Briefing

HQ Quarterly Case Report

This quarterly case summary highlights English court judgments concerning the aviation industry in Q1 2026. In this edition, we summarise judgments on aircraft leasing disputes, security for costs applications and important guidance from the Supreme Court on the application of UK sanctions relating to Russia.

Aircraft leasing

Airline Geo Sky LLC v Air Albania SHPK [2026] EWHC 395 (Comm)

Airline Geo Sky LLC (“Geo Sky“) applied for summary judgment in respect of its claim for unpaid rent due under a wet lease agreement for a Boeing 737. The Defendant, Air Albania, did not dispute the unpaid rent and twice acknowledged that the debt was owed and even made partial payment. Air Albania did not instruct legal counsel to defend the summary judgment application.

The Commercial Court granted summary judgment in Geo Sky’s favour, finding that (a) there was no realistic prospect of Air Albania defending the claim and (b) there being no other compelling reason why the case should proceed to trial (being the two tests for summary judgment). In addition to the underlying debt and interest, the Court also confirmed that Geo Sky could enforce an indemnity in the lease agreement and recover the legal expenses that it incurred in connection with the debt owed under the lease agreement. The Court awarded these costs in full (including local Albanian lawyer’s fees), noting that a contractual indemnity in respect of costs does not require the same “reasonableness” assessment as is applied to the recovery of costs under the CPR.

Rostrum Leasing 1 DAC v MAE Aircraft Management WLL [2026] EWHC 57 (Comm)

Rostrum Leasing 1 DAC (“Rostrum”) applied for summary judgment in respect of its claim for unpaid rent due under an aircraft lease agreement. The Defendant, MAE Aircraft Management WLL (“MAE“), alleged that it was not liable for the alleged unpaid rent because the aircraft was not “airworthy” when delivered and did not satisfy contractual “delivery conditions”.

The Commercial Court granted summary judgment in Rostrum’s favour. The court found that MAE was estopped (by convention) from denying that delivery of the aircraft had properly occurred and that there was a valid signed Technical Acceptance Certificate (“TAC“) – and as a result, MAE had accepted the aircraft and therefore had an obligation to make rental payments under the lease agreement. The Court found that, regardless of any alleged defects on the aircraft, both parties had for some time proceeded on a shared assumption that the lease was operative and that rent was due, as evidenced by MAE’s payment of rent and its continued possession and use of the aircraft. The Court therefore decided that it would be unconscionable to allow MAE to retreat from that shared assumption.

The Court also found that MAE was contractually estopped from asserting that the aircraft had any defects beyond those expressly set out in the TAC, which was held to be “contractually conclusive”.

Sunbird France 02 SAS v SpiceJet Ltd

Sunbird France 02 SAS (“Sunbird“) applied for summary judgment in relation to rent and maintenance accruals in the amount of US$9.7m alleged to be due under aircraft engine lease agreements. SpiceJet’s lawyers did not have instructions to participate in the summary judgment hearing and there was no acknowledgment of service.

As to the threshold issues of service and jurisdiction, the Court found that: (a) there was valid service of the Claim Form and it was therefore appropriate to proceed in SpiceJet’s absence; and (b) there was no basis for SpiceJet to contest jurisdiction as the lease agreements contained exclusive jurisdiction clauses in favour of the English courts. Importantly, Sunbird was not seeking default judgment as SpiceJet’s assets were believed to be in India, where enforcement would require a judgment on the merits.

Having examined the rental and maintenance figures and the unchallenged witness evidence provided by Sunbird, the Court granted summary judgment. SpiceJet had no substantive defence to the claims and had not advanced one. Under the lease terms, no right of set-off was available and Sunbird’s determination of interest was contractually conclusive. Costs were awarded on an indemnity basis in accordance with the provisions of the lease agreement.

Casamance Owner SARL v Air Senegal SA [2025] EWHC 3196 (Comm)

Casamance Owner SARL (“Casamance”) and Wilmington Trust (London) Limited (“Wilmington”) applied for summary judgment following the termination of two aircraft lease agreements with Air Senegal SA (“Air Senegal”). Air Senegal had sold the aircraft to Casamance in 2019 and 2020 and leased them back under English law governed leases. From mid 2024, Air Senegal fell into repeated and admitted default on rent payments, with arrears exceeding €16 million by June 2025. Despite a substantial part payment shortly before termination, significant sums remained outstanding.

In addition to the outstanding rent, Air Senegal failed to redeliver both aircraft. Air Senegal repeatedly acknowledged that its only potential defence to the claim, which the Court said was “the only way that Air Senegal could put the genie back into the bottle”, was an application for relief from forfeiture. However, no such application was made before the summary judgment hearing.

The Court held that there was no real prospect of Air Senegal defending the claim: the admitted payment defaults and valid termination of the lease agreements entitled Casamance to redelivery and payment. The mere possibility of a future application for relief from forfeiture did not amount to a defence: “until the application is made there is no defence at all.” The Court therefore entered summary judgment, but this was subject to an “unless” provision allowing Air Senegal a short final opportunity to apply for relief from forfeiture.

STLC Europe Thirteen Leasing Ltd (“STLC”) v Qatar Airways Group QCSC (“Qatar Airways”) [2026] EWHC 519 (Comm)

The Court was asked to resolve a dispute over the draft terms of a confidentiality ring order (“CRO”) in the context of ongoing proceedings between STLC and Qatar Airways relating to the leasing of two aircraft. Following Russia’s invasion of Ukraine in 2022, sanctions were imposed on STLC and the leased aircraft were subsequently withdrawn from service by Qatar Airways. In short, STLC’s claim is for alleged outstanding rent payments, damages for alleged failure to maintain the aircraft and end-of-lease compensation. Qatar Airways has a counterclaim for additional storage costs and loss of profits.

The parties disagreed over the definition of “Confidential Information” in the CRO. STLC contended that communications with US sanctions authorities should be confidential on the basis that the disclosure of such documents may harm its legitimate interests. In particular, it asserted that applications to US authorities were made in the context of its liquidation and therefore contained sensitive business information, including proprietary data, financial details and internal business strategies regarding the liquidation process. Qatar Airways contended that STLC had not explained how the US sanctions materials met the test for departing from the principle of open justice.

The Court held that the US sanctions materials were confidential information requiring the protection of the CRO. The Court also resolved other disputed terms of the CRO, including confidentiality undertakings and various procedures for designating, challenging and producing material which fell within the definition of Confidential Information. As with other similar judgments, the outcome turned on the particular facts relating to the confidentiality issues.

Security for costs

Limited Liability Company Air Company Air Manas (“Air Manas”) v GTLK Middle East SPV Three Ltd (“GTLK”). [2026] EWHC 177 (Comm)

Air Manas ceased operations in 2022 following sanctions affecting Russia linked entities, including GTLK. GTLK obtained an arbitral award against Air Manas in the amount of c.£11 million as a result of alleged breaches of the aircraft lease agreement that they entered into. Air Manas applied to the English Court to challenge the arbitral award, and GTLK then sought £270,000 as security for its costs.

Air Manas accepted that it was unlikely to be able to meet an adverse costs order in full. It offered to pay £100,000 as security for GTLK’s costs, but contended that anything above that amount could leave it with insufficient funds to pursue its claim. The Court found that there was very limited evidence concerning Air Manas’ financial position and/or funding, other than that it recently held over US$270,000 in an account and continued to fund its legal costs. The Court also decided that it could not find that Air Manas’ financial difficulties were caused by GTLK’s alleged breach; whilst this argument was open to Air Manas in principle, it only worked if Air Manas could establish that it was impecunious (which it had failed to do).

Ultimately, the Court ordered security for costs in the amount of £125,000. This was a reduction from the £270,000 requested, which reflected the Court’s approach to assessing Guideline Rates and what is recoverable in the circumstances.

Sanctions

UniCredit Bank GmbH, London Branch v Constitution Aircraft Leasing (Ireland) 3 Ltd and another; and UniCredit Bank GmbH, London Branch v Celestial Aviation Services Ltd [2026] UKSC 10

This is the Supreme Court’s long-awaited decision on the effect of UK sanctions on obligations connected with lease agreements. The issue concerned whether Regulation 28(3)(c) of the Russia (Sanctions) (EU Exit) Regulations 2019/855 (“Reg. 28(3)(c)“) prohibited a German bank from discharging payment obligations owed to Irish companies under letters of credit following the termination of aircraft lease agreements with Russian airlines.

The Supreme Court confirmed that Reg.28(3)(c) is intentionally broad and prohibited the bank from making payments under the letters of credit until licences were granted, as the language of Reg.28(3)(c) requires only a factual link between the provision of funds and arrangements making aircraft available in Russia. In these cases, that connection arose because the letters of credit secured obligations under lease agreements whose object or effect was to make the aircraft available for use in Russia. The Court further held that interest could not accrue while the bank was legally barred from paying.

The second issue concerned whether the bank could avail itself of the protection under s.44(2) of the Sanctions and Money Laundering Act 2019 (“SAMLA“) against claims for recovery of the debt, interest on the debt, and associated costs. Although it was not necessary to decide this point for the appeal as payment was already prohibited under reg.28(3)(c) until a licence was granted, the Court considered it important to address the interpretation of s.44(2) SAMLA due to its wider relevance. Section 44 SAMLA is intended to protect those who reasonably believe that sanctions law requires them to act, or omit to act, in a particular way. The Court held that s.44(2) SAMLA does not prevent civil proceedings from being brought, but instead provides a defence to claims for debt, interest, and associated costs arising from a failure to pay – in these cases under the letters of credit.

HFW’s David Savage, Sarah Hunt, Amanda Rathbone and Holly Colaco have examined how the judgment applies UK sanctions regulations and what this could mean for the autonomy principle and the value of letters of credit as security. Read the full article here.

Dimitris Dimitropoulos, Trainee Solicitor; Michael Gould, Trainee Solicitor; Michael Popp, Trainee Solicitor; and Ollie Youngman, Solicitor Apprentice, assisted in the preparation of this briefing.

If you have any queries relating to any of the topics covered in the case summaries please contact Guy Marrison or Ed Spencer.