Aviation: Service Of Proceedings On A General Sales Agent Was Ineffective

If a foreign company does not provide an address for service of proceedings upon it, service is only permissible at a place within the jurisdiction where the company 'carries on its activities' or has a place of business.

But what is meant by 'carries on its activities'? A recent judgment involving the Papua New Guinea national airline, whose only presence within the jurisdiction was through a general sales agent, sheds some light on this important issue.

The background

In Noble Caledonia Ltd v Air Niugini Ltd, the claimant tour operator issued proceedings in relation to a cancelled flight booked with the defendant, the national airline of Papua New Guinea. The flight was supposed to carry 45 of the claimant's clients from Singapore to Port Moresby in Papua New Guinea to connect with a cruise around Indonesia. The flight was delayed and then cancelled, and the clients consequently missed the cruise. The claimant paid in excess of £649,000 in refunds, the cost of repatriation of clients to the UK, and other costs and expenses. It sought to recover these sums from the defendant airline.

The booking had been arranged by the claimant through Flight Directors Scheduled Services Limited (FD), the defendant's general sales agent in the UK, which had an office near Gatwick Airport. The claimant served the claim form on the general manager of FD, but FD refused to accept service on behalf of the defendant. The claimant argued FD was the defendant's London based agent.

The issue

The defendant was a company incorporated under the laws of Papua New Guinea. As such, service at FD's office would only be valid if that was a place at which the defendant carried on its activities, or was its place of business within the jurisdiction, pursuant to Rule 6.9 of the Civil Procedure Rules (CPR). Could the activities carried on by FD be attributed to the defendant?

The legal relationship between FD and the defendant

The relationship between the defendant and FD was covered by a General Sales Agency Agreement (the Agreement) which provided, amongst other things that:

FD carried on its activities in its own name; FD could not vary or modify the defendant's terms and conditions and was limited to selling tickets at the prices and on the terms set by the defendant; FD had no power, discretion or authority to bind the defendant to different terms and whilst it could book tickets electronically on the defendant's system, the bookings were confirmed and tickets issued to...