Blue Sky One Ltd & Ors v Blue Airways Llc & Ors

A contempt finding requires intentional conduct, with knowledge of the facts making the conduct a breach of the order. For a company, deliberate conduct by an officer or employee may suffice where it objectively breaches the order. In deciding whether to prevent a contemnor from participating in proceedings, the court has a broad discretion directed to securing compliance and protecting the course of justice. The court may act where continuing non-compliance makes enforcement of future orders more difficult, even if it does not prevent a fair trial on the issues. Any restriction on access to the court must remain proportionate under Article 6. The court must assess the particular circumstances, including the contemnor’s conduct, the effect on enforcement, and whether any effective alternative means of securing compliance exists.

The claimants sought findings that Mahan Air and Blue Sky Aviation Co FZE were in contempt for failing to comply with orders requiring two aircraft to be grounded at Schiphol Airport and Bills of Sale to be delivered up. The defendants argued that compliance had been prevented by third-party actions and circumstances outside their control. They also opposed striking out their statements of case or debarring them from participating in the forthcoming Phase 2 trial, concerning quantum and related issues.

The court considered whether the breaches were intentional, whether the defendants knew the facts constituting the breaches, and whether exclusion from the trial would be a proportionate means of securing compliance.

1. The Mahan parties were in contempt. Contempt required intentional conduct, with knowledge of the facts rendering the conduct a breach of the relevant order. In the case of a company, deliberate conduct by a director or employee which was not accidental and objectively breached the order was sufficient. The defendants had failed to take timely steps to prepare the aircraft for delivery and had concentrated on alternative arrangements instead of complying with the order.

2. The subsequent intervention of the Iranian Civil Aviation Organisation, restrictions affecting the flight plans, and alleged difficulties concerning the Bills of Sale did not remove the earlier breaches. The defendants’ failure to act before the deadline caused the practical difficulties on which they relied. Their conduct concerning the Bills of Sale was also unsatisfactory and inconsistent with the position presented during the earlier trial.

3. The court had a discretion whether to hear a contemnor. The discretion was directed to the particular facts and could be exercised where the contempt impeded the course of justice by making it more difficult to enforce orders, even where the court could still ascertain the truth at the Phase 2 trial. The purpose of the grounding order was to protect the claimants’ interests in the aircraft pending determination of the quantum issues.

4. Article 6 required proportionality. The defendants’ non-compliance appeared to be a calculated and systematic attempt to avoid grounding the aircraft without providing adequate security. The court therefore rejected the submission that exclusion from Phase 2 was necessarily disproportionate merely because the breach did not threaten the fairness of the trial itself.

5. The final decision whether to bar the Mahan parties from participation was deferred. The court required further information about the aircraft recall, the legal basis for the Iranian intervention, steps taken to release and deliver the aircraft, and any substantial alternative security package.