[COURT OF APPEAL]

MIDLAND BANK PLC. AND ANOTHER v. LAKER AIRWAYS LTD. AND OTHERS

[1982 M. No. 4180]

Injunction - Jurisdiction to grant - Restraint of foreign proceedings - United Kingdom airline's antitrust action in United States - No alternative English forum - Defendants having no relevant presence or activities in United States - Whether action in United States unconscionable

The liquidator of the defendant companies caused proceedings to be commenced in the United States alleging that action taken by, inter alia, a number of international airlines, which had preceded the financial collapse of the defendant airline, amounted to breaches of United States antitrust legislation. The plaintiffs were United Kingdom bankers involved in mounting a financial rescue operation for the defendant airline in the United Kingdom and had no relevant business in the United States. The liquidator informed the plaintiffs that it was intended to instigate proceedings against them in the United States, alleging that they had withdrawn support from the defendant airline in circumstances from which the United States court might infer a conspiracy with the defendants in the existing American action to put the defendant airline out of business. The plaintiffs issued a writ claiming (1) a declaration that they were not liable under either English or United States law for the collapse of the defendant airline, and (2) an injunction restraining the defendants from instituting or continuing an antitrust suit against them in the United States. On the plaintiffs' application an interlocutory injunction in the same terms as the writ was granted to the plaintiffs. The defendants subsequently applied to discharge the injunction and to strike out the plaintiffs' points of claim. The judge discharged the interlocutory injunction and struck out that part of the claim by which the plaintiffs sought a declaration that they were not liable under United States law in connection with the collapse of the defendant airline.

On appeal by the plaintiffs and cross-appeal by the defendants against the judge's refusal to strike out the claim for a declaration in so far as it related to the plaintiffs' liability under English law:-

Held, (1) allowing the appeal, that the jurisdiction of the court to restrain anyone subject to its jurisdiction from bringing or continuing proceedings in a foreign court would be exercised only where, in all the circumstances, the bringing of the proceedings would be unconscionable; and that, since at the relevant time the plaintiffs had no relevant presence in, and had not submitted themselves to the jurisdiction of, the United States and their activities in relation to the defendant airline were part of their business in England which was intended to be governed by English law, it would be unconscionable to allow

the defendants to bring an antitrust suit against them in the United States (post, pp. 699A, E-F, 700A-B, 701C-D, 705A-C,712G, 715C-D, F).

British Airways Board v. Laker Airways Ltd. [1985] A.C. 58, H.L.(E.) distinguished.

(2) Allowing the cross-appeal, that, as the defendants had never threatened to take proceedings against the plaintiffs in the English courts, there was no jurisdiction to make a declaration that the plaintiffs were not liable under English law for or in connection with the collapse of the defendant airline; and that, accordingly, the plaintiffs' claim for such a declaration should have been struck out (post, pp. 700H - 701A, 710C-D, 715G).

In re Clay [1919] 1 Ch. 66, C.A. applied.

Per Lawton and Neill L.JJ. The lack of evidence is a factor which can be taken into account, together with more weighty factors, in deciding whether the bringing of foreign proceedings is unconscionable (post, pp. 700C, 713B-C, E-F).

Per Lawton L.J. To treat the weakness of the evidence as a separate and distinct ground for adjudging that the threatened conduct in a case such as the present is unconscionable raises difficult problems. It would be wrong for English judges to regard themselves as examining magistrates, deciding whether the plaintiff in the foreign court had made out a case fit for trial. Cases might arise in which it was plain that the foreign suit was bound to fail so that the making of it was frivolous and vexatious. In such cases the English courts could interfere, but they are likely to be rare (post, p. 700C-F).

Per Dillon L.J. (i) The complete absence of any evidence against the plaintiffs renders it a fortiori unconscionable that the defendants should be allowed to bring antitrust proceedings against them (post, p. 710B).

(ii) It is important to insist on keeping the United States antitrust legislation within the territorial jurisdiction of the United States in accordance with accepted standards of international law. Prima facie, in view of the oppressive nature of the United States procedures, it is unconscionable and unjust for a person who is subject to the jurisdiction of the English courts to seek to invoke the United States jurisdiction under that legislation against an English company or individual who is not subject to the United States jurisdiction (post, pp. 704F-G,710A-B).

Per Neill L.J. It cannot be right for the court, while paying lip-service to the principle of comity, to treat the possibility of exposure to United States pre-trial discovery as a source per se of injustice. Nor is it right to criticise or appear to criticise the wide-ranging nature of United States antitrust legislation (post, p. 714F-G).

Decision of Leggatt J. reversed.

The following cases are referred to in the judgments:

American Cyanamid Co. v. Ethicon Ltd. [1975] A.C. 396; [1975] 2 W.L.R. 316; [1975] 1 All E.R. 504, H.L.(E.)

Boys v. Chaplin [1971] A.C. 356; [1969] 3 W.L.R. 322; [1969] 2 All E.R. 1085, H.L.(E.)

British Airways Board v. Laker Airways Ltd. [1984] Q.B. 142; [1983] 3 W.L.R. 544; [1983] 3 All E.R. 375, C.A.; [1985] A.C. 58; [1984] 3 W.L.R. 413; [1984] 3 All E.R. 39, H.L.(E.)

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

Bryanston Finance Ltd. v. de Vries (No. 2) [1976] Ch. 63; [1976] 2 W.L.R. 41; [1976] 1 All E.R. 25, C.A.

Bushby v. Munday (1821) 5 Madd. 297

Carron Iron Co. v. Maclaren (1855) 5 H.L. Cas. 416, 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.)

Clay, In re [1919] 1 Ch. 66, C.A.

Ellerman Lines Ltd. v. Read [1928] 2 K.B. 144, C.A.

Lowe v. Baker (1692) 2 Freem. 125

Portarlington (Lord) v. Soulby (1834) 3 Myl. & K. 104

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

Wharton v. May (1799) 5 Ves.Jun. 26

The following additional cases were cited in argument:

Abidin Daver, The [1984] A.C. 398; [1984] 2 W.L.R. 196; [1984] 1 All E.R. 470, H.L.(E.)

Crofter Hand Woven Harris Tweed Co. Ltd. v. Veitch [1942] A.C. 435; [1942] 1 All E.R. 142, H.L.(Sc.)

Hytrac Conveyors Ltd. v. Conveyors International Ltd. [1983] 1 W.L.R. 44; [1982] 3 All E.R. 415, C.A.

Phillips v. Eyre (1870) L.R. 6 Q.B. 1

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.)

Tennant (Lady Anne) v. Associated Newspapers Group Ltd. [1979] F.S.R. 298

APPEAL and CROSS-APPEAL from Leggatt J.

By writ dated 29 November 1982 the plaintiffs, Midland Bank Plc. and Clydesdale Bank Plc., claimed (1) against the first defendant, Laker Airways Ltd., and the third defendant, Laker Airways (International) Ltd., declarations that the plaintiffs were not party to any unlawful combination or conspiracy in violation of the antitrust laws of the United States, that the plaintiffs did not by their conduct intentionally and unlawfully by the laws of either the United States or England cause injury to the first or third defendant and that the plaintiffs were not liable in any way by the laws of either the United States or England for or in connection with the collapse of the first or third defendant; and (2) against the first and third defendants and the second defendant, Mr. Christopher Morris, an order restraining them from instituting or continuing legal proceedings against the plaintiffs, either in the United States or elsewhere, for relief in connection with any alleged unlawful combination or conspiracy in violation of the antitrust laws of the United States or any allegation that the plaintiffs had intentionally or unlawfully injured the first or third defendant or were liable in any way for or in connection with the collapse of the first or third defendant. On 29 November 1982 Mustill J. granted the plaintiffs ex parte an interlocutory injunction in terms similar to that claimed in the writ. On 4 February 1983 Parker J. continued the injunction. On a summons by

the first and second defendants, Leggatt J., on 10 June 1985, inter alia, discharged the interlocutory injunction; struck out so much of the plaintiffs' claims as related to declarations as to the plaintiffs' liability under United States law; and refused to strike out any further part of the plaintiffs' claims.

By notice of appeal dated 20 June 1985 the plaintiffs appealed on the grounds, inter alia, that (1) the judge wrongly equated the position of the plaintiffs with that of the plaintiffs in British Airways Board v. Laker Airways Ltd. [1985] A.C. 58; (2) the judge misunderstood that on the evidence before the court the action of the plaintiffs relied on as giving rise to liability took place wholly within England; (3) the judge wrongly held that it would be premature for the court to consider to what extent if at all the claim threatened against the plaintiffs by the defendants was supported by evidence until after discovery had taken place in the proposed American proceedings; (4) the judge wrongly held that the case was a single forum case; (5) the judge failed to apply the tests appropriate to the continuation or discharge of an interlocutory injunction; (6) by implication the judge wrongly held that the plaintiffs had no seriously arguable case for saying that it would be unconscionable and unjust for them to be sued in the United States and/or that on a balance of convenience the continuation of the interlocutory injunction would not be justified; and (7) the plaintiffs had on any view, on the evidence before the court, a seriously arguable case that they came within the exceptional circumstances envisaged in British Airways Board v. Laker Airways Ltd. [1985] A.C. 58 and ought to be granted a permanent injunction.

The first and second defendants cross-appealed by notice dated 20 June 1985, against the judge's refusal to strike out the remaining part of the plaintiffs' claims and to dismiss or stay all further proceedings in the action against the first and second defendants, on the grounds, inter alia, that (1) having correctly found that the first and second defendants did not assert any claims against the plaintiffs under English law, the judge erred in law and/or the exercise of his discretion in refusing to strike out such part of the declaratory relief claimed by the plaintiffs as related to their liability under English law; and (2) having correctly rejected the basis on which the plaintiffs sought a final injunction against the first and second defendants, the judge erred in law and/or in the exercise of his discretion in declining to strike out the plaintiffs' claim to such an injunction.

By respondents' notice dated 27 June 1985 the first and second defendants gave notice of their intention to contend that the judgment should be affirmed on the additional ground that the plaintiffs had failed to make out a prima facie case that for the first defendant to commence an antitrust case against the plaintiffs in the United States would be so unconscionable as to require the English court to intervene to prevent injustice.

The facts are stated in the judgment of Lawton L.J.

Robert Alexander Q.C., Howard Page and Andrew Popplewell for the plaintiff banks.

David Johnson Q.C., Michael Crystal Q.C. and Richard Hacker for the first and second defendants.

The main submissions of counsel are set out in the judgments (pp. 695D - 696E, 698G-H, 702G - 703E, 712H - 713B, F - 714F.)

30 July 1985. The following judgments were handed down.

LAWTON L.J. On 5 February 1982 the airline, Laker Airways Ltd., which Sir Freddie Laker had tried so hard over many years to establish, collapsed. An experienced liquidator, Mr. Christopher Morris, was appointed to wind up the holding company, Laker Airways (International) Ltd. Mr. Morris discovered evidence which seemed to prove that in the months before February 1982 a number of airlines, both United States and European, operating on north Atlantic routes, had agreed together to make operations financially difficult for Laker Airways by the use of what have become known as predatory fares, that is by charging fares as low as Laker Airways' fares and offering passengers additional amenities at a loss to themselves. What was done has been recounted in detail by Lord Diplock in British Airways Board v. Laker Airways Ltd. [1985] A.C. 58. Most of these facts were common knowledge in aviation circles before the collapse of Laker Airways. They need not be repeated in this judgment. British Caledonian Airways Ltd., however, did not charge predatory fares themselves because at the material time they were not in direct competition with Laker Airways on the north Atlantic routes; but they had a common interest with the other airlines who were, because at any time Laker Airways might obtain additional scheduled routes which would compete directly with those of British Caledonian Airways. There was evidence before us that British Caledonian Airways regarded Laker Airways as disrupting airline business on the north Atlantic routes.

The liquidator was advised by United States attorneys that the combination of airlines on the north Atlantic routes to act as they did amounted to a breach of the United States antitrust legislation. A suit under that legislation was started against a number of airlines, including British Airways and British Caledonian Airways in the Federal District Court for the District of Columbia. The well-known aircraft manufacturers, McDonnell Douglas Corporation and a financial subsidiary, McDonnell Douglas Finance Corporation, were also brought in, seemingly because, having offered financial help to Laker Airways sometime before 5 February 1982, shortly before that date they withdrew their original offer and substituted for it a less helpful conditional offer. The liquidator discovered later in the course of pre-trial discovery in the antitrust suit that this had come about because McDonnell Douglas had been threatened by some European airlines, including British Caledonian Airways, that, if they went on helping Laker Airways as they had originally offered to do, these airlines would buy no more aircraft from them.

The liquidator was also advised by United States attorneys that he could sue Midland Bank Plc. and its subsidiary, Clydesdale Bank Plc.,

because they too had withdrawn financial support from Laker Airways on 3 February 1982 in circumstances from which a United States federal district court might infer a combination or conspiracy with the airlines and McDonnell Douglas Corporation and McDonnell Douglas Finance Corporation to put Laker Airways out of business. He told Midland Bank what he had been advised and that he intended to act on the advice. He showed senior officials of Midland Bank a document drafted by his United States attorneys which purported to set out a summary of what was being alleged against Midland Bank. This document was referred to in the subsequent litigation as "attachment 7."

Midland Bank were outraged by the suggestion that they had combined or conspired either with the airlines or anyone else to put Laker Airways out of business. They contended that their dealings with Laker Airways had been in the ordinary course of their banking business in England; that for some months, at the request of the Bank of England, they had tried to organise financial help for Laker Airways and had extended their own and Clydesdale Bank's commitments to help Laker Airways; and that it was only after they had received information about Laker Airways' trading figures from the Civil Aviation Authority and had consulted with them and with the Bank of England that they decided to tell Sir Freddie Laker that, unless he could get financial help elsewhere and quickly, they would have to appoint a receiver. As he failed to get such help they did appoint a receiver as any prudent bank would have done.

Midland Bank are concerned about the consequences of the threat to sue them in the United States under that country's antitrust legislation. They say first that the liquidator has not got the beginnings of a case against them: they have never combined or conspired with anyone to put Laker Airways out of business and the liquidator has no evidence which will implicate them in any combination or conspiracy and will find none. Secondly, they say that, if they are sued in the United States, they will be subjected there to the onerous and costly pre-trial discovery which federal district courts have and they will have no hope of getting costs out of the liquidator if they are dismissed from the suit as they expect to be. Thirdly, they say that lawful acts done in this country should not be the subject of suit in another country when the same acts if done there would have been unlawful. Finally, they say (and the Bank of England support them in this) that, if what they did in their banking dealings with Laker Airways makes them liable under United States antitrust legislation, for the future they and other banks will have to hesitate a long time before offering banking facilities to any customer, English or foreign, who carries on or who intends to carry on business in the United States.

Midland Bank's sense of outrage led them on 29 November 1982 to issue a writ, together with Clydesdale Bank Plc., claiming, first, a declaration that they were not liable under either English or United States law for the collapse of Laker Airways and, secondly, an injunction restraining the liquidator from instituting or continuing an antitrust suit against them in the United States. On 29 November 1982 Mustill J.

granted an interlocutory injunction as asked and on 4 February 1983 it was continued by Parker J.

On 20 May 1983 Parker J. refused to grant injunctions in favour of British Airways and British Caledonian Airways restraining Laker Airways from pursuing the United States action against them. Both airlines successfully appealed to the Court of Appeal against that refusal [1984] Q.B. 142 but on 19 July 1984 the House of Lords allowed appeals by Laker Airways [1985] A.C. 58.

Thereupon, the liquidator applied to discharge the interlocutory injunction in the present action. The liquidator refused, as he was entitled to do, to await discovery and any cross-examination on affidavits which might have been ordered had the plaintiff banks gone to trial. His argument before Leggatt J. was that the plaintiff banks were in the same position as British Airways and British Caledonian Airways. Leggatt J. accepted this submission, discharged the injunction and struck out the plaintiff banks' applications for a declaration that the liquidator's claim against them in the United States courts was invalid. He left in the plaintiff banks' claims for declarations that the liquidator had no claim against the plaintiff banks under English law.

The liquidator has appealed against this part of the judge's order. This claim is of no value to either side. The liquidator has so far made no claim against the plaintiff banks which is triable under English law; but on advice he has not been prepared to abandon his appeal. The case is now primarily before the court on appeal by the plaintiffs. Their counsel, Mr. Alexander, has put his case on two main grounds: first, that the plaintiff banks were in a different position altogether from British Airways and British Caledonian Airways. They were banks carrying on ordinary banking business in England with an English customer whose centre of operations was in England. The law governing that business was the law of England. It had not been suggested and could not have been that this business was tainted with illegality. They had not had at any material time banking business with any of the other airlines, either directly or indirectly. Mr. Alexander contrasted their position with that of British Airways and British Caledonian Airways. Since they operated over United States territory and picked up and put down passengers there, they had to comply with the domestic legislation of the United States, including the antitrust legislation. Since they operated international airlines to and from the United States, if what they did was done with intent to injure a rival who was operating inside that country, their activities clearly came within the United States antitrust legislation. Further, submitted Mr. Alexander, the threatened antitrust suit would be frivolous and vexatious because there was no evidence to support it. In all the circumstances of this case, it would be unconscionable for the liquidator to institute his threatened suit in the United States.

The reply of Mr. Johnson to these submissions was that the differences between the plaintiff banks and British Airways and British Caledonian Airways were of no significance and were irrelevant. The House of Lords had decided in the British Airways and British Caledonian Airways cases [1985] A.C. 58 that, when a British subject starts in the

United States an antitrust suit against another British subject who can properly be sued there, English law recognises that such suit shall be subject to United States law, procedure and practice. United States procedure and practice do not require a plaintiff to set out in the document, called a complaint, which starts the proceedings, a statement of the material facts relied upon, as does English procedure. A complaint in an antitrust suit can be described as a cross between a writ and a statement of claim. It lacks both the brevity of a writ and the particularity of a statement of claim. The United States courts find this way of starting an antitrust suit satisfactory. It is not, submitted Mr. Johnson, for an English court to say that it is unfair. The filing of a complaint is followed by pre-trial discovery which is much more extensive than what English courts think of as discovery. Potential witnesses can be, and are, examined and cross-examined. Under United States procedure the proper time for examining the evidence is after pre-trial discovery, not before or during. This procedure does allow for suits to be dismissed because they are frivolous and vexatious, albeit it is seldom used. If the plaintiff banks think that they have a case for dismissal on this ground, they should apply to the appropriate United States court after the suit has been instituted. In any event, submitted Mr. Johnson, there was before this court enough evidence to justify the liquidator starting a suit in a United States court.

Before considering the legal issues which both sides submitted disposed of this appeal, I will refer shortly to the evidence which is before this court. Mr. Alexander for the plaintiff banks submitted that it proves nothing; Mr. Johnson that there is enough to justify a United States federal court allowing pre-trial discovery to start.

By the summer of 1981 Laker Airways were known in banking circles to be likely to run into financial difficulties before long. On or about 26 August 1981 the Bank of England asked Midland Bank to lead an attempt to help Laker Airways to reschedule its debts and to keep in business if it were possible to do so. Midland Bank agreed so to act. They were the chief British lender to Laker Airways. There were other larger, but foreign, lenders. Midland Bank did what they could, keeping the Bank of England at all times informed of what they were doing. By Christmas Eve 1981 the rescue operation had got so far that a public announcement was made that an agreement had been reached in principle with Laker Airways' lenders for a rescheduling package of debt which should enable Laker Airways to stay in business. Between Christmas 1981 and the end of January 1982 Laker Airways' trading and financial positions got worse. On 26 January 1982 Midland Bank, as the leader of a banking syndicate of European and North American banks, had to serve a notice of default on Laker Airways pursuant to a loan agreement made on 7 January 1981, since some members of this syndicate refused further time for payment. Some of the parties to the rescheduling arrangements had become alarmed: they queried whether these arrangements would be adequate to save Laker Airways. One of the parties, McDonnell Douglas Corporation, became reluctant to put up £5,000,000 which they had agreed to do. Midland Bank went on trying to find a way of helping Laker Airways. Through Clydesdale

Bank they increased Laker Airways' overdraft facilities by £2,000,000 without taking any further security. On 1 and 2 February 1982 discussions were still going on with the object of saving Laker Airways. Sir Freddie Laker was, unjustifiably, very optimistic about the outcome of the discussions. During the whole period of these discussions Midland Bank had no contact of any kind with airlines operating over the north Atlantic routes. In my judgment, there is no evidence from which any court, whether English or United States, could infer that, before 3 February 1982, the plaintiff banks had joined such combination or conspiracy as there may have been between the airlines on the north Atlantic routes.

It is now necessary to examine in some detail what happened on 3 February 1982. Midland Bank by that date had decided that they could not commit themselves any further to Laker Airways. McDonnell Douglas Corporation had, under pressure from the European airlines, withdrawn their original offer of £5,000,000 in cash and the conversion of the debts of Laker Airways to them into a share of Laker Airways equity and replaced it with an offer of £4,000,000 in cash. On 2 February 1982 the Civil Aviation Authority had told Midland Bank that they would not be satisfied with a cash margin of £4,000,000, enhanced by an undefined flexible overnight facility, in place of the £5,000,000 which they had said earlier would be necessary as a minimum safeguard. On 3 February 1982 the Civil Aviation Authority told the Bank of England that the suggested cash margin was unacceptable. They also told Midland Bank that, if they went on supporting Laker Airways, they would have to provide sufficient cash immediately and be prepared to give support during the tourist season of 1982. Sometime during 3 February 1982 the Civil Aviation Authority gave Midland Bank Laker Airways' trading figures for the last week of January 1982. They were significantly down. Midland Bank decided that they could not support Laker Airways any longer and would have to tell Sir Freddie Laker so as soon as possible. They could not do so that day as he was out of the country. Before telling him, Midland Bank told the Bank of England that they could not give Laker Airways any more support and that it was likely that a receiver would be appointed almost immediately. On 4 February 1982 they did tell Sir Freddie what they had decided. They gave him until 5 February 1982 to get financial support from some other source. This he was unable to do. On 5 February 1982 they appointed a receiver.

One of the assets of Laker Airways was a hangar at Gatwick Airport. This the receiver sold to British Caledonian Airways on or about 26 February 1982 for £4.6 million which was paid at once. Mr. Johnson submitted that the circumstances in which this sale took place provides some evidence that Midland Bank had joined the north Atlantic airline combination or conspiracy because the receiver did not give a fair opportunity of buying the hangar to a consortium which at the time of sale was trying to restart Laker Airways.

In my judgment, by the standards of English law, the facts which I have summarised would not begin to justify making a charge of conspiracy in either a criminal or a civil court. I have referred to them

as "facts" rather than evidence of alleged facts because I have taken them from affidavits sworn by senior officers of the Bank of England, Midland Bank and the Civil Aviation Authority. They are corroborated substantially by some contemporary notes made by an officer of McDonnell Douglas Finance Corporation. Mr. Johnson submitted that the averments made by the officers of Midland Bank should not be regarded as facts since they were statements made by persons accused of conspiracy and were what such persons could be expected to say in order to exculpate themselves.

I do not accept this cynical approach to the assessment of affidavit evidence. It is pertinent in this context for me to remind myself that what on 3 February 1982 had led Midland Bank to decide and act as they did was the intervention of the Civil Aviation Authority and the seeming approval of their decision given by the Bank of England. If Midland Bank did join the alleged north Atlantic combination or conspiracy, on the facts as the court knows them, the Civil Aviation Authority must have brought the bank into it and the Bank of England must have had some knowledge, if not complicity, in what was going on. Mr. Johnson pointed out that at this stage of the dispute the court does not know all the facts. There must be, he said, numerous documents and memoranda about the events of, and leading up to, 3 February 1982 which might reveal what had happened on that date. These documents would be disclosed in the United States pre-trial discovery. I found this submission disingenuous. They would have been disclosed in this litigation if the liquidator had consented to this case going to trial, instead of trying to get the interlocutory injunction discharged. Anyway, a search for relevant documents has been made by a partner in the firm of solicitors acting for Midland Bank. He has deposed that he found none relevant to the liquidator's charge of combination or conspiracy.

Whilst the court over some days was examining such evidence as there was touching upon the issue of combination or conspiracy, Mr. Johnson from time to time told us that the liquidator had not put before the court all the evidence implicating the plaintiff banks which he had but only such parts as he had in England and which were relevant to some of the averments in the affidavits put in by the plaintiff banks. I found this somewhat surprising. In the pre-trial discovery which has already taken place in the United States in the suit against the airlines and others thousands of documents have been disclosed and 32 depositions taken. Had any documents been disclosed which clearly implicated the plaintiff banks in the alleged combination or conspiracy I would have expected them to have been produced. None were.

Mr. Johnson's main submission was that this court should not have concerned itself with the evidence at all. In a case such as this, as in British Airways Board v. Laker Airways Ltd. [1985] A.C. 58, the assessment of evidence was for the United States court, not an English court. Mr. Alexander's main submission was that the ratio decidendi of the British Airways case did not apply to this case; but that, even if it did, on such evidence as there was, the court should declare that the proposed suit in the United States was frivolous and vexatious and should be stopped by injunction.

What then did the British Airways case decide? First, that an English court should not stop by injunction a suit brought in a foreign court by anyone subject to English jurisdiction against another party also subject to that jurisdiction unless the conduct of the party bringing the suit is unconscionable. Secondly, that the United States antitrust legislation was not justiciable in England. Thirdly, that both British Airways and British Caledonian Airways:

"by obtaining an air transport licence from [the Civil Aviation Authority] to operate scheduled services on routes between the United Kingdom and the United States as British airlines designated by the United Kingdom government under Bermuda 2, [British Airways, British Caledonian Airways and Laker Airways] alike voluntarily submitted themselves to a regulatory regime which, so far as their operations within the territorial jurisdiction of the United States were concerned, required that each of them should become subject to American domestic law including American antitrust laws:" see [1985] A.C. 58, 84, per Lord Diplock.

Fourthly, that in these circumstances it was impossible to

"argue plausibly either that Laker by submitting itself to such a regime precluded itself from relying upon any cause of action against [British Airways] or [British Caledonian Airways] that might accrue to it under American antitrust laws as a result of what these airlines subsequently did within the territorial jurisdiction of the United States; or that there was anything so unconscionable or unjust in Laker's conduct in pursuing such cause of action in a [United States] court that an English judge, in the proper exercise of a judicial discretion, would be entitled to grant an injunction to prevent Laker from doing so:" see per Lord Diplock, at p. 84.

In my judgment, the plaintiff banks were in a wholly different situation. Their connection with Laker Airways arose from banking transactions in England which were governed by English law and were intended to be so governed. There was no connection between them and any airlines operating in the United States by any arrangement comparable to the Bermuda 2 Treaty (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)). They did nothing in the United States which would have been governed by the United States antitrust legislation. At the material time, save on the international inter-bank market, they themselves had no banking business in the United States. Midland Bank's subsidiary bank in California, which had a separate legal existence and over which they had no managerial control, had no connection of any kind with the airlines involved in the liquidator's antitrust suit. Such banking activities as their subsidiary, Thomas Cook Ltd., carried on in the United States were incidental to that group's tourist business and had no relevance. It follows, so it seems to me, that it cannot be said that the plaintiff banks have submitted themselves to the United States antitrust legislation in the way that British Airways

and British Caledonian Airways had done. Leggatt J. misdirected himself in adjudging that the position of the banks was comparable to that of the two airlines. When deciding to discharge the interlocutory injunction he took into account matters which he should not have done.

It still remains to consider whether the threatened antitrust suit if instituted would be unconscionable conduct on the part of the liquidator. What he is trying to do is to make the plaintiff banks liable to the heavy financial penalties which can be awarded in a United States antitrust suit for acts done in England and intended to be governed by English law and in respect of which he has no claim at all in England. In my judgment, this would be unjust and, in consequence, unconscionable; and the more so when, so far as can be seen from an English Bench, the liquidator has not, by English standards, got the beginnings of a case to justify a charge of combination or conspiracy against the plaintiff banks. In my judgment, the weakness of the evidence is a factor which can be taken into account, together with the other more weighty factors, in deciding whether conduct is unconscionable.

To treat the weakness of the evidence as a separate and distinct ground for adjudging that the threatened conduct in a case such as this is unconscionable raises difficult problems. Clearly, someone subject to English jurisdiction can act in breach of the United States antitrust legislation and anyone aggrieved by such acts should, prima facie, be allowed to seek compensation in a United States court, using United States procedure and having his suit judged by United States standards, not English. It would be wrong, so it seems to me, for English judges to regard themselves as examining magistrates, deciding whether the plaintiff in the United States court had made out a case fit for trial. That is the function of the United States judge after the conclusion of the pre-trial discovery. Cases might occur, as Lord Diplock recognised in the British Airways case [1985] A.C. 58, 86, in which it was plain that the United States suit was bound to fail so that the making of it was frivolous and vexatious. In such cases an English court could interfere; but they are likely to be rare. I do not regard what Lord Diplock said, at pp. 86-87, as qualifying what he had said at p. 86C-G. I infer that he was referring to what was known about British Caledonian Airways' case. Having regard to what was common knowledge in aviation circles about what the north Atlantic airlines were trying to do to Laker Airways, the application to strike out on the grounds that the suit against British Caledonian Airways was frivolous and vexatious was very optimistic indeed. As I have found other reasons for adjudging that the threatened proceedings are unconscionable, it is not necessary for me in this case to adjudge whether the description frivolous and vexatious would be an apt one of the threatened antitrust suit against the plaintiff banks.

There remains one further point. As I have already recounted, Leggatt J. refused to strike out the plaintiff banks' claims for declarations that they were not liable under the laws of England for or in connection with the collapse of Laker Airways. As the liquidator has never threatened to take proceedings against either bank in the English courts, on the authority of In re Clay [1919] 1 Ch. 66, there is no jurisdiction in

the court to make the declarations asked for. The claims for them should be struck out.

I would allow the plaintiff banks' appeal against the order of Leggatt J. discharging the injunction and the defendants' appeal against his refusal to strike out the plaintiff banks' claims for declarations.

DILLON L.J. This case is a single forum case, and not a choice of forum case, in that the claim which Laker Airways want to bring against Midland Bank can only be brought in the federal courts of the United States, and Laker Airways have no relevant claim against Midland Bank which could be brought in the English courts. In particular, Laker Airways have no claim against Midland Bank founded on the tort of conspiracy as known in English law.

Nonetheless, it is common ground between the parties to the appeal, as a result of the decision of the House of Lords in British Airways Board v. Laker Airways Ltd. [1985] A.C. 58, that the English High Court has a jurisdiction, albeit one to be exercised sparingly, to grant an injunction to restrain a person amenable to the jurisdiction of the English court from bringing proceedings in a foreign court against another person where the bringing of those proceedings against that person would, in the circumstances, be unconscionable and so unjust. The question is whether that jurisdiction, which the court refused to exercise in favour of British Airways or British Caledonian in the British Airways case, should be exercised in favour of the plaintiff banks.

It is common ground between the parties that guidance as to the exercise of the jurisdiction in the circumstances of the present case is to be found in the speeches of the House of Lords in the British Airways case, particularly in relation to the claim in that case by British Caledonian that the suit against it should be restrained because there was no evidence whatsoever to support the allegations of conspiracy made in the suit. However, there has been much dispute in the course of argument as to the nature and extent of that guidance. As I see it, since the jurisdiction arises through the width and flexibility of equity which are not, as Lord Scarman said in Castanho v. Brown & Root (U.K.) Ltd. [1981] A.C. 557, 573, to be undermined by categorisation, the speeches of their Lordships in British Airways Board v. Laker Airways Ltd. [1985] A.C. 58 should be taken as primarily directed to the detailed facts of that case. As a preliminary, I regard the following propositions as clear. (1) The fact that Midland Bank can be easily served in the United States with the proposed antitrust suit in the United States because Midland Bank opened an office in New York about a year after the collapse of Laker Airways, is only a minor factor on the question whether it is unconscionable that Laker Airways should be allowed to pursue Midland Bank in such a suit. It will normally only be in a case where the party seeking the injunction can be served with process in the foreign country that the jurisdiction to grant injunctions to restrain proceedings in a foreign country will be invoked.

(2) Since the jurisdiction to grant such injunctions is an English jurisdiction, the question whether it is unconscionable that Laker Airways should be allowed to pursue the plaintiff banks in a United

States antitrust suit must be decided by the criteria of English law, though having regard to the nature of the United States proceedings in their United States context as part of the factual background of the case.

(3) If a British company, like British Caledonian Airways in the British Airways case [1985] A.C. 58, is carrying on business in the United States at the time of the activities which are relied on as constituting breaches of the United States Sherman and Clayton Antitrust Acts, and if the acts of the British company which are said to have infringed those Acts, whether done by the British company in the United States or elsewhere, were in respect of its operation of such United States business, then the British company cannot complain that it is unconscionable or unjust that it should be made a party to an antitrust suit in the United States on account of those acts, because it will be held to have accepted that it was subject to the private law of the United States when operating and doing business within the United States. This was the basis of the judgment of Parker J. in British Airways Board v. Laker Airways Ltd. [1984] Q.B. 142: see especially his careful analysis, at pp. 167-168. That judgment was substantially approved in the speeches of the House of Lords [1985] A.C. 58 and this proposition must, at the least, follow from those speeches.

(4) The mere fact that pre-trial procedure is in the United States a recognised procedure for obtaining evidence to support or improve a claim would not automatically require the English court to refuse an injunction, if it sufficiently appeared that the United States suit was brought mala fide to put blackmailing pressure on an English party because of the expense and harassment of the pre-trial procedure. That appears from the comments of Lord Diplock in British Airways Board v. Laker Airways Ltd. [1985] A.C. 58, 86 on Smith Kline & French Laboratories Ltd. v. Bloch [1983] 1 W.L.R. 730, and any other conclusion would be an abdication of responsibility by the English court.

However, this fourth proposition has no direct relevance to the present case. There is no allegation in the plaintiff banks' pleadings in the English action of mala fides or blackmailing intent on the part of the liquidator of Laker Airways or his American attorney. On the contrary, the antitrust suit against the airlines, including the European airlines and British Caledonian, is by the evidence shown to be brought bona fide and apparently well founded. The bona fides of the liquidator in desiring, on advice, to bring the plaintiff banks into a related antitrust suit is not challenged, and I see no reason to doubt the integrity and bona fides by American standards of the liquidator's American lawyers in the advice they have given to the liquidator.

On this appeal the plaintiff banks claim to distinguish the British Airways decision [1985] A.C. 58, particularly in relation to British Caledonian Airways, on the facts. Midland Bank asserts that all their activities, in relation to the abortive rescue of Laker Airways, took place in England as part of their banking business in England, and they did not at that time have any relevant business in the United States. Therefore, unlike British Caledonian Airways, the plaintiff banks have, it is claimed, never submitted in respect of their relevant activities to the United States Sherman and Clayton Acts, and it would be unconscionable

that they should in such circumstances be exposed to an antitrust suit based on an extra-territorial application of those Acts which an English court should not recognise. In answer to this Laker Airways offer two arguments. Their secondary contention is that, on the facts, Midland Bank did carry on business in the United States at the time of the Laker Airways collapse and must be held to have accepted (in that respect like British Caledonian Airways) that it was subject to the private law of the United States, including the Sherman and Clayton Acts, in all its business activities. But the primary contention of Laker Airways is that it does not matter whether the plaintiff banks had or had not a presence in the United States at the relevant time because, it is said, the speech of Lord Diplock in the British Airways case shows that the English courts recognise the exploratory nature of the pre-trial procedure in a United States antitrust suit and of the discovery, depositions and preliminary cross-examination which that procedure permits, and the English courts will therefore not stop an antitrust suit before at any rate the end of the pre-trial procedure, if there is no proof of mala fides on the part of the plaintiff in that suit and no special personal equity, such as promissory estoppel or election and the other matters mentioned by Lord Diplock in the British Airways case [1985] A.C. 58, 81 to preclude that particular plaintiff suing that particular defendant in the United States courts. These are, to my mind, the important issues on this appeal.

It is further urged for the plaintiff banks, however, that the proposed United States antitrust suit by Laker Airways against them would be frivolous and vexatious and should be restrained on that ground because there is not a shred of evidence and there is not any likelihood of evidence being obtained to show that the plaintiff banks made themselves parties to any antitrust conspiracy against Laker Airways. I shall have to refer to the evidence later, but it seems to me that this contention cannot stand by itself. If indeed, because of the extra-territorial nature of the jurisdiction asserted by the United States courts and because all the plaintiff banks' relevant activities took place in England, it is unconscionable that they should be sued by Laker Airways in an antitrust suit in the United States, it may be said, from the English standpoint, to be a fortiori unconscionable that the plaintiff banks should be so sued when there is not a shred of evidence against them and the inherent probabilities of the situation point the other way. But if what might be labelled the extra-territorial jurisdiction point does not avail the plaintiffs, then the absence of evidence also does not avail them because the United States pre-trial procedure is designed to enable evidence to be obtained. In other words, if the extra-territorial jurisdiction point does not avail the plaintiffs, there is no distinction between their position and the position of British Caledonian Airways in the British Airways case [1985] A.C. 58, and the comments of Lord Diplock about the United States procedure, at pp. 86-87, are directly applicable to the plaintiffs.

That the United States pre-trial procedure in an antitrust suit is, by English thinking, oppressive has been said many times. The procedure is long drawn out and very expensive, and any defendant, even if ultimately

dismissed from the suit or successful when the suit comes on for trial, has in practice virtually no chance of recovering its costs. Conversely, the plaintiff, if it can find a United States lawyer prepared to undertake the suit on a contingency fee basis, has no worry over costs and, even if insolvent, will not have to give security for costs.

What is more immediately important for present purposes, however, is the extent to which United States courts claim extra-territorial jurisdiction in such antitrust suits. The basis of an antitrust suit under the United States Sherman and Clayton Acts in the form relevant to the present case is that there has been a conspiracy to injure someone's business in the United States by unfair trading on the part of the conspirators. But, by the analogy of the hub and spokes, the net is cast much wider and the United States courts claim that any person in any part of the world who, with knowledge of the primary conspiracy, takes steps in his own country in defence of his own legitimate interests may be held to have made himself a party to the conspiracy and to be liable to an antitrust suit before a United States jury in a United States court even though what he did subjected him to no civil or criminal liability by the law of his own country. In his judgment at first instance in the British Airways case [1984] Q.B. 142 Parker J. referred, at p. 158, in relation to United States antitrust suits, to "what is regarded here as an exorbitant assertion of extra-territoriality." In the United States District Court for the Southern District of New York, Judge Brieant, allowing, as matters then stood, an application by Midland Bank to quash subpoenas served on it in the Laker Airways antitrust suit, commented that the extra-territorial jurisdiction asserted over foreign interests by the American antitrust laws has long been a sore point with many foreign governments, including that of the United Kingdom.

The starting point, as I see it, is that Laker Airways' cause of action in the existing antitrust suit and in the proposed antitrust suit against the plaintiff banks arises solely under the provision of United States statutes, the Sherman Act and the Clayton Act. These first made certain combinations or conspiracies in restraint of trade criminal offences under United States law and then gave civil remedies in the United States federal courts against the offenders. By English conflict of law rules these Acts are purely territorial in their application: see per Lord Diplock in the British Airways case [1985] A.C. 58, 79. Prima facie, therefore, in view of the oppressive nature, to English minds, of the United States procedures, it is unconscionable and unjust for a person who is subject to the jurisdiction of the English courts to seek to invoke the United States jurisdiction under these United States Acts against an English company or individual who is not subject to United States jurisdiction.

Of course, an English company may be found to have submitted to the foreign law, e.g. to the Sherman and Clayton Acts, in respect of its activities on which the complaint against it in the foreign proceedings under, e.g., those Acts would be founded. In such a case, it would not be unconscionable or unjust that the foreign proceedings should be brought against the English company because of those activities. That was the factual position of British Airways and British Caledonian

Airways in British Airways Board v. Laker Airways Ltd. [1985] A.C. 58 as I have already mentioned and, for my part, I read the speech of Lord Diplock in that case as primarily directed to the facts of that case, and his observations, at pp. 86-87, as delivered against the background of his findings in relation to the position of British Caledonian Airways in relation to the Bermuda 2 agreement. If the plaintiff banks had at the time of the Laker Airways collapse no relevant presence in the United States, and as their activities at that time took place in England as part of their banking business here, then it would, in my judgment,. be unconscionable that Laker Airways should be allowed to bring an antitrust suit against the plaintiffs in the United States under United States statutes which are not part of English law. Contrary to the view of Leggatt J., therefore, I would reject Laker Airways' primary contention that it does not matter whether the plaintiff banks had or had not a presence in the United States at the relevant time.

Having concluded that there was no difference between the position of the plaintiff banks and the position of British Caledonian Airways because the Englishness of all the plaintiffs' activities did not matter, Leggatt J. seems also to have felt that comity with the courts of a friendly state required that any action which was properly commenced in the United States courts in accordance with United States procedure ought not to be restrained by the English court. But comity, in such a context as this, is a matter on which different views can be held, and I notice that in British Nylon Spinners Ltd. v. Imperial Chemical Industries Ltd. [1953] Ch. 19, 28 Denning L.J. said tersely: "The writ of the United States does not run in this country, and, if due regard is had to the comity of nations, it will not seek to run here."

We were invited in the course of the argument to consider the speeches in Boys v. Chaplin [1971] A.C. 356. That was the converse of the present case in that an action was brought in England for tortious acts done in another country. But the general rule of private international law confirmed by the House of Lords in that case does support the logic of the plaintiff banks' position, if they have not submitted to the United States antitrust laws in respect of their relevant business: see the observation of Lord Wilberforce, at p. 389:

"The broad principle should surely be that a person should not be permitted to claim in England in respect of a matter for which civil liability does not exist, or is excluded, under the law of the place where the wrong was committed."

I turn to consider Laker Airways' second argument that, on the facts, Midland Bank did carry on business in the United States at the time of the Laker Airways collapse and so must be held to have accepted that it was subject to the Sherman and Clayton Acts, as part of the private law of the United States in relation to its business activities.

The facts relied on for this are to be found in the reports of the directors and accounts of Midland Bank for the years 1981 and 1982. These accounts give in each year a page of statistical information giving a geographical analysis of current deposit and other accounts with Midland Bank and advances by Midland Bank, by domicile of office.

The analyses show a very substantial increase of United States business in 1981 and again in 1982, over small figures for 1980 which may have represented the travellers' cheque activities of Midland Bank's wholly owned subsidiary Thomas Cook Ltd. It is common ground that the increases for 1981 and 1982 reflect Midland Bank's investment, which has since become somewhat notorious, in 1981 in the acquisition of a holding of between 50 and 60 per cent. of the share capital of a United States company, Crocker National Corporation, which in turn had a wholly owned subsidiary, Crocker National Bank, which carried on a banking business in California. It was said for Laker Airways that in 1981 and 1982 Midland Bank had, through Crocker, a banking presence in the United States and that was enough to subject all Midland Bank's banking activities in England or elsewhere to the United States internal law, including the Sherman and Clayton Acts. It was said, conversely, for Midland Bank that its holding in Crocker was a mere investment which, though it gave Midland Bank's board representation, did not give it management control of Crocker National Corporation or Crocker National Bank.

Since the successive chairmen of Midland Bank, in their statements with the accounts for 1981 and 1982, refer in remarkably glowing terms to the investment in Crocker as providing an important group presence on the eastern flank of the Pacific basin, and then refer to the opening of Midland Bank's own branch in New York as giving Midland Bank a direct presence in New York which was complementary to the operations of Crocker National Corporation, I would hesitate long before accepting Mr. Alexander's submission for Midland Bank that the investment in Crocker was a mere investment and so to be distinguished from the banking activities of Midland Bank itself. But, in my judgment, however they are regarded, the activities of Crocker and, for that matter, also the activities of Thomas Cook Ltd., are wholly irrelevant to anything that happened in the present case.

It is frankly accepted by Laker Airways that Crocker had nothing whatever to do with Midland Bank's Laker Airways rescue operation. The same goes for Thomas Cook Ltd. Nothing whatsoever done by Crocker is the subject of complaint in the proposed antitrust suit. I would seek to test the position by analogy. If an English shopkeeper in London sold goods at his shop in London to an American for the American to take back to the United States, the sale would not thereby in the eyes of English law be subject to a United States statute (assuming for the sake of the example there to be one) about sales of goods to United States citizens for which the United States legislature claimed extra-territorial effect. It would, to my mind, make no difference that the English shopkeeper happened to have another shop in New York which had not sold any goods to the particular American. Sales at the shop in New York would be subject to the United States statute but not sales at the shop in London. There are well known English companies which have shops in a very large number of countries throughout the world. It could not, in my view, be said that, therefore, any sale by such a company at one of its English branches is subject to the private law, however extra-territorial in its effect, of every other

country in which the company happens to have a shop. The analogy of a shop is, I think, permissible because everything done by Crocker or Thomas Cook Ltd. at any time was entirely separate from and had nothing to do with the Laker Airways rescue operation.

I would add that it would, in my judgment, be a grave situation if English banks, when invited by the Bank of England to mount for domestic English reasons a rescue operation in England for an English company (Laker Airways' parent company) whose operating subsidiary with main offices in England had done business in the United States, had before accepting to consider anxiously whether, if they accepted, they ran a risk of being entangled in the meshes of United States antitrust procedure.

We were referred to Bryanston Finance Ltd. v. de Vries (No. 2) [1976] Ch. 63 for the proposition that an interlocutory injunction to restrain Laker Airways from bringing an antitrust suit against the plaintiff banks in the United States courts should not be granted, or continued, unless they have shown a prima facie case that it would indeed be unconscionable and unjust if the plaintiff banks were subjected to such a suit. I agree. It is not enough for the plaintiffs to show that they have an arguable case that the suit would be unconscionable, and for them then to claim, on the principles in American Cyanamid Co. v. Ethicon Ltd. [1975] A.C. 396, an interlocutory injunction until the English action can be tried.

In my judgment, however, the prima facie case is made out, for the reasons I have endeavoured to give, which depend (a) on the position of the plaintiff banks being different from that of British Caledonian Airways in the British Airways case [1985] A.C. 58 because the banks did not at the time of the Laker Airways rescue have any relevant presence or activities in the United States; (b) on the extra-territorial jurisdiction claimed by the United States courts under the Sherman and Clayton Acts; (c) on my interpretation of the speeches in the House of Lords in the British Airways case as to be read in the light of the facts of that case and not as laying down the wider rule in relation to antitrust suits contended for by Laker Airways; and (d) on the oppressive nature to English minds - apart altogether from any question of lack of evidence - of the United States pre-trial procedure in an antitrust suit.

With that background I turn to the facts to consider whether, from the English standpoint, it is a fortiori unconscionable that the plaintiff banks should be sued in the proposed antitrust suit when there is not, it is submitted, a shred of evidence against them and the inherent probabilities of the situation point the other way.

The basis of the antitrust suit in the form relevant to the present case is, as I have said, that there has been a conspiracy to injure someone's business in the United States by unfair trading on the part of the conspirators. Then it is said that other parties who do acts which further the ends of the conspirators become parties to the conspiracy and thus liable.

In the present case there is sufficient evidence, for the purposes of these proceedings, of a primary conspiracy between British Airways, PanAm and T.W.A. and possibly other carriers of passengers between

Europe and New York to force Laker Airways out of business by unfair means and, in particular, by charging "predatory" fares. That conspiracy reduced Laker Airways to the brink of bankruptcy by the autumn of 1981 and led to default by Laker Airways by 15 September 1981 under its airbus loan agreement of 17 January 1981. There is thereafter ample evidence of a second conspiracy, riding on the back of the first, by seven or eight of the leading European airlines (Lufthansa, Swissair, K.L.M., S.A.S., Sabena, et al) and British Caledonian Airways and other private British charter airlines such as Britannia Airways and Dan-Air, to wreck the attempt to rescue Laker Airways and keep it in business by putting strong and concerted pressure on McDonnell Douglas Corporation and McDonnell Douglas Finance Corporation and the American General Electric Co. not to take part in or make any contribution to the Laker Airways rescue operation which Midland Bank was endeavouring to organise. The reason for this attitude by the European airlines, and the British charter companies, was fear of Sir Freddie Laker's announced intention of introducing Laker Airways cut price flights on European air routes. But, in relation to the whole period before 3 February 1982, there is not a shred of evidence that Midland Bank was a party to either of these conspiracies or was under any pressure from anyone to drop the attempt to rescue Laker Airways.

On the contrary, Midland Bank's position was that it had been invited by the Bank of England, through Lord Benson, to put together a rescue operation for Laker Airways, and it was endeavouring to do just that, working hand in glove with the Bank of England, as is shown by the affidavits of Midland Bank's senior representatives and of Mr. Walker, a director of the Bank of England. Midland Bank was no doubt selected by the Bank of England as the bank to mount the rescue operation because Midland Bank's subsidiary, Clydesdale Bank, was Laker's principal banker and Midland Bank itself had been the lead bank of the syndicate of banks ("the airbus syndicate") which had entered into the airbus loan agreement mentioned above. As to these points, the evidence is clear that, while the rescue operation was proceeding, up to 3 February 1982, Clydesdale Bank greatly increased its advances to Laker Airways, which were secured by a debenture, and Midland Bank was doing all it could to persuade the members of the airbus syndicate to agree to a recycling of the advances under the airbus loan agreement. A rescue operation would have been futile if repayment under the airbus loan agreement could still have been immediately enforced. There are indications in the evidence that some German and Austrian banks in the airbus syndicate were reluctant to agree to a recycling of the loan, possibly as a result of pressure from national airlines on the Continent, but there is no evidence of any reluctance on the part of Midland Bank.

At the end of January 1982 the rescue operation received a hard knock when, apparently as a result of pressure from the second conspiracy, McDonnell Douglas reduced its contribution to the rescue operation by way of loan to Laker Airways from £5,000,000 to £4,000,000. But, despite further pressure, McDonnell Douglas stood by the lower figure and, at the start of business on 2 February 1982, the

rescue operation, though precarious, was on course with the continued support of Midland Bank. Indeed, on the evening of 1 February, Sir Freddie Laker had held a celebration party.

By the evening of 3 February, the rescue operation was in tatters and abandoned, and Sir Freddie Laker had been asked to present himself at the offices of Midland Bank on the following morning where he was to be told that all was at an end and he was to be asked (with a brusqueness which I find not unfamiliar where the appointment of receivers is concerned) to invite Clydesdale Bank to appoint a receiver. There is no doubt that the change of front was the direct result of what had happened during 3 February, namely a series of discussions between Midland Bank, the Bank of England and the Civil Aviation Authority at board level. The pretext for the change of front was a requirement by the Civil Aviation Authority, allegedly based on figures showing a drop in the number of passengers carried by Laker Airways in the last fortnight of January, that a guarantee must be given that Laker Airways would have the financial capability to continue its flying operations throughout the summer of 1982, and would not collapse in mid-season.

In these circumstances, looking at the matter solely by English eyes in so far as that is permissible, I find the following points clear: (1) if Midland Bank joined the conspiracy, it did so on 3 February 1982 and not earlier; (2) if Midland Bank joined the conspiracy on 3 February, it is inconceivable that the Civil Aviation Authority and the Bank of England did not also join it on that day; subject only to difficulties of service or sovereign immunity under United States law the three stand or fall together qua the Sherman and Clayton Acts; and (3) there is not a shred of evidence that any of the three did join the conspiracy or act in any way improperly on 3 February 1982.

There is indeed evidence that British Airways had suffered heavy losses as a result of Laker Airways' incursion into the transatlantic air routes, and there is a jeu d'esprit by Mr. McMillan, the chairman of McDonnell Douglas Finance Corporation, under the guise of an outline prepared for his daughter, surmising with some distortion of known facts that the collapse of Laker Airways came about on 3 February 1982 because the British Government had decided at the highest level to sacrifice Laker Airways to secure the continuance of British Airways. There is also a reference in a private note of Mr. Sedgwick, a senior vice-president of McDonnell Douglas, to the effect that Laker Airways' traffic deterioration in the last two weeks of January was merely the ostensible reason for the Civil Aviation Authority's making impossible demands, whereas the real reason was undoubtedly something said by a Laker Airways official to British Airways a few days before. None of this, however, is evidence.

In an affidavit of Mr. Beckman, Laker Airways' United States lawyer, there is perhaps a hint that it may be suggested that the Civil Aviation Authority "became a party to the conspiracy" in order to save British Airways and put pressure on Midland Bank, to which Midland Bank succumbed, to join "the conspiracy" likewise. As yet, there is no such suggestion against the Bank of England; but it may be doubtful whether that can be ruled out in the farrago of suspicion upon innuendo

upon suspicion that seems to characterise the building up of an antitrust suit by the United States pre-trial procedure.

It seems to me all the more important - not least in that what can be the subject of a civil suit under the Clayton Act is criminal under the Sherman Act - to insist on keeping the United States statutory provision of the Sherman and Clayton Acts within the territorial jurisdiction of the United States in accordance with accepted standards of international law.

In all the circumstances, I regard the complete absence of any evidence against the plaintiff banks as rendering it a fortiori unconscionable that Laker Airways should be allowed to bring antitrust proceedings against them.

I would allow this appeal and continue the injunction granted by Mustill J. and continued by Parker J. The defendants' appeal against Parker J.'s order for costs therefore fails.

There remains the very minor matter of the defendants' cross-appeal against the refusal of Leggatt J. to strike out the parts of the plaintiffs' pleadings which claim declarations to the effect that Laker Airways has no cause of action against the plaintiff banks in England. For the reasons given by Lawton L.J., and in view of In re Clay [1919] 1 Ch. 66, I agree that the cross-appeal should be allowed.

NEILL L.J. It is important to emphasise at the outset the exceptional nature of the jurisdiction which the plaintiffs are seeking to invoke. Moreover, the application for an injunction is made against the following background. (1) It is not suggested by the defendants ("Laker Airways"), at any rate at this stage, that they have any right of action against the plaintiff banks in England. (2) It is common ground that, if Laker Airways were to succeed in proving the matters set out in the relevant paragraphs of the draft complaint, Laker Airways would have a valid claim for damages in a New York court for infringement of the Sherman and Clayton Acts. (3) The service of the proceedings on Midland Bank in New York cannot be impugned: at the time of service Midland Bank had an office in New York which had been opened in about April 1983. (4) The New York court itself has a procedure for striking out or dismissing on motion claims which are without any factual basis: see Federal Rules of Civil Procedure, rule 11 and rule 12(b)(6). Nevertheless, despite this factual background, the plaintiff banks assert that Laker Airways should be enjoined from instituting their proceedings in New York.

I propose to start by considering the jurisdiction of an English court to prevent a person from bringing or continuing proceedings abroad. The existence of this jurisdiction has been recognised since about 1800: see Wharton v. May (1799) 5 Ves.Jun. 26, 70; the earlier decision of Lord Clarendon L.C. in Lowe v. Baker (1692) 2 Freem. 125 where he held that an injunction did not lie "to stop a suit at Leghorn or any other foreign parts" has not been followed.

In exercising this jurisdiction the court does not purport to interfere with the foreign court but merely makes an order in personam to bind the party within the jurisdiction of the court in England: see Bushby v.

Munday (1821) 5 Madd. 297, 307 per Sir John Leach V.-C.; and Lord Portarlington v. Soulby (1834) 3 Myl. & K. 104, 107 per Lord Brougham L.C. Nevertheless, it has to be recognised that, if an order is made, there is in fact an indirect interference with the process of justice in the foreign court.

The Court of Chancery, and later the High Court in the exercise of its equity jurisdiction, intervened where it was inequitable for the party concerned to be allowed to proceed; it seems that the court gave effect to the same general principle as that applied from the time of Lord Ellesmere until the enactment of section 24(5) of the Supreme Court of Judicature Act 1873 (36 & 37 Vict. c. 66) to restrain a person from bringing an action in one of the courts of common law.

An examination of the cases decided in the last 150 years shows that in practice claims for injunctive relief have been put forward in two main categories of cases: (a) cases where proceedings have been brought both in England and in a foreign court relating to the same subject matter; and (b) cases where by contract the parties have selected a particular jurisdiction for the resolution of their disputes. But the jurisdiction to grant an injunction is not limited to these two categories. In Carron Iron Co. v. Maclaren (1855) 5 H.L.Cas. 416, Lord Cranworth L.C. referred to the general jurisdiction of the court, at pp. 436-437:

"There is no doubt as to the power of the Court of Chancery to restrain persons within its jurisdiction from instituting or prosecuting suits in foreign courts, wherever the circumstances of the case make such an interposition necessary or expedient. The court acts in personam, and will not suffer anyone within its reach to do what is contrary to its notions of equity, merely because the act to be done may be, in point of locality, beyond its jurisdiction."

He then considered cases where there was pending litigation both in England and abroad and continued, at p. 439:

"But even when there is no question as to the foreign litigation being or not being necessary, or being or not being likely to be so effectual as litigation in this country, still if a person within the jurisdiction of the Court of Chancery is instituting proceedings in a foreign court, the instituting of which is contrary to equity and good conscience, the court will, on a bill filed here, restrain the prosecution of such foreign suit, just as if it had been a suit in this country."

This later passage from the speech of Lord Cranworth L.C. was referred to by Scrutton L.J. in Ellerman Lines Ltd. v. Read [1928] 2 K.B. 144, 152, where the Court of Appeal held that an injunction could be granted to restrain a British subject from enforcing a foreign judgment where it was shown that it had been obtained by a breach of contract or by fraud. And, more recently, the wide scope of the court's jurisdiction was restated by Lord Scarman in Castanho v. Brown & Root (U.K.) Ltd. [1981] A.C. 557, 573:

"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."

But caution is necessary, particularly when, as in the instant case, the court is dealing with a situation where the foreign court provides the only forum in which the party against whom the injunction is sought can obtain the relevant relief. On this aspect of the matter I need only refer to the speech of Lord Scarman in British Airways Board v. Laker Airways Ltd. [1985] A.C. 58, 95, where he said:

"The approach has to be cautious because an injunction restraining a person within the jurisdiction of the English court from pursuing a remedy in a foreign court where, if he proves the necessary facts, he has a cause of action is, however disguised and indirect, an interference with the process of justice in that foreign court. Caution is needed even in a 'forum conveniens' case, i.e., a case in which a remedy is available in the English as well as in the foreign court. Caution is clearly very necessary where there is no remedy in the English court in respect of the cause of action which, if the facts be proved, is recognised and enforceable by the foreign court.

"Nevertheless, even in the latter case, the power of the English court to grant the injunction exists, if the bringing of the suit in the foreign court is in the circumstances so unconscionable that in accordance with our principles of a 'wide and flexible' equity it can be seen to be an infringement of an equitable right of the applicant. The right is an entitlement to be protected from a foreign suit the bringing of which by the defendant to the application is in the circumstances unconscionable and so unjust. This equitable right not to be sued abroad arises only if the inequity is such that the English court must intervene to prevent injustice. Cases will, therefore, be few: but the jurisdiction exists and must be sustained."

In his speech in the same case Lord Diplock gave a list of some of the defences which could be capable of amounting to an equitable right not to be sued in the foreign court, at p. 81:

"estoppel in pais (which was also a defence at common law), promissory estoppel, election, waiver, standing by, laches, blowing hot and cold - to all of which the generic description of conduct that is 'unconscionable' in the eye of English law may be given."

But these were merely examples and, as I understand the matter, the question to be determined in any particular case is whether in all the circumstances it would be so inequitable to allow the party concerned to proceed in the foreign court that the English court "must intervene to prevent injustice."

I turn to the facts of the instant case. They have been set out in the judgment of Lawton L.J. and I need not repeat them. In support of the appeal, counsel for the plaintiff banks sought to put the case for an injunction on two main grounds: (1) that the transactions between the plaintiff banks and Laker Airways (a) took place in England, (b) were

governed by English law, (c) were in no way in breach of English law, and (d) took place at a time when Midland Bank themselves had no office either in New York or in any part of the United States; and (2) that there was a complete absence of any evidence of a combination or conspiracy to which the plaintiff banks were a party and that accordingly the claim was demonstrably frivolous and vexatious. Indeed, the absence of evidence was a clear indication that the proceedings in New York would be brought merely in order to achieve a settlement. These arguments were relied on both severally and cumulatively.

I can deal very shortly with the second ground. I readily accept that, looking at the present state of the evidence, the support for the allegation of a conspiracy in which the plaintiff banks were involved is, to the eyes of an English lawyer, too frail to withstand any detailed analysis. But counsel for Laker Airways have satisfied me that it is premature even to attempt to assess the sufficiency of the evidence particularly as the ingredients of the cause of action relied upon by Laker Airways are unfamiliar to an English judge. The words used by Lord Diplock in British Airways Board v. Laker Airways Ltd. [1985] A.C. 58, 86-87 are clear:

"no one knows what evidence in support of its claim will have become available to Laker to put before the jury in the trial of the action in the District Court. To search for and obtain such evidence (which may be totally unknown to it at the time when, encouraged only by hopes entertained by its contingency-fee'd lawyer, Laker's action was launched) is what, in American proceedings, pre-trial discovery is for."

On the other hand, the fact that there is at present no evidence of a combination or conspiracy involving the plaintiff banks means that there can be nothing to place in the opposite scale if the first ground relied upon by the plaintiff banks indicates that the scales of equity and justice should come down in favour of an injunction. I must therefore turn to examine the first ground in more detail.

Counsel for the plaintiff banks submitted that, quite apart from the argument based on lack of evidence, an injunction should be granted, at any rate at an interlocutory stage, because of the history and nature of the dealings between the banks and Laker Airways. Counsel relied on a number of matters which I can summarise as follows. (1) Midland Bank and Clydesdale Bank had been bankers to Laker Airways for a substantial period. The banking transactions between the parties were governed by English law and formed part of the domestic, as opposed to the international, business of those banks. (2) The transactions were in no way connected with the business of Crocker National Corporation, a bank in California in which Midland Bank acquired a substantial interest in 1981. Nor were the transactions in any way connected with the New York office of Midland Bank which was not opened until April 1983. (3) The actions which the plaintiff banks took in relation to Laker Airways in 1981 and early 1982 were taken in England and in the context of an operation which was encouraged and supervised by the Bank of England. Everything which Midland Bank did was demonstrably,

and certainly at this stage incontrovertibly, in accordance with English law. (4) Effect should be given to the general principle that "Everyone should be entitled to adjust his conduct to the law of the country in which he acts:" see Morris, The Conflict of Laws, 3rd ed. (1984), p. 303. In this context we were referred to the speech of Lord Wilberforce in Boys v. Chaplin [1971] A.C. 356 where he said, at p. 389:

"The broad principle should surely be that a person should not be permitted to claim in England in respect of a matter for which civil liability does not exist, or is excluded, under the law of the place where the wrong was committed."

It was submitted that, though Lord Wilberforce's words were used in the context of the law of tort, the principle could be applied so as to restrict the extra-territorial effect of foreign statutes creating civil or criminal wrongs. (5) There was available to the plaintiff banks a personal equity in that in proceedings in New York they would be deprived of the defence available under English law that their predominant purpose was to protect their own legitimate trading interests. (6) Having regard to the "Englishness" of the dealings between the plaintiff banks and Laker Airways, it would be unjust and inequitable that the banks should be subjected to the oppressive procedures of pre-trial discovery in New York. (7) Putting the matter at its lowest, the plaintiff banks had established a strong prima facie case that they were entitled to an interlocutory injunction to protect them from injustice.

Counsel for Laker Airways, on the other hand, submitted that the position of the plaintiff banks was in reality no different from that of British Caledonian Airways, and that the plaintiff banks could not establish any personal equity entitling them to an injunction. The claim that the relevant acts of the plaintiff banks took place in England overlooked the fact that, in the case of a conspiracy, the acts of one conspirator can be imputed to the others. In the present case, other parties to the conspiracy had plainly taken steps in furtherance of the conspiracy within the United States. Such then in broad outline were the arguments.

In my view, it is right to treat with great caution the argument that pre-trial discovery is oppressive. The American courts have developed this form of discovery as part of their ordinary procedure and it cannot be right for this court, while paying lip-service to the principle of comity, to treat the possibility of exposure to pre-trial discovery as a source per se of injustice.

Nor is it right for this court to criticise or appear to criticise the wide-ranging nature of United States antitrust legislation. We must not overlook the fact that on this side of the Atlantic too there are legal rules designed to stimulate competition and to control restrictive practices: see, for example, article 85 of the E.E.C. Treaty.

At the same time, however, it is legitimate to look very closely at the suggestion that a resident in country A who has a series of dealings in country A with another resident of country A and who conducts his dealings in accordance with and subject to the law of country A is at the same time exposing himself to a potential liability in country B because

the way in which he conducts the dealings may offend some law in country B.

This question may arise in many different situations, often in fields far removed from antitrust legislation. Where the question does arise, then, in my judgment, the court has jurisdiction to consider whether it is just and equitable for the party affected to be brought before the courts of country B. The jurisdiction can, of course, only operate in personam and can therefore only be exercised where the other party to the foreign proceedings is amenable to an order of the court of country A.

Where the jurisdiction exists the court must look at all the circumstances to see whether the person who is seeking relief has conducted himself in the relevant sphere of his operations in such a way as to bring himself within the scope of the foreign law.

I return to the facts of the instant case. In my view, the dealings between the plaintiff banks and Laker Airways were, as counsel submitted, part of the domestic business of the banks. The dealings took place subject to English law and in an English context. In contra-distinction to British Caledonian Airways, the plaintiff banks did not at any stage subject the relevant banking dealings and operations to the scrutiny or control of the United States authorities. Accordingly, in my judgment, the English court has jurisdiction to intervene to prevent the plaintiff banks from being subjected to proceedings in the New York court.

The questions then arise: should the jurisdiction be exercised in this case and, if so, at this stage, and, further, should it be exercised despite the decision of the very experienced judge who, in the exercise of his discretion, discharged the earlier injunction? I have given anxious consideration to these questions. I have well in mind the warning of Lord Scarman in British Airways Board v. Laker Airways Ltd. [1985] A.C. 58, 95, that to grant an injunction would amount to an indirect interference with the process of justice of the New York court. Furthermore, the equity on which the plaintiff banks seek to rely is not a recognised equitable defence such as laches.

Nevertheless, I have come to the conclusion, looking at all the circumstances of this case, that justice requires that the court should intervene to prevent the plaintiff banks from being subjected to the proposed antitrust proceedings by Laker Airways in the New York court. With the utmost respect to the judge, I consider that he erred in principle in failing to recognise the scope of the equity which the plaintiff banks are seeking to invoke. For these reasons I would allow the appeal and continue the injunction which was granted.

Furthermore, for the reasons given by Lawton L.J., I agree that the cross-appeal by Laker Airways should be allowed and that the claim by the plaintiff banks for declarations that Laker Airways has no cause of action against them in England should be struck out.

Solicitors: Coward Chance; Durrant Piesse.

C. N.