Briefing

CIT v SpiceJet: Guidance on Early Termination Agreements and snapback clauses

Case snapshot

The decision in CIT Group Finance (Ireland) Unlimited Company v SpiceJet Limited [2026] EWHC 1277 (Comm) provides helpful guidance on the English courts’ approach to ‘snapback’ provisions in Early Termination Agreements for aircraft leases. It also demonstrates how the court approaches common challenges such as alleged implied Braganza duties and waiver and estoppel arguments.

Background

In 2018, SpiceJet leased two Boeing 737-8 MAX aircraft. The lease agreements contained typical provisions on the payment of rent and maintenance reserves, and they required the aircraft to be redelivered to CIT at the end of the lease term in the “Lease Redelivery Condition”.

From around 2023, SpiceJet fell into arrears which it said were caused by the COVID-19 pandemic amongst other things. In early 2024, following further payment Events of Default under the lease agreements, the parties entered into Early Termination Agreements (the “ETAs”) for each aircraft. The court noted that “the ETAs provided an alternative route to what might have been a costly, difficult and potentially disruptive repossession action by CIT.” As is typical, the two principal commercial terms in the ETAs were (a) the early redelivery of the aircraft and (b) the payment of outstanding amounts due under the lease agreements.

Under the terms of the ETAs, SpiceJet agreed to pay all outstanding amounts under the lease agreements (e.g. rent, supplemental rent and interest) and to redeliver the aircraft in a condition that was more favourable than under the lease agreements (the “ETA Redelivery Condition”). The ETAs also contained a ‘snapback’ provision which had the effect (on CIT’s case) of rendering the ETAs “null and void” and taking the parties back to the original lease agreement terms if SpiceJet failed to comply with its obligations under the ETAs.

In February 2024, SpiceJet returned both aircraft. CIT issued redelivery acceptance certificates (the “ETA Redelivery Certificates”) which confirmed that the aircraft complied with the ETA Redelivery Condition. By November 2024, SpiceJet had failed to meet the payment terms in the ETAs and substantial sums remained outstanding. CIT then served demand notices and exercised its right under the ‘snapback’ provision to terminate the ETAs which (on CIT’s case) had the effect of rendering them null and void.

Subsequently, CIT issued claims for sums it said were due under the lease agreements, including: unpaid rent and supplemental rent, the costs of recovering possession of the aircraft, the costs of restoring the aircraft to the Lease Redelivery Condition, replacement engine and reconfiguration costs, insurance costs, and legal fees. SpiceJet defended the claims and CIT applied for summary judgment.

The issues arising from the summary judgment application

The court approached the analysis by first determining the proper construction of the ‘snapback’ clause (13.14) in the ETAs. In simplistic terms, that would answer whether the terms of the ETAs (as SpiceJet contended) or the lease agreements (as CIT contended) prevailed. The court then addressed SpiceJet’s main defences to the summary judgment application, namely:

whether CIT was entitled to summary judgment on its claim for certain undisputed sums (the “Undisputed Sums”) under the ETAs or under the lease agreements;
whether there was an implied obligation in the ‘snapback’ clause that CIT would exercise its right to terminate the ETAs rationally, in good faith and/or for a proper commercial purpose (i.e. a Braganza duty); and/or
whether the ETA Redelivery Certificates gave rise to a contractual or promissory estoppel, or a waiver, which precluded CIT from asserting any rights under the lease agreements, even where CIT had exercised its right under the ‘snapback’ clause to set aside the ETAs.

Construction of the ‘snapback’ clause

Clause 13.14 of the ETAs provided as follows:

“Any failure to comply with the terms of this Agreement shall at the Lessor’s discretion render this Agreement null and void and the Lessor may revert to the terms of the Lease in place prior to date of this Agreement, in particular in respect of the Redelivery Condition and payments due thereunder and proceed in accordance with the relevant terms of the Lease. The Lessor also reserves its rights to claim for the full amount of Basic Rent to be paid under each Lease and to apply the Security Deposit to outstanding sums as it sees fit.”

CIT contended that the meaning and effect of this clause was clear: that where SpiceJet breached the terms of the ETAs, CIT had the power to terminate the ETAs and to revert to the remedies available under the lease agreements. This would include losses related to restoring the aircraft to the Lease Redelivery Condition (rather than the ETA Redelivery Condition).

SpiceJet accepted that the clause preserved CIT’s right to revert to the lease agreement terms in respect of unpaid rent and the costs of recovering possession of the aircraft. But it contended that the costs of restoring the aircraft to the Lease Redelivery Condition were excluded. SpiceJet’s case on construction was that the ‘snapback’ clause only permitted CIT to revert to the original (more onerous) lease agreement terms where there were “clear and obvious remedies”. The judge rejected this argument, finding that he was “unable to follow the chain of reasoning” in this argument; that the distinction between “clear and obvious remedies” and other remedies was unclear; and that the wording of the clause did not support this interpretation.

The judge also found that the language of the clause made clear that any failure by SpiceJet to comply with the terms of the ETAs would entitle CIT to “revert to the terms of the Lease in place prior to date of [the ETAs], in particular in respect of the Redelivery Condition and payments due thereunder“. This included the costs of restoring the aircraft to the Lease Redelivery Condition, which was not curtailed when the aircraft were in fact redelivered when the ETAs were in force.

Having decided the proper construction of the ‘snapback’ clause, the judge went on to consider SpiceJet’s defences to the summary judgment application.

Were the Undisputed Sums due under the ETAs or the lease agreements?

SpiceJet contended that since the contractual basis on which CIT sought summary judgment on the Undisputed Sums was contested, it was inappropriate to decide the matter summarily, and it should instead be determined at trial.

The judge rejected that argument in short order, finding that whether the Undisputed Sums were payable under the ETAs or the lease agreements made no difference to CIT’s entitlement to them. He added that, in any event, clause 3.2 of the ETAs made clear that if SpiceJet failed to pay the amounts due, the obligation to pay those amounts under the lease agreements would remain.

Accordingly, summary judgment was entered in respect of the Undisputed Sums.

Was there an implied Braganza duty in the ‘snapback’ clause?

In Braganza v BP Shipping Ltd [2015] UKSC 17, [2015] 1 WLR 1661, the Supreme Court recognised that where a contract confers a discretion on one party, the law can imply a duty that the discretion must be exercised rationally and in good faith (the Braganza duty).

SpiceJet contended that the words “at the Lessor’s discretion” in the ‘snapback’ clause imposed a Braganza duty on CIT when exercising its right to terminate the ETAs. It argued that CIT failed to discharge this duty because terminating the ETAs when it did would operate “as a retrospective reversion to the Lease Redelivery Condition in circumstances where: (a) that standard cannot now be retrospectively satisfied or cured… and (b) the exercise of the discretion in that manner makes no coherent sense…”.

Those arguments were rejected. First, the judge found that Braganza duties are only implied where the contractual purpose requires it. That was not the case here: any exercise of the termination right in the ‘snapback’ clause would be to SpiceJet’s disadvantage and CIT could decide for itself how patient it was willing to be before “pulling the rug”. The ETAs’ aim was to incentivise SpiceJet to return the aircraft and pay its arrears, in return for CIT’s forbearance from enforcing its pre-existing remedies in the lease agreements. Second, CIT’s exercise of its termination right was not “retrospective”, it simply “resurrected” rights it had always been entitled to.

Was there an estoppel/waiver preventing the exercise of the ‘snapback’ clause?

SpiceJet argued that the effect of the ETA Redelivery Certificates was to prevent CIT from contending, post-redelivery, either (i) that the Aircraft fell short of the ETA Redelivery Condition, even if clause 13.14 was exercised to render the ETAs null and void; or (ii) that CIT was entitled to recover the costs of restoring the aircraft to the Lease Redelivery Condition, whatever state of repair they were in fact in on redelivery. The judge rejected those arguments, finding that the ETA Redelivery Certificates served a narrow purpose: they established, for the purposes of the ETAs, that the ETA Redelivery Condition had been met. CIT made no wider promise than that. Accordingly, there was no contractual estoppel by virtue of the ETA Redelivery Certificates.

The judge added that even if the ETA Redelivery Certificates had created an estoppel, the estoppel could not survive the annulment of the ETAs. Once the ETAs ceased to have force, the agreed state of affairs in the ETA Redelivery Certificates ceased to be relevant. Citing Sofer v Swissindependent Trustees, the judge confirmed that “a contractual estoppel, being produced in and for the purposes of a particular contract, should be limited in its operation to claims based on that contract“.

SpiceJet’s promissory estoppel/waiver cases also failed due to the fact that CIT made no unqualified promises in the ETA Redelivery Certificates. In addition, SpiceJet was unable to prove detrimental reliance, an essential “ingredient” to both theories, in respect of the alleged representation or promise.

The court therefore entered summary judgment on the remaining heads of loss claimed by CIT, subject always to questions of causation and quantum.

Conclusion

This case provides strong support for well drafted ‘snapback’ provisions in ETAs. The court found that these provisions serve a clear and useful commercial purpose: incentivising lessees to comply with the terms of the ETA or face reverting to the more onerous and costly terms of the lease agreement. There is also useful guidance on further clauses and language that can be used in ETAs to preserve and (if necessary) revert to rights contained in the original lease agreement.

This is also another example of the English court’s willingness to deal with the enforcement of aircraft lease agreements summarily. The defendant raised common challenges to the summary judgment application, but in the absence of strong contemporaneous evidence, the court dismissed them without the need for a full trial. The findings on Braganza duties will have wider application, but in this context mean lessors will not have to justify pulling the rug on an ETA.

Dimitris Dimitropoulos, Trainee Solicitor, assisted in the preparation of this briefing.