British Airways Board v Laker Airways Ltd

An English court may restrain a person within its jurisdiction from pursuing foreign proceedings only where the applicant has a legal or equitable right not to be sued there. In a single-forum case, the foreign suit must be so unconscionable and unjust that intervention is necessary to prevent injustice.

Participation in an international regulatory regime does not confer immunity from the domestic law governing operations within a foreign state. An English licence cannot relieve its holder from obligations imposed by that foreign law. Nor may an English court interpret an unincorporated treaty or derive private-law public policy merely from the executive’s views.

Laker Airways collapsed after operating low-fare transatlantic services in competition with British Airways and British Caledonian Airways. Its liquidator brought proceedings in the United States alleging an unlawful conspiracy under American antitrust law. The British airlines sought injunctions in England restraining those proceedings.

Parker J refused permanent injunctions, but the Court of Appeal reversed him in [1984] QB 142, relying substantially upon an order and directions made under the Protection of Trading Interests Act 1980. Laker also challenged those measures by judicial review.

The conjoined appeals concerned whether the American action could be restrained when it disclosed no justiciable English cause of action, and whether the Secretary of State’s order and directions were lawful.

1. The civil appeals were allowed unanimously and the injunctions discharged. Lord Diplock delivered the leading speech. Lord Fraser of Tullybelton, Lord Scarman, Lord Roskill and Lord Brightman agreed with his reasoning and disposition.

2. Per Lord Diplock and Lord Scarman, an injunction is not an independent cause of action. It ordinarily depends upon an existing legal or equitable right enforceable against the defendant. That principle extends to a right not to be sued abroad, arising contractually or from conduct which English law regards as unconscionable. In a single-forum case, restraint is justified only where the foreign proceedings are so unconscionable and unjust that equity must intervene to prevent injustice.

3. The American court was the only competent forum for Laker’s antitrust claim. The alleged conduct disclosed a claim under American law but no claim justiciable in England. Restraining Laker would therefore determine the controversy one-sidedly against it while preventing any determination in its favour. The burdens of American discovery, costs and multiple damages did not themselves establish unconscionability.

4. The British airlines voluntarily subjected their operations within United States territory to American domestic law, including its antitrust law. Sections 21(1) and 21(2) of the Civil Aviation Act 1971 required compliance with an English air transport licence but could not relieve an operator from obligations imposed by the foreign state. Approval of particular fares did not immunise the antecedent alleged agreement where the competent American authority had granted no antitrust exemption.

5. The Bermuda 2 treaty formed no part of English law. English courts could neither interpret it nor adjudicate an alleged inter-state breach. Any such dispute belonged to arbitration or diplomatic action.

6. British Caledonian had not shown that the American claim against it was frivolous or vexatious. It was premature to determine the evidential merits before American pre-trial discovery had been completed.

7. The measures made under the Protection of Trading Interests Act 1980 did not justify an injunction. The section 1 direction did not prohibit payment of a foreign multiple-damages judgment. The section 2 direction permitted an application for consent to disclose material needed for the airlines’ defence.

8. The judicial review appeal was dismissed unanimously. The statutory reference to overseas measures included legislation. The Secretary of State’s decisions concerning international relations could be invalidated for unreasonableness only on a very strong case, and no such case was established.

1. House of Lords: Allowed Laker’s appeals in the two civil actions, set aside the Court of Appeal’s orders and discharged the injunctions. Dismissed Laker’s judicial review appeal and affirmed the Court of Appeal’s order.

2. Court of Appeal: In [1984] QB 142, reversed Parker J in the civil actions and granted injunctions restraining the American proceedings. It dismissed the challenge to the Secretary of State’s order and directions.

3. High Court: Parker J refused permanent injunctions in the civil actions, while granting temporary protection pending appeal. The judicial review application challenged measures made under the Protection of Trading Interests Act 1980.