Town Hall: Aircraft escrow firms refuse more ‘undesirable’ clients
Mike Stones
Business aircraft escrow companies are turning away far more
“undesirable” prospective clients and detecting more attempted fraud, according to Corporate Jet Investor’s recent Town Hall online meeting on closing transactions.
Joan Roberts, Insured Aircraft Title Service vice president, told delegates:
“We have seen a lot more undesirable people trying to set up escrows with us and airplanes that we consider undesirable. We know they will come under investigation somewhere down the road.”
Roberts was unsure what sparked the increase in dubious escrow proposals. Factors accounting for the rise could include what she described as drug cartels having greater access to the US or recent high-profile indictments in the business aviation industry.
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Salam Air SAOC v Latam Airlines Group SA ([2020] EWHC 2414 (Comm)), the Commercial Court:
dismissed Salam Air s application for an injunction against Latam, which sought to prevent Latam making a demand for payment under three letters of credit issued in its favour; and
rejected Salam Air s argument that the COVID-19 pandemic had frustrated the underlying aircraft leases.
Facts
In 2017 Salam Air accepted a delivery of three aircraft from Latam, which were leased to it pursuant to operating lease agreements governed by English law and which it intended to operate from Muscat International Airport, Oman. Each aircraft lease agreement had a six-year term and contained customary dry lease provisions – significantly, a hell or high water obligation to pay rent.
In the recent case of
Helice Leasing SAS v PT Garuda Indonesia (Persero) Tbk ([2021] EWHC 99 (Comm)), 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 (LCIA) rules instead of proceeding by court action.
The court upheld the parties arbitration agreement pursuant to the lease agreement terms despite conflicting references therein which stated that the lessor could proceed by appropriate court action following an event of default.(1) The court endorsed the one-stop shop principle established by the House of Lords in
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