974] A.C. 436; and In re Westinghouse Electric Corporation Uranium Contract Litigation M.D.L. Docket No. 235 (Nos. 1 and 2) [1978] A.C. 547, that in ascertaining specific governmental policy it may be legitimate for the court in certain cases to receive any statement as to such policy which may be tendered through the Attorney-General. The extent, however, to which any such statement should be taken into account in any particular case will be very limited for it is of the essence of the rule of law that the rights and obligations of individuals depend upon the law and not upon executive policy, which does not and must never be allowed to override the law for, if it is so allowed, the rule of law will cease to exist.

In the Westinghouse case [1978] A.C. 547 the Attorney-General intervened, whereas in the present case he did not intervene but was

invited by the court to attend, for the purpose of stating the views of the government. There the question for decision was whether certain letters rogatory, issued by the court in Virginia in proceedings in which Westinghouse were defendants and in which they alleged in their defence that the contracts for breach for which they were being sued were incapable of performance by reason of a cartel of uranium producers including two United Kingdom companies, Rio Tinto Corporation Ltd. and R.T.Z. Services Ltd., should be given effect. These companies were also defendants in antitrust proceedings in Illinois, in which triple damages were being claimed. There was, in addition, in existence a grand jury investigation into possible violation of antitrust laws by the alleged cartel. After the letters rogatory had been issued, indeed after orders implementing them had been made and upheld by the Court of Appeal, the United States Department of Justice intervened and, in effect, converted the letters rogatory into a request for evidence for the purpose of the grand jury investigation. The House of Lords held, inter alia, that this attempt to extend the grand jury's investigation internationally was not permissible and constituted an infringement of United Kingdom sovereignty. The decision of the Court of Appeal was reversed. The foregoing description of the case constitutes a drastic simplification but is sufficient for present purposes.

In that case what was held to be an invasion of sovereignty was the attempt by the United States Government to enforce its antitrust laws in their criminal aspect against individuals not subject to United States jurisdiction in respect of acts taking place exclusively outside the United States on the ground that such acts had had an effect within the United States: see Lord Fraser of Tullybelton at p. 650E-G. This is the "effects" doctrine asserted by the United States which has been a long standing source of dispute between the United States and this and other countries, some attempt to counter which by legislation had already been made in the Shipping Contracts and Commercial Documents Act 1944.

Although, in argument, objection was taken to the letters rogatory also on the ground that the evidence sought would be available in the antitrust suit in Illinois (in which R.T.Z. were taking no part on the basis that the court lacked jurisdiction) this formed no part of the decision of the House and was specifically left open by Viscount Dilhorne, at p. 632A-B.

For this reason and also because there has since been further Parliamentary intervention to counter further invasion of sovereignty the case itself and the content of the Attorney-General's intervention in it are of limited assistance for present purposes. It appears to me to follow, however, that if, in the present case, it was established that in pursuing their claim in the United States against the present plaintiffs, Lakers were a party to any invasion of sovereignty it would follow that an injunction should be granted, or at least that the position constituted a powerful factor in favour of the grant of an injunction.

The subsequent Parliamentary intervention is to be found in the Protection of Trading Interests Act 1980. This Act gives to the Secretary of State wide powers. Under section 1(1) if it appears to him that under the law of a foreign country measures have been taken or are proposed

to be taken for regulating or controlling the international trade and that those measures, in so far as they apply or would apply to things done or to be done outside the territorial jurisdiction of that country by persons carrying on business in the United Kingdom, are damaging or threaten to damage the trading interests of the United Kingdom he may direct that the section shall apply to those measures. Under section 1(3) he may then give to any person carrying on business in the United Kingdom directions forbidding compliance with such measures.

Section 2 further empowers the Secretary of State to prohibit any person in the United Kingdom from producing pursuant to the requirement of any court tribunal or authority of a foreign country any commercial document outside the territorial jurisdiction of that country if the requirement infringes the jurisdiction of the United Kingdom or is otherwise prejudicial to the sovereignty of the United Kingdom. No relevant directions have been given.

Under section 4 the courts of the United Kingdom are prohibited from making orders under section 2 of the Evidence (Proceedings in other Jurisdictions) Act 1975 giving effect to requests from a foreign tribunal if it is shown that the request infringes the jurisdiction of the United Kingdom or is otherwise prejudicial to the sovereignty of the United Kingdom and a certificate signed by or on behalf of the Secretary of State to the effect that it infringes that jurisdiction or is so prejudicial is conclusive evidence to that effect.

Sections 1, 2 and 4 thus give the Secretary of State the power where he sees fit effectively to counter exorbitant assertions of jurisdiction.

Next the Act concerns itself with judgments. By section 5 no foreign judgment is enforceable in this country inter alia if it is a judgment for multiple damages. This is aimed directly at judgments in antitrust actions and goes to the whole of the judgment not merely the multiple or penal part of it.

B.A. and B.C. not unnaturally rely upon this as showing Parliamentary disapproval of antitrust actions as a whole. Section 5, however, must be considered together with section 6. By subsection (1) that section applies where a foreign court has given a judgment for multiple damages against a "qualifying defendant" namely: (a) a citizen of the United Kingdom or Colonies or (b) a United Kingdom company or a company incorporated in a territory for whose international relations Her Majesty's Government in the United Kingdom is responsible or (c) a person carrying on business in the United Kingdom, and the qualifying defendant has paid an amount on account of damages either to the party in whose favour the judgment was given or to another party who is entitled as against the qualifying defendant to contribution in respect of damage.

The primary substantive provision is contained in subsection (2). This gives the qualifying defendant the right to recover against the party in whose favour the judgment was given, in effect, that part of any sum paid which represents the excess over compensation. In antitrust actions therefore a qualifying defendant is entitled to recover against the plaintiff two-thirds of any amount which he may have paid.

The overall disapproval demonstrated by section 5 is thus only taken as far as non-enforcement. If a qualifying defendant has paid the whole

amount he cannot recover the whole. He can only recover, in the case of triple damages, two-thirds. It is thus for the excess over compensation that maximum disapproval is demonstrated.

There follow in subsections (3) and (4) of section 6 two important qualifications. The right of recovery given by subsection (2) does not apply in the case of:

"(3) ... an individual who was ordinarily resident in the overseas country at the time when the proceedings in which the judgment was given were instituted or a body corporate which had its principal place of business there at that time." (The emphasis is mine).

"(4) ... where the qualifying defendant carried on business in the overseas country and the proceedings in which the judgment was given were concerned with activities exclusively carried on in that country.

In the instant case the right of recovery would be of very limited use to B.A. or B.C. for Lakers are in liquidation, albeit neither would be deprived of the remedy by subsections (3) or (4) since (a) neither had its principal place of business in the United States at any time; (b) although both carried on business in the United States the antitrust claim (and indeed the alternative claim) is not concerned exclusively with activities carried on in the United States.

It is in my view clear that section 5 has nothing whatever to do with sovereignty. It would, for example, prevent one United States corporation enforcing in this country a judgment in an antitrust suit against another United States corporation which had assets and a place of business here, notwithstanding that the antitrust infringements took place wholly within the United States. In such a case no question of any invasion of sovereignty could arise.

Section 6 requires closer examination for to give a right of recovery in respect of moneys properly paid under the judgment of a foreign court would on the face of it seem to require for its justification some such strong ground as that the proceedings in which the judgment was given constituted in whole or in part an invasion of sovereignty. Subsections (3) and (4) may seem to suggest that this is indeed the basis of the right given, but in my view this is not so.

Under subsection (3) a qualifying individual defendant will have no right of recovery if at the time the proceedings in question were instituted he was ordinarily resident in the country in which the judgment was given and the same will apply to a corporate defendant with its principal place of business in that country at that time.

The proceedings may, however, be concerned exclusively with acts carried out outside the foreign country and lawful where they were so carried out and the defendant or defendants concerned may at the time they were carried out have neither resided nor had a principal or indeed any place of business there. To seek to make such defendants answerable in the foreign court in such circumstances is the sort of excess of sovereignty which was, at least in the criminal field, held unacceptable in the Westinghouse case [1978] A.C. 547, yet the subsection appears to accept that so long as the defendants are fully within the jurisdiction of

the foreign court ac the time when proceedings are instituted there should be no right of recovery.

Subsection (4) does concern itself with the subject matter of the proceedings but it excludes the right of recovery only where the qualifying defendant was carrying on business in the foreign country and the proceedings are concerned with activities exclusively carried on in the foreign country. It is therefore taking objection to the triple element of the damages in a positive way, as opposed to the negative refusal to enforce judgments, even where the defendant was carrying on business in the foreign country and even where the proceedings concerned activities which were carried on for the most part in that country. This goes further than the Westinghouse case [1978] A.C. 547 and further than would, as it seems to me, to be justified by any principle of comity or international law. It is moreover to be considered in the earlier sections of the Act. Under section 1 there is power to prohibit compliance with foreign law in so far as it would apply to things outside the territory of the country in which the law is in force. This is clearly aimed, although not in express words, at invasion of sovereignty and under section 2 there is express reference to prejudice to the sovereignty of the United Kingdom.

I conclude, therefore, that whilst section 5 is based in essence on the principle that the courts here will not enforce the penal laws of another country and section 6 extends that principle so as to enable the penal element of any amount paid to be recovered in certain circumstances they cannot be regarded as a sound foundation for any submission that an antitrust action based in part, or even substantially, on acts committed outside the United States by English companies carrying on business in the United States in relation to the carrying on of that business constitutes such an invasion of sovereignty that a United Kingdom company engaged in a like business should be restrained from pursuing his claim.

In essence the position is that a United Kingdom designated airline with its principal place of business in the United Kingdom, but also carrying on business in the United States as an essential part of the operation of the services which it is designated by the United Kingdom and permitted by the United States to perform, is suing two other United Kingdom airlines in like case in respect of actions which could only be effective if C.A.B. approval was obtained and thus necessarily involved action being taken in the United States.

Parliament has said that if judgment is recovered in that action it will not be enforced here. Parliament has also said that the defendants, if they pay under any such action, shall be entitled to recover back the penal element from the plaintiff but it has not said that such an action shall not be pursued. If Parliament has not said so then some other ground must be shown for preventing Lakers from pursuing it.

That the penal nature of an antitrust suit affords no such ground is in my judgment plain. It has, as I have said, been dealt with by Parliament so far as Parliament has seen fit to deal with it and Mr. Peter Scott for the Attorney-General, not surprisingly, did not suggest that there was any policy basis upon which the penal element should be given any wider effect than Parliament has seen fit to give it

It is equally clear that invasion of sovereignty or extra-territoriality afford no ground. They too have been dealt with by Parliament, to some extent directly and to some extent by giving to the Secretary of State wide powers to act in case of need. The direct Parliamentary intervention does not avail B.A. and B.C. The powers conferred by Parliament have not been exercised and a United Kingdom designated airline carrying on business in the United States by permission of the United States Government must prima facie comply with United States law or take the consequences.

This conclusion fully accords with the statement by Mr. Peter Scott on behalf of the Attorney-General:

"Her Majesty's Government has consistently taken the position that British enterprises engaged in transnational business operations should comply with the laws and governmental policies of the countries in which they transact business."

It is said, however, both by B.A. and B.C. and on behalf of the government that this prima facie position is vitally affected by the relationship between the antitrust laws and the provisions of Bermuda 2.

Her Majesty's Government regards the Government of the United States as being in breach of its obligations under Bermuda 2 in allowing antitrust laws to be applied directly or indirectly, in respect of damage alleged to have flowed from tariffs approved under Bermuda 2 or scheduling arrangements made under the provisions of Bermuda 2 for, it is said, any such application will undermine Bermuda 2. This position is disputed by the Government of the United States and as between the two governments the dispute procedure has been invoked. If the dispute is not resolved by agreement, I was informed that an arbitral decision could be obtained in about a year. It is to be noted that Her Majesty's Government's position is all embracing and covers the case not merely where one United Kingdom designated airline seeks to invoke antitrust laws in respect of damage flowing from the application of approved tariffs against another United Kingdom designated airline but also where any plaintiff claims against any defendant airline on a like basis. No doubt in so far as defendants were American airlines Her Majesty's Government might not seek to complain but the proposition involves the contention that an American plaintiff should not be permitted to bring such an action against American defendants.

B.A. and B.C. do not seek to go so far. They limit their proposition to cases where a designated United Kingdom airline is suing other designated United Kingdom airlines for damage alleged to flow from tariffs approved under Bermuda 2. Such cases it is said involve an airline, which only operates in right of Her Majesty's Government, taking part in a derogation of the rights granted to Her Majesty's Government under Bermuda 2 and, as I understand it, passed on to other United Kingdom airlines who also thus operate in right of Her Majesty's Government.

For the Attorney-General, Mr. Peter Scott developed his contention in some 16 separate points all of which are recorded in the transcript and I will not lengthen this judgment by setting them out here. Mr. Richard Scott and Mr. Ross-Munro for B.A. and B.C. also presented their

arguments in a number of ways all of which are also recorded. For the same reasons I will not rehearse them here. I shall simply set out the reasons which lead me to the conclusion that the relationship between the antitrust laws and Bermuda 2 afford no ground upon which it would be in my judgment right to grant an injunction. They are as follows: 1. An injunction would deprive Lakers of a cause of action which can only be asserted in proceedings properly brought in America against American defendants and B.A. and B.C. 2. It is possible that under American law Bermuda 2 becomes part of that law without further enactment. If this is right, the American courts will decide whether its effect is to grant antitrust exemption or not. It may be that the American courts will so hold, in which case the antitrust claim will fail. If they do not so hold, then, if other conditions are established, it will succeed. 3. Bermuda 2 is not part of English domestic law and to use it to deprive Lakers of the right to pursue a claim would at the very least require a very strong case. 4. I cannot accept that Lakers' claim involves an undermining of Bermuda 2 or any derogation of rights. The essence of Lakers' case is that there was a tariff agreement not submitted for approval under Bermuda 2 which provides for the submission of tariff agreements. Furthermore, it is conceded by B.A. and B.C. that if any combination went as far as to constitute a common law conspiracy, Lakers could sue without undermining or derogating from the rights granted under Bermuda 2. For the Attorney-General, Mr. Peter Scott made no such express concession but said that each case would depend on its own circumstances.

If this be so, it is clear that there is no settled policy or clear international right or obligation preventing the pursuit of a conspiracy claim. An antitrust claim need not establish anything like as much as is required in the case of a common law conspiracy, although Lakers' allegations in the American action amount very nearly, if not quite, to the assertion of a common law conspiracy. An antitrust claim as was stressed by Judge Greene in his recent judgment is of a different and special kind. Nevertheless if there is no obstacle to a conspiracy claim and if by obtaining authority to discuss and laying before the C.A.B., any agreement reached antitrust exemption can be obtained, I see no reason for saying that the application of antitrust laws undermines Bermuda 2. What, if anything, would undermine it, is a secret agreement not disclosed to C.A.B. followed by the filing of a tariff presented as an individual tariff when it was in fact filed pursuant to the secret agreement and possibly accompanied by the advancing of false or misleading information as to costs.

5. Finally, it is not to be forgotten that the final alleged blow to Lakers was the frustration of the rescue scheme by pressure on McDonnell Douglas. As to this, Mr. Peter Scott made no submissions. It has in my judgment nothing to do with Bermuda 2.

If then public or governmental policy, extra-territoriality and the penal nature of the remedy do not avail as special factors, one comes back to the essential question: "Would it be an injustice to B.A. and B.C. to allow the action against them in America to proceed?"

The claim is for damage to a United Kingdom designated airline in its transatlantic air transport operations carried on alike in the United States

by permission of the United States Government, and in the United Kingdom by permission of Her Majesty's Government. The defendants include both United Kingdom and United States designated airlines. Lakers allege that the United States and United Kingdom airlines carrying on like operations have combined to damage them by means which necessarily involve acts taking place in the United States and which affect the fares paid by American citizens. What is unjust in allowing the United Kingdom airlines, if the facts are established, from answering alike with the American airlines for breach of the laws of the country by permission of whose government they were operating? I can see no injustice. Suppose, for example, that there was in a given case an antitrust conspiracy. Suppose, further, that two United Kingdom airlines hatched up a scheme to drive another airline out of business, and persuaded Pan Am and T.W.A. to join in, making sure that their agreement to do so was secured on British soil. Suppose, finally, that in order to disguise what was happening the United Kingdom airlines proposed, and the others agreed, that initially one of them would file with C.A.A. and C.A.B. for approval what appeared to be an individual tariff and that thereafter, when it had been approved, the others would file like tariffs on the basis that it was merely to meet competition. In such circumstances whether the damaged airline was a United States or a United Kingdom designated airline, I can see no injustice in allowing the instigators of the scheme to be answerable to the plaintiffs as well as those whom they had persuaded to join it. Indeed, it would seem a manifest injustice to allow them to escape, the more particularly when their actions would constitute a plain abuse of the hospitality of and permission to operate given by the United States Government.

It is true that an antitrust claim has the undesirable features which I have already mentioned but some of these are common to all United States actions, and the others appear to me to have been dealt with by Parliament, so far as Parliament has deemed it to be necessary to do so. This court should, in my judgment, go no further.

If then there is a prima facie cause of action in America, I can see no ground for restraining Lakers from pursuing it. In the result, B.A.'s application must fail. As to B.C., there still remains the argument that the action as against them is frivolous or vexatious. In pursuit of this argument, Mr. Ross-Munro took me through the evidence as it presently stands in great detail. If, however, the action, as such, is one which affords no ground for a stay, it is in principle a matter for the American courts to decide whether it should proceed to trial. They might decide that it should not for any one of a number of reasons, e.g. because as a matter of law antitrust laws cannot apply to combinations with regard to the establishment of fares approved by C.A.B. and C.A.A. under the Bermuda agreement or because the allegations against B.C. are manifestly without foundation.

I do not say that there can be no case where the plaintiff in a foreign action which sets up a cause of action which can only be pursued in that action, cannot be restrained on the ground that it is vexatious or oppressive. If, for example, the plaintiff's claim was firmly tied to an agreement alleged to have been made at a single meeting and there were incontrovertible

evidence that the defendant had not been at the meeting, e.g. because he had been in some entirely different part of the world at the time, it might well be that it would be held that the plaintiff was pursuing the action for some ulterior purpose and that to avoid injustice to the defendant the plaintiff must be stopped.

But that is not this case. I accept that the evidence as presently before me is not strong but I am quite unable to say that the position is so clear that Lakers must be prevented from pursuing the action at all. Speaking of late events, Mr. Ross-Munro stressed that when in the winter of 1981 Pan Am, T.W.A. and B.A. dropped their fares B.C. had not done so. He also stressed that although B.C. had objected strongly to McDonnell Douglas becoming a major shareholder in Lakers, which was its main contribution to the rescue scheme, this was, on the evidence, merely because McDonnell Douglas was its aircraft supplier, and it did not wish to have such a supplier a shareholder in a competitor. This is so, but there is certainly some evidence that McDonnell Douglas was influenced by pressure coming, inter alia, from B.C., and its evidence as to the reason for it might in the end be rejected. If it was, then taken with all other matters including cross-examination of B.C.'s witnesses, an inference might be drawn that the pressure was exerted pursuant to a combined scheme. Lakers were at the time seeking to get into Europe and it was in the interests of B.C. and others that it should not do so.

Again, with regard to the fact that B.C. did not lower its fares this is of little significance. It was not flying on any routes then being operated by Lakers and for it to lower its fares would have therefore had much less impact than a lowering of fares by the other three. It is possible that it was nevertheless a party to an agreement that fares would be lowered by those flying competing routes.

These matters must, in my judgment, be left for the United States' court to determine.

I have considered the matters now before me at considerable length in deference to the arguments advanced but, in my judgment, the applications by B.A. and B.C. could be shortly disposed of on the grounds: (1) that there is nothing in Bermuda 2 to justify a court in saying it would be unjust to allow the action to proceed. It is conceded that, notwithstanding Bermuda 2, a common law action for conspiracy could properly be brought. Hence, it cannot be alleged that Bermuda 2 provides a complete code, provided its provisions are complied with. Furthermore, even if it could, it is inherent in the allegations that the provisions of Bermuda 2 have not been complied with. If there was an agreement then it should under article 12 have been submitted for approval. It was not. (2) Since, if there was a fares agreement, antitrust exemption could have been sought and since both B.A. and B.C. (a) carried on business in the United States at the material time, (b) whilst so doing are alleged to have combined with American airlines in breach of the antitrust laws, (c) had necessarily, in order to put the alleged combination into effect to put fares before C.A.B. for approval, (d) also concealed from C.A.B. the existence of the alleged agreement, I can see nothing unjust in allowing Lakers to proceed. (3) The submission that if the antitrust laws continue to operate it would be a derogation from the grant by the United States of rights

under Bermuda 2, is wholly unsustainable unless Bermuda 2 can be construed as granting to the United Kingdom a blanket exemption from antitrust actions against its designated airlines by others of its designated airlines. I can see no basis on which it can be so construed. (4) I am unable to accept that there is any invasion of sovereignty involved in applying antitrust laws to companies carrying on business in the United States under Bermuda 2 in respect of their operation of such business even if part or even the very much greater part of what is complained of took place outside the United States and in this country. I would regard it as being inherent in the grant of permission to operate in the United States that the designated airlines comply with United States law. If at any time the Secretary of State were to consider that the application of antitrust laws damaged the essential trading interests of this country he could take action under section 1 of the Act of 1980 in respect of acts taking place outside the United States. If and when such action is taken it might well be that an action by one United Kingdom company against another could not be allowed to proceed for such an action might constitute an attempt to obtain damages for doing that which was expressly authorised under English law. (5) Accordingly, the attempt to prevent Lakers from proceeding fails and the airlines antitrust action must be allowed to proceed. This being so, I need not deal separately with the alternative claim. It is common ground that it too must be allowed to proceed.

As to the counter-applications, it is common ground that if Lakers are allowed to pursue the American action B.A.'s and B.C.'s actions should be stayed or dismissed. They would serve no useful purpose and would merely involve both sides in unnecessary expense.

Accordingly the applications by B.A. and B.C. will be dismissed. On Lakers' counter-applications, the appropriate order appears to me to be that the B.A. and B.C. actions be stayed, rather than dismissed, if only to ensure that no confusion can arise. If the actions were dismissed, my experience of this litigation leads me to believe that someone might seek to raise some res judicata argument. This would of course be quite wrong. I wish to make it clear that nothing which I have said must be taken to indicate that I consider, much less that I find, that B.A., B.C. or anyone else has acted in any way in breach of the Sherman Act or caused damage to Lakers otherwise than by that lawful competition which the Sherman Act is designed to secure and which Bermuda 2 expressly encourages. I am concerned only with the question whether Lakers should be prevented from seeking to establish in the sole forum available to them that there have been breaches of the Sherman Act and that damage to Lakers has been thereby caused. I conclude only that Lakers should not be so prevented.

There remains the question of the injunctions presently in force. In the light of the decision of Sir John Donaldson M.R. on March 30 in relation to the injunction of March 2, it would seem clear that the appropriate order will be that the injunctions will be continued for a fixed period and if, within that time, notice of appeal is given, they be continued thereafter until the determination of such appeal or further order.

I will hear the parties as to suggestions on time, and also with regard to the question of stay, if anybody wants to suggest dismissal rather than a stay ought to be granted.

Solicitors: Richards Butler & Co.; Herbert Smith & Co.; Durrant Piesse; Treasury Solicitor.

[Reported by PAUL MAGRATH, ESQ., Barrister-at-Law]

APPEALS from Parker J.

APPLICATION for judicial review.

British Airways Board ("B.A.") and British Caledonian Airways Ltd. ("B.C.") appealed from the judgment of Parker J. on May 20, 1983. The grounds of appeal of B.A. were that the judge (1) erred in law in holding that civil action 82 3362 brought by the first defendant ("Lakers") in the United States District Court for the District of Columbia did not involve an invasion of the sovereignty of the United Kingdom. (2) The judge ought to have held that the action invaded the sovereignty of the United Kingdom in that (i) in the action Lakers sought redress from B.A. in respect of damage alleged to have been caused to Lakers by B.A. in implementing and charging certain tariffs notwithstanding that B.A. were bound by the law of England to implement and charge the tariffs; (ii) the action was based on an allegation by Lakers that the tariffs were improper, notwithstanding that by virtue of a treaty between the United Kingdom and the United States done at Bermuda on July 23, 1977 ("Bermuda 2"), the United Kingdom was entitled to have B.A., as its designated airline, implement and charge the tariffs; (iii) the action was based on allegations of fact which, so far as they were particularised, occurred wholly or alternatively substantially outside the United States and/or in England; (iv) the allegation was based on the assumption that the municipal law of the United States was effective to regulate air transport between the United Kingdom and the United States; (v) the action was an attempt by British nationals to employ foreign remedies and procedures which were injurious to the international aviation interests of the United Kingdom. (3) The judge held that the action, an antitrust action in respect of international air transport brought by one British designated airline against another British designated airline, was not contrary to public policy; in that the judge was wrong, in particular, (i) he was wrong in holding (in effect) that the fact that B.A.'s business involved operations in the United States was conclusive against the operation of such a public policy; (ii) he

was wrong in holding that the Protection of Trading Interests Act 1980, on its true construction, embodied no public policy against antitrust actions as such and/or antitrust actions concerned with matters occurring outside or substantially outside the United States; (iii) he was wrong in holding that the policy embodied in the Act was confined to an objection to the penal element of a judgment for multiple damages; (iv) he attached insufficient weight to the statement of executive policy made on behalf of the Attorney-General; (v) he attached insufficient weight to the insolvency of Lakers and the effect of that insolvency on the potential remedy provided to B.A. by section 6 of the Act of 1980; (vi) he attached insufficient weight to B.A.'s statutory obligation to provide air transport services between the United States and the United Kingdom and to the effect of that obligation on Lakers' ability to enforce a triple damages award against B.A. notwithstanding the provisions of section 5 of the Act. (4) The judge erred in law in holding or proceeding on the basis that the application of the United States antitrust law to tariff agreements was consistent with the terms and/or the general tenor of Bermuda 2, in particular he, (i) ought to have held that Bermuda 2 expressly envisaged that tariffs would be filed for approval with the aeronautical authorities of the United Kingdom and the United States after consultation and/or agreements in that regard as between airlines seeking to charge such tariffs; (ii) erred in holding that on the proper construction of Bermuda 2 the filing of any such agreement, qua agreement, was an essential part of the tariff fixing procedure; (iii) erred in regarding as relevant the fact that antitrust immunity might, as a matter of discretion, be granted for such agreements or discussions by the authorities in the United States (iv) attached insufficient weight to the fact that at the time Bermuda 2 was concluded, no such immunity was available in respect of agreements between British airlines and that until 1980 no British airline could apply for such immunity; (v) was wrong in stating that B.A. had conceded that in respect of a combination regarding tariffs which represented common law conspiracy, an action could be brought by Lakers without derogating from the rights granted under Bermuda 2; B.A.'s submission was that although such action would represent a derogation from the rights granted under and would be inconsistent with the provisions of Bermuda 2, nevertheless, since such an action would, prima facie, be permissible in England, such an action would not, as a matter of discretion, be likely to be stayed in the United States. (5) The judge attached insufficient weight to those features of United States antitrust procedure which, on the evidence, rendered the action oppressive to B.A. (6) The judge erred in holding that the prosecution of the action by Lakers against B.A. was not an injustice and ought to have held that the prosecution was an injustice in that (i) Lakers were wholly-owned by British nationals and operated a transatlantic aviation business headquartered in England pursuant to licence from the Civil Aviation Authority (C.A.A.) and by designation of the Government of the United Kingdom pursuant to rights conferred on the United Kingdom under the Bermuda 2 agreement; (ii) B.A. were created by Parliament to carry out British aviation interests and were at all times operating under licence from the C.A.A. and by designation of the British Government; (iii) the protection of Lakers against injuries

inflicted in the course of competition on U.K.-U.S. routes was the primary concern of the United Kingdom; (iv) Lakers sought in the U.S. antitrust action to penalise B.A. for implementing fares approved by the C.A.A. and which B.A. were bound to implement; (v) the invocation of the United States antitrust laws and the procedures by which they were enforced was oppressive and threatened injury to B.A. and the aviation interests which they were created by Parliament to serve and the interests of the British Government in international aviation; (vi) the United States antitrust remedies invoked by Lakers and the procedures used to enforce them were contrary to British public policy; (vii) Lakers were prosecuting the United States antitrust action in order to obtain juridical advantages of United States law which were contrary to British public policy; (viii) there was no legitimate justification for Lakers to seek relief against B.A., except under the laws of England, to the extent that such laws provided a remedy for the conduct alleged.

By a supplementary notice of appeal, B.A. gave notice that on the hearing of the appeal B.A. would rely upon the following grounds of appeal, in addition to the grounds set forth in the notice of appeal, namely: (1) (i) The Protection of Trading Interests (U.S. Antitrust Measures) Order 1983 (S.I. 1983 No. 900) made on June 23, 1983; (ii) the general direction which was made on June 23, 1983, by the Secretary of State for Trade and Industry under section 1 of the Protection of Trading Interests Act 1980 and which came into operation on June 27, 1983; and (iii) the general direction which was made on June 23, 1983, by the Secretary of State under section 2 of the Act of 1980 and which came into operation on June 27, 1983; (2) by virtue of the Order and the directions it would be unlawful for B.A., inter alia, to comply or to cause or permit compliance with any requirement imposed on B.A. by order made in the action entitled "Laker Airways Ltd. against Pan American World Airways Inc. et al" which was pending in the United States District Court for the District of Columbia (Civil Action No. 82-3362 H.G.), being an order made pursuant to sections 1 and 2 of the United States' Sherman Act, section 4 of the United States' Clayton Act or any of those sections; in particular, it would be unlawful for B.A. to comply with or to cause or permit compliance with an order for damages and with discovery obligations made in the action pursuant to the sections; (3) B.A. contended that the prosecution of the action by Lakers against B.A. represented an injustice to B.A., was an invasion of sovereignty and was contrary to public policy and would rely on the matters set forth in the foregoing paragraphs in addition to the matters relied on before the judge.

By a respondents' notice under R.S.C., Ord. 59, r. 6, the defendants gave notice of intention upon the hearing of B.A.'s notice of appeal to contend that Parker J.'s order should be affirmed on the following grounds additional to those relied upon by the judge, that (1) the issue of B.A.'s liability to Lakers under the antitrust laws of the United States was not justiciable in the English courts; (2) none of the defendants in the action had made or asserted any claim against B.A. based upon English law; (3) the court's jurisdiction to make a declaration of non-liability was limited to cases in which a defendant had made or asserted a claim against a plaintiff which was justiciable in the English courts and the proper or

governing law of which was English law; (4) in the premises: (a) the court had no jurisdiction to make the declaration sought by B.A. in the action; (b) the writ of summons disclosed no cause of action; and (c) accordingly the court had no jurisdiction to grant to B.A. the injunction sought in the writ.

B.C.'s grounds of appeal were that the judge (1) erred in holding that (a) it would not be an injustice to B.C. to allow Lakers to prosecute the United States action against B.C.; (b) the United States action against B.C. was not vexatious or oppressive; (c) there was no public policy of which the courts should take cognisance that foreign claims for multiple damages and in particular United States antitrust suits brought by United Kingdom-based plaintiffs and/or claims brought before foreign courts in respect of matters occurring in part or substantially outside the territorial jurisdiction of such states constituted such an invasion of the sovereignty of the United Kingdom that such plaintiffs should be restrained from pursuing such claims; (d) the antitrust claim made by one United Kingdom designated airline against other United Kingdom designated airlines in the United States action did not involve a derogation of rights granted to the United Kingdom government under the Bermuda 2 agreement. (2) The judge should have held that (a) there was no material which could properly justify the making of an allegation by Lakers that B.C. conspired with other airlines to damage Lakers by charging "predatory fares" between the United Kingdom and the United States; (b) the opposition expressed by B.C. (and other airlines) to McDonnell Douglas' proposed participation in a financial restructuring and rescue of Lakers could not properly justify the making of an allegation by Lakers that B.C. thereby became party to a pre-existing conspiracy between other airlines to damage Lakers by the use of "predatory fares"; (c) there was no material which could properly justify the making of an allegation by Lakers that the opposition referred to in (b) above caused the collapse of Lakers; (d) the negotiations concerning the financial restructuring and rescue of Lakers and the acts and events relating to such negotiations and their failure took place outside the United States and in particular in England; (e) the commencement and prosecution of the United States action was vexatious and oppressive and motivated by the collateral purpose of pressurising B.C. into paying a substantial sum in settlement of the action against them in order to avoid the financial and other prejudice and risk involved in the defence thereof; (f) B.C. would be seriously prejudiced in and by the United States action having regard in particular to (i) the oppressive extent and expense of pre-trial discovery and interrogatories; (ii) the cost of the litigation; (iii) the irrecoverability of legal costs by a defendant (though not by a plaintiff in an antitrust suit) and the consequent inability to obtain security from an insolvent plaintiff; (iv) the standards of proof and of liability under the Sherman Act; (v) trial by jury; (vi) the absence of any right to contribution against co-defendants; (vii) the ability of Lakers to finance the United States action by the contingency fee system; (viii) the possible inability of B.C. to exercise any rights under section 6 of the Act of 1980 by reason of Lakers' insolvency; (g) the appropriate or convenient forum for the trial of matters referred to in (d) above was England having regard in particular to (i) the identity and

location of the parties; (ii) the identity and location of the relevant witnesses; (iii) the location and ownership of relevant documents; (iv) the role played in those events by the Civil Aviation Authority, the Bank of England and the Midland Bank; (v) the place where the events occurred; (vi) the law properly applicable to those matters; (h) it was contrary to public policy (as expressed in the Act of 1980 and whether or not the Secretary of State exercised his powers under the Act in the present case) for a United Kingdom-based plaintiff to sue a United Kingdom-based defendant in a foreign court for multiple penal damages (i) at all, or (ii) in relation to extra-territorial matters such as those referred to in (d) above occurring outside the jurisdiction of the foreign state and in particular in England; (i) it was contrary to public policy (as expressed in the Act of 1980 and whether or not the Secretary of State exercised his powers under the Act in the present case) and involved an invasion of United Kingdom sovereignty for a United Kingdom-based plaintiff to invoke the antitrust jurisdiction of a United States court in relation to matters such as those referred to in (d) above occurring outside the United States and in particular in England; (j) the assumption of jurisdiction by a United States court over matters relating to the alleged conspiracy to charge "predatory fares" undermined and was incompatible with the Bermuda 2 agreement and the invocation of such jurisdiction by Lakers was contrary to public policy; (k) in all the circumstances of the case it would be unjust and/or contrary to public policy and/or vexatious and oppressive to permit Lakers to continue the United States action against B.C.

B.A.'s and B.C.'s appeal came on for hearing on July 4, 1983. On July 13, 1983, Laker Airways Ltd. and Christopher Morris, their liquidator, applied to Woolf J. for leave to apply for judicial review of the Order and directions given by the Secretary of State for Trade and Industry under the Protection of Trading Interests Act 1980. Woolf J. refused leave stating that in the interests of justice the matter should go straight to the Court of Appeal and on July 13, 1983, the Court of Appeal granted leave and gave directions as to service.

On July 19, 1983, the Court of Appeal refused, for reasons to be given later, an application by Lakers Airways and Mr. Morris for a declaration that each of the Protection of Trading Interests (U.S. Antitrust Measures) Order 1983 (S.I. 1983 No. 900) and general directions of June 23, 1983, and July 1, 1983, made by the Secretary of State for Trade and Industry under sections 1 and 2 respectively was ultra vires, null, void and of no effect. The court gave its reasons for dismissing the application in its judgment on B.A.'s and B.C.'s appeals.

Richard Scott Q.C. and Jonathan Sumption for British Airways. Both appeals arise out of the antitrust action brought by Lakers in Washington, D.C., alleging conspiracy to fix prices and to drive Lakers out of business. There are two counts in that action: (i) of conspiracy in breach of the United States Sherman and Clayton Acts to monopolise United States commerce in international air transportation and (ii) of common law conspiracy intentionally to injure Lakers, which adds nothing to (i). The procedural consequences of wide discovery do not distinguish between the two counts. Even if it were possible for a civil action for conspiracy to

be framed independently of the antitrust claim, B.A. would object because it would be contrary to the public policy of this country and this country's treaty rights.

The basis of B.A.'s case is that Lakers' prosecution of the United States action should be stopped as being contrary to public policy, contrary to United Kingdom sovereignty and contrary to justice to B.A.

Parker J. held that there was jurisdiction to grant the injunctions sought in an appropriate case. The judge's analysis of the law concerning jurisdiction is accepted. The appeal is against his analysis of the facts, of the nature of the United States action, its effect on United Kingdom rights and on B.A.'s trading rights.

As to the nature of the action and its effect on B.A., it is an antitrust action, penal in character, and oppressive as regards discovery, interrogatories and crippling costs. The result of the action may be the serious impairment of B.A.'s ability to carry on its statutory function. Aviation rights are entirely the creature of treaty rights. Bermuda 2 has settled the fare levels and national governments express their aviation policy.

The United States antitrust law is part of United States domestic policy and to apply that policy to how one United Kingdom airline behaves towards another United Kingdom airline is an interference by the United States into the sphere of the United Kingdom's national interest. The damage of which Lakers complain flows from fares fixed by the United Kingdom and international agreement.

It is not open to a United Kingdom airline like Lakers to invoke a foreign court to seek to recover loss caused by our own civil aviation authority. The question arises as to how far one United Kingdom company can invoke a foreign court to adjudicate on a dispute with another United Kingdom company. The only allegation of substance by Lakers against B.A. relates to low fares.

B.A. also rely on the effect of the Protection of Trading Interests (U.S. Antitrust Measures) Order 1983 (S.I. 1983 No. 900) and on the General Directions given by the Secretary of State under sections 1 and 2 respectively of the Protection of Trading Interests Act 1980 on June 23, 1983. The effect of the direction given under section 1 is to prohibit B.A. from complying with any requirement or prohibition imposed on B.A. in Lakers' antitrust action. The effect of the direction under section 2 is to prevent B.A. complying with the discovery procedures required by the action. The continued prosecution of the action against B.A. would be unjust.

B.A. rely upon seven matters: (1) the nature of the air transport business and the framework of international law governing it; (2) Lakers' status on the air transport routes as a licensee and designee of the United Kingdom Government, under Bermuda 2; (3) B.A.'s statutory character and its status on the air transport routes as a licensee and designee of the United Kingdom government; (4) the nature of Lakers' complaint against B.A. in the U.S. Action; (5) the nature of U.S. antitrust law as it affects acts done outside or substantially outside the United States; and (6) the nature of antitrust litigation in United States courts; (7) the effect of Lakers' antitrust action on B.A. and on the sovereign interests of the United Kingdom.

As to (1) and (2), there is no legal right to fly between the United Kingdom and the United States except in accordance with the provisions of the treaty between the two governments (Bermuda 2) and the terms on which those governments designate and license airlines: Bermuda 2, article 2; Civil Aviation Act 1971, sections 21 and 22. By virtue of Bermuda 2 and of legislation in force in England the fares to be charged by designated airlines on the North Atlantic route are determined not by the airlines themselves but by the public authorities of the United Kingdom and the United States, namely, in the United Kingdom (see sections 1, 2, 3, 5 of the Act of 1971) the Civil Aviation Authority ("C.A.A.") and in the United States the Civil Aeronautics Board ("C.A.B."): Bermuda 2, article 12 which expressly envisages that where a designated airline applies to those authorities for a particular fare to be fixed, that fare may have been the subject of consultations and agreements between airlines (article 12(4)). As a matter of English municipal law such consultations and agreements are also envisaged in the terms of the licences granted to designated airlines pursuant to statute and are lawful save in the exceptional case where they are made without any thought of benefiting the parties making them and with the object of injuring another. Before any fares are approved by the C.A.A. the proposed fares are communicated to other interested British airlines which are given an opportunity to object thereto before a final decision is taken; once the fares have been fixed, the airline is obliged under English municipal law to charge those fares: Civil Aviation Act 1971, section 21(1)(b). The rights of any British airline to fly the North Atlantic route are derived from the rights granted to the U.K. under Bermuda 2 and are subject to the control exercisable by the C.A.A. under the Civil Aviation Act 1971. Accordingly, U.K. designated airlines operating in accordance with the provisions of Bermuda 2 and within the terms of licences granted by the C.A.A. are an important means by which U.K. civil aviation policy is put into effect.

B.A. do not say that it has a right to fly free of U.S. antitrust law B.A. and Lakers are both designated airlines and B.A. is being sued in the United States courts for something which is authorised by United Kingdom law and Bermuda 2. United Kingdom citizens should not be harassed by improper litigation brought in a foreign forum by someone subject to our jurisdiction. As to public policy and treaty rights, see per Lord Simon of Glaisdale in The Atlantic Star [1974] A.C. 436, 471-472. The damage claimed is that caused by the officially approved fares.

It is contrary to public policy for the United States antitrust law to seek to control C.A.A. regulation of fares; a fortiori to impose penalties for adopting the decisions of the C.A.A. Parliament set up the British procedure under which Lakers operated. [Reference was made to the United States Federal Aviation Act as amended.] Bermuda 2 contemplated disputes being resolved by consultations between governments. Each country has its own domestic procedures that suit it. It is wrong to use the domestic procedures of another country. It is unjust for Lakers to sue B.A. in the United States. It is difficult to disentangle injustice from public policy. This is injustice in the public field. There is an essential conflict in the application of the U.S. antitrust laws to the prevention of

competition inside the United States and to foreign airlines. The general tenor of Bermuda 2 is not consistent with United Kingdom airlines being penalised in damages by the U.S. antitrust legislation. As a result of the Sherman Act the tort of conspiracy has not developed in the United States as it has here in the last 100 years, but a tort of conspiracy which sought to penalise United States airlines would be just as objectionable here.

As to (3), B.A. is a statutory corporation with the statutory function of providing air transport services (section 37 of the Civil Aviation Act 1971 and section 1 of the British Airways Board Act 1977) including the North Atlantic service which it has to fly at fares approved by the regulatory procedures under Bermuda 2 and by the C.A.A. and C.A.B.

As to (4), the basis of Lakers' claim against B.A. is of conspiracy to charge low fares and of damage thereby caused. It depends on events occurring in the United Kingdom with the exception of B.A.'s participation in a meeting of I.A.T.A. members in January 1982 at Hollywood, Florida, as to which antitrust immunity was conferred by the U.S. authorities.

As to (5), see sections 1 and 2 of the Sherman Act and section 4 of the Clayton Act. That legislation is penal in character. American authorities such as Flintkote Co. v. Lysfjord (1957) 246 F.2d 368 and Industrial Investment Development Corporation v. Mitsui Co. Ltd. (1982) 671 F.2d 876 show that it is penal. The application of the U.S. antitrust law is contrary to international comity, contrary to the policy of Parliament expressed in the Protection of Trading Interests Act 1980, particularly section 5 (see also sections 1-4, 6), and contrary to the rights granted to the United Kingdom under Bermuda 2.

As to (6), the antitrust litigation procedure in the United States is oppressive and unjust to B.A. in particular with regard to the mandatory triple damages, the breadth of discovery, the heavy costs which will be irrecoverable if B.A. succeed, the length of the pleadings, the jury trial and the lack of contribution between the defendants. The combination of these features in the litigation lends itself to blackmail.

The court should look closely at Lakers' complaint against B.A. It's not said that there is no material for an antitrust action, but B.A. is being sued in the United States courts for the fixing of fares under Bermuda 2. The facts as to fares are not challenged on the appeal. The jurisdiction which the courts have established is based on the applicant showing that it is unjust and contrary to public policy to allow the foreign action to be continued.

As to (7), it is not permissible for an action for damages to be brought by Lakers on the basis of fares fixed under the procedures of English law. Public policy prevents it. Actions should not be permitted complaining of the results of Government acts: see Hoani Te Heuheu Tukino v. Aotea District Maori Land Board [1941] A.C. 308, 322. Lakers' action interferes with the United Kingdom's sovereign interests.

The law has developed in the last ten years. It starts with cases where a stay is sought here because of proceedings abroad. The courts can order persons over whom there is an in personam jurisdiction to cease proceedings abroad. Lakers contended below that foreign proceedings could only be stayed if the same cause of action was being litigated here. There are

authorities which say that an injunction must be in support of an existing right: see Gouriet v. Union of Post Office Workers [1978] A.C. 435 and Chief Constable of Kent v. V. [1983] Q.B. 34. Compare Dyson v. Attorney-General [1911] 1 K.B. 410. The relief sought in the action is entirely legitimate so far as B.A. is concerned. Individuals have a right not to be vexed in foreign proceedings which have been unjustly instituted. Where there is an action which should have been brought here but is unjustly being litigated abroad, there is jurisdiction to restrain it.

The High Court acts in personam in granting an injunction. Halsbury's Laws of England, 4th ed., vol. 24 (1979), para. 912, p. 515, encapsulates the position. The Atlantic Star [1974] A.C. 436, 453-454, per Lord Reid, shows that there is a jurisdiction to stay where the court thinks it just. Where what is sought is a stay in England you do not have to look for a right. The courts are masters of their own procedure. See also MacShannon v. Rockware Glass Ltd. [1978] A.C. 795, 810-814, per Lord Diplock; 818B-C, 822, per Lord Salmon; 822G-H, per Lord Fraser of Tullybelton and 828H, per Lord Keith of Kinkel. The court will look at all the circumstances and see where the balance of injustice lies. Castanho v. Brown & Root (U.K) Ltd. [1981] A.C. 557 is most important on jurisdiction and how the discretion should be exercised. See per Lord Scarman at pp. 572C-G, 573F, 577D-F. When the criteria expressed by Lord Scarman are satisfied there is jurisdiction to stay the proceedings. See also Smith Kline & French Laboratories Ltd. v. Bloch [1983] 1 W.L.R. 730, 738-739, 743. The judgment of O'Connor L.J. at pp. 746-748 is entirely consistent with the Castanho case [1981] A.C. 557 where the House of Lords said that there was jurisdiction to stop the foreign proceedings where they would cause injustice to the person invoking the assistance of the court.

As to the court's consideration of international obligations, see per Lord Simon of Glaisdale in The Atlantic Star [1974] A.C. 436, 471H-472. Since Parker J's judgment, the Secretary of State's Order and General Directions have put B.A. in an impossible position. Ground 4 of the Judge's reasons (ante, p. 165C) is wrong. He did not sufficiently recognise the nature of the aviation business and his purported concession by the plaintiffs (ante, p. 165C-D) cannot be recalled as having been made. The appeal should be allowed and injunctions granted.

Colin Ross-Munro Q.C. and David Donaldson for British Caledonian. At the end of the day the court has to decide whether it would be just to grant an injunction. There are five submissions for consideration: (1) On the material before the court so far as B.C. is concerned there are no facts to support a reasonable inference that Lakers' conspiracy claim can be established. The strength, weakness or non-existence of evidence is an important element in the exercise of discretion. (2) Public policy, on which B.A.'s submissions are adopted. (3) The justice of granting an injunction. (4) The judge's incorrect exercise of his discretion. (5) Whether an independent right is needed: see the respondents' notice.

As to (1) on which the submissions for B.A. are adopted, there is no evidence at all with regard to conspiracy. The English court is entitled to look at the material and if it finds that the plaintiff has no case in the foreign proceedings and that it is so weak and vague that the proceedings

must have been brought in order to get a good settlement, the court should consider whether it is just to grant an injunction. See the Smith Kline case [1983] 1 W.L.R. 730 and Midland Bank P.L.C. v. Laker Airways Ltd., The Times, February 8, 1983.

[SIR JOHN DONALDSON M.R. There is a measure of common agreement in the arguments for B.A. and B.C., although B.C. have additional submissions on the facts. The court would like to hear Lakers on B.A.'s and B.C.'s cases as they stand.]

Ross-Munro Q.C. Should Lakers lose against B.A. but were in a position to succeed against B.C., the latter would want to address the court on extra-territoriality.

David Johnson Q.C., Michael Crystal and Richard Hacker for Lakers. B.A. say that public policy alone is not a ground for an injunction, but it is not said that the United States' system of justice is not a just system. The foundation of B.A.'s argument is on Bermuda 2 and the Protection of Trading Interests Act 1980. There is no precedent, warranty or jurisdiction for founding a case based on a treaty which is not part of English law. Lakers are a company carrying on business in the United States and it is said that they should not be allowed to sue there. The United States' proceedings are perfectly legitimate and well recognised there. It is a classic case of large combines ganging up against a small operator. Each party was properly sued in the United States which is the natural forum.

What B.A. and B.C. are trying to do in the English proceedings is very different from cases like The Atlantic Star [1974] A.C. 436; MacShannon v. Rockware Glass Ltd. [1978] A.C. 795 and the Smith Kline case [1983] 1 W.L.R. 730 where the only question was "where shall it be tried?" and not "shall it be tried?"

On comity, it is very rare for courts to restrain foreign proceedings. B.A. and B.C. are only two out of ten defendants and the United States' courts would rightly consider it an interference with their jurisdiction. There should be no conflict between the courts of the two countries, no new form of protectionism and no scramble to the court-house door. The difficulties over Bermuda 2 can and should be settled at a higher level. Lakers are claiming a private right which has nothing to do with an inter-governmental treaty.

Comity demands recognition of the fact that an English company carrying on business abroad must observe that country's law; as foreigners here must comply with our laws. A company must be taken to have accepted the procedure and practice of the courts where it carries on business. A company carrying on business abroad is entitled to the benefit as well as the burden of the foreign law: it may sue as well as be sued. Pan-Am could not have been stopped if they had brought an action in the United States against B.A.

The appellants' basic ground of appeal is injustice with an element of Üpublic policy. In Castanho v. Brown & Root (U.K.) Ltd. [1981] A.C. 557, 575, Lord Scarman was dealing with another, alternative, forum. Here there is no alternative forum. As to public policy and its limitations, see Halsbury's Laws of England, 4th ed., vol. 9 (1974), paras. 392, p. 83 and pp. 88-89 and Lord Atkin's warning in Fender v. St. John-Mildmay [1938]

A.C. 1, 10; and per Lord Thankerton at p. 23 and Lord Wright at pp. 38, 40. There is no reason why Lakers should not pursue their claim for damages in the United States' courts. By being designated under Bermuda 2 Lakers cannot be said to have abrogated their other rights. Merely because you have to be designated to fly the Atlantic does not give you immunity from the United States' antitrust laws.

It was conceded below that a claim under the Sherman Act could not be made in England. Section 4 of the Clayton Act gives exclusive jurisdiction to the U.S. District Court. [Reference was made to Laker Airways Ltd. v. Department of Trade [1977] Q.B. 643, 650F-G.]

Bermuda 2 is of no relevance in considering whether to grant an injunction. No authority has been cited which supports B.A.'s public policy argument where it affects private rights. What is being said here is that it is unjust. United Kingdom citizens are not bound by any treaty which is not part of English law. Outside well-established areas such as those considered in Adams v. Adams (Attorney-General intervening) [1971] P. 188 United Kingdom citizens are not affected by treaties in considering their private rights.

Changes in fares are initiated by airlines, not by governments. Since 1946 airlines flying to the United States have known that meetings to discuss fares should be approved beforehand to obtain exemption from antitrust legislation. Bermuda 2 has to be approached in the light of its background and the existing framework. The terms of Bermuda 2 clearly show that the parties did not intend that everything to do with fares and tariffs should cease to be regarded as liable to antitrust action. It is conceded that Lakers would be in great difficulty if all discussions took place outside the United States. There is nothing in Bermuda 2 to suggest that it is inconsistent with U.S. antitrust law. It is not legally relevant to granting an injunction.

Lord Simon of Glaisdale was dissenting in The Atlantic Star [1974] A.C. 436, 471H-472B and was speaking there in connection with the recognition of foreign sovereignty: the passage is obiter (see per Lord Reid at p. 455A). The well-established principle is clearly to the contrary. See Brownlie's Principles of Public International Law, 3rd ed. (1979), p. 49 and Walker v. Baird [1892] A.C. 491, 497.

Lord Hailsham of St. Marylebone in Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A. [1979] A.C. 210, 262F-263B, offers valuable guidance on questions of policy. One cannot divest accrued private rights in a foreign country by reference to a treaty which is not part of English law. Pan-American World Airways Inc. v. Department of Trade [1976] 1 Lloyd's Rep. 257 clearly recognises that save in well-defined circumstances which do not exist here the courts do not consider treaties. Laker Airways Ltd. v. Department of Trade [1977] Q.B. 643, 717G, is entirely consistent with Scarman L.J. in the Pan-Am case. As an example of where a treaty is part of our law, see section 2 of the European Communities Act 1972. If there is anything in the appellants' points the right court in which they should be raised is the Columbia District Court.

Statements concerning public policy in a suit concerning private rights should be treated with great reserve. The United Kingdom Government's concern with the antitrust laws is confined to the extra-territorial Operation

of the "effects doctrine". This case is not like In re Westinghouse Electric Corporation Uranium Contract Litigation M.D.L. Docket No. 235 (Nos. 1 and 2) [1978] A.C. 547. This conspiracy was aimed at the destruction of Lakers, not at North Atlantic traffic. Bermuda 2 has nothing to do with the refinancing part of the conspiracy. B.A. were not taken by surprise by the antitrust laws. Without the consent of the United States Government B.A. could not be flying the Atlantic. They should comply with its laws. The logic of the appellants' position and the statement on behalf of the Attorney-General seem to mean that Bermuda 2 has the effect of making action by United States' agencies in the United States objectionable. The court's approach is not to interfere with a domestic basis for jurisdiction. Even if public policy were relevant it must be distinguished from the policy of a particular government.

The Protection of Trading Interests Act 1980 is no warrant for an assertion that it is British Government policy to oppose U.S. antitrust legislation. It would be most unusual for it to have extra-territorial effect. Lakers challenge the propriety of the Order (S.I. 1983 No. 900) and General Directions under the Act. The fact that they were made was most disturbing to Lakers. It is properly conceded that they do not affect the financing aspect of Lakers' claim in the U.S. [Reference was made to Reg. v. Industrial Injuries Commissioner, Ex parte Amalgamated Engineering Union [1966] 2 Q.B. 21.]

The submission that section 1(3) of the Act of 1980 prevents the appellants from satisfying a judgment awarding damages to Lakers in the United States is ill-founded: see the long title of the Act. There is a dichotomy between "requirements and prohibitions" and judgments. The same dichotomy is followed throughout the Act: see sections 1-4, 5(2), 6 and 7. "Requirement or prohibition" in section 1(3) refers back to section 1(2): "notice" must be given to the Secretary of State of any such "prohibition or requirement". "Requirement" does not refer to a judgment. "Imposed" in section 1(2) is not relevant to a judgment. The whole Act shows that when Parliament is referring to a judgment it does so expressly. [Reference was made to British Nylon Spinners Ltd. v. Imperial Chemical Industries Ltd. [1953] Ch. 19; the Westinghouse case [1978] A.C. 547; the Shipping and Commercial Documents Act 1964, the precursor of the Act of 1980.]

[SIR JOHN DONALDSON M.R. (after reference had been made to section 31 of the Supreme Court Act 1981; Reg. v. Industrial Insurance Commissioner, Ex parte Amalgamated Engineering Union [1966] 2 Q.B. 21 and R.S.C., Order. 53, r. 5(3)) said that since Lakers were challenging the validity of the Order and Directions they should apply to the Divisional Court for judicial review.]

Johnson Q.C., continuing. The Westinghouse case [1978] A.C. 547, 631F, 650C-D, has nothing to do with this case. The judge's approach was correct. The burden is on the appellants to show injustice. There was a hostile reaction to Lakers from the time that they appeared upon the scene. It is accepted that B.A. carry on business in the U.S.A. As to triple damages, compare Castanho v. Brown & Root (U.K.) Ltd. [1981] A.C. 557, 570H, 576C. What Lord Denning M.R. said in the Smith Kline case [1983] 1 W.L.R. 730, 737-739, was in accordance with Lord Scarman.

The characteristics of American proceedings are not a factor to be taken into account; or only to a very limited extent. The fact of being able to bring the action in the United States is a juridical advantage to Lakers. Those who operate there are subject to certain constraints. As to the exercise of discretion, see Corthon Invest A.B. v. Ford Motor Co. Ltd. [1976] 2 Lloyd's Rep. 720.

B.A. and B.C. have not discharged the burden which is on them in relation to Lord Scarman's "critical equation" because on the second part of the equation Lakers would be deprived of an existing right. This is of supreme importance. The appellants have not shown that Lakers would not be deprived of legitimate juridical advantages. The judge was right.

On Lakers' respondents' notice; in order to obtain an injunction an applicant has to show that he has made or asserted a claim against the other party which is justiciable in the English courts: Gouriet v. Union of Post Office Workers [1978] A.C. 435, 501, per Lord Diplock. There has to be the assertion of a separate justiciable right: the Siskina case [1979] A.C. 210, 256, per Lord Diplock. In Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation Ltd. [1981] A.C. 909 all members of the House spoke in the same way: see per Lord Diplock at p. 979G-H; 991D-992 (Lord Fraser of Tullybelton) and 995E (Lord Scarman). An injunction should be refused on this ground. What Lord Scarman said in the Castanho case [1981] A.C. 557, 571, was obiter. It was not necessary for the decision. There is no authority which could extend these well recognised principles in a way which could help the appellants. [Reference was made to Chief Constable of Kent v. V. [1983] Q.B. 34, 45E, 49D.] There must be a recognised legal or equitable right with clear parameters. A man who is properly sued cannot refuse to disclose documents. See The Supreme Court Practice (1982), vol. 2, paras. 3343 and 3346 and section 42 of the Supreme Court Act 1981.

Parker J. considered all matters and properly decided to exercise his discretion by refusing an injunction. The appellants have not shown any error of judgment on his part. Bermuda 2 is not part of our law. The fact that there is a difference of view between the United States' and the United Kingdom's governments does not give rise to any public policy which would interfere with Lakers' accrued right to sue in the United States. The refinancing part of the conspiracy is not at all affected by Bermuda 2.

[Following the refusal by Woolf J. of Lakers' application for judicial review of the Order and General Directions of the Secretary of State, SIR JOHN DONALDSON M.R. said that the court would give Lakers leave to apply for judicial review and directions were given for service on all interested parties.]

Peter Scott Q.C. and Christopher Clarke for the Attorney-General. Appearance for the Attorney-General was made below at the invitation of Parker J. but not on any express points. On public policy, three points seem to arise: sovereignty, penalties and Bermuda 2. Nothing said for the Attorney-General in the Westinghouse case [1978] A.C. 547 or here should be taken as indicating that the concern of Her Majesty's Government is confined to the "effect" doctrine.

If the alleged conspiracy did not take place in the United States, the question of sovereignty would arise. In the Westinghouse case [1978] A.C. 547 the American court was acting extra-territorially. Lakers are subject to the American jurisdiction but no other country has the right to come to this country to get documents.

In so far as rights and obligations arise out of a treaty, they arise under international law and have to be interpreted accordingly. The governments of the United States and the United Kingdom have an obligation to see that their domestic laws do not infringe the rights mutually granted to each other under Bermuda 2. As between private litigants under English law private litigants cannot rely on or complain of obligations of the United Kingdom under a treaty.

[Counsel referred to his submissions before Parker J. (see ante, pp. 164B-C, D-F, H, 165D).] It was not said that the re-financing aspect could be separated from the rest of the conspiracy claim. B.A. and B.C. are subject to an in personam jurisdiction in the United States where they carry on business or if they have submitted to the jurisdiction. But the United Kingdom Government and the United States part company so far as the present proceedings are concerned. [Counsel's words are set out in the judgment (post, pp. 192E-F, 193H - 194G).]

Under article 12(4) of Bermuda 2 tariff agreements are subject to the approval of the aeronautical authorities of both contracting parties. Parker J. asked the wrong question. It was not Bermuda 2 but everything that happened pursuant thereto that make the present action unjust. Parker J. should not have construed the Treaty. He construed it contrary to the view of Her Majesty's Government. Once the High Contracting Parties have approved the Treaty it is up to each of them to ensure that their domestic law does not conflict.

David Johnson Q.C., Michael Crystal and Richard Hacker for Lakers on their application for judicial review. In approaching the Protection of Trading Interests Act 1980 the court should bear in mind its background. This is more and more emphasised in construing statutes at the present time.

The relevant sections of the Sherman and Clayton Acts are not for the purpose of regulating international trade. They are the antithesis of that. It is the purpose of the Act which has to be looked at. The court must necessarily have regard to the mischief, to the facts on the basis of which the Act was passed. [Reference was made to British Nylon Spinners Ltd. v. Imperial Chemical Industries Ltd. [1953] Ch. 19, 25-27; Hadmor Productions Ltd. v. Hamilton [1983] 1 A.C. 191; Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G. [1975] A.C. 591; the Westinghouse case [1978] A.C. 547; the Shipping Contracts and Commercial Documents Act 1964; the Shipping Contracts (Foreign Measures) Order 1968 (S.I. 1968 No. 1382) and the preamble to and sections 1-6 of the Act of 1980.]

The terms of the S.I. 1983 No. 900 Order show that the Secretary of State regards sections 1 and 2 of the Sherman Act and sections 4 and 4A of the Clayton Act as "measures" within section 1(1) of the Act of 1980. That is wrong. If the United States Acts or those sections were "measures" they were not "for regulating or controlling international trade." The

word "measures" is not apt to refer to a statute. A foreign Act is not "by or under the law of any overseas country". It is the law; compare section 5(2) and (4) and contrast section 5 and section 1.

[Counsel mentioned, without citing, a number of United States' authorities referred to in an affidavit (22 U.S. 1, 193; 322 U.S. 553, 558; 228 U.S. 87; 148 F.2d 416; 370 U.S. 690 and 451 U.S. 630).]

Further, the absence of the giving of "notice" under section 1(2) of the Act means that "directions" given under section 1(3) are of no effect. That objection applies to the section 1 direction.

The section 2 direction does not specify the ground or grounds upon which the "requirements" to which it relates appear to the Secretary of State to be "inadmissible" within the meaning of section 2(1) of the Act of 1980. The approach in Padfield v. Minister of Agriculture, Fisheries and Food [1968] A.C. 997 must be remembered: see per Lord Reid at p. 1030B and Lord Morris of Borth-y-Gest at p. 1046C. See also Secretary of State for Employment v. ASLEF (No. 2) [1972] 2 Q.B. 455, 464E (per Sir John Donaldson), 492E-493D (per Lord Denning M.R.) and Secretary of State for Education and Science v. Tameside Metropolitan Borough Council [1977] A.C. 1014, 1047C-E, per Lord Wilberforce. No reasons are given for the section 2 direction. That is unsatisfactory and there is no indication that the Secretary of State applied his mind under recital (c) of the direction. There is an ordinary action in the United States with a request for discovery which cannot be said to be prejudicial to the security of the United Kingdom.

Section 1(1) of the Act of 1980 has two separate requirements in (a) and (b). The power in the penultimate line is one which has to be exercised having satisfied both requirements.

The Order and the directions are too wide and general. The direction under section 2 produces uncertainty. See Craies on Statute Law, 7th ed. (1971), p. 329 (foot) and compare the position here. A right of action is a matter of property. The purpose of the Act has to be borne in mind. It is penal legislation. See McEldowney v. Forde [1971] A.C. 632, 653D-C, per Lord Pearce.

Peter Scott Q.C., Simon D. Brown and Timothy Walker for the Secretary of State. The Act of 1980 has to be looked at with its wording and the matrix in which it was passed. The Act of 1964 was repealed. There are significant differences in wording between the two Acts.

[SIR JOHN DONALDSON M.R. The court is satisfied that the Clayton and Sherman Acts are "measures" and do regulate or control international trade within section 1(1) of the Act.]

There was no need for the Secretary of State to specify grounds but he did so; and see the affidavit of Mr. Turek (post, p. 198D-E).

[Counsel was stopped.]

Johnson Q.C. replied.

[SIR JOHN DONALDSON M.R. The declaration will be refused for reasons to be given hereafter.]

Johnson Q.C. replied to the submissions for the Attorney-General on the main appeals.

July 26. SIR JOHN DONALDSON M.R. handed down the following judgment of the court.

Introduction

In these appeals plaintiffs, British Airways Board ("B.A.") and British Caledonian Airways Ltd. ("B.C.") seek to reverse decisions of Parker J. given on May 20, 1983. Although he was concerned with two separate actions brought by B.A. and B.C. respectively, there was a large measure of common ground and the two actions were heard together and were the subject matter of a single judgment.

In hearing the appeals, we have adopted a similar approach, save that we have not heard counsel for B.C. in so far as he wished to contend that there were special features depending upon the evidence or lack of evidence in their case which, in his submission, entitle them to succeed in their appeal, even if the appeal of B.A. is dismissed.

In each of the actions B.A. and B.C. respectively sought injunctions restraining the defendants, to whom we will refer collectively as "Lakers", from causing or permitting the continuance against B.A. and B.C. of a civil action, no. 82-3362, which Lakers had instituted in the United States District Court for the District of Columbia. Although the matter came before the judge at an early stage in the life of the actions and would normally have been considered solely on the basis of what relief, if any should be granted pending their trial, all concerned were agreed that in the general interest Parker J. should decide the matter on the materials then available as if he were concerned with claims for final relief. On this basis the judge refused the relief sought by B.A. and B.C. and, on the application of Lakers, stayed the actions.

Since Parker J. gave judgment, the Secretary of State for Trade and Industry has made the Protection of Trading Interests (U.S. Antitrust Measures) Order 1983 (S.I. 1983 No. 900) under the Protection of Trading Interests Act 1980, and has given directions under that Order. We do not have to decide whether or not Parker J. was correct in the decision which he reached in the circumstances as they then existed, having regard to the effects of this legislative and executive intervention of which we have had to take account and which, on any view, produces a wholly different situation.

During the hearing of the appeals, Lakers indicated that they wished to challenge the validity both of the Order and the directions by judicial review. For this purpose they applied to Woolf J. for leave to apply for judicial review. Woolf J. rightly took the view that the interests of justice would best be served if the issues which would be raised by such an application were able to be considered by this court concurrently with the instant appeals. This result could be and was achieved by his refusal of leave to apply for judicial review followed, as he intended, by a renewal of that application to this court. We granted leave and directed that the application be served on the Secretary of State and on B.A. and B.C. and that notice of it be given to any other bodies, such as other airlines, which might have a sufficient interest in the matter to justify their applying to be joined if they so wished: see R.S.C., Ord. 53, r. 3(7). In the Supreme Court Practice Direction (Judicial Review: Appeals) [1982] 1 W.L.R. 1375, it was stated that where the Court of Appeal grants leave to apply for judicial review the substantive application should be made to the Divisional Court unless the Court of Appeal otherwise ordered. In the

exceptional circumstances, we ordered that the substantive application be heard before us and it has been heard accordingly.

It follows that in determining these appeals not only have we had to take account of the legislative order and executive directions made thereunder, but we have also had to determine the validity of that Order and of those directions.

Jurisdiction

The jurisdiction of the High Court, and of this court on appeal from it, to grant the relief sought has been challenged by Lakers. In addition, Judge Harold H. Greene of the United States District Court which is seised of United States civil action no. 82-3362 has expressed strong views on the propriety of the English courts granting the relief sought. We refer in particular to the judge's opinion dated March 9, 1983, on a motion by Lakers for a preliminary injunction.

Whatever the ultimate conclusion in this litigation - and it seems likely that the unsuccessful party or parties will wish to take the matter to the House of Lords - we and all other English judges would deeply regret any misunderstanding on the part of our brethren in the United States of what exactly we are doing and why we are doing it. I personally sought to avoid any such misunderstanding in relation to the interim order which I made on March 30, 1983, in my judgment of that date and we wish now to extend that effort in relation to the present decision of this court. Accordingly, we propose to consider the issue of jurisdiction in greater detail than might otherwise have been necessary.

First, let it be said, and said loud and clear, that no one has ever suggested that the United States District Court is without jurisdiction to try Lakers' complaint against B.A. and B.C. both under the Sherman and Clayton Acts and in respect of the commission of an intentional tort. Both B.A. and B.C. carry on business in the United States of America sufficiently to make them amenable to the jurisdiction of its courts. If any such submission had been made, it would have been rejected out of hand.

Second, let it be said at no less volume and with no less clarity that no submission has been made to this court that the civil procedures of the United States courts and, in particular, the system of pre-trial discovery by the taking of depositions, the administration of interrogatories and the disclosure of documents, the limited circumstances in which a successful defendant would be awarded costs and the conduct of litigation upon the basis of contingency fees are in any way to be criticised. They are different from English civil procedures, but the days are long past when the English courts and judges thought that there was only one way of administering justice and that was the English way. Each nation must decide for itself which way is appropriate to its needs and there is nothing strange in two nations which enjoy a common legal heritage and could be described as "cousins-in-law" rightly deciding that different procedures suited them best.

Third, let it be said no less loudly and clearly that neither the English courts nor the English judges entertain any feelings of hostility towards the American antitrust laws or would ever wish to denigrate that or any other American law. Judicial comity is shorthand for good neighbourliness,

common courtesy and mutual respect between those who labour in adjoining judicial vineyards. In the context of the United Kingdom and the United States, this comes naturally and, so far as we are concerned, effortlessly.

We learn from Judge Greene's opinion that a United States court "has power to enjoin a party over whom it has personal jurisdiction from pursuing litigation before a foreign tribunal", but that it is a jurisdiction which is only exercised in "unusual very narrow circumstances". We also learn that an examination of the reported circumstances in which it has been used shows that the circumstances were there quite different from those obtaining in the present case.

Precisely the same situation obtains under English law in relation to the English courts. The jurisdiction exists, but it is to be exercised with extreme caution. Furthermore, the reported authorities do not disclose any case in which consideration has ever been given to restraining the prosecution of proceedings in a foreign court when, as here, there is no alternative English forum before which the same, or substantially the same, right could be asserted.

All this Mr. David Johnson for Lakers accepts. But he goes a little further and submits that there is an obvious reason why the reports do not reveal any case in which the prosecution of proceedings in a foreign court has been restrained in the absence of an alternative English forum. It is that an injunction can only issue in support of a legal or equitable right or interest justiciable in the English courts: Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A. [1979] A.C. 210.

In The Siskina the plaintiffs, who were cargo-owners, were in dispute with shipowners and were seeking a Mareva injunction freezing insurance moneys owing to the shipowners. They had no legal or equitable right or interest over or in respect of those insurance moneys and, although they may well have had such a right or interest enforceable against the shipowners, the shipowners were outside the jurisdiction of the English courts. By contrast there is no territorial limitation on the courts' jurisdiction in the present case, all concerned being admittedly subject to that jurisdiction. Accordingly the sole question is whether B.A. and B.C. are seeking to enforce a justiciable legal or equitable right against Lakers. Many years ago it might have been debatable whether a plaintiff could have a legal or equitable right not to be a defendant in litigation before a foreign tribunal. But that debate is long since over. The sole question now open concerns the circumstances in which the jurisdiction is to be exercised. Accordingly we conclude that, properly analysed, Mr. Johnson's submission is not that this court has no jurisdiction to grant the relief sought by B.A. and B.C., but that, regardless of any other circumstance, it should not exercise that jurisdiction unless there is an alternative English forum available to Lakers. This submission, if accepted, would dispose of the appeal and we therefore examine it before any other consideration of the issues in dispute.

Fortunately we have the benefit of a very recent decision of the House of Lords, Castanho v. Brown & Root (U.K) Ltd. [1981] A.C. 557 which, in our judgment, is decisive in establishing that the absence of an alternative English forum is not, of itself, fatal to B.A.'s and B.C.'s claims

to relief, although the absence of such a forum is without doubt a major obstacle which powerfully reinforces the caution which, as a matter of English law, English judges are bidden to display and do display when considering the exercise of this jurisdiction.

Equally fortunately Lord Wilberforce, Lord Diplock, Lord Keith of Kinkel and Lord Bridge of Harwich agreed with the speech of Lord Scarman and accordingly we are not faced with the problem of interpreting different shades of judicial opinion.

Lord Scarman, at p. 574D, in considering the criteria which should govern the exercise of the court's discretion either to impose a stay in English proceedings or to grant an injunction restraining a person who is subject to the jurisdiction of the English courts from prosecuting a claim in a foreign court, said that whichever remedy was sought the principle was the same. In determining and defining that principle, it was no longer necessary to examine the older case law since the modern statement of the law was to be found in the majority speeches in The Atlantic Star [1974] A.C. 436. Lord Scarman continued, at p. 575:

"In MacShannon v. Rockware Glass Ltd. [1978] A.C. 795, 812 my noble and learned friend, Lord Diplock, interpreted the majority speeches in The Atlantic Star [1974] A.C. 436, as an invitation to drop the use of the words 'vexatious' and 'oppressive' (an invitation which I gladly accept) and formulated his distillation of principle in words which are now very familiar: 'In order to justify a stay two conditions must be satisfied, one positive and the other negative: (a) the defendant must satisfy the court that there is another forum to whose jurisdiction he is amenable in which justice can be done between the parties at substantially less inconvenience or expense, and (b) the stay must not deprive the plaintiff of a legitimate personal or juridical advantage which would be available to him if he invoked the jurisdiction of the English court'.

"Transposed into the context of the present case, this formulation means that to justify the grant of an injunction the defendants must show: (a) that the English court is a forum to whose jurisdiction they are amenable in which justice can be done at substantially less inconvenience and expense, and (b) the injunction must not deprive the plaintiff of a legitimate personal or juridical advantage which would be available to him if he invoked the American jurisdiction.

"The formula is not, however, to be construed as a statute. No time should be spent in speculating as to what is meant by 'legitimate'. It, like the whole of the context, is but a guide to solving in the particular circumstances of the case the 'critical equation' between advantage to the plaintiff and disadvantage to the defendants."

Mr. Johnson's submission that the critical equation presupposes an alternative forum to whose jurisdiction the parties are amenable and that, in its absence, the jurisdiction can never be exercised is, as it seems to us, a mere variant of the submission by Mr. Castanho's counsel (see p. 573B) that the jurisdiction is to be found to have been exercised only in two classes of case: (1) "Lis alibi pendens" where the object is to prevent

harassment; and (2) where there is a right justiciable in England, which the court seeks to protect.

Commenting on this submission, Lord Scarman said, at p. 573E:

"No doubt, in practice, most cases fall within one or other of these two classes. But the width and flexibility of equity are not to be undermined by categorisation. Caution in the exercise of the jurisdiction is certainly needed: but the way in which the judges have expressed themselves from 1821 onwards amply supports the view for which the defendants contend that the injunction can be granted against a party properly before the court, where it is appropriate to avoid injustice."

In our judgment that passage confirms the existence of the jurisdiction which we are asked to exercise and poses the question which we have to ask ourselves, namely, "In all the circumstances, is it appropriate to grant the relief sought in order to avoid injustice?" In the context of this case the avoidance of injustice to all parties may not be possible but, that failing, we have to ask ourselves whether the grant or the refusal of the relief sought will create the lesser injustice. We have, in Lord Scarman's words, to resolve that "critical equation." That involves taking account of a number of circumstances to which we now turn.

The Laker story

The story of the rise and fall of Laker Airways is well known. Suffice it to say that Sir Freddie Laker conceived the idea of creating an airline which would provide low cost scheduled air services across the Atlantic and elsewhere. He founded Laker Airways in 1966 and entered the air charter business. In 1971, at a time when Laker Airways were already undertaking transatlantic charter flights, he applied for permission to operate a "Skytrain" scheduled service between London and New York. The basic distinction between the proposed service and existing services was that, in the case of "Skytrain", passengers would buy tickets at the airport on the day of travel on a "First come, first served" basis and that the ticket would not entitle the passenger to a free meal service. There were other distinctions, such as the inability to purchase through tickets for travel by Laker Airways and other airlines, and the whole concept could be summed up by saying that it was intended to be a "No frills, low cost" operation.

Transatlantic scheduled air services between the United Kingdom and the United States are controlled by an inter-governmental licensing system and it was not until 1977 that Laker Airways obtained permission to operate the "Skytrain" scheduled service. The reasons for this delay are recorded sub. nom. Laker Airways Ltd. v. Department of Trade [1977] Q.B. 643. Their first route was London-New York, but the service was extended to London-Los Angeles in September 1978, London-Miami in May 1980 and London-Tampa in April 1981. Laker Airways hoped to continue this expansionary process and, with that end in view, obtained licences from the United Kingdom Government for a trans-Pacific route from Los Angeles and San Francisco to Hong Kong via Honolulu and

Tokyo, a London-Hong Kong route via the Middle East and European routes between London and Berlin and London and Zurich.

Unfortunately in the second half of 1981 Laker Airways encountered financial difficulties engendered, in part at least, by a drop in the dollar value of the pound sterling and was unable to service the large loans which it had obtained. Despite considerable efforts to rescue it, Laker Airways was forced to cease trading in early February 1982.

The United States proceedings

On November 24, 1982, Lakers instituted civil action no. 82-3362 in the United States District Court for the District of Columbia by a complaint endorsed "Jury trial demanded." Lest any summary do less than Justice to Lakers, we append a copy (post, pp. 203C et seq.). By the consolidation of a further action, K.L.M. and Sabena have been added as defendants. As will be seen, it alleges a combination and conspiracy in restraint of trade and to monopolise in violation of the United States Sherman Act causing damage to Lakers in excess of U.S.$350,000,000. It also repeats the same narrative as a basis for an allegation of a further cause of action, namely, "intentional tort." The relief claimed is U.S.$350,000,000 compensatory damages in respect of both causes of action and U.S.$700,000,000 as punitive damages in respect of the cause of action under the Sherman Act together with interest, costs and attorneys' fees.

The complaint itself was accompanied by a very extensive request for the production of documents and another request for answers to interrogatories of a far-reaching nature. The requests were respectively made pursuant to rules 33 and 34 of the Federal Rules of Civil Procedure, and we have no reason to believe that they were not proper requests in accordance with those rules.

It is or may be material that they appear to be requests which were made in circumstances in which a requirement to the same effect could be imposed pursuant to rule 37 (see section 2(5) of the Protection of Trading Interests Act 1980). These were followed a month later by a second request for the production of documents and a second request for answers to interrogatories to which similar considerations appear to apply.

We should perhaps explain that the word "predatory", which is frequently referred to in the pleadings, is defined in and for the purpose of the United States Federal Aviation Act 1958 (section 101(35)) as "any practice which would constitute a violation of the antitrust laws as set forth in the first section of the Clayton Act (15 U.S.C. 12)." In the context of the dispute between Lakers and the other airline defendants, it is usually used adjectivally in conjunction with the word "fares" as meaning a loss-making level of fares having no commercial justification and intended solely to eliminate Lakers as a competitor.

B.A. and B.C. responded in the United States action to such extent as was necessary to avoid being in contempt of the District Court or having a default judgment signed, but no more, and in January 1983 they began the present actions seeking to restrain Lakers from further prosecuting the United States action against them.

Since then Lakers have been restrained from proceeding further with that action as against B.A. and B.C. by a series of interim injunctions. These have been granted solely on the basis that justice requires that the status quo be preserved whilst B.A.'s and B.C.'s claims to relief were being considered by Parker J. and, after he had refused that relief, by this court on appeal from his decision.

Section 1 of the Sherman Act, which was enacted in 1890, subject to immaterial exceptions, renders every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, illegal and provides, as amended, that every person who makes any contract or engages in any combination or conspiracy thereby declared to be illegal shall be guilty of a felony and on conviction shall, if a corporation, be punishable by a fine not exceeding one million dollars and, if any other person, by a fine not exceeding $100,000 or by imprisonment not exceeding three years or both in the discretion of the court.

Section 2 of the Sherman Act provides that every person who shall monopolise, or attempt to monopolise, or combine or conspire with any other person or persons, to monopolise any part of the trade or commerce among the several states, or with foreign nations, shall also be guilty of a felony and subject to similar penalties.

Section 4 of the Clayton Act, enacted in 1914, provides that any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws (which is defined to include the Sherman Act) may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee.

Section 4A provides a similar right of recovery for the United States, limited to actual damages sustained and the cost of the suit. There is a four year limitation period on suits under sections 4 and 4A.

The Bermuda 2 Treaty

Since the Second World War, United Kingdom airlines, including B.A. and B.C. and also Lakers, together with their aircraft, have been subject to control by the United Kingdom Civil Aviation Authority (C.A.A.). The corresponding body for United States airlines and aircraft is the United States Civil Aviation Board (C.A.B.). The C.A.A. regulates, inter alia, the fares chargeable by British airlines. A similar regulatory function is performed by the C.A.B. Neither body can, of course, authorise a flight into foreign territory although they can no doubt forbid it.

In the absence of a treaty between the United States and the United Kingdom, United Kingdom airlines could only fly to the United States upon such terms as the United States Government in its absolute discretion saw fit to impose. Furthermore, that government could alter those terms at any time and from time to time. Equally United States airlines seeking to fly to the United Kingdom would have been at the mercy of the United Kingdom Government. Faced with this impossible situation, the two

nations concluded bilateral treaties: first Bermuda 1 in 1946 and then Bermuda 2 in 1977. The essence of both treaties was equality of opportunity for the airlines of each country.

It is important to bear in mind that, as a matter of English law, treaties are not part of the domestic laws of the United Kingdom and give rise to no private rights under English law. They are agreements between states and they can only be honoured or breached by states. If and in so far as they involve an obligation to ensure that domestic laws conform with the treaty, this is a matter for the states concerned. There have been indications that the position may be different under United States law and that the provisions of treaties to which the United States is a party may themselves vary or limit the scope of pre-existing United States laws. We express no view on whether or not that is the case and do not think it material for present purposes. We mention the status of a treaty in English law, solely because there are passages in the judgment of Parker J. which might be taken to suggest that he thought that if Lakers' complaints were proved, it would follow that B.A. and B.C. were in breach of article 12 of the Treaty which deals with tariffs. This article cannot bind either Lakers or B.A. and B.C. and they cannot be in breach of it.

For present purposes, the essence of the Treaty was that each country had the right to designate airlines of its own nationality to fly particular routes and enter through specified "gateways". But each country had the right to refuse to accept the other's designation of an airline and each national civil aviation authority had the right to refuse to accept tariffs and other licensing matters approved by the other authority. In practice, as one would expect, the two national authorities were at one on issues such as safety. Where they differed was on the acceptability of particular fare structures and similar commercial considerations in terms of their respective national interests which, inevitably, were liable to differ.

This is amply demonstrated on the evidence, but it is important to note that both the C.A.A. and the C.A.B. when asked to approve tariffs gave every opportunity to all who might be affected to make representations. Both Lakers and B.A. and B.C. as United Kingdom airlines were licensed on terms that they charged fares approved by the C.A.A. and were only authorised to fly into the territory and airspace of the United States if those fares were also approved by the C.A.B. Thus Lakers had the opportunity of objecting to the fares now characterised as "predatory" both before the C.A.A. and the C.A.B. and availed themselves of that opportunity.

It is also clear, as one would expect, that the C.A.B. applied the same criteria as those prescribed by the Sherman Act, which has been described by Judge Greene as "the charter of economic freedom" comparing its role to that which the Bill of Rights plays with respect to personal freedoms. The interrelationship between the Sherman Act and the C.A.B.'s duties under the United States Federal Aviation Act 1958 is underlined by the fact that under section 414 of that Act the C.A.B. is empowered to grant exemption from the operations of the "antitrust laws" set forth in subsection 1(a) of the Clayton Act. The exercise of this exemptive power is referred to by the rather quaint term of "immunisation", which, by inference, we feel does less than justice to the United States Economic

Bill of Rights. Furthermore, if the C.A.B. approves a tariff agreement, it is required to "immunise" the parties to such extent as is necessary to enable them to proceed with the transactions specifically approved by the board. Curiously, if the C.A.B. refuses to approve such an agreement, but its decision is overridden by the President of the United States, the President appears to have neither the power nor the duty to grant "immunisation" and it would be necessary to ask the C.A.B. for relief which it might or might not grant in the exercise of its discretion.

It is reasonably clear on the evidence that throughout the currency of Bermuda 1 and Bermuda 2 the application of United States antitrust laws to United Kingdom designated airlines was a potential source of disagreement between the two governments. However, all concerned avoided anything in the nature of a confrontation until Lakers sought to avail themselves of the Sherman and Clayton Acts in a suit against B.A. and B.C. and Pan American and Trans World airlines in 1974 which was speedily settled and in the present United States litigation. As the latter action has not been settled and indeed has led directly or indirectly to a grand jury investigation, this sensible "agreement to differ" has been impossible to sustain any longer.

As we have said, as a matter of English law, a treaty is an agreement between sovereign states which does not of itself give rise to either rights or obligations in private individuals. Consistently with this approach this court has no jurisdiction to determine the meaning or effect of any treaty to which the Government of the United Kingdom is a party and indeed is not equipped to do so, that being a matter of public international law. This court is, however, concerned to be informed of the views of Her Majesty's Government concerning any treaty which forms part of the background to a dispute between private persons. In the present appeals we have been so informed in the usual way, namely, by a statement in open court by or on behalf of Her Majesty's Attorney-General. Mr. Peter Scott, who has appeared on behalf of the Attorney-General, has stated that Her Majesty's Government regard the Government of the United States as being in breach of its obligations under Bermuda 2 in applying or permitting the application of United States antitrust laws to international commerce and, in particular, to operations carried out under or pursuant to Bermuda 2.

The Treaty itself provides the mechanism for the resolution of inter-governmental disputes. First, there must be formal consultations under article 16 and then, if this does not resolve the dispute, either side may invoke the compulsory arbitral procedure provided under article 17. In March 1983 Her Majesty's Government requested formal consultations under article 16 on the question of whether it is consistent with the rights and obligations of the contracting parties for the provisions of the United States antitrust laws to apply to the activities of the designated airlines. Although the United States Government claims that the application of these laws is wholly outside the scope of Bermuda 2 and, therefore, not a matter for consultation under article 16, they agreed to take part in such consultations and they have taken place. We were told that Her Majesty's Government hopes to resolve the dispute by negotiation, but that deep differences remain between the two governments over the question of

whether and to what extent the United States antitrust laws are incompatible with the arrangements contained in Bermuda 2 and what steps are called for to remedy the situation. At present neither government has begun arbitration proceedings against the other, but Her Majesty's Government has fully reserved its right to do so.

Public policy

It is a matter of considerable constitutional importance that the courts should be wholly independent of the executive, and they are. Thus, whilst the Judges, as private citizens, will be aware of the "policy" of the government of the day, in the sense of its political purpose, aspirations and programme, these are not matters which are in any way relevant to the courts' decisions and are wholly ignored. In matters of home policy, the courts have regard only to the will of Parliament as expressed in the statutes, in subordinate legislation and in executive acts authorised by Parliament.

The position is different in relation to foreign affairs. Relations between the United Kingdom and foreign states are not the subject of direct Parliamentary action, but are a matter for Her Majesty acting on the advice of Her Government. The foreign policy which is adopted is referred to as that of the United Kingdom Government, but this is misleading since in reality it is that of the nation. Accordingly it would be strange if in this field the courts and the executive spoke with different voices and they should not do so: see In re Westinghouse Electric Corporation Uranium Contract Litigation M.D.L. Docket No. 235 (Nos. 1 and 2) [1978] A.C. 547, 617, 650-651, per Lord Wilberforce and Lord Fraser of Tullybelton respectively.

We have already recorded the attitude and contentions of the United Kingdom Government in relation to Bermuda 2. Its policy externally and that of Parliament internally is also indicated by the terms of the Protection of Trading Interests Act 1980 and the Protection of Trading Interests (U.S. Antitrust Measures) Order 1983. However, we have also been assisted by fuller information on the United Kingdom Government's foreign policy which has been provided by Mr. Peter Scott on the instructions of the Attorney-General and to this we must now turn.

It was contended by Mr. Johnson in the course of argument that the concern of the United Kingdom Government over the United States antitrust laws was confined to the extra-territorial operation claimed for them under the "effects doctrine". This was coupled with a repeated contention that the United Kingdom Government accepted unreservedly the obligation of all those who carried on business within the United States to comply with the laws of that country. Mr. Peter Scott made it clear that both contentions are over-simplified.

B.A. and B.C. carry on business in a large number of different countries, including the United States. This is inherent in the business of an international airline. The United Kingdom Government accepts that it follows that each of these countries will have an in personam jurisdiction over B.A. and B.C. in accordance with international law. However, Mr. Peter Scott told us that the United Kingdom Government takes the view that there is another sense in which jurisdiction has to be considered,

namely, in relation to its subject matter and that it is here that it parts company with the Government of the United States. He put the matter this way:

"In general, substantive jurisdiction in antitrust matters, in the view of the British Government, should only be taken on the basis either of the territorial principle or the nationality principle. There is nothing in the nature of antitrust proceedings as such which justifies a wider application of these principles. That is to say, a wider application than is generally accepted in other matters. On the contrary, there is much in the nature of antitrust which is the reflection of the public economic law of the state which calls for a narrower application of these principles.

"As your Lordships will appreciate, in inherently international activity, like aviation or shipping, it may be difficult to apply these principles with precision, but the activities can take place in both of the states concerned. In those cases, Her Majesty's Government would expect a state enforcing its regulatory laws to do so with restraint and only after paying due attention and due regard to the interests of the other state concerned, and to its own treaty obligations.

"The matter is complicated, of course - I say 'complicated', I perhaps should say 'enforced' [reinforced] by the peculiar nature of the Sherman Act and Clayton Act procedures, with the penal nature of the judgments sought, the breadth of discovery, the cost, and the other elements which are relied upon by [B.A. and B.C.]. These are all matters which, in a sense, only make a fortiori the submission that one would make even if it was an ordinary claim for compensation."

Earlier in his address to the court, Mr. Peter Scott had referred to remarks made by him before Parker J., and said:

"What I was attempting to do was to lay the foundation for the submissions which I wish to make in the particular circumstances of this case and certainly not to make some broad statement that in all and any circumstances Her Majesty's Government would expect nationals of this country to obey domestic laws in the course of trans-national business operations. In the ordinary way, of course Her Majesty's Government would not wish to intervene between the laws of other countries and people who find themselves for one reason or another in those other countries, but there most certainly are cases where they would wish to do so."

He then went on to refer to the recent dispute concerning British companies who carried on business in the United States and had contracted outside the United States to deliver goods which were also outside the United States to contractors working on the Russia to Western Europe gas pipe-line. On the basis of the undoubted United States in personam jurisdiction over these companies, the United States Government had claimed the right to issue executive orders requiring the companies not to deliver. This right was disputed by the United Kingdom Government which took action to prevent the companies complying with the United States executive order.

The Protection of Trading Interests (U.S. Antitrust Measures) Order 1983 and general directions dated June 23 and July 11, 1983

The making of this Order and the giving of these directions have, on any view, fundamentally altered the "critical equation" if they are valid. However, their validity is challenged by way of judicial review.

The Order, which came into operation on June 27, 1983, over a month after Parker J. gave judgment, is in the following terms, omitting footnotes:

"Whereas it appears to the Secretary of State that the measures to which this Order relates have been taken by or under the law of the United States of America ('the United States') for regulating or controlling international trade and that those measures, in so far as they apply to things done or to be done outside the territorial jurisdiction of the United States by persons carrying on business in the United Kingdom, are damaging or threaten to damage the trading interests of the United Kingdom: Now therefore the Secretary of State, in exercise of his powers under section 1(1) of the Protection of Trading Interests Act 1980 ('the Act of 1980') and of all other powers enabling him in that behalf, hereby makes the following Order:-

"1. (1) This Order may be cited as the Protection of Trading Interests (US Antitrust Measures) Order 1983 and shall come into operation on June 27, 1983. (2) In this Order - 'the Bermuda 2 Agreement' means the agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States signed at Bermuda on July 23, 1977, concerning air services; 'air service' and 'tariff' shall be construed in accordance with the Bermuda 2 Agreement; 'U.K. designated airline' means a British airline (within the meaning of section 4(2) of the Civil Aviation Act 1982) designated by the Government of the United Kingdom under the Bermuda 2 Agreement.

"2. (1) The Secretary of State hereby directs that section 1 of the 1980 Act shall apply to sections 1 and 2 of the United States' Sherman Act and sections 4 and 4A of the United States' Clayton Act in their application to the cases described in the following paragraph. (2) The cases mentioned in paragraph (1) of this article are - (i) an agreement or arrangement (whether legally enforceable or not) to which a U.K. designated airline is a party; (ii) a discussion or communication to which a U.K. designated airline is a party; (iii) any act done by a U.K. designated airline, which, in respect of each case, concerns the tariffs charged or to be charged by any such airline or otherwise relates to the operation by it of an air service authorised pursuant to the Bermuda 2 Agreement."

The power to make such an order is derived from section 1(1) of the Protection of Trading Interests Act 1980 which is in the following terms:

"1. (1) If it appears to the Secretary of State - (a) that measures have been or are proposed to be taken by or under the law of any overseas country for regulating or controlling international trade; and (b) that those measures, in so far as they apply or would apply to things done

or to be done outside the territorial jurisdiction of that country by persons carrying on business in the United Kingdom, are damaging or threaten to damage the trading interests of the United Kingdom, the Secretary of State may by order direct that this section shall apply to those measures either generally or in their application to such cases as may be specified in the order."

Mr. Johnson submits that the order is ultra vires the power for two reasons. The first reason is that "measures" in the Act can only refer to things done under the authority of the statute or executive power and cannot refer to the authority itself. In Mr. Johnson's submission this is supported by the references to requests, requirements and prohibitions in subsections (2) and (3) of section 1 and in sections 2, 3, and 4. Accordingly whilst the Order could apply section 1 of the Act of 1980 to measures taken under the Sherman and Clayton Acts, it could not apply the section to the Acts themselves or any specified sections of those Acts. We do not accept this submission. "Measures" is a very wide term of generic description, which could well include statutes and, far from limiting the prima facie width of the meaning of the term, section 1(1)(a) by referring to "measures ... taken by ... the law of any overseas country" confirms that "measures" is intended to include foreign statutory provisions.

Second, it is submitted that in any event the measures to which section 1 can be applied must be restrictive or regulatory of international trade, whereas the Sherman and Clayton Acts are intended to free international trade from the constrictions of anti-competitive cartels. This submission seems to us to be disingenuous and we reject it. A statute is none the less controlling or regulatory because it seeks to prevent international trade being conducted on the basis of co-operative agreements designed to minimise or eliminate competition.

There is a further objection to the Order, but as it also applies to the directions, we will defer consideration of it until after we have considered the specific objections to the directions.

There are two directions to be considered. The first is dated June 23, 1983, and was made under section 1 of the Act of 1980. The second is dated July 1, 1983 (in replacement of another direction dated June 23) and was made under section 2 of that Act.

The specific objection to the section 1 direction is that, as Mr. Johnson submits, there is no power to make a direction under section 1(3) unless a direction has first been made under section 1(2) and no such direction has been made. The subsections are in the following terms:

"(2) The Secretary of State may by order make provision for requiring, or enabling the Secretary of State to require, a person in the United Kingdom who carries on business there to give notice to the Secretary of State of any requirement or prohibition imposed or threatened to be imposed on that person pursuant to any measures in so far as this section applies to them by virtue of an order under subsection (1) above. (3) The Secretary of State may give to any person in the United Kingdom who carries on business there such directions for prohibiting compliance with any such requirement or prohibition as aforesaid as he considers appropriate for avoiding damage to the trading interests of the United Kingdom."

The issue here is one of construction. Does "any such requirement or prohibition as aforesaid" mean a prohibition or requirement of which notice is required to be given pursuant to a direction under section 1(2) or does it mean a "requirement or prohibition imposed or threatened to be imposed on that person pursuant to any measures in so far as this section applies to them by virtue of an order under subsection (1) above?" We can see no reason why Parliament should have intended to limit the powers of the Secretary of State to prohibiting compliance with requirements or prohibitions which have been notified to him. The clear intention is that his prohibitory power shall extend to a category of requirements and prohibitions, whether he knows of them or not, and that, in addition, he can, if he wishes, obtain information as to what requirements or prohibitions are being made. In other words the two subsections are quite independent of one another.

The specific objection to the section 2 direction is that it does not specify the ground or grounds upon which the requirements to which it relates appear to the Secretary of State to be "inadmissible" within the meaning of section 2 of the Act of 1980. It is well settled that in using this form of enabling power a Secretary of State need only state that it appears to him that the specified pre-conditions exist. It is then for an objector to challenge his good faith, which has not been done in this case, or to show that the Secretary of State has misdirected himself in law. The Secretary of State does not have to explain why it appears to him that the preconditions exist. If authority be required for this proposition, it is to be found in the Secretary of State for Employment v. ASLEF (No. 2) [1972] 2 Q.B. 455.

The section 2 direction recites:

"Whereas it appears to the Secretary of State: (a) that the United States' Department of Justice has begun an investigation into alleged price fixing and other allegations relating to the air transport of passengers over the North Atlantic for possible violations of sections 1 and 2 of the 'Sherman' Act; and that for this purpose a grand jury ('the grand jury') has been empanelled in the District of Columbia in the United States of America; (b) that a requirement may be imposed on a person or persons in the United Kingdom to produce to the United States Department of Justice or the grand jury commercial documents which are not within the territorial jurisdiction of the United States or to furnish to the United States Department of Justice or the grand jury commercial information; (c) that civil antitrust proceedings of a penal nature are now pending in the United States District Court for the District of Columbia ('the District Court') relating to similar matters to those which are the subject of the United States Department of Justice investigation and that commercial documents and commercial information which are produced in the civil antitrust proceedings may be utilised in the Department of Justice investigation or before the grand jury; (d) that a requirement may be imposed on a person or persons in the United Kingdom to produce to the District Court commercial documents which are not within the territorial jurisdiction of the United States or to furnish to the District Court commercial information; (e) that

any such requirement would be inadmissible within the meaning of section 2(2) and (3) of the Protection of Trading Interests Act 1980 (the '1980 Act')."

If there were nothing more, there would be no reason to doubt the Secretary of State's assertion since he might very well consider that requirements by the United States Department of Justice would infringe "the jurisdiction of the United Kingdom" or otherwise be prejudicial to its sovereignty (see section 2(2)(a)) and/or compliance with such a requirement would be prejudicial to the relations of the Government of the United Kingdom with the government of another country (see section 2(2)(b)). He might also very well consider that a requirement in the context of a grand jury investigation would be one "made otherwise than for the purposes of civil or criminal proceedings which have been instituted in the overseas country" (see section 2(3)(a)) and that a requirement in the context of the district court proceedings satisfied section 2(3)(b) as requiring

"a person to state what documents relevant to any such proceedings are or have been in his possession, custody or power or to produce for the purposes of any such proceedings any documents other than particular documents specified in the requirement."

However, there is more. Mr. Andrew Turek, a legal assistant in the Office of the Treasury Solicitor, has deposed that the substance of correspondence between the liquidator of Laker Airways Ltd. and the C.A.A. and between the C.A.A. and the Department of Trade and Industry, which he exhibited, was brought to the attention of the Secretary of State before he made the directions. This correspondence clearly shows the link between the district court proceedings and the grand jury investigation and that the United States Department of Justice was seeking to use the liquidator as its agent to obtain discovery from B.A. and B.C. for the purposes of the grand jury investigation. This abundantly justifies the Secretary of State's view that "inadmissible requirements" might be made.

Lastly, Lakers object to the Order and to both directions on the grounds:

"The terms of the Order and of the two general directions are (a) so wide as to exceed the sections under which they purport to be made and (b) so general as insufficiently to indicate what is and what is not sought to be prohibited."

We accept the possibility that circumstances may arise in which it may be debatable whether or not the Order or directions apply, but we do so not because of any excessive width or generality in the words, but because any order or direction which is not all embracing - and this Order and directions are not - is capable of giving rise to problems on the periphery of its ambit. Certainly, in our judgment, the Secretary of State has in no way exceeded his jurisdiction.

It was for these reasons that we dismissed the application for judicial review.

The critical equation

We now come back to the "critical equation" and ask ourselves the question

"In all the circumstances, is it appropriate in the interests of avoiding injustice to enjoin Lakers from pursuing their claim against B.A. and B.C. in the United States courts?"

If we are to grant B.A. and B.C. the relief which they seek, it will, so far as is known, be the first occasion upon which an English court has exercised its jurisdiction to prevent the further prosecution of proceedings before a foreign court or tribunal when there is no alternative forum in England or elsewhere to which the defendants can have resort. It follows that B.A. and B.C. have a very heavy burden to discharge.

The starting point must be what Lakers will lose. B.A. and B.C. are only two of ten defendants against whom Lakers are making the same or substantially the same claim. If they were to be wholly successful, they could levy execution against any or all and the defendants who satisfied the judgment would have no right of contribution inter se or from other defendants. Accordingly, it might appear that the disappearance of B.A. and B.C. as defendants in the United States action would leave both Lakers and the other defendants in exactly the same position as if Lakers had succeeded against all, but only levied execution upon the other defendants. There is no suggestion that the other defendants could not satisfy such a judgment and it may be asked whether Lakers really stand to lose anything at all.

This in our judgment is too simple a view of the position. First, it is possible that other actions might be brought by the other defendants seeking similar relief. We express no view on whether they would succeed, because different considerations might apply in their cases. By way of illustration, we would mention that only the two United States airlines would appear to have been flying under the auspices of Bermuda 2 and they have the benefit of a consent from the Secretary of State disapplying the general direction under section 1 of the Act of 1980. The other airlines presumably fly under the auspices of other bilateral treaties. And there will probably, if not inevitably, be other distinctions. Furthermore it was suggested in argument, and may be correct, that the burden of fighting an antitrust claim is so heavy in terms of time, expense and disruption to the carrying on of a business, that defendants are often willing to settle with the plaintiff. On this assumption, the more defendants there are, the greater the chances of achieving settlements which, in the aggregate, will be as satisfactory as a judgment. Yet again the elimination of two defendants will mean that fewer parties are available to give discovery which may assist in proving the claim against all, although account must be taken of the inhibitions upon B.A. and B.C. giving Lakers assistance in this respect in the light of the Secretary of State's Order and directions.

Accordingly we assume, for the purposes of the critical equation, that the grant of the relief sought by B.A. and B.C. might well have farreaching adverse effects upon what would otherwise be Lakers' prospects of success in the United States litigation and might indeed eliminate them. Logically this must lead on to a consideration of what is the value of those

prospects, if no relief is granted to B.A. and B.C. In this connection it is tempting to speculate whether, and, if so, how Lakers will overcome the argument that their real loss flows from the fact that B.A. and B.C. and the other airlines adopted fares and schedules which were authorised and largely "immunised" for antitrust purposes. However, it is a temptation which must be resolutely resisted, because it would involve this court in virtually trying a United States antitrust action which we are wholly incompetent to do.

This may be a convenient moment to notice the argument that this court should not in any event restrain Lakers from pursuing their claim against B.C. in so far as it is alleged that B.C. interfered with the Laker financial rescue operation by bringing pressure to bear on McDonnell Douglas since this activity, unlike the charging of 'predatory" fares, was outside the scope of Bermuda 2. Again it is said that this court should not in any event restrain Lakers from pursuing their claim based upon "intentional tort", as contrasted with that based upon the Sherman and Clayton Acts and that similar considerations would apply if Lakers were minded to start an action claiming damages in the United States for common law conspiracy under United States law.

We are at the moment only concerned with a claim for relief in respect of the proceedings in the United States District Court for the District of Columbia and no claims have been made in that court on the basis of common law conspiracy. However, the claims which have been made seem to us not to be capable of severance. The allegation of "intentional tort" is in terms based upon exactly the same material as that which forms the basis of the antitrust claim and, save that penal damages cannot be claimed for "intentional tort", the two causes of action seem to us to be indistinguishable. So far as the financing allegation is concerned, it is clear that this is but one aspect of the overall antitrust conspiracy which is alleged and could not stand by itself. We therefore conclude that it is a case of "all or nothing". Either we must wholly restrain the further prosecution of the district court proceedings by Lakers against B.A. and B.C. or we must refuse B.A. and B.C. any relief.

So much for Lakers' side of the equation. We now turn to B.A.'s and B.C.'s side. They have no right to submit, and do not submit, that the United States civil procedures create any injustice whatsoever. But they are entitled to rely upon the fact that these procedures impose a great burden on defendants in terms of time, expense and disruption to their business and that in no circumstances will this be made good by Lakers. Similarly a United States company would have no right to submit that United Kingdom civil procedures create any injustice. But they would be entitled to rely upon the fact that our rules as to costs, which involve an unsuccessful claimant in paying the costs of the defendant and may involve him in giving security for these costs, together with the refusal by the legal professions to permit legal assistance to be provided on a contingency basis can impose a very heavy burden in terms of actual and potential expense. These burdens are facts which have to be faced and facing them involves no criticism of the legal system concerned. There can be no doubt that in antitrust suits this burden is of formidable proportions.