Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
MR JUSTICE BURTON
Between :
Virgin Atlantic Airways Limited | Claimant |
- and - | |
(1) K.I. Holdings Co. Ltd (2) Mitsubishi Corporation International (Europe) PLC | Defendants |
Michael Crane QC, James Cutress and Richard Power (instructed by Bird & Bird LLP ) for the Claimant
Vernon Flynn QC and Christopher Howitt (instructed by Wilmer Cutler Pickering Hale and Dorr LLP) for the First Defendant
John Lockey QC and Alexander Milner (instructed by Ince & Co LLP) for the Second Defendant
Hearing date: 15 April 2014
Judgment
Mr Justice Burton :
Between 2001 and 2008 the Claimant, Virgin Atlantic Airways Ltd (“Virgin”) acquired 25 ship-sets and one part ship-set of aircraft seats (either ‘Kash’ seats or ‘Alpha’ seats) designed, manufactured and tested in Japan by the First Defendant, K.I. Holdings Co. Limited (“KIH”), either direct from KIH or from the Second Defendant, Mitsubishi Corporation International (Europe) PLC (“MCUK”), which, although certified by KIH as airworthy and in accordance with applicable regulations and technical specifications, were not.
On 2 June 2011, the European Aviation Safety Agency (“EASA”) issued an Airworthiness Directive (“2011AD”), which read:
“The Japan Civil Aviation Bureau (JCAB) have informed EASA that a review of the safety of passenger seats manufactured by [Koito] has disclosed discrepancies which include falsification of static, dynamic and flammability testing, as well as uncontrolled changes to production data (material and dimensional). In addition, JCAB confirmed that Koito records, showing evidence of falsification, could not be deemed complete.
Examples include:
• Fictitious dynamic test pulse plots inserted into test reports following failure to meet required certification requirements.
• Flammability test coupons not representative of production parts, for instance by use of alternative adhesive not specified on the approved drawing.
• Fictitious deformation values entered in test reports when values exceeded the maximum allowed.
JCAB and EASA have concluded that all data (both design and manufacturing) generated by Koito must be treated as suspect.
Results from tests performed by Koito with the supervision of JCAB confirmed that a high proportion of seat models failed the requirements for structural, flammability and occupant injury criteria.
The exact level of airworthiness risk for each seat model can only be determined through further dynamic or static testing (as per the applicable certification basis) and flammability testing.”
At a press conference on 8 February 2010, KIH’s President, Mr Takashi Kakegawa had admitted that “fraudulent acts were conducted across the organisation . . . Fraudulent acts can be traced back to the mid-1990’s, as far back as we have records. It was one organisational fraud, as such conduct has been found in multiple divisions”. Further in a letter dated 12 March 2010 to the JCAB, KIH stated:
“Our wrongful acts concerning seats for aircraft severely impair our credibility as an enterprise that engages in aviation related business, and we feel remorse for, and sincerely apologize for, having caused considerable inconvenience and concern to customers and all other parties concerned”.
Virgin claims against KIH in contract and in tort (by way of fraudulent, alternatively negligent, misrepresentations, set out in detail in the pleadings) and against MCUK in contract. KIH is a Japanese company: MCUK is an English company, served within the jurisdiction. There was no issue before me as to the existence or arguability of these causes of action. The issues have related to the applications by KIH to set aside the permission to serve out of the jurisdiction granted to Virgin, in respect of its claims against KIH in contract and tort, on 28 June 2013, and to MCUK, in respect of its Part 20 claims for breach of contract, tort and contribution, on 1 August 2013, each granted by Blair J.
There is no dispute that the seats were designed and manufactured in Japan by KIH. Prices and specifications of seats were agreed directly between KIH and Virgin. MCUK were the ‘middle man’. On occasion the seats were sold by KIH through MCUK to Virgin, an issue now being whether in relation to some of such arrangements MCUK was acting as buyer and on-seller or was acting as agent for KIH.
There are 3 main contracts or groups of contracts involved:
The “Mitsubishi Agreement” dated 14 May 2001. This was between Virgin and MCUK, and it related to up to 14 Kash sets of seats. It is described as a “Koito Seat Pricing and Specification Agreement”.
The four “Retrofit Agreements” made between 2001 and 2003 between Virgin and KIH alternatively MCUK (as explained above). These related to the supply of sets or part sets of Kash seats to four aircraft, VHOT, VBIG, VFAB and VWOW.
The General Terms Agreement (“GTA”) dated 8 September 2005 between Virgin and KIH (Mitsubishi being a party to the agreement but not, in this case, suggested to be the seller). This relates to eight Alpha sets of seats. The claim under this Agreement by Virgin is, in quantum terms, much the largest.
In respect of the Mitsubishi Agreement, Virgin claims damages for breach of contract against MCUK, and MCUK claims over against KIH. In relation to the GTA, Virgin’s contractual claim is only against KIH. MCUK has asserted that it was not party to the Retrofit Agreements, but was simply agent for KIH, and that it is therefore not liable in contract to Virgin (there is no claim against MCUK in tort). Consequently Virgin has, in respect of those agreements, sued KIH and MCUK in the alternative. There is no dispute that that is a proper course in terms of English procedure. MCUK claims over against KIH if it be found liable.
Virgin claims that, for the purposes of service out, it can establish a necessary gateway in respect of all its claims in contract and in tort against KIH. MCUK submits similarly in respect of its Part 20 claim.
Apart from the question of establishing a gateway, a claimant seeking service out must of course also show that there is a serious issue to be tried so far as the facts are concerned, and must establish that England and Wales is clearly an appropriate forum. There is, as can be seen from paragraphs 2 and 3 above, at least at this stage no issue as to the arguable existence of breaches of the various contracts set out above, or as to making, falsity or reliance in respect of the fraudulent or negligent misrepresentations alleged.
There are however two other matters, raised by Mr Flynn QC for KIH, in the context of serious issue to be tried, which, since they relate across the board to all the various gateways alleged by both Mr Crane QC for Virgin and Mr Lockey QC for MCUK, I shall deal with compositely at this stage:
Limitation. There was a Standstill Agreement between the parties on 7 September 2012, which has the effect of stopping the limitation period running from that date. As for any claims therefore, the 6 year limitation period in respect of tort and contract at English law (subject to any statutory extension) cannot go back beyond 7 September 2006. There is some doubt as to whether all of the 8 sets of Alpha seats were delivered prior to 6 September 2006: 4 or it may be 5 were not. In addition, so far as the GTA is concerned, there are sufficiently pleaded claims by reference to a 10 year warranty in clause 14 and an indemnity in clause 25, which would extend beyond the 6 year period, and there is a similar warranty in the Mitsubishi Agreement. Moreover Virgin and MCUK assert/accept that Virgin has at least a serious issue to be tried at this stage by reference to s32 of the Limitation Act 1980, by reference to deliberate concealment. S32(1)(b) provides as follows:
“(1) . . . where in the case of any action for which a period of limitation is prescribed by this Act, either -
. . .
(b) any fact relevant to the [claimant’s] right of action has been deliberately concealed from him by the defendant; or
. . .
the period of limitation shall not begin to run until the [claimant] has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.
References in this subsection to the defendant include references to the defendant’s agent and to any person through whom the defendant claims and his agent.
(2) . . . deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.”
It is not in dispute so far as concerns the GTA that there is a serious issue to be tried that by reference to s32 a limitation defence will not be available to KIH, at least in respect of the period prior to 2009/2010. The same applies to Virgin’s claims in tort against KIH. As for the contractual claims (in the alternative) against KIH under the Mitsubishi Agreement or the Retrofit Agreements, the same obviously applies. With regard to the Part 20 etc claims over by MCUK, if MCUK has been found liable it will be because it was the contracting party; Virgin would then be entitled to contend reliance on s32(1)(b) as against MCUK as such contracting party, by virtue of the dishonest concealment by its agent, the manufacturer: Applegate v Moss [1971] 1 QB 406 is relied on. I am wholly unpersuaded that there is any inconsistency, given the alternative nature of the claim, between MCUK asserting on the one hand that it was KIH’s agent and thus not liable on the contract (such that the s32 case would apply to KIH direct) and on the other hand that if, contrary to its case, it was the contracting party then Virgin would be able to rely on s32(1)(b) by reference to KIH as its agent.
Loss. Two points were taken by Mr Flynn QC in his skeleton. Both seem to me to have been overtaken or answered by Virgin’s evidence. There is no doubt that no such loss is being claimed in respect of the five aircraft which were disposed of by the Claimant without any material loss. As to the balance the evidence is overwhelming, and I do not need to set it out, that there is substantial arguable loss (particularly in respect of the Alpha seats) and potential and contingent loss by way of works yet to be done by way of dealing with the faulty seats in order to comply with requirements. As for Mr Flynn’s second point, it was understandably derived from the pleading in paragraph 45 of the Particulars of Claim, setting out the consequences “in respect of the 25 aircraft in which the Seats have been installed, all of which were/are leased by” Virgin. It now appears at least arguable from a schedule produced by Mr Crane QC that (even in respect of the 5 aircraft disposed of without any expenditure on replacing or recertifying the seats) all 25 aircraft were subject to a lease: 14 of them were leased and the balance subleased.
Some issues remain as to the existence of contracts as between KIH and MCUK, relevant to the Part 20 claims, which relate also to the issues of gateway, but that apart, in relation to all the claims, I have no doubt that there is a serious issue to be tried as between Virgin and KIH, and between Virgin and MCUK, so as to found the latter’s claim over against KIH.
A case originally made by KIH by reference to non-disclosure was not pursued.
Gateways
I turn to the question of gateways. I shall deal with each gateway by reference to the particular contractual or tortious or contribution claim upon which Virgin and MCUK rely, but the significant and common gateway relied upon by them is, pursuant to CPR 6BPD 3.1(3) the ‘necessary or proper party’ gateway, based upon the well-established authority that, subject always to the question of the burden upon a claimant to satisfy the forum test, it is appropriate to join a party as a necessary or proper party if, had the proceedings been against parties within the jurisdiction, both parties would be proper parties to the action (see Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at 87 per Lord Collins and United Film Distribution v Chhabria [2001] 2 All ER (Comm) 865, at 38 per Eady J).
I am satisfied that, as MCUK is an ‘anchor’ defendant within the jurisdiction, there is a good arguable case that KIH is a necessary or proper party pursuant to Virgin’s claim for:
breach (in the alternative) of the Retrofit Agreements;
tortious claims against KIH arising out of the Kash seats delivered under the Mitsubishi and Retrofit Agreements – a case not specifically made in the original application to Blair J, but upon which I can, as Mr Flynn accepts, allow reliance, in the light of the disapproval of Parker v Schuller [1901] 17 TLR 299 C.A. by the Supreme Court in NML Capital Limited v Republic of Argentina [2011] 3 WLR 273, at paras 131-137 per Lord Collins, by permitting amendment without re-service of the original application. Plainly there is, as Ms Miles puts it in her fourth witness statement (though submitting to the contrary) ‘commonality’ between the claims against MCUK for breach of contract and against KIH for tortious misrepresentations in relation to the same seats said to have been delivered in faulty condition;
MCUK’s contractual/tortious/contribution claims over by Part 20 claim against KIH in respect of the claims by Virgin against MCUK relating to the Kash seats delivered under the Mitsubishi and Retrofit Agreements.
Similarly, once a sufficient case is established against KIH to join it as Defendant under the Retrofit Agreements, then on that basis also MCUK’s contractual and/or tortious and/or contribution claims over against it, if otherwise arguable, are properly founded on the same basis: if necessary the same could be said by reference to Virgin’s claims against KIH in relation to the Alpha Seats, given that there appears to be no distinction between the kinds of seats so far as the fraud was concerned.
In those circumstances, most if not all of the claims by Virgin and MCUK against KIH can be permitted through the necessary or proper party gateway alone. I turn however to the issue of joinder of KIH as Defendant by Virgin under the GTA. The GTA contains by clause 38 the following provision:
“This Agreement shall be governed by and construed in accordance with English law and the parties hereby submit to the non-exclusive jurisdiction of the English courts.”
This is a non-exclusive jurisdiction clause, but Mr Flynn QC accepts the application of the words of Gloster J in Antec International Ltd v Biosafety USA Inc [2006] EWHC 47, helpfully summarising a great deal of previous authority, which emphasise (i) the significant presumptions which arise as a result of such a provision (ii) the need for some unexpected or unforeseeable factor ordinarily to be present for such presumption to be ousted. I shall consider whether there are such features when I turn later to the question of forum. The GTA relates to 8 of the aircraft and, as I have set out above, features the largest claim in quantum terms.
As to the Retrofit Agreements, claims under those Agreements are to be heard in England and Wales as against MCUK. But the alternative claim is made against KIH. If KIH indeed was party to those agreements, then they were made (as is common ground) by an agent (MCUK) trading or residing in the jurisdiction under CPR PD 6B para 3.1(6)(b) and/or were made within the jurisdiction (CPR PD 6B para 3.1(6)(a)).
Mr Flynn submits that there cannot be a good arguable case within the words of Waller LJ in Canada Trust Co v Stolzenberg [1998] 1 WLR 547, namely that the Claimant must have “much the better of the argument”, when the claim is put in the alternative. He accepts that it is not necessary in order to satisfy such a test that a Claimant must show that it has a 50% case or better, but he submits that where the Claimant itself effectively only puts its case at 50/50 (i.e. 50% against KIH) and KIH submits the contrary, it is difficult if not impossible logically to postulate that the Claimant has “much the better of the argument” as against KIH. I find Waller LJ’s words difficult to put into effect even in an ordinary case, save so as to accept that a Claimant does not have to show at such preliminary stage that it is going to succeed on the balance of probabilities; but particularly so in a case where, as here, the Claimant is only submitting that one or other of the Defendants must be liable. In BNP Paribas S.A. v Anchorage Capital Europe LLP[2013] EWHC 3073 (Comm)Males J considered that in a case, as here, of a claim put in the alternative by a claimant on the basis that one or other defendant was liable, he was entitled to treat Waller LJ’s test as ‘sufficientlyflexible’, and was satisfied that it was in those circumstances complied with. He did go on to conclude (as I do here) that the ‘alternative’ defendant was a necessary or proper party, such that that gateway was in any event satisfied. Rather than conclude that Waller LJ’s test is flexible, I would rather say that it does not apply in an ‘alternative case’, provided that there is a good arguable case that one or other of the defendants was liable, and I would be satisfied that the gateway is complied with in this case. But as I have already concluded in paragraphs 13 to 15 above, I am satisfied in any event that, as alternative defendant, there is a good arguable case that KIH is a necessary or proper party to the Claimant’s case against Mitsubishi under the Retrofit Agreements.
As to the tortious claims by Virgin, there is plainly a good arguable case, and Mr Flynn, mindful of the impact of Fiona Trust Holding Corp v Privalov [2008] 1 Lloyd’s Rep 254 H.L, does not contend otherwise, that such tortious claims, insofar as they relate to the Alpha seats, fall within the ambit of clause 38 of the GTA, set out in paragraph 16 above.
In any event, so far as all the tortious claims are concerned, relating to both Alpha and Kash seats, there is plainly on the evidence a good arguable case that Virgin has suffered loss and damage within the jurisdiction (CPR PD 6B para 3.1(9)(a)). I have been greatly assisted by the helpful analyses by all counsel of authorities such as Booth v Phillips [2004] 1 WLR 3292, Cooley v Ramsey [2008] EWHC 129 (QB), Wink v Croatio Osiguranje DD [2013] EWHC 1118 (QB), and Pike v Indian Hotels Company Ltd [2013] EWHC 4096 (QB), and am satisfied that Virgin’s propositions on the facts of this case are plainly arguable and give it much the better of the argument.
That is sufficient, but there is an alternative gateway, that the damage sustained resulted from an act committed within the jurisdiction, namely the misrepresentations made to Virgin in England, received and acted upon in England. So far as that is concerned, there is obviously an issue of law in dispute between authorities such as Domicrest Ltd v Swiss Bank Corporation [1998] QB 548 and Newsat Holdings Ltd v Zani [2006] EWHC 342 (Comm) and the words of Collins J in Bank of Tokyo-Mitsubishi Ltd v Baskan Gida [2004] 2 Lloyd's Rep 395 at 223, but I do not need to resolve it.
As for the tortious claims over by MCUK, Mr Lockey’s arguments are similarly rested: and so far as concerns loss by MCUK within the jurisdiction, he points persuasively to the fact that its putative liability to Virgin under any judgment of the English Court will fall to be paid to Virgin in England (Société Commerciale de Réassurance v Eras International Ltd [1992] 1 Lloyd’s Rep 570 and London Helicopters v Heliportugal[2006] EWHC 108 (QB)).
I am satisfied that MCUK’s contribution claims, insofar as not brought within the necessary or proper partygateway,qualify as a tortious claim as above.
I do not need to decide the interesting question raised by Mr Lockey by reference to Lister & Co Ltd v E G Thomson (Shipping) Ltd (No 2) [1987] 3 AER 1032, as to whether permission would in any event be necessary for a Part 20 claim, once KIH and MCUK were both parties.
I turn to consider the position of MCUK, so far as a contractual gateway is concerned, in respect of its claim over in contract against KIH if it be liable to Virgin - always subject to its case, which I have accepted, that it can in any event establish a gateway as a proper and necessary party.
Its first case is by reference to the “Koito Side Letter”, dated 7 October 2008. It is common ground that this was entered into between MCUK and KIH at the same time as the similar Side Letter dated 2 October 2008 between MCUK and Virgin, in circumstances when works of upgrade (by reference to “dress cover and foam change”) were required, which KIH agreed that it was unable or unwilling to carry out, so that they would be carried out by a third party. Hence by Recital D it was provided that “Virgin desires, and MCUK and [KIH] agree that the warranties and indemnities provided by [KIH] in relation to the Equipment under the [Mitsubishi] Agreement will not apply to a failure of Equipment arising after and caused by the dress cover and foam change”. By clause 3.1, KIH and MCUK agreed that “the warranties and indemnities under the [Mitsubishi] Agreement remain in full force and effect”. Then, and essentially so far as concerns MCUK’s claim against KIH, by clause 3.2 KIH:-
“agrees that it shall indemnify and hold harmless MCUK for any and all claims, suits and actions against MCUK under the [Mitsubishi] Agreement and in relation to the upgrade and MCUK shall assist [KIH] if requested.”
MCUK relies by way of its contractual claim against KIH upon the Side Letter, which provided by clause 10 that:-
“This Side Letter shall be governed by the laws of England and the parties submit to the exclusive jurisdiction of the English courts.”
The argument for KIH is that its warranty in clause 3.2 only related to the upgrade. However:-
This would seem counterintuitive, when the works of upgrade were not to be carried out by KIH, and the purpose and intent of the agreement must have been to preserve KIH’s liability notwithstanding the fact that a third party would now be doing some further works.
The wording of clause 3.2 in any event appears clear that the indemnity is being given in respect of claims etc against MCUK under the Mitsubishi Agreement and in relation to the upgrade.
Recital D does not support this proposition, nor does the wording of clause 3.3(1) whereby “for the avoidance of doubt, [KIH] confirms that… the revised seat recline (due to the Upgrade) does not in any way affect the warranty cover given in the [Mitsubishi] agreement.”
There is clearly in my judgment a good arguable case that this gateway applies, and clause 10 provides for the exclusive jurisdiction of the English courts, which creates (as is clear from e.g. Donohue v Armco Inc [2002] 1 Lloyd's Rep 425 HL at 433 per Lord Bingham) an even stronger presumption than in the case of a provision for non-exclusive jurisdiction. As I have set out in paragraph 19 above, this would also be the case for any tortious claims.
MCUK then relies upon ‘Back to Back’ agreements in respect of the arrangement which it asserts was straightforward (as set out in paragraph 5 above) that (if and insofar as MCUK was not an agent for KIH) any liability it undertook to Virgin as ‘middle man’, was to be passed on to KIH as the manufacturer/designer. There are two issues here, one is as to the existence of such Back to Back agreements, and the other, clearly related, issue is the case put forward by KIH that the ‘middle man’ was not MCUK but Mitsubishi Corporation.
The starting point is that there are in fact on any basis four such Back to Back agreements in writing between MCUK and KIH which have been so far produced and/or identified. There are two relating to seats sold under the Mitsubishi Agreement (VBLU and VWKD, both dated 16 August 2004) and two relating to seats under the Retrofit Agreements (VHOT dated 15 March 2004 and VFAB). The first three have been exhibited by MCUK, and the fourth has been found by KIH and has not yet been exhibited, but is admitted to be in the same form. Each of them is a contract of purchase by MCUK from KIH containing relevant warranties and indemnities, and by clause 11:
“This contract shall be governed by and construed in all respects in accordance with the laws of England. [KIH] submits to the non-exclusive jurisdiction of the English courts for the settlement of disputes arising under or in connection with this Contract and [MCUK] may institute proceedings under or in connection with this Contract in such Courts or in the courts of any other jurisdiction, but any claim by [KIH] shall be brought only in the English courts, to whose exclusive jurisdiction [MCUK] submits. ”
Again there is thus clearly an available contractual gateway, and the jurisdiction clause is verging on an exclusive jurisdiction clause. Again tortious claims would appear to fall within it.
As to the other Retrofit Agreements (VBIG and the odd seats for VWOW) and the other twelve sets of seats subject to the Mitsubishi Agreement, Mitsubishi submits that either Back to Back Agreements were made but cannot be found, as with the VFAB agreement until it was discovered by KIH, or never existed in writing but only by way of an oral agreement or an implied agreement providing for the same obvious arrangement:
There is no reason to assume that there is any difference between those transactions and the agreements which have been produced:
The existence of such Back to Back agreements is to be assumed or inferred from the terms of the Side Letter, as appears from Recital D and clauses 3.1 and 3.3 set out at paragraphs 26 and 27 above.
Mr Flynn points to the regular appearance of Mitsubishi Corporation in relation to the documents (and to the longstanding relationship between Mitsubishi Corporation and KIH) and submits that if there is any middle man entitled to the benefit of any such warranty or indemnity it will be Mitsubishi Corporation. However:
The documents set out above are obviously to the contrary. In fact there were purchase orders in relation to VWKD and VBLU in the name of Mitsubishi Corporation, but the Back to Back agreements themselves were entered into with and by MCUK. Mr Springthorpe in his third witness statement (at paragraph 72) explains that, notwithstanding an early letter of claim dated 13 July 2010, at a time when Virgin had seen a draft GTA with Mitsubishi Corporation, “the reason that no claim is brought against Mitsubishi Corporation is that the draft Mitsubishi Corporation GTA was not executed and none of the seats were purchased by [Virgin] from Mitsubishi Corporation”.
In the Mitsubishi Agreement itself, MCUK is described as the “seller”, as KIH plainly knew, or must have known, not only from the references to that Agreement in the Side Letter set out above but from the cross-reference to it in the KIH Seat Pricing document, and the very description of the Mitsubishi Agreement set out in paragraph 6(i) above.
There are issues as to the identity of the parties to the various agreements, which Mr Cooper himself for MCUK, in preserving its position as against Virgin, indicates will need to be resolved, such as the fact, which he points out in his second witness statement, at paragraph 23, that some of Virgin’s orders were sent not by it but a company called ILFC. But I am entirely satisfied that there is a good arguable case, when considering the existence of the precise contractual arrangements between seller/manufacturer/designer, middle man and ultimate purchaser, that there are the agreements upon which MCUK (and Virgin) relies, and, so far as concerns the Back to Back agreements, upon which MCUK relies in relation to all the Kash seats. If those agreements existed, it appears to me probable that expressly or by implication they contained the same terms as to English jurisdiction. In any event, as I have set out above, the necessary or proper party gateway is plainly available.
Forum
I am therefore satisfied that Virgin has sufficiently established that there is at least a good arguable case in relation to its gateways, in contract (paragraphs 16 and 17-18), tort (paragraphs 19 and 20) and (if and as necessary) necessary or proper party (paragraph 14): and that MCUK has established gateways in respect of contract (paragraphs 26 to 34), tort/contribution (paragraphs 22-23, 28, 31-34) and necessary or proper party (paragraphs 14 and 15). I must now turn to the question as to whether they have established that the English courts are clearly and distinctlythe appropriate forum (see Altimo Holdings at para 71 per Lord Collins).
I set out the major factors, all of which plainly favour the English jurisdiction:-
The claim by Virgin against MCUK in respect of the Kash seats sold and delivered under the Mitsubishi Agreement and the Retrofit Agreements is plainly properly issued in these courts and will continue. All issues as to the condition of the Kash seats, and inevitably as to the Alpha seats, their causes and consequences and the representations made in that regard by KIH will be heard in these courts. If the claim against KIH is not joined, then there will be parallel proceedings in different jurisdictions, and the question as to whether KIH or MCUK was liable under the Retrofit Agreements will be decided in two different proceedings. Similarly there may be inconsistent decisions in relation to the inevitable claim over by MCUK against KIH, if that is to be heard in the Japanese courts.
The Japanese proceedings were issued subsequently, and are still at the jurisdiction stage (there is a further hearing fixed for 28 May) and it is entirely possible that they may be resolved in accordance with this judgment. In any event they are second in time, and MCUK is not a party to them.
As to the claim between Virgin and KIH, the terms of the GTA, both as to contractual and (as discussed above) tortious claims provide for the non-exclusive jurisdiction of the English court as a matter of contractual obligation by KIH. Any features now relied upon by KIH must be (a) “overriding or at least very strong” (Antec at para 7(ii)), (b) not foreseeable at the date of contract (Antec at para 7(iii)).
As to the claims between MCUK and KIH, I am satisfied that the contractual claims over (and the tortious claims) are subject to the exclusive jurisdiction of the English courts (under the Side Letter) or certainly so far as any claim by KIH concerned (the Retrofit Agreements): or at any rate subject to non-exclusive jurisdiction clauses.
Mr Flynn relies upon the following features in support of Japanese jurisdiction:
KIH is a Japanese company, with no base or assets in this jurisdiction. Although MCUK is an English company, it obviously has connections with Japan, and in particular Mitsubishi Corporation has had a long-standing relationship with KIH. Virgin has some connections with Japan.
The seats were designed, manufactured and tested in Japan (though Mr Springthorpe in his third witness statement, at paragraph 66.4, points out that a number of planning and design meetings took place in England and France).
The Japanese regulatory reports and decisions were in Japan (though of course there were also conclusions by EASA).
KIH’s documents are in Japanese and in Japan and the KIH employees will be in Japan and speak Japanese (although Mr Springthorpe points out at paragraph 66.3 of his third witness statement that there were no direct communications in Japan between Virgin and KIH without a member of Virgin’s engineering department from England present, and there is a considerable number of documents in English, particularly those communicating the test results to Virgin).
KIH asserts, but Virgin and MCUK both deny, that the law of tort applicable to the representations would be Japanese. I cannot possibly resolve at this stage the competing arguments with regard to the impact of the making, receipt and reliance of the fraudulent misrepresentations. Mr Lockey draws specific attention to the recent decision of the Supreme Court in VTB v Nutritek Capital [2013] 1 AER 1296, in which, in relation to misrepresentations alleged to have been made by a defendant in Russia to the claimant in England, relied upon in England by expenditure of money, all five Supreme Court Judges at the interlocutory stage concluded in favour of the applicability of English law.
So far as Virgin is concerned, the claims under the GTA, where there is a non-exclusive jurisdiction clause, only relate to 8 out of the 25 sets of seats in issue (or actually 8 out of 20, given that 5 of the aircraft with Kash seats supplied under the Mitsubishi Agreement have been disposed of without any material loss suffered). However, as set out above, those 8 do carry with them the largest claims, and in any event, there are the jurisdiction clauses upon which MCUK relies.
Evidence as to works required to rectify the condition of the seats will be given by Japanese witnesses: but Mr Crane and Mr Lockey submit that this will largely, if not entirely, be a matter for expert evidence.
Virgin and MCUK submit that none of these matters begin to oust the substantial factors set out in paragraph 36 above, and can in any event be largely accommodated (e.g. by translation) or are counter-balanced by factors such as the largely English or European aspects of the evidence and witnesses to be called by them. In any event the expert evidence, both technical and regulatory, can be as conveniently called in these courts. As for the evidence, it is clear to me that although some evidence as to the manufacture, design and testing in Japan will need to be given, in the light of the admission as to the frauds, much if not all of it can be given by way of written witness statement which need not be challenged and thus will not require the calling of the witnesses orally.
I am urged by Mr Flynn to take the opportunity to conclude that the case of Owusu v Jackson [2005] ECR I-1383, [2005] QB 801 does not require me to find that the English court is constrained by Article 23 of Council Regulation (EC) 44/2001 from declining the jurisdiction of this court by excluding any application of the forum non conveniens principle, even though the potential alternative jurisdiction is not that of a Member State, and refers me to my own discussion of this point in Deutsche Bank AG v Sebastian Holdings Inc [2009] EWHC 3069 at paras 30-39 in which, as in a number of other cases, I left the point open. It is common ground that Owusu would apply where there is an exclusive jurisdiction clause, as for example in the Side Letter (Skype Technologies v Joltid Ltd [2009] EWHC 2783 (Ch) and Equitas Ltd v Allstate Insurance Company [2009] 1 Lloyd’s Rep IR 227), the only issue thus remaining outstanding being whether it applies in cases of non-exclusive jurisdiction. I am entirely satisfied however that the point does not arise here for determination, because I am entirely clear that this is not a case where I would think it appropriate, but for Owusu, to decline the jurisdiction of the English courts, but rather I am satisfied that English jurisdiction is clearly and distinctly appropriate. It is not a case where, as Mr Flynn has submitted, Virgin and MCUK are looking for a hook, nor a case in which, as he sought to argue, the centre of gravity is in Japan. The claims against KIH are properly brought within this jurisdiction and I dismiss their applications. So far as necessary I shall permit the amendment referred to in paragraph 14(ii) above, without re-service.