Submissions On Behalf Of The Parties
91 Mr Neil submitted that there is no incidence of the plaintiff's and defendant's membership, which gives rise to a legal right in the plaintiff to compel the defendant to trade exclusively with it, so that an essential element of the plaintiff's cause of action, namely the entitlement to bring the proceedings, is missing. He noted that members, by Article 5A, have all the rights, privileges and duties connected with such membership in accordance with the Articles of Association, the trading rules and/or regulations enacted by the Executive Board from time to time in accordance with Article 9. He referred to the duties, as expressed in Article 8, which related to the obligation to pay an entrance and an annual subscription fee; the limitation of personal liability of members for the debts of the organisation being limited to the extent of their unpaid fees, levies and dues; measures for the timely payment by members of fees, levies and dues; and the organisation and administration by the Organisation of a Mutual Indemnity Fund to indemnify members against losses suffered in air freight transactions with fellow members in the event of insolvency.
92 He submitted that these various duties pointed to duties the members had to the society, rather than to other members, and made particular reference to Sub-Article (D), which contemplates the taking of action by a member against the indemnity fund, rather than against the insolvent member.
93 Mr Neil conceded that it is not now open to the defendant to put in issue the validity of G.R.1.1 on the basis that it exceeded the aims and objectives of the articles. However, his submission was that the validity question only extended to the obligations of the defendant to all other members, and not to any obligations of the defendant to another enforceable by that other member. The submission continued that G.R.1.1 imposed duties on members to trade on an exclusive basis "to the extent permitted by law", and that if it is lawful to have exclusive dealing, that is to the extent "permitted by law".
94 I think some assistance in construing G.R.1.1 is to be obtained from considering G.R.1.2 and G.R.1.3. G.R.1.2 provides that if any member becomes subjected to force majeure or government stipulation "in respect of his dealings with other members of the organisation" the member shall immediately advise the chairman of the Executive Board of the circumstances and of the other members involved.
95 G.R.1.3 provides that for the purpose of "the foregoing, trade on an exclusive basis shall involve ..". Sub-clause (1) provides for the development of all types of air traffic, consolidated and non-consolidated, between members. Sub-clause (2) provides for the sending of all consolidated and back-to-back consignments exclusively to other members. Sub-paragraphs (3), (4) and (5) provide obligations which, in my opinion, are concerned with the relationship between all members and, sub-paragraph (6) states:-
"That each Full Member and each Full and Associate Member shall be active in marketing on an exclusive basis and, in particular, in generating and answering routing orders and sales leads in accordance to rules and regulations as stipulated in The WACO Resolutions Manual."
96 It was Mr Neil's submission that when one has regard to the whole of G.R.1.1, .2 and .3, it leads to the conclusion that the resolutions were intended to regulate the position as between all members, rather than as between individual members, although it also had the latter effect as all such resolutions would. However, that was a by-product of the need to have obligations imposed on all members for the benefit of one in pursuance of the aims and objectives of the society, and was consistent with the aims and objectives of promoting for the members' mutual benefit the carriage of goods by air between members of the organisation in the ways set out in the subsequent Aims and Objectives.
97 In the way in which the submissions proceeded the issue became not so much the ascertainment of the terms of the duties, but rather the nature and consequences, legal or otherwise, that attended their imposition. The nature of the duty, Mr Neil submitted, was that each Full Member owes to the Organisation and not to another Full Member the obligations imposed by the duty, such that the other Full Member does not have a legal right to bring proceedings to enforce the duty as the plaintiff has sought to do in the present case, although the Organisation does. This submission is consistent with the uncontroversial requirements of Swiss law. The submission continued that the consequence was that a Full Member, which failed to comply with the duty, may be liable to be dealt with by the Organisation, in accordance with the Articles and, hence, liable, inter alia, to expulsion: Articles 7A(3) and (5).
98 Mr Neil submitted that upon a proper construction of the law of Switzerland, the duty which G.R.1.1 imposed on Full Members is not an "empty" one, but one which can be enforced by the Organisation, (every member of it having an interest in its enforcement), as the entity to which it is owed, acting through its responsible organs, so that if it was a matter within the exclusive competence of the Executive Board it would be the body to enforce the duty; and if it was not within the exclusive competence of the Executive Board then it was a matter within the competence of the Organisation in general meeting.
99 Mr Jackman submitted that the duty was directly enforceable by the plaintiff either pursuant to the Swiss Law of Associations or to New South Wales Contract Law. He referred to paragraph 34 of Dr Hoffet's affidavit in which he said:-
"Summarising the above, both based on Heini's and Riemer's views, it is possible for associations to create reciprocal obligations between members, enforceable at the suit of one member against the other, be it directly in the articles or internal regulations (Riemer) or indirectly by means of a second legal relationship, i.e. an agreement between the members resulting from the provisions in the articles (Heini)."
100 The difficulty I have with reliance on this passage is that it is the concluding paragraph to Dr Hoffet's answer to the question: "Does Swiss law permit associations to create reciprocal rights and obligations between its members, enforceable at the suit of one member against the other?"
101 In paragraph 28 of his affidavit, Dr Hoffet said, as I have noted, that the Code does not deal with the question explicitly, and that the questions whether and to what extent the membership of a society does "never-the-less" create direct legal relationships between members is not answered by precedents of Swiss Courts "at all" and the academic analysis is "not uniform". Thereafter, Dr Hoffet relied upon the views put forward by Professor Riemer and Professor Heini, the latter stating that membership only creates rights and obligations vis-à-vis the society in situations when the Articles of Association create rights and obligations in the immediate interest of the members. He noted, in paragraph 30, that those rights and obligations would turn out to be indirect effects of the membership, but that Professor Heini's view was that if the articles contained provisions according to which the members should be placed under reciprocal obligations, they would be deemed to enter into a contract with other members when joining the society.
102 In paragraph 32, Dr Hoffet noted that according to Professor Riemer membership obligations in principle only arise vis-à-vis the society, there being no direct legal relationships between members of a society pursuant to substantive law. Therefore, according to Professor Riemer, "it is a matter for the association to enforce the fulfilment of membership obligations amongst members". He continued that Professor Riemer was of the view that the individual member is, in principle, not entitled to sue for the fulfilment of the membership obligations of another member, and that direct relationships between members can be created by the articles or other internal rules or obligations and, by agreements independent from the articles.
103 The basic principle is, accordingly, well understood and was accepted, as I understood it, by the parties. It is that membership, in itself, only creates rights and obligations vis-à-vis the society. The academic writers hypothesised how rights may be created as between member and member but could not point to any case or statute supportive of this view.
104 Mr Jackman relied on four specific articles to seek to show that the present situation can fall within one of the suggested exceptions. He noted, in Article 1, that the articles apply not only to the relationship between any Member and the Organisation and "as well as, where applicable, to the relationship amongst the Members": (my emphasis). Therefore, he submitted that there was a contemplation within the articles that not only they, but also the Organisation's Operations, Marketing and Financial Resolutions would similarly apply "where applicable, to the relationship amongst the Members".
105 But there is no explicit provision making rights and duties enforceable by a member against another. The words on which Mr Jackman relied would accommodate the requirement for "absolute political, national and religious neutrality": Article 4; the pursuit of the indemnity fund: Article 8(D); the imposition of specific duties, consistent with the aims and objectives, on "Members or Categories of Members": Article 9; and the provisions of Article 14, all by way of example. Whilst these apply to individual members and their relationship with other members, there is no suggestion that they are enforceable other than by the Organisation. Some further support is obtained from the provisions of Section 68, which preclude direct involvement of members.
106 Nextly, Mr Jackman referred to Articles 3(1) and 5(A) to which I have referred and which it is convenient to consider together. It does not seem to me, with respect, that the former goes beyond providing for the promotion of the carriage of goods by air for the mutual benefit of the members, which is a general obligation more amenable to enforcement by the Organisation than by individual members against other members. In respect of the latter, I do not read that as going beyond a statement of the rights, privileges and duties members have by virtue of their being members of the Organisation. I do not consider that the words in that Article provide for rights and obligations as between members, as such, but rather for rights and obligations of members to the Organisation.
107 Fourthly, Mr Jackman relied upon Article 20 and, in particular, on the words "between Members or any Member and the Organisation". He submitted that these words meant that if there was a serious dispute or disagreement between members, i.e. one member on the one hand and another on the other; or if there was such a dispute or disagreement between any member and the Organisation that, in the circumstances of Article 20, each of those disputes was amenable to arbitration. Accordingly, Article 20 contemplated that there could be a dispute or disagreement between two members, which dispute or disagreement was not one also with the Organisation, and that the members agreed to refer that to arbitration.
108 I do not consider that is the proper construction of the first sentence of Article 20. The words "between Members or any Member and the Organisation" mean, in my opinion, either between more than one member and the Organisation, i.e. between Members and the Organisation, or between one member and the Organisation, i.e. "or between any Member and the Organisation", so that the arbitration provision applies to any serious dispute or disagreement between more than one member, on the one hand, i.e. Members and the Organisation, or one Member and the Organisation. The draftsman of the Article has been careful to distinguish between "or" and "and". In doing so he has ensured that disputes with the Organisation between either a single member or more than one member, on the one hand, and the Organisation, on the other, will be subject to arbitration. It seems to me that this construction not only flows from the words used, but more easily accommodates the nature of the Organisation that the members set up and joined. It is hardly likely that the Organisation, set up for the purpose of advancing the interests of members, would wish to become involved in any dispute or disagreement between members inter se, particularly as such a dispute could arise out of a matter having little or no connection with the aims and objections of the Organisation.
109 Article 19 provides some support for this interpretation by the use of the same words "between Members or any Member and the Organisation", in circumstances strongly suggestive of disputes between Members and the Organisation or between a Member and the Organisation, not between a member and another member and/or members.
110 Mr Jackman nextly relied upon the Manual. He noted that its purpose was stated to be:-
".. to make members fully aware of their obligations and requirements towards other members when they commit themselves to membership of .." the Organisation.