Virgin Aviation TM Limited & Anor. v Alaska Airlines, Inc

Whether to bifurcate a trial is a discretionary case-management decision requiring a pragmatic balancing exercise. The court should assess how the case is likely to unfold with and without a split, including costs, trial preparation, witness inconvenience, complexity, prejudice, the feasibility of a clean division, duplication, delay, settlement prospects and the effect on the trial timetable.

Where bifurcation depends on a very late amendment or newly introduced issue, the court may apply analogous principles. The applicant bears a heavy burden, particularly where the trial is imminent and substantial preparation and expenditure have occurred. A split should be refused where the proposed division is difficult to define, offers limited savings and is likely to increase aggregate costs or impair a fair and efficient determination.

The claim concerned the interpretation of a trade mark licence agreement between Virgin and Virgin America, whose rights and obligations had been assumed by Alaska Airlines, Inc. The dispute included claims concerning minimum royalty payments, cessation of use of the Virgin brand and the parties’ alleged legitimate interests.

Alaska applied to hive off several issues for determination at a later date. The application followed a late allegation that Virgin had breached the agreement through activities involving Virgin Atlantic Airways Ltd. Alaska accepted that the breach allegation could not be introduced into the forthcoming trial. The central issue was whether the trial should nevertheless be bifurcated.

1. Application refused. The court refused Alaska’s application to bifurcate the trial. The ruling concerned only the proposed carve-out issues and did not determine whether Alaska could later pursue its breach claim.
2. Bifurcation was essentially a discretionary case-management matter. The court adopted the pragmatic approach summarised in Electrical Waste Recycling Group Ltd v Philips Electronics UK Ltd [2012] EWHC 38 (Ch) and restated in Daimler AG v Walleniusrederierna Aktiebolag [2020] EWHC 525 (Comm). Relevant considerations included costs, trial preparation and management, witness inconvenience, complexity, prejudice, the possibility of a clean split, duplication, delay, settlement prospects and the overriding need for fair, quick and efficient adjudication.
3. The court accepted that the analogy with a very late amendment had force. An amendment would be required, and the newly introduced issues could not fairly be tried at the imminent trial. The principles in Quah Su Ling v Goldman Sachs [2015] EWHC 759 (Comm) therefore provided relevant guidance, including the heavy burden on a party seeking a very late amendment and the legitimate expectation that a fixed trial date will be preserved.
4. Applying those considerations, the application was too late, the proposed division was difficult to define, and the parties were still debating changing concessions about its scope. The likely costs savings were modest compared with a trial expected to cost over £7m, and bifurcation was likely to increase rather than reduce aggregate costs.
5. Alaska remained entitled to bring its breach claim. Any evidence common to that claim and the issues already in the proceedings remained relevant to the current trial.