AMERICAN LLOYD TRAVEL SERVICE LTD v. INTERNATIONAL AIR TRANSPORT ASSOCIATION

HCA 660/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 660 OF 2007

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J U D G M E N T

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Introduction

1.  This is an application by the Plaintiff for an interlocutory injunction to suspend the operation, by the Defendant, of a resolution passed by it on the occasion of its 29^th Passenger Agency Conference (“the Conference”) held at Geneva on 28 and 29 June 2006 entitled “Same day Voiding/Cancelling of Traffic Documents” which it incorporated into the Passenger Agency Agreement (“PAP”) in Hong Kong.  It is said that the Conference passed the resolution in breach of its agreement with its associated travel agents by failing to follow the procedures contained in Resolution 860a which established the Passenger Agency Programme Global Joint Council (“PAPGJC”) which I will refer to as the Council.  It is submitted that the effect of that breach means that the resolution is of no effect and therefore cannot bind the Plaintiff and the other members of the group that it represents.  I have said enough already to demonstrate that this matter needs careful explanation before one can readily understand what this dispute is all about as well as the various issues that arise from it.

What is IATA

2.  In its present constitution IATA was established at Havana, Cuba in April 1945 and incorporated in Canada in December that year  succeeding a previous, identically named, association which had been set up at The Hague in 1919 at about the time of the first scheduled air services.  Its purpose is to represent and serve the airline industry.  Its aims are to promote safe, reliable and secure air services, provide a means of collaboration amongst airlines and co-operation with the International Civil Aviation Organisation and other international organisations.  It has over 270 members from more than 140 countries.

3.  Its member airlines sell their tickets to fare paying passengers either directly to its passengers or through travel agents.  When a ticket is sold through a travel agent, the agent will be responsible for collecting the fare from the passenger and account to the airline for it, less the agent’s commission on each sale.  Having regard to the volume of such transactions, IATA has established agreed procedures with travel agents that are accredited to its organisation for the payment of the fare and other charges to its member airlines.  Unsurprisingly, these procedures are designed to ensure that payment is effected quickly and in a uniform manner.

4.  In order to become an accredited IATA travel agent, the agent must conform to certain standards and criteria.  In order to become an accredited IATA travel agent in Hong Kong an agent must be licensed.  This requires the agent to be a member of one of eight association members of the Travel Industry Council of Hong Kong (“TIC”) which, amongst other things, carries a requirement of having a paid-up capital of at least HK$500,000.  Having become licensed by the Registrar of Travel Agents, a travel agent wishing to become accredited by IATA must apply to join its Passenger Agency Programme.  In order to do so the travel agency must have at least three IATA qualified and certified ticketing staff, employ a general manager with at least five years IATA experience and have operated as a licensed travel agent for 18 months demonstrating financial soundness and probity.

5.  By becoming accredited an agent is able to deal with IATA member airlines directly, rather than purchasing tickets for its customers through a third party.  The agent will also be allowed a maximum period of 15 days before accounting to the airline for the fare in respect of tickets that it sells on the airlines behalf for which it will receive a 7% commission on each sale.

6.  The Plaintiff is bringing this action on behalf of the Society of IATA Passenger Agents Limited (“SIPA”) which is one of the eight association members of the TIC.  SIPA has 122 members, all of which are accredited by IATA which in turn has 231 accredited travel agents in Hong Kong. 

IATA’s Relationship with Its Accredited Travel Agents

7.  IATA’s arrangements with its accredited travel agents is on the same basis throughout the world.  Usually there are no exceptions granted for particular countries or territories although implementation of its conditions may, on occasions, take longer in some countries than in others.  As the issue before me is restricted to the same day voiding provisions that were decided at the June 2006 Conference, I need only refer to these.  The provisions form part of the PAP which contains the rules and procedures that govern the sale of tickets by IATA accredited travel agents.  The 2005 guide to the PAP asserts that it:

“provides an industry framework which allows IATA Agents’ relations with airlines to be based on rules and agreements developed in consultation with representatives of the agency community.”

The legal relationship between an agent, including in this case the Plaintiff, and IATA is regulated by the Passenger Sales Agency Agreement.  IATA has signed on behalf of its member airlines.  The version between the Plaintiff and the Defendant is at page 128 of the main bundle and is dated 15 December 1994.  Clause 2.1 and particularly 2.1(a), 2.1(a)(ii) and 2.1(b) are of relevance these provisions incorporating by reference the Rules and Regulations which form part of the agreement applicable to the dispute before me.  Clause 17 is to the effect that the law applicable to the Agreement is that of the Agent’s principal place of business, in this case Hong Kong, IATA itself having a legal presence in Hong Kong by being an oversea registered company under part IX of the Companies Ordinance.

8.  Two bodies that are established within IATA’s organisation are of paramount importance to the decision that I am required to make.  The Passenger Agency Conference, to add another abbreviation, PAConf (“the Conference”), which is the overall decision making body governing the PAP.  It only comprises representatives of the airlines.  Its aspirations, if I can describe them as such, appear in the Travel Agents Handbook [page 135]: 

“To be meaningful and effective any body of regulations must be seen to be reasonable and fair to those who are subject to them.  The IATA Agency Programme tries to meet those requirements through daily contact between 49,000 travel agency locations around the world and more than 260 airlines.  It can do it more effectively where travel agents communicate freely and openly with the airlines and where they support their national associations.”

9.  The other body is the Passenger Agency Programme Joint Global Council, which reduces to the PAPGJC, and which I will refer to as the Council.  This was established in 2005.  A helpful description of the Council is at pages 138 and 139.  The agents have representation on the Council.  Resolution 860a established the Council [page 143] and sets out its composition and responsibilities.  This Resolution forms part of the package of provisions which regulate the relationship between the airlines and the travel agents.  The preamble to the Resolution states that the Council is:

“established to manage the agent/airline relationship, provide a consultation forum for (the) Conference decisions and jointly promoted the IATA Passenger Agency Programme to airlines and agents.”

Clause 1 specifically provides that the Council is:

“…. responsible for providing oversight on those aspects of the PAP relevant to agent/airline relationships.”

Given its importance in this application, I ought to refer to the Resolution’s material provisions.  Clause 2 relates to the Council’s composition.  2.1 provides that the Council will be composed of a maximum of 18 members with equal representation of agents and airlines.  2.3 says that:

“the Council shall act by submitting recommendations that must first be approved by a simple majority present of each of the two constituencies.”

This provision I think amply demonstrates where the balance of power lies in IATA as an organisation.  It is, after all, an association of airlines.  The travel agents that are accredited to it, whilst having a formal voice in relation to airline/agent relations are severely restricted in how that voice can be channelled and given effect to.  Firstly, the Council is limited to making “recommendations” and those recommendations can only see the light of day if they are approved by a majority of the agents’ representatives as well as of the airline representatives.  And so if at Council level the agents’ views, which they wish to go forward as a “recommendation” do not carry favour with the majority of the airline representatives, can have no formal standing before the Conference which, as I will indicate more fully in a moment, is IATA’s decision making body.

10.  2.4 ordains that the Council:

“Shall meet not less than twice annually, and at least one meeting shall be arranged to coincide with the publication of the [Conference’s] Agenda.”

The effect of this is that the Council is able to convene before the Conference meets and the Agents representatives can at least discuss the Agenda of the Conference, express their views, and if they can carry the vote in both constituencies on the Council, make recommendations on matters on the Agenda and, I would have thought, other matters as well which if carried can go forward for consideration by the Conference.  2.5 requires IATA to provide adequate Secretariat support for the Council’s meetings.  It also requires reports and recommendations of the Council to be placed on the Agenda of the Conference, which confirms my remarks on the effect of 2.4.  This is all given formal recognition in Clause 3 which sets out the Council’s responsibilities.  Given the fundamental importance of Clause 3, I propose to set out in full the parts of Clause 3 which have a bearing on my decision:

“	3.1	The Council shall be responsible for making recommendations to Conference on the development, management and marketing of the Passenger Agency Programme which shall include the consideration and development of an Ombudsman.  The Council may make recommendations to Conference for improvements to all aspect of the Agency Programme.
	3.2	The Council shall review the Conference agenda immediately after publication and in any event no later than 30 days from publication.
	3.2.1	The Council shall be authorised to review all agenda items, and recommend changes to proposed resolution amendments having a direct impact on the Agent/Airline relationship.  The procedure for taking forward Council recommendations shall be as per the following provisions:
	3.2(a)	any recommendations shall be included with the next Conference agenda submittal by the Secretary;
	3.2(b)	the Conference will review both the original proposal and the amended proposal submitted by the Council.  If Conference takes action to adopt the original proposal the matter will be referred back to the Council, and the resolution amendments shall be held suspended pending review the Council;
	3.2.1(c)	provided there are issues to be addressed, the Council shall convene to review the decisions of PAConf immediately following such Conference, and in any event no later than 30 days following that Conference;
	3.2.1(d)	following the review any changes to the proposal, including any recommendation for deferral of implementation, shall be presented to the Conference for consideration by mail vote, or as a recommendation for an agenda submission to the next PAConf;
	3.2.1(e)	thereafter the Secretary will declare the result, whether in favour of the Council recommendation or that agreed at Conference, and the new or amended resolution change will be adopted;
	3.2.1(f)	the Council shall also review any on-site items considered by the Conference and recommend any changes as per the procedure listed above;
	3.2.1(g)	the Council is not authorised to change or ignore Resolutions.”

The Ticket Voiding Arrangements before June 2006

11.  In Hong Kong, as elsewhere within the IATA regime, ticket agents are required to account to the airlines for the proceeds of ticket sales on the 15^th and 30^th day of each month, for sales during the previous two week period.  This presents no problem unless a passenger changes his mind and decides not to travel on the date and flight that he has booked, for which a ticket has been issued.  If that happens then one of two courses are available to the agent.  It can either void (that is to say cancel) the ticket or require the passenger to apply to the airline for a refund of the ticket.  If it voids the ticket that would be the end of the matter subject to a modest penalty but, if the passenger is required to apply for a refund on his having cancelled the flight, then an administrative charge of about $250 will be applied by the agent which is shared with the airline.  This in itself is also no great hardship for the passenger but he must then wait for as much as three months and sometimes longer for his refund to be paid.  The amount of the refund depends on the terms of the ticket.  If the ticket is a cheaper one, the refund may only be a small percentage of the cost of the ticket.  Sometimes a ticket may prohibit refunds with the result that the passenger will get nothing, alternatively he may wish to pay a penalty as appears on the ticket and change the date of his flight.  Whichever it is, by far the best option from the passenger’s point of view is for the agent to void the ticket for him.  Ticket voiding is a very common practice in Hong Kong because of the way that travel agents do business with their customers — particularly their corporate clients who will provide them with a lot of business and frequently purchase business or first class tickets at higher cost, and also their regular, and therefore known to them and trusted, individual customers.  The evidence is that Hong Kong agents are prepared to give such clients credit.  That is to say that they will issue a ticket first and require payment later.  It may be that credit terms given to corporate clients can be as long as 30 days.  With others it may be shorter.  Nevertheless, the point is that the ticket is issued by the agent before payment is made by the passenger.  Once the ticket is issued the agent becomes liable to the airline for the cost of the ticket.

12.  Recognising the prevalence of ticket voiding in Hong Kong, the airlines and the agents had arrived at an accommodation, the detail of which appears at page 234 which is an e-mail from IATA’s Hong Kong representative office.  The position at the time of the challenged resolution by the Conference at Geneva in June last year was that for the first 15% of tickets issued that are voided no penalty was charged to the agent.  There is then a sliding scale, with 15-20% attracting a charge of HK$15 per voided ticket, 20-50% HK$30 and 50% plus HK$150.

13.  Under this procedure for an agent who has to account to the airlines for its ticket sales on the 15^th and 30^th day of each month voiding is possible during that two week period with no financial penalty for the first 15% and a relatively modest penalty thereafter.  The agents are therefore able to provide their clients with a flexible service.  Passengers know that they can make bookings before payment of the ticket knowing that these bookings can be changed at very little cost to themselves.  Agents are also able to make multiple bookings on behalf of clients and so provide them with several options in terms of flights and dates of travel which can then be voided without the need for the passenger to pay the fare.  The evidence is that by doing so Hong Kong travel agents can provide their customers with a level of service, which frequently includes delivery of tickets to a passenger at his office or home, that is far superior to their counterparts in other parts of the world.

The Effect of the Same Day Voiding Resolution

14.  Put shortly, the resolution means that an agent may only void a ticket on the day of its issue.  At present an agent has up to the 15^th and 30^th day of each month, being the two dates each month that payment for ticket sales during those two periods need to be accounted for.  Under the new procedure, if a ticket is not voided on the day of issue the agent is required to adopt the refund procedure which, as I have already described, is time consuming and will result in a substantial percentage of the cost of the ticket not being refunded, depending on the type of the ticket purchased, in addition to administrative costs.

15.  Such a change would cause a travel agent no hardship at all provided the agent was paid the cost of the ticket at the time of issue of the ticket.  If the passenger had a change of mind then the passenger would have to take the consequences of that or, I presume, could insure against such a change of travel plan provided he could show good reason — ill-health, family bereavement being obvious examples.  The travel agent would sustain no loss.  It would be in funds and able to account to the airline for the fare.  Whilst this is accepted as being a factually correct by Mr Yan SC, who appears for the Plaintiff, he submits that this situation has no basis in fact for Hong Kong travel agents.  They have a very well entrenched way of doing business with their clients who are given credit as I have already mentioned.  Whilst a very small percentage of passengers, being walk-in passengers and those who deal with airlines direct or book on-line will have to pay for their ticket at the time of booking the flight, the vast majority of fare paying passengers in Hong Kong who deal with travel agents are extended some form of credit — up to 30 days in the case of corporate clients.

16.  What this means, according to the Plaintiff, is that whenever a passenger who has a firm booking changes his mind after the date of issue of the ticket and has not paid for the ticket, the agent will not be able to void it and it is the agent who will be looked to by the airline for the cost of the ticket and have to wait for a substantial period of time before a penalised and reduced refund is paid.  Mr Yan submits, I think correctly, that no agent except the most substantial with large cash flow and reserves of cash could afford to continue doing business on this basis.  The smaller agents, many of whom are represented by the Plaintiff, simply could not bear the capital cost.  They would either go under or only deal with their clients on a cash basis — payment at the time of issue of the ticket.  Mr Yan, relying on the evidence of Mr Bagaman, the Plaintiff’s principal, says that this will result in customers, the corporate clients and the individual regulars, leaving the smaller agents who could not afford to provide credit terms and go to the larger agents who could.  The smaller agents, of which there are many in Hong Kong, would suffer a very considerable downturn in their business or, at worst, have to close down.

17.  It is not difficult to see the force of that submission although on the Defendant’s behalf it is said by Miss Ho, who has provided the evidence on its behalf in her affidavit, that the same day voiding scheme will bring far greater benefits and be much fairer to the travelling public at large and that it is why it has been adopted by the Conference.  Multiple bookings by agents will have to cease and so free up seats for other passengers who are regularly told that flights of their choice are full only to find seats becoming available at the last moment as multiple bookings are released by agents.  There are also some more dishonourable practices which IATA would wish to put an end to by adopting the same day voiding measures.  There is no doubt at all that there is much to be said for the adoption of the resolution and it is right to say that the resolution which was scheduled to come into effect on 1 October 2006 and then put back to 1 January 2007 and again to 1 April 2007, to allow Hong Kong travel agents time to adjust to its consequences, has in fact been adopted by travel agents in all save very few of the IATA territories world-wide.  It is only Hong Kong and one or two other places that have shown resistance and required more time.

18.  I have attempted to set out the consequences of the new system of ticket voiding as it will impact on the Plaintiff and its group and other travel agents in Hong Kong as well as on the travelling public as a whole, who pay for the tickets, be they large corporations buying tickets for business travel by their staff down to individual fare paying passengers who go on holiday abroad once or twice a year.  All of this having been said, at the end of the day what I am required to decide is a point of construction of Resolution 860a.  The Plaintiff’s primary contention is that Conference has passed the same day voiding measures in breach of Resolution 860a.  Accordingly, the measure is invalid and I should say so and give effect to the Plaintiff’s complaint by prohibiting its introduction in Hong Kong until the measure has been properly passed.

19.  Mr Smith, SC submits that the measure has been properly adopted and that if that is so then the Plaintiff must fail and the injunction should be refused.  But even if the Plaintiff can pass muster and show that it has a serious issue to be tried on whether the measure has been lawfully adopted, I should nevertheless, in the exercise of my discretion, refuse it interim relief because it has had in any event, by virtue of two periods of delay to January and April 2007, all that it could have hoped for in order to adjust to the effect of the new measures where, it has always accepted, that these measures would have to come into existence.  These therefore are the matters that I need to give attention to in deciding this application.

How the Same Day Voiding Measure was Passed

20.  This matter was not on the Conference agenda for its meeting on 28 and 29 June but was brought forward for consideration as an “on-site” matter.  That this was so appears in the Minutes of the meeting [page 174] as agenda item C1.18.  The effect of the matter coming before the Conference as an on-site item (akin to an “any other business” item) meant that the Council at its meeting prior to the Conference would not have had an opportunity to discuss it and make any recommendations, provided that the agents could obtain a majority of votes from its own constituency as well as a majority from the airline representatives.  Miss Ho at paragraph 12 of her 1^st affidavit on behalf of the Defendant [page 34] points out that although the measure was passed in this way, the travel agents representatives were present at the Conference and had the opportunity to collect the relevant papers beforehand and consider the proposal.  This having been said the agents representative would have had no say in Conference, this being a body only comprising the airlines representatives who, having discussed it, passed it unanimously as required by the Conference’s articles.  The measure was to take effect as from 1 October 2006.

The Plaintiff’s Case on the Irregularity of the Measure

21.  This having been brought up and being passed in the way that it was, gives rise to the argument on why the measure is of no effect.  This requires an analysis of Clause 3 of Resolution 860a (see para.10 above).  Mr Yan begins this part of his submissions by referring to 3.2.1(f) which requires the Council to review any on-site items considered by the Conference and recommend any changes by following the procedure set out in the preceding parts of 3.2.  Particular attention is drawn to 3.2.1 which authorises the Council to review all agenda items and to “recommend changes to proposed resolution amendments having a direct bearing on the agent/airline relationship.  The procedure for doing so appears in 3.2.1(a) to (e).  This requires any recommendations to be included in the next Conference agenda.  In the event that a Council recommendation goes forward to the Conference then the Conference must review the original proposal and the amended proposal which is the subject of the Council’s recommendation.  If the Conference decides to adopt the original proposal, the matter will be referred back to the Council and the resolution amendments are held suspended pending review by the Council [3.2.1(b)].  Under 3.2.1(e) if there are issues to be addressed the Council shall convene to review the Conference’s decisions no later than 30 days following the conference.  Following that review:

“any changes to the proposal, including any recommendation for deferral of implementation, shall be presented to the Conference for consideration by mail vote, or as a recommendation for an agenda submission at the next (Conference).”

See 3.2.1(d).  Thereafter, the result at the Conference will be declared either in favour of the Council recommendation or that originally agreed by the Conference [3.2.1(e)].

22.  Given this procedure, Mr Yan complains that the Secretary (IATA being required to provide the Council with secretariat support, see 2.5 above) should have convened a meeting of the Council no later than 30 days after the 28 and 29 June Conference, when the same day voiding measure passed as an on-site item, at which Council meeting the measure would have been reviewed.  Because this mandatory procedure giving the Council its right of review was not followed the measure has not been lawfully passed and is therefore ineffective.

23.  Mr Smith’s retort is to say two things.  Firstly, this measure does not impact on the agent/airline relationship as required under 3.2.1 and therefore does not engage the review process.  I do not think that can be right.  This measure must, quintessentially, have that effect.  It is all about that relationship, affecting the agent’s rights on voiding of tickets.  It is difficult to imagine anything more relevant to that relationship than this measure.

24.  Secondly, Mr Smith submits that nobody on the travel agent’s side asked for such a meeting of the Council to be convened thereby waiving any requirement for that to happen.  Mr Yan’s response is that the provision is a mandatory one and it fell to the Secretary to do his duty and to convene a meeting of the Council no later than 30 days after 30 June, it being obvious that the measure was one which impacted on the agent/airline relationship.

25.  It seems to me that a meeting of the Council should have been convened under 3.2.1(c) and the failure to do so has deprived the travel agents’ representatives on the Council the opportunity to argue their case for changes to the same day voiding measure.  Nevertheless, the prospects of them succeeding in doing so I suspect would have been very slim indeed given the voting arrangements in the Council which I have already described.  Never mind about that says Mr Yan — this is an important right of review which has been denied the agents’ representatives on the Council.  I should not approach the matter by speculating as to the outcome of the re-convened Council meeting.  Rights have been ignored which go to vitiate the decision making process.

Conclusion on This Aspect of the Case

26.  It seems to me that Mr Yan must be right in his analysis.  The Plaintiff has therefore, in my judgment, demonstrated a highly arguable case of material procedural irregularity on the part of IATA.  This being my view, the Plaintiff has undoubtedly cleared the first hurdle of showing a serious issue to be tried which then brings me to what I believe is the more difficult second part of the exercise in what is, of course, a discretionary jurisdiction.

Adequacy of Damages, Balance of Convenience, Discretion

27.  Mr Yan submits that where the relative strength of the parties’ cases clearly favours the Plaintiff, this must be a matter which I ought to have particular regard in deciding the application and which should favour the grant of the injunction.  In this regard he has cited the decision of Laddie J in Series No. 5 Software Ltd v Philip Clarke & Ors (1996) FSR 273 in which he reviewed the effect of the House of Lord’s decisions in American Cyanamid v Ethicon (1975) AC 396 and Hoffman La Roche v Secretary of State for Trade and Industry (1975) AC 295.  Having analysed the law and practice as it had been before those decisions, Laddie J distilled the principles, now of course very well known, which should be applied.  I am taking the trouble to set out what he said more fully in view of Mr Yan’s submission that the court should give significant weight at this stage to any finding that one party has shown that its case is plainly stronger than the other’s.  The following passage at pages 286 and 287 is of particular assistance:

“	1.	The grant of an interlocutory injunction is a matter of discretion and depends on all the facts of the case.
	2.	There are no fixed rules as to when an injunction should or should not be granted.  The relief must be kept flexible.
	3.	Because of the practice adopted on the hearing of applications for interlocutory relief, the court should rarely attempt to resolve complex issues of disputed fact or law.
	4.	Major factors the court can bear in mind are (a) the extent to which damages are likely to be an adequate remedy for each party and the ability of the other party to pay, (b) the balance of convenience, (c) the maintenance of the status quo, (d) any clear view the court may reach as to the relative strength of the parties’ case.
	In coming to this conclusion I am encouraged by the following considerations:
	1.	The House of Lords in American Cyanamid did not suggest that it was changing the basis upon which most courts had approached the exercise of the discretion in this important area.
	2.	The only issue which it was expressly addressing was the existence of the inflexible ‘rule of law’ which had been applied as a mandatory condition by the Court of Appeal.
	3.	It would mean that there was no significant inconsistency between the Roche and American Cyanamid decisions.
	4.	It would be consistent with the approval given by the House of Lords to the decision in Hubbard v. Vosper and, implicitly, the decision to the same effect in Evans Marshall & Co. v. Bertola S.A. (a decision of Lord Edmund-Davies when in the Court of Appeal).
	5.	It would preserve what was one of the great values of interlocutory proceedings, namely an early, though non-binding, view of the merits from a judge.  Before American Cyanamid a decision at the interlocutory stage would be a major ingredient leading to the parties resolving their differences without the need for a trial. There is nothing inherently unsatisfactory in this.  Most clients ask for and receive advice on prospects from their lawyers well before there has been cross-examination.  In most cases the lawyers have little difficulty giving such advice.  It should also be remembered that in many jurisdictions on the continent trials are conducted without discovery or cross-examination.  There is nothing inherently unfair in a court here expressing at least a preliminary view based on written evidence.  After all it is what the courts managed to do for a century and a half.
	6.	Allowing parties to come to an earlier view on prospects would assist in reducing the costs of litigation.  This is an issue to which much attention is being given at the moment.
	7.	It would mean that the approach of the courts in England and Wales to the grant of interlocutory relief would be the same as that followed in Scotland.  In NWL Ltd v. Woods [1979] 3 All E.R. 614, Lord Fraser of Tullybelton commented on the practice in Scotland and compared it with what he understood to be the English practice since American Cyanamid namely that the court is prevented from considering the strength of the parties’ case.  He said:
		‘	In Scotland the practice is otherwise, and the court is in use to have regard to the relative strength of the cases put forward in averment and argument by each party at the interlocutory stage as one of the many factors that may go to make up the balance of convenience.  That is certainly in accordance with my own experience as Lord Ordinary, and I believe the practice of other judges in the Court of Session was the same.  Whether the likelihood of success should be regarded as one of the elements of the balance of convenience or as a separate matter seems to me an academic question of no real importance, but my inclination is in favour of the former alternative.  It seems to make good sense; if the pursuer of petitioner appears very likely to succeed at the end of the day, it will tend to be convenient to grant interim interdict and thus prevent the defender or respondent from infringing his rights, but if the defender or respondent appears very likely to succeed at the end of the day it will tend to be convenient to refuse interim interdict because an interim interdict would probably only delay the exercise of the defender’s legal activities. (p.628f-h).’”

28.  As I hope to demonstrate in a moment the sentiments expressed by Lord Fraser of Tullybelton in NWL Ltd v Woods (supra.) are of particular assistance as to the way in which I ought to dispose of this application.

29.  On this part of the case, Mr Smith has submitted that the Plaintiff has more than achieved its objective, which is to delay the implementation of this measure so that it and those agents that it represents can have time to adjust to the changes that it will cause to the way that they do business.

30.  In this regard, the evidence is that two delays were negotiated with the Defendant to 1 January 2007 and then to 1 April 2007.  These delays were the result of discussions of the Executive Council on 19 September 2006 [pages 258-259] and subsequently at its meeting on 11 December 2006 [pages 261-263] which unanimously agreed to postpone implementation to 1 April 2007 and which also passed a motion to submit the same day voiding measure to IATA at Geneva for final implementation.

31.  Basing himself on these two sets of minutes, Mr Smith submits that these properly reflect the travel agents stance.  There was no objection to the measure as such but time was needed for the market to adapt.  It is also on this material that Mr Smith has submitted that there was no need to reconvene the Council, there being no issue for it to discuss, the agents having decided to limit themselves to discussing postponement through meetings of the Hong Kong Executive Council of IATA at a local level.

32.  Having accepted that this measure was going to be introduced, subject to delaying its implementation which they have succeeded in doing for six months beyond the originally intended implementation date on 1 October 2006, the travel agents (at least those represented by the Plaintiff) have now completely changed their stance and have decided to adopt a strictly legalistic approach which will, at best, only obtain a further delay.  In the meantime, says Mr Smith, the vast majority of agents world-wide have already adopted the measure although some, very few, countries are considering legal action of this type to prevent implementation or at least obtain further delay.

33.  In my judgment, the court has to take a pragmatic approach to an important matter such as this.  I have found that the Plaintiff has made out a good arguable case on a breach of procedure which may go to vitiate the validity of the measure because of the failure to reconvene the Council to review the measure which had been passed as an on-site item, rather than a specific item on the Conference agenda.  The question then becomes this: should a procedural error of this sort further delay an important measure which has been substantially adopted world-wide by IATA agents, in 76 out of 79 areas, in circumstances where the Plaintiff and other agents have approached the measure on the basis that it would have to be adopted subject to delays to assist in adapting to this measure, which has already been granted to a generous extent.  It strikes me that given the way IATA is organized, the agents through their representation on the Council, would not have achieved more than they would have done had the procedural rules been followed as they should have been.

34.  This is a discretionary jurisdiction, it is discretionary at this stage as it will be at the trial because the judge will be asked for the same remedy.  It strikes me in the circumstances that I have just been considering that it is highly likely that the Plaintiff will fail to get its injunction at the trial.  It is in this regard that Lord Fraser of Tullybelton’s remarks (supra.) are of great assistance and apposite.  The fact is that the Plaintiff has not been done any substantive injustice by the failure to follow the Council’s rules — the fact is that there is very compelling evidence that they have already been treated with great consideration.  It seems quite wrong for me to step in now and make an order that will cause well-planned and perfectly sensible arrangements to be unscrambled on an application originally made ex parte, and quite wrongly so, I refused to entertain it as such, at the very last moment when the matter had been under discussion for a very long time.  To step in now would, it seems to me, be unconscionable.

35.  Mr Smith has also referred to a number of other matters, as to why the injunction should not go, which relate to the balance of convenience and the inability of the Plaintiff to provide any sort of useful undertaking in damages including fortification, which I would also have upheld had I considered it necessary to do so.  But in the event, I have decided this application on the basis that, notwithstanding having shown a good case on procedural breach, the Plaintiff is nevertheless highly unlikely at the trial of the action to succeed in obtaining the injunction that it seeks.  Accordingly, it would not be right to give it one on an interim basis.  The summons must therefore stand dismissed.  Both parties have asked for a speedy trial.  Given its importance and the urgency with which this matter needs to be settled one way or another, I certify the action as fit for a speedy trial and as fit for vacation business.  I will leave it to the parties to draw up appropriate directions for my consideration.

Costs

36.  Although the Plaintiff has failed, it has succeeded in getting off the ground on the procedural issue which has been argued over.  In such circumstances, I will say that the costs of this summons including costs reserved should be costs in the cause rather than making an order more favourable to the Defendant notwithstanding the fact that it has succeeded.  This order will be an order nisi.