Virgin Atlantic Airways Ltd v K.I. Holdings Co. Ltd & Anor

For service out of the jurisdiction, a claimant must establish a relevant gateway, a serious issue to be tried and that England and Wales is clearly or distinctly the appropriate forum. The necessary or proper party gateway may be satisfied where a foreign defendant is an alternative defendant to an anchor defendant within the jurisdiction, provided there is a good arguable case that one or other defendant is liable. In that situation, the demanding formulation that the claimant have much the better of the argument does not apply. Contractual jurisdiction clauses, especially exclusive clauses, create a substantial presumption in favour of the chosen forum. Parallel proceedings and the risk of inconsistent decisions are powerful factors supporting England as the appropriate forum.

Virgin acquired aircraft seats designed and manufactured by K.I. Holdings Co. Ltd in Japan. Following revelations of falsified testing and certification data, Virgin brought contractual and tortious claims against K.I. Holdings and contractual claims against Mitsubishi Corporation International (Europe) PLC. Mitsubishi also brought or proposed Part 20 claims over against K.I. Holdings.

K.I. Holdings applied to set aside permission to serve proceedings out of the jurisdiction. The issues were whether the claims satisfied the relevant jurisdictional gateways, whether there was a serious issue to be tried, and whether England and Wales was clearly or distinctly the appropriate forum, particularly in light of related proceedings in Japan.

1. Applications dismissed. The court held that Virgin and Mitsubishi had established serious issues to be tried. The pleaded contractual breaches, fraudulent or negligent misrepresentations, loss and limitation issues were sufficiently arguable. Deliberate concealment under Limitation Act 1980, section 32(1)(b), could provide a serious answer to limitation objections, including where concealment was by an agent.
2. The necessary or proper party gateway under CPR PD 6B paragraph 3.1(3) was available. Mitsubishi was an anchor defendant within the jurisdiction, and there was a good arguable case that K.I. Holdings was a necessary or proper party to the alternative contractual claims, related tort claims and Mitsubishi’s claims over.
3. In an alternative claim alleging that one or other defendant was liable, the Canada Trust formulation requiring the claimant to have much the better of the argument did not apply. It was sufficient that there was a good arguable case that one or other defendant was liable. The gateway was in any event satisfied on the necessary or proper party basis.
4. The contractual jurisdiction provisions supplied additional gateways. The non-exclusive English jurisdiction clause in the GTA, and the exclusive or substantially exclusive clauses in the Side Letter and Back to Back agreements, created strong presumptions in favour of English jurisdiction. The contractual and tortious claims were sufficiently connected with those provisions.
5. England and Wales was clearly and distinctly the appropriate forum. The existing English proceedings, the risk of parallel proceedings and inconsistent decisions, the English jurisdiction clauses, and the fact that the Japanese proceedings were later and at an early jurisdictional stage outweighed the Japanese connections concerning manufacture, documents and witnesses. The court therefore did not need to decide the unresolved question concerning the effect of Owusu on non-exclusive jurisdiction clauses.

The applications were dismissed. The court permitted, so far as necessary, the amendment identified at paragraph 14(ii) without re-service.

First-instance decision. The judgment itself records no subsequent appellate decision.