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Genesis v Spicejet

Philip Shepherd KC leading Erin Hitchins represented the operating lessor Genesis in the latest round of its successful claims against the lessee SpiceJet in the London Commercial Court in respect of the failure by SpiceJet to return a Boeing 737-800 in the stipulated redelivery condition.

The judgment of Foxton J contains important findings on the ability of a lessor under operating leases to determine and certify the amount due from the lessee, that is likely to be of benefit to the entire lessor community.

In February 2022, Philip acted for the lessor Genesis when, in the face of opposition from leading and junior counsel, Genesis obtained summary judgment against SpiceJet for US$5,334,121.25 in unpaid Rent and Supplemental Rent. In addition, indemnity costs were ordered against SpiceJet because of its conduct of the litigation in attempting to take a series of unmeritorious and unheralded points.

The action then proceeded in May 2023 proceeded with the redelivery condition claims. As trial approached, SpiceJet’s lawyers came off the record due to SpiceJet’s failure to pay their legal fees. Following this, SpiceJet represented themselves in interlocutory hearings including an application to adjourn the trial. Foxton J gave that application short shrift, stating it was “the latest in a long-running series of attempts by SpiceJet to play for time”. When it came to trial, SpiceJet decided not to attend although GASL was still required to prove its case on the merits that Foxton J found it had done.

In common with most operating leases, the lessor was entitled to certify any amount due to it from the lessor. Foxton J was persuaded that since the lease contained appropriate indemnity language and a lessor determination clause, Genesis was entitled to certify the cost of remedying the breaches of the redelivery conditions, there was no manifest error in the certification. Hence, Genesis was thus entitled to judgment in the amount certified. This finding is likely to be of significant assistance to the swift resolution of redelivery condition disputes.

Additionally, Foxton J held that on the evidence there had been a breach by SpiceJet of the redelivery condition to return engines with sufficient flight hours and cycles remaining to the next engine performance restoration as calculated by reference to the lessee’s MTBR for comparable engines. Foxton J found that breach of that requirement entitled Genesis to the full costs of a performance restoration shop visit for the engines.

This judgment is to be welcomed as a further example of English courts supporting aviation leasing by understanding the risk allocation in a lease, giving effect to the contractual wording agreed by the parties and holding defendants to account where they seek to delay and evade their obligations.

Philip and Erin were instructed by Andrew Ward and Philip Jackmuah, partners in Watson Farley Williams (London and New York)

The full judgment can be read here.