Federal Court Australia MH 17 decision makes interesting findings about where MAS conducts its business ,and where its cash earnings go

by Ganesh Sahathevan



The MH 17 tragedy raises many questions


In Gibson v Malaysian Airline System Berhad (Class Membership) [2019] FCA 1399 (28 August 2019) Perram J said, in a finding of fact:

The evidence before me shows that it was Dr Dyczynski who purchased the ticket online in his daughter’s name. Dr Dyczynski was in Australia when he did this, but the evidence shows that the ticket was issued either by the airline’s office in Amsterdam or by its head office in Kuala Lumpur. This is apparent from the face of the ticket, which shows that the issuing agency was an entity called ‘M A S E COMMERCE AMSTERDAM NL’, which is nominated as the issuing entity when the ticket is purchased online. That entity is located in the Netherlands.


The ticket also contains the code ‘RLOC MH’, which shows that the reservation was made in Malaysia. I am satisfied, therefore, that the place of business of the airline ‘through which the contract was made’ was not in Australia. Consistently, the ticket price was denominated in euros. I do not need to determine whether the airline’s place of business through which the contract was made was the Netherlands or Malaysia, but I accept that it was clearly not in Australia.

Perram J's findings would be of interest to anyone who has had reason to analyse MAS's earnings and business over the decades. The existence of M A S E COMMERCE AMSTERDAM NL is not widely known (if at all) and it does raise the question whether there are other such entities that MAS employs or has employed for the collection of its revenue. 

There are then issues of shifting revenue to jurisdictions other than those in which MAS is assumed to conduct its business; MAS has had a visible presence in Australia for many years and the finding that Australia is not the  "airline’s place of business "  will come as a surprise to many (despite the legal basis for the finding).

And finally, the question that the Malaysian taxpayer would want to answered,given the Malaysian Government funding that has propped up the airline for at least the past 30 years: is the revenue earned by entities such as M A S E COMMERCE AMSTERDAM NL coming back to Malaysia, or is it going elsewhere? Is there a discrepancy between earnings booked in Malaysia and actual cash earnings? 

END