Jurisdiction(s):
United Kingdom

English Commercial Court: No Set-Off Clause Bars Circuity of Action Defence to Royalty Debt; Minimum Royalties Payable Regardless of Breach of Exclusivity in Virgin/Alaska Trade Mark Licence

Published on: 15 October 2025

Published by a LexisNexis Commercial expert

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Article summary

Alaska Airlines Inc v Virgin Aviation TM Ltd and another company [2025] EWHC 2505 (Comm)

What are the practical implications of this case?

The principal outcomes of Mr Justice Foxton’s analysis can be stated as follows:

Where an unjust enrichment claim founded on failure of basis is invoked to stop payment of a contractual amount, the correct characterisation is that this engages the defence of circuity of action (para [49]).
In that scenario, circuity of action does not mean the debt is never due; rather, it supplies a defence to liability. A broadly drafted no set off clause captures such a defence, so summary judgment can be granted (para [52]).

To reach those conclusions, Foxton J reviewed a range of authorities in which no set off provisions were relied upon (see especially para [47]), and he also considered and clarified other decisions relevant to the underlying issues of principle. Accordingly, a debtor cannot avoid a summary determination merely by pointing to an unjust enrichment counterclaim where a comprehensive no set off covenant applies. The judgment offers structured guidance on the interaction between no set off clauses and restitutionary claims arising from failure of basis...

What was the background?

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