London lawyers want Asian firms to sue over airline cartel

PUBLISHED : Thursday, 30 December, 2010, 12:00am
UPDATED : Thursday, 30 December, 2010, 12:00am

Lawyers from a London law firm plan to visit China and other Asian countries in the next few months to encourage manufacturers and suppliers caught in a global airfreight cartel to sue airlines for compensation.

The move is part of a second legal action being brought against airlines after the European Commission fined 11 carriers, including Cathay Pacific Airways, Euro799.4 million (HK$8.2 billion) for operating an air cargo cartel that fixed fuel and security surcharges from 1999 to 2006.

Anthony Maton, a partner in Hausfeld & Co, said about 300 companies, which had paid around US$3 billion in airfreight charges during the period, had joined the action, which was launched by Hausfeld against British Airways.

A separate damages action has been initiated by Ireland's Claims Funding International against Air France, KLM and the Netherlands' Martinair on behalf of more than 300 companies who had paid about Euro4.3 billion in airfreight charges.

Maton said the two actions were separate cases involving different air cargo customers.

The four named airlines are keen to involve the other carriers in the actions to reduce their possible liability. As a result, he said, British Airways had applied to add 36 others including Cathay, Singapore Airlines and Qantas to the claim in an attempt to reduce its own financial exposure.

He estimated that Hausfeld's case against British Airways in London's High Court would start around the spring of 2012.

'A couple of Asian clients' were among the companies that were part of the group seeking damages, he said, but he thought many more would be able to join the action. 'Undoubtedly Asian companies suffered losses as a result of the cartel. We're very dedicated to get Asian clients in this and other matters.'

Maton said his trip to Asia was expected in spring next year.

He said there had been 'definite interest' by Asian companies, including firms in China, to join the action. But he noted some reticence as well, possibly in part because Asian companies found it difficult to understand they were able to claim in a London court based on a decision by the European Commission.

He said it was only more recently that firms in Europe had taken legal action to seek compensation from monopolists. As a result, he said, European companies still believed suing for compensation was an alien concept, but it was 'even more alien for Asian, Chinese companies'.

Maton said any firm in Asia, including those in Hong Kong, the mainland and Singapore, that had suffered loss as a result of the airlines' action could bring a claim. It was easier to do so in European jurisdictions, where courts had to follow the European Commission judgment, he said. Maton indicated that firms could be embarrassed about seeking compensation because they did not want to admit they might have been overcharged by airlines.

He estimated that the 300 companies that had joined the Hausfeld action had been overcharged by about 10 per cent, equivalent to US$300 million. But he also pointed to academic studies that showed firms which were victims of a cartel had to pay 18 per cent more as a result of the monopoly's behaviour.