The Commercial Court recently rejected an airline's argument that the COVID-19 pandemic had frustrated its aircraft lease agreements and that it was therefore relieved of its contractual obligation to make rent payments. The court held that the airline's inability to operate the aircraft was a risk that it had assumed when it entered into the aircraft lease agreements. This decision will be welcomed by aircraft lessors and financiers.
In a recent case, the Commercial Court decided that the claimant, aircraft leasing company Helice, must arbitrate its claim against airline Garuda for more than $5,150,000 in unpaid lease rent under London Court of International Arbitration rules instead of proceeding by court action. The court endorsed the 'one-stop shop' principle established by the House of Lords, which holds that the parties to a contract are likely to have intended for any disputes arising out of that contract to be decided in the same forum.
The Corporate Insolvency and Governance Act 2020 shifted the focus of the UK insolvency regime from administration and liquidation to rescue and recovery and introduced numerous interesting features that apply to companies experiencing financial difficulties. This article considers how some of these features fit into the insolvency regime of the Cape Town Convention.
The government aims to implement a UK emissions trading system (UK ETS) in January 2021 following Brexit. This article outlines aviation-specific considerations of the proposed UK ETS and the interaction of the proposed scheme with the Carbon Offsetting and Reduction Scheme for International Aviation, the International Civil Aviation Organisation's market-based mechanism for offsetting emissions from aviation.
A recent High Court case demonstrates the utility and importance of including standard representations and warranties regarding power, authority and validity in aircraft leases, including as an estoppel against a defendant's claim that a lease is void and unenforceable as a result of alleged breaches of foreign public procurement legislation and lack of authority. The decision also illustrates the benefit of choosing English law to govern aircraft lease transactions, particularly between international parties.
Letters of credit are often issued in aircraft leasing transactions as an alternative to the provision of a cash security deposit and, less frequently, the obligation to pay maintenance reserves in cash. In an airline bankruptcy scenario, it is important to understand the differences that exist between different forms of letter of credit and some of the challenges that may arise for an enforcing lessor or financier.
A recent Court of Appeal decision regarding a claim of economic duress against an airline reinforced the fundamental importance of ensuring contractual clarity and certainty as a matter of English law. For companies operating in the aviation sector, where there may be an unequal power dynamic, parties will be unable to look to economic duress to undo a lop-sided bargain unless there is some unlawful action or provable bad faith on the part of the party with greater power.
In a recent High Court Case, Aircraft Purchase Fleet Limited (APFL) sought $260 million in damages from Compagnia Aerea Italia (CAI) for an alleged repudiatory breach of a framework agreement under which CAI had agreed to lease certain new Airbus A320 family aircraft. APFL had agreed to buy these aircraft from Airbus. However, CAI argued that it had become impossible for either party to perform the framework agreement following Airbus' termination of its obligations to sell aircraft to APFL.
In July 2017 the government released proposals to regulate the use of drones in the United Kingdom. Since then, the regulation of drones has been transferred to the European Union and now falls under the EU Basic Regulation. Many of the UK government's proposals for drone operators are included in the EU Basic Regulation, which sets the groundwork for establishing rules that will require operators of drones that weigh 250kg and above to register them and ensure that they are marked for identification.
Monarch Airlines Limited's administrators have won an appeal with the Court of Appeal regarding Monarch's rights in and to certain 'slots' at Luton and Gatwick airports after it went into administration. The case is significant, as it reaffirms the value ascribed to slots by airlines and their financiers as rights of the airline and the fact that, as a result, they can be traded for value even after insolvency.
The Department for Transport recently published its response to a public consultation concerning the safe use of unmanned aircraft systems in the United Kingdom. Both in the consultation and the response, it is clear that the government's focus is on ensuring safety, particularly relating to operational issues in the leisure market. However, the response also provides insight into the direction of the government's policy as it affects commercial operators and its determination to develop world-class systems.
The Court of Appeal has delivered its judgment on the appeal by PK AirFinance and GECAS against the Commercial Court's decision in Alpstream v PK AirFinance. The judgment provides a welcome clarification of duties owed by mortgagees to financiers and lessors.
The Cape Town Convention and Aircraft Protocol recently entered into force in the United Kingdom. The disapplication of the historically vexed lex situs rules in the context of UK Cape Town interests is a welcome step, as it means that English law and jurisdiction are likely to be the best choice for any mortgage or bill of sale on a transaction involving parties situated in the European Union.
The Cape Town Convention and Protocol is now set to enter into force in the United Kingdom later this year. Its entry into force was confirmed following the deposit of the instrument of ratification with the International Institute for the Unification of Private Law on July 27 2015 at the UK embassy in Rome.
The International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015 were recently laid before Parliament, marking the commencement of the final administrative steps to ratify the Convention on International Interests in Mobile Equipment and the Protocol thereto on Matters Specific to Aircraft Equipment in the United Kingdom. It could enter into force by the end of Summer 2015.
As part of the government's ongoing consultation on the ratification of the Convention on International Interests in Mobile Equipment and the Protocol thereto on Matters Specific to Aircraft Equipment, the government response to the call for evidence has been published. The response is positive, but cautious about any benefits that may accompany ratification.
A recent High Court decision highlights the duties of financiers in the context of aircraft repossessions and the associated power of sale in default scenarios, while also raising questions about the level of intention required on the part of a defendant in unlawful means torts. The case garnered significant mainstream media attention, principally because the claimants are controlled by Russian billionaire Alexander Lebedev.
Following the French Court of Cassation's Rothschild decision, the High Court has ruled that one-sided jurisdiction clauses will be upheld by the English courts. This decision confirms that English courts are unlikely to follow Rothschild and is of considerable importance to aircraft lessors, lenders and airlines.
The Court of Appeal recently issued a decision that is of considerable importance to aircraft lessors, lenders and airlines. The decision sends a clear message that aircraft leases and their related certificates of acceptance should be construed in accordance with their plain, unambiguous terms, and that the risk allocation set forth in those documents between lessee and lessor should be given effect.
The High Court recently upheld a tribunal award relating to reinsurance contracts covering losses arising out of the terrorist attack on the World Trade Centre of September 11 2001. The judge held that the unity of cause in the attacks was both hijacking and terrorism, and that a finding as to whether the attacks fell under the terrorism or hijacking perils was irrelevant as to the question of whether one event or two had occurred.
Financiers and operating lessors should ensure that the delivery condition of an aircraft (including the airworthiness requirement) is an objective condition precedent in favour of the lessee. In this way, no positive obligation need be imposed on the lessor to ensure the delivery of an aircraft in any particular condition.
Recent European airline bankruptcies have highlighted the need for care when devising aircraft repossession and recovery strategies. Stakeholders should be aware of the detention and sale regime in the United Kingdom, possible approaches to the risk of the Eurocontrol fleet-wide lien, and the protection available for owners and financiers in the context of EU Emissions Trading Scheme legislation.