On 3 February 2008 the High Court of Australia held that the International Air Transport Association’s clearing house was compatible with Australia’s insolvency laws.1 In 1975 the House of Lords had come to the opposite conclusion on an earlier version of this clearing house.2 The purpose of this note is to critique the Australian decision and assess its overall importance.

If airline A issues a ticket for an international flight and the passenger or cargo is carried part of the way by airline B, the latter is prima facie entitled to be paid by the former for the service rendered. In order to minimize transaction costs in relation to the very many services of this kind routinely performed by airlines, the International Air Transport

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