On Aug. 16, 1978, Mr Neston Kalaw, a Vice-President of the Philippine National Bank, presented himself at San Francisco airport for carriage aboard a Pan American World Airways service to Tokyo. He did not hold a confirmed reservation, his ticket being marked “RQ” signifying that he was on the wait list. After a short interval, however, Mr Kalaw was given a first-class boarding pass, his baggage was checked, and he boarded the aircraft in the company of the President of the bank.

Prior to take-off he was asked by an airline employee to return to the lounge for an unspecified reason. Once in the lounge he was told that he would not be able to travel on the aircraft as it was overbooked. It appeared that a large group of economy-class Japanese passengers had checked in late and in order to accommodate them five were being upgraded to first-class, this necessitating the offloading of some of the recently boarded standby passengers. Mr Kalaw complained but to no avail. The aircraft left without him but carrying his already checked baggage. The passenger cancelled a business meeting scheduled in Tokyo and returned next day direct to Manila.

Subsequently Mr Kalaw filed suit in the Philippines against Pan American alleging humiliation, embarrassment, wounded feelings and loss of business opportunity as a result of the discriminatory and unwarranted denial of his right to be carried in accordance with the terms of a valid contract.

Pan American first essayed to move the court to dismiss the action on the grounds that the contract of carriage was governed by the Warsaw Convention and under the rules prescribed by art. 28(1) the Philippines was not one of the alternative fora available to the plaintiff.

Article 28(1) reads as follows:

“An action for damages must be brought at the option of the plaintiff in the territory of one of the High Contracting Parties either before the Court of the domicile of the carrier or of his principal place of business, or where he has a place of business through which the contract had been made or before the Court at the place of destination”.

In considering the merits of the Pan American motion the Manila Court of First Instance relied heavily upon a series of authorities from United States jurisdictions to which it was referred by the parties.

There was no dispute that the Philippines was not the domicile of Pan American, a licensed foreign corporation, and no real argument that its principal place of