Aviation Disputes

Redelivery and maintenance disputes

Advising lessors in highly complex and technical engine and aircraft redelivery disputes in various jurisdictions. We have in-depth experience and expertise in advising on technical airframe and engine maintenance issues, compliance with lease return condition requirements, referencing AMMs, SRMs, and MPDs, disputes with OEMs, MROs, and damages claims arising from late redelivery of aircraft.  We also work with a wide range of technical experts including powerplant engineers, CAMOs, avionics experts, appraisers and valuers both pre-dispute and in court proceedings or international arbitrations.

Examples of redelivery and maintenance issues on which we have advised include:

• Whether airframe and engine maintenance events qualify for release from accrued maintenance reserves and/or lessor contributions, including disputes concerning workscopes and work undertaken during C-Checks and engine shop visits.
• Compensation to be paid by lessees as end-of-lease maintenance adjustment (true-up) payments for usage of aircraft and engines (including airframe C-Checks, engine performance restoration, engine LLPs, landing gears, and APU).
• Compliance with ADs and SBs, and lease requirements for removal and replacement of parts and components.
• Compliance with technical lease redelivery conditions, including disputes arising out of delivery and redelivery acceptance certificates.
• Engine OEM aftercare maintenance programmes and service packages.
• Validity of certificates of release to service issued by MROs following maintenance, faulty workmanship by MROs, asserted liens, and liability for damage to the airframe while undergoing C-Checks.

Pre-delivery / delivery disputes

Advising lessors in respect of pre-delivery payment (PDP) and sale & lease-backed arrangements and the impact of the cancellation of aircraft orders. We also have experience in advising lessors on disputes that may arise in relation to the physical acceptance of an aircraft and disagreements regarding operational performance and also engine reliability issues and on the exercise of lessor’s rights following termination of aircraft purchase agreements by OEM manufacturers.

Examples of pre-delivery issues on which we have advised include:

• Pre-delivery payment (PDP) financing and sale & lease-back arrangements, including the impact of airlines' purported cancellation of aircraft orders following the prolonged grounding of the Boeing 737 MAX aircraft type and reliability issues concerning certain engine types.
• Exercise of a lessor's step-in rights following the occurrence of an event entitling the OEM manufacturer to terminate or cancel part of an aircraft purchase agreement.
• Conversion of passenger aircraft to freighter and subsequent leasing of aircraft, including claims for damages for slot-out delays.

Lease defaults, terminations and aircraft repossessions

We also have extensive experience in supporting and advising lessors on breaches by lessees of the terms of leases, protecting the value of aircraft assets and investments in asset-backed securitization (ABS) structures and maximising returns on investment.  We often project manage cases across different jurisdictions, leading teams of international lawyers, asset managers, experts, valuers/appraisers and re-marketing brokers to ensure a fully co-ordinated onward lease or sale of the recovered aircraft.

Examples of lessee defaults and aircraft repossession issues on which we (with our network of international offices and associated firms) have advised include:

• Unpaid rent and maintenance reserves, and "true-up" claims, both during the lease term and following redelivery, including rent escalation provisions and claims against guarantors.
• Lessee airlines' cessation of business and commencement of airline restructuring and/or insolvency procedures, including impact of associated stays of legal proceedings and moratoriums imposed under relevant insolvency.
• Events of default and other contractual claims, and preparation and service of notices of default, events of default, termination of the leasing and grounding the aircraft.
• Arrestment and delivery up of leased aircraft and engines (including aircraft records) following lessee defaults, including Cape Town Convention remedies in default and insolvency scenarios, and advising on quiet enjoyment provisions, IDERAs, DPOAs and the export and deregistration of aircraft.
• Where the lessor has taken physical redelivery of leased aircraft to carry out remedial or refurbishment works prior to forward leasing and seeks recovery of its costs from the lessee (including how to carry out such works without waiving any rights to claim against the lessee).
• Global enforcement of English judgments, including summary judgment, and arbitral awards in various jurisdictions.
• Successfully obtained summary judgment within 5 months against the third-largest Indian airline, SpiceJet, for over US$11 million in unpaid aircraft lease rent owed to lessor, Alterna Aircraft V B Limited, and defeated SpiceJet’s request for a stay of execution.
• During the Covid-19 pandemic, our Hong Kong aviation team was awarded the "China Business Law Journal - Deals of the Year 2021" for its work in assisting ICBC Leasing in aircraft repossessions involving over 50 aircraft across 15 different jurisdictions, including Australia, India, Indonesia, Japan, Korea, Malaysia, Nepal, the Philippines, Singapore, the PRC, Hong Kong, Laos, Thailand, Vietnam and Cyprus.

We have extensive experience advising airlines, lessees, and operators on a wide range of complex disputes. Our expertise includes handling issues related to:

• Leasing disputes, including rent defaults, maintenance payments, termination rights, and redelivery conditions.
• Aircraft purchase agreements and damp/wet leases, covering cancellation rights, force majeure, and frustration.
• Early aircraft returns and the consequences of early termination.
• Total loss of an aircraft, including issues related to casualty occurrence.
• Supplier agreements, including disputes over delays, and supply chain issues.
• Commercial matters arising from ground-handling agreements and commercial contracts with catering companies.

Examples of cases on which we have advised airlines, lessee and operators can be seen here.

• Goshawk Aviation Ltd & Ors v Terra Aviation Network S.A.S & Ors - Acted for the Lion Air group of companies in defending proceedings brought by Goshawk in the English Commercial Court in relation to rent defaults caused by the Covid-19 pandemic, including the first successful application under the UK Cross-Border Insolvency Regulations (CBIR) 2006 for recognition of French conciliation proceedings.
• Pindell Ltd & Anor v AirAsia Berhad - Acted for AirAsia in the landmark English Commercial Court case brought by a lessor in which the English Court considered whether claims for lost profit from an onward sale of c.US$10 million arising out of a late redelivery could be claimed by the lessor.
• Laudamotion v Lufthansa - Acted for Laudamotion (the Austrian airline founded by Formula One driving legend Niki Lauda) in a highly publicised aircraft leasing dispute in the English Commercial Court concerning the termination of nine aircraft leases in circumstances alleged to be an abuse of a dominant position.
• Acted for a Middle Eastern airline in commencing arbitral proceedings under the London Court of International Arbitration (LCIA) Rules against an Asian wet-lease operator concerning the breach of wet-lease agreements in which force majeure and frustration were raised.
• Acted for a Chinese airline in defending arbitral proceedings brought by a lessor under the International Chamber of Commerce (ICC) Rules concerning the delay in returning aircraft and engines in redelivery condition, and the alleged operation, modification, and repair of engines in breach of contractual requirements.
• Acted for numerous airlines in redelivery disputes litigated in the English High Court and in international arbitrations involving compliance with return conditions of both airframe and engines, C-Checks, airframe structural repairs, engine shop visits, engine thrust increases, APUs, landing gears, and whether maintenance events qualify for release from accrued maintenance reserves.
• Advised numerous airlines on negotiations with lessors on the terms of the early return of aircraft, buy-out of return condition, and calculation of end-of lease maintenance adjustment (true-up) payments.
• Advised airlines during the Covid-19 pandemic on requests to lessors for deferral of rent, lease extensions, power-by-hour arrangements, and the efficacy of force majeure and frustration defences.

We are able to seamlessly navigate multi-jurisdictional contractual disputes relating to the sale and purchase of major components and engines, and have extensive experience advising on multi-aircraft passenger-to-freighter (P2F) conversions and issues arising from delays to conversion schedules / delayed delivery.

Examples of cases on which we have advised aircraft owners and operators include:

• Advised aircraft owners and operators in disputes with aircraft and engine OEMs concerning inherent defects, airworthiness and safety, performance guarantees and reliability issues concerning airframes, major components and engines.
• Advised in relation to a multi-aircraft passenger-to-freighter (P2F) conversion programme, impact of delays to the conversion schedule, and damages for delayed delivery / slot-out.  
• Advised a legacy European airline in relation to the sale of five aircraft, to be converted from passenger to cargo aircraft, in the English High Court and during a mediation.
• Advised in relation to a lien (or a right of retention) asserted by an MRO for alleged outstanding amounts owed by the operator, and the MRO's threat to part-out / sell the aircraft.
• Acted for a European airline in a dispute concerning the supply and installation of in-seat power systems across the airline's fleet of Airbus A320 family aircraft.
• Acted for an African airline in relation to a complex and multi-jurisdictional contractual dispute regarding the sale of landing gear to a major global supplier of aviation spare parts and validity of certain ARCs.
• Acted for a Middle Eastern airline in relation to a global supplier of high value aviation spare parts arising out of a consignment agreement concerning missing inventory and substantial damage caused by inappropriate storage.

We have extensive experience representing airlines and operators in the English High Court, Court of Appeal, in cross-border proceedings, arbitration and mediation. We find strategies and solutions to achieve the most optimal outcome, often resolving disputes without the need to litigate all the way to a costly trial. 

Our team has a strong track record of representing airlines in judicial review proceedings against regulatory bodies like the CAA, defending investigations and enforcement actions brought by regulators addressing matters of compliance and the application of aviation regulations.

Examples of cases on which we have advised airlines on commercial aviation disputes include: 

• Defended Part 8 Enterprise Act 2002 enforcement proceedings brought against Ryanair DAC by the UK CAA in the High Court (and on appeal to the Court of Appeal and UK Supreme Court) concerning Regulation (EC) No 261/2004 and whether the union-led strikes that affected Ryanair's operations in 2017 and 2018 amounted to "extraordinary circumstances."
• Represented an airline in judicial review proceedings brought against the UK CAA in the English Administrative Court regarding the Alternative Dispute Resolution (ADR) scheme administered by the UK Civil Aviation Authority relating to passenger claims.
• Acted for Ryanair DAC as an Interested Party in the judicial review challenge of the 'Traffic Light' travel restrictions imposed by the Secretary of State for Transport during the Covid-19 pandemic.
• Acted for Ryanair in claims brought by online travel agents (OTAs) On the Beach and Travel Republic under UK Package Travel and Linked Travel Arrangements Regulations 2018 relating to right to redress for refunds for OTAs paid to passengers for cancelled flights during the Covid-19 pandemic.
• Represented airlines in defending / appealing substantial financial sanctions proposed / issued by the UK's airport slots coordinator related to those airlines' alleged operation at slot-coordinated (capacity constrained) airports at times significantly different from the allocated slots.
• Acted for a major European airline in LCIA arbitration proceedings against a European airport regarding the classification of routes and the levels of airport charges under an airport services agreement, and in English Commercial Court proceedings against the UK air navigation services provider, NATS, relating to air navigation charges.
• Advised a major European airline in relation to contractual disputes with its ground handling contractors based at various airports around Europe.

We also have experience in advising administrators and receivers and also airlines and operators on R&I issues across multiple jurisdictions.

We assist multinational lessors and airlines/operators on matters of airline restructuring, cross border recognition in the UK and the applicability of the Cape Town Convention and the restructuring of the financing and leasing aircraft portfolios.

Advising financier, lessors and aircraft owners

Examples of our experience advising financiers, lessors and aircraft owners on R&I issues in the aviation industry include:

• Advised an internationally leading lessor in various aircraft repossessions and restructuring of airlines involving more than 50 aircraft in total in multiple jurisdictions across Asia Pacific region including Malaysia, Australia, India, Indonesia, Japan, Korea, Nepal, the Philippines, Singapore, Cyprus, PRC, Laos, Thailand and Vietnam.
• Advised a US operating lessor on matters relating to the restructuring of Virgin Atlantic, the first restructuring undertaken pursuant to the Corporate Insolvency and Governance Act 2020.
• Advised a leading PRC lessor on both Hong Kong and English law issues relating to the restructuring of Hong Kong Airlines, the first dual track restructuring involving a Hong Kong Scheme of Arrangement and UK Restructuring Plan.
• Advised various aircraft lessors in respect of several airline restructurings including Thai Airways, Garuda, AirAsia, MAB Leasing, and Flybe, and insolvency of Thomas Cook.

Advising administrators and receivers

Example of our experience advising administrators and receivers on R&I issues in the aviation industry include:

• Advised Ernst & Young in their capacity as administrators of Flybe, dealing, in particular, with the fleet issues including negotiating with the numerous lessors and financiers in respect of the servicing, maintenance and ultimate return of all leased and financed aircraft and engines.
• Advised the manager of an international group specialising in spare parts logistics for the aviation industry in multiple lawsuits following the opening of liquidation proceedings against the group’s holding before the French Courts.
• Advised the trustee in bankruptcy on its contractual rights following the bankruptcy of AS Estonia Air.
• Advised fixed charge receivers of a private aircraft on their appointment and subsequent sale of the aircraft.

Advising airlines and operators

Examples of our experience advising airlines and operators on R&I issues include:

• Advised Singapore-based Transportation Partners on the restructuring of the Indonesian airline group, Lion Air, over a period of 18 months in a project that involved over 200 aircraft and around 50 lessor groups, including the first successful application under the Cross Border Insolvency Regulations 2006 for recognition of French conciliation proceedings.
• Advised a South African based aircraft operator, following the impact of the Covid-19 pandemic, on the potential impact of a South African business rescue process on its lease arrangements, including advice on cross border recognition in the UK and the applicability of the Cape Town Convention.
• Advised a major group of European airlines in its project to acquire in a pre-insolvency and then in an insolvency process some of the assets of a distressed French airline.
• Advised and acted for Malindo Air on the restructuring of the financing and leasing of its entire portfolio of 46 aircraft following regulatory changes in Labuan.