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February 2011: Newsletter 3 FLO – Aviation

Flieger A., lawyer Flieger Law Office bvba

with the participation of Stijn Brusseleers, lawyer Flieger Law Office bvba

Summary Comments on the decision dd. January 11th, 2011 of the Ontario Superior Court of Justice

Court file No: 07-CL-006825

On January 11th, 2011 the Ontario Superior Court of Justice dismissed the claims of Sabre Inc and Sabre International, Inc. in its dispute with IATA over IATA’s use of billing and settlement data stored in GDS databases for its PaxIS airline intelligence product.

violated confidentiality obligations.

The Superior Court applied three criteria in determining whether a breach of confidence had been made out:

–    Whether the information conveyed the necessary quality of confidence;

–    Whether the information was communicated in confidence; and

–    Whether the information was misused by the party to whom it was communicated.

The Superior Court made a very interesting survey of those three criteria, and gave as well a clear review of the confidentiality issues.

The Court referred to leading cases such as Lac Minerals Ltd vs International Corona Resources Ltd (1989, 2. S.C.R.574 ) and Coco vs An Clark ( Engineers) Ltd (1969) R.P.C. 41 (ch.).

As such the Court came to the point that the test as to confidential information is to be applied at the relevant time in the dealings between parties.  In the presented case, the communication of the alleged confidential information occurs pursuant to the ETSPA. So the relevant time must relate to making of that agreement. Sabre participated in the discussion to settle the form of the ETSPA. The form was submitted to PAConf for the approval of the member airlines.

A main question was raised to verify if in said ETSPA there is an imposition of an obligation of confidentiality on the TSP and not on IATA.

The ETSPA contains a confidentiality clause imposing an obligation of confidentiality on the TSP, but not on IATA. In considering whether it had a duty of confidentiality to the TSPs in respect of the information it received from them, IATA would reasonably consider that the absence of a confidentiality clause made in unlikely that the TSPs were entering into the agreement on the assumption of a duty of confidentiality unless there is some other reason that would make likely that that assumption was held.  The Court stresses that it is relevant to this assessment that the parties to the ETSPAs are sophisticated business companies which can reasonably be taken to be well acquainted with the use of confidential clauses in agreements for the disclosure of information

The Court states the information which was communicated between parties must be regarded as sensitive from the point of view of the interest of the participating Airlines.  IATA would necessary be aware of that, and would properly take into account that its role as the trade association of airlines

is to act on their behalf for their benefit. There is no apparent reason why a reflexion on that fact would prompt IATA to consider that it owes a duty to the TSPs in that regard.  It would reasonably

consider that ensuring the proper use of the information with respect to the interest of its members is already part of its role for the benefit of its members. There is no evident reason why IATA would consider that the TSPs would have an interest in the matter.

Furthermore the Court investigates the nature of the information communicated as well the nature of the work done to produce the information. The Court looks into in the confidentiality issues and concludes that confidentiality concerns typically arise where one party is disclosing to another party information that the first party has obtained or created prior to discussions in the course of which the disclosure is made, prior to the making of an agreement whose implementation is to be furthered by the disclosure.

However the Court comes to the conclusion that this is not the case with the ETSPA.

When a TPS enters into ETSPA, it agrees to send to the DPC the information which it will henceforth receive from the agents about their sale of airlines tickets.  That information will not come into the possession of the TPS independently of the ETSPA. Its acceptance of the ETSPA is a condition to participate in BSP systems and therefore of its being able to offer to travel agents the ticket service which travel agents contract to obtain from the TSP.

The Court comes to the conclusion that nothing in these considerations exists to conclude that there is a duty of confidentiality to the TSP.

Further the Court investigates the use for the billing and settlement purposes and its commercial value of the information.

The decision gives further a very good description of the role of IATA under the agreements and a description of IATA acting as Law agent of the airlines in entering into the ETSPA.

The decision is a very good description of the actual practice in the market, and as mentioned above it’s actually up to parties – that know what they are negotiating – to define in their contracts what should be treated as confidential.

In its 32 pages decision, the Court comes to the conclusion that IATA acted lawfully in developing the PaxIS products based on data from its BSPs. Each of Sabre’s arguments that IATA owed Sabre a duty to use BSP date solely for settlement purposes and not for commercial products such as PasIS were rejected. The Court determined that Sabre could not claim confidential rights to the airline ticketing data.

Needless to say that IATA was pleased with this decision, the more that, accordingly to its CEO G. Bisignani, it “brings clarity to the market place”.

However it’s good to pinpoint that in a similar case brought by Travelport in 2009, the Amsterdam District Court denied an injunction sought by the GQS to block IATA’s use of data stores in Travelport databases for PaxIS.

In reference to the Dutch case it should be stressed that it’s an injunctive and not a final decision as the Canadian case. The Dutch Court concludes in the injunction that Travelport’s database – made of the information it received from travel  agents – contains some similarities with the list of ticket information it dispatches to IATA, but said list is not a collection in the sense of Reg 7 961/9 EU. 

Therefore it’s possible for IATA, in the Dutch case, to recollect the received information in its own database. ( Rechtbank Amsterdam, 433126/KG ZA 09-1499).

 

 

For further information and comment, please contact Arthur Flieger at

Flieger@fliegerlaw.com, Website: www.fliegerlaw.com, telephone: 03/238.77.66 –

Fax: 03/216.18.44

Copyright A. Flieger

PaxIs : Passenger Intelligence Services

ETSPA: Electronic Ticketing System Provider Agreement

PAConf : Passenger Agency Conference ( established by IATA )

TSP: The System Provider

DPC: Data Processing Centre

BSP: Billing and Settlement Plans