Philip Santucci (led by Bret Walker SC) appeared in the High Court of Australia in VB Lease Co v Wells Fargo [2022] HCA 8 for the unsuccessful aircraft engine lessor.
The case is significant as the first detailed consideration by any ultimate appellate Court of any Contracting State of the Cape Town Convention and Aircraft Protocol that governs international security interests in mobile aircraft assets.
The case turned principally on the scope of the insolvency provisions in Article XI of the Aircraft Protocol. In particular the scope of an insolvency administrator’s obligation under Article XI(2) of the Aircraft Protocol to “give possession” of aircraft objects (airframes, engines, records and related equipment) after the expiry of the “waiting period” (moratorium) in an insolvency administration.
The appellant lessors had sought to give content to that obligation by seeking to be given possession in accordance with the contractual regime for redelivery of the engines in the United States. The High Court rejected that approach and in summary held that the Art XI(2) obligation to “give possession” requires only that the creditor be “given the opportunity to take possession”, which at most requires the airline or insolvency administrator taking “whatever steps may be necessary to provide an opportunity for the exercise of the right to take possession”: at [47].
The High Court’s consideration of the operation of the Cape Town Convention and Aircraft Protocol will be important to both insolvency practitioners dealing with aircraft assets and the aviation finance industry.
Read the judgment here.
