FW Aviation (Holdings) 1 Ltd v VietJet Aviation Joint Stock Company [2025] EWHC 928 (Comm) (17 April 2025)

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Cite as: [2025] EWHC 928 (Comm)

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		Neutral Citation Number: [2025] EWHC 928 (Comm)
		Case No: CL-2022-000467

IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS OF ENGLAND & WALES
KING'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

17 April 2025

B e f o r e :

MR JUSTICE PICKEN
____________________

	FW AVIATION (HOLDINGS) 1 LIMITED	Claimant
	- and -
	VIETJET AVIATION JOINT STOCK COMPANY	Defendant

____________________

Mr Akhil Shah KC, Mr Richard Lissack KC, Ms Niamh Cleary, Mr Jacob Turner and Mr Orestis Sherman (instructed by Quinn Emanuel LLP) for the Claimant.
Mr Steven Thompson KC, Mr Sebastian Isaac KC, Mr Alexander Milner KC, Ms Erin Hitchens, Mr Giles Robertson, Mr Kit Holliday and Mr Moritz Grimm (instructed by King & Spalding LLP) for the Defendant.

Hearing dates: 15, 16, 20, 21 and 22 January 2025.
Judgment provided in draft: 10 April 2025.
____________________

HTML VERSION OF JUDGMENT
____________________

Mr Justice Picken:

Introduction

This judgment follows the judgment on liability which I handed down on 31 July 2024: [2024] EWHC 1945 (Comm). In that judgment, I decided that the Claimant ('FWA') succeeded in its claim against the Defendant ('VietJet') and rejected VietJet's application for relief from forfeiture.

Although some quantum issues were resolved by the order which I made on 31 July 2024 following the liability trial, notably those concerning accrued so-called Rent and Swap Breakage Costs for all four Aircraft (as defined previously in the liability judgment and again later in this judgment), other quantum issues remain live and it is in respect of those issues that this further judgment is concerned, with one exception.

The exception concerns whether, FWA having recovered possession of all four Aircraft in December 2022 and having by the time of trial in January 2025 exported three of them and in March 2025 having also exported the fourth, any delay by FWA exporting any of the Aircraft is because of any culpable acts by VietJet, or because of FWA's own failures, or just the result of the actions of third parties, or events outside the parties' control.

That issue will be the subject of a further (and hopefully final) trial likely to take place in 2026. Coming into this (first) quantum trial, four issues were to be dealt with, namely (and adopting the definitions used in the liability judgment):

(1) Whether VietJet is liable to pay FWA under Clause 19.3(a) of the Sub-Leases: (i) the 'A Line Termination Value' (for the NEOs, c.US$108 million); and (ii) the 'Termination Value' (for the CEOs, c.US$57.1 million).

(2) If the 'A Line Termination Value' is not payable in respect of the NEOs, whether VietJet is liable to pay FWA the 'Basic Termination Amount' (a component of the 'A Line Termination Value')– which is c.US$75.0 million.

(3) Whether FWA is entitled to the declarations sought in paragraphs 1(a), 1(d) and (2) of the prayer to the Re-Re-Amended Particulars of Claim, i.e. declarations that: (i) FWA has the right to immediate possession, custody and control of the Aircraft; (ii) VietJet do provide to FWA, its agents and its affiliates, all necessary assistance and cooperation in respect of FWA taking possession, custody and control of the Aircraft; and (iii) FWA is entitled to deregister the Aircraft from the Vietnam aircraft register, and to procure the export and physical transfer of the Aircraft.

(4) What amount VietJet is liable to pay to FWA pursuant to Clause 20.4(c) of the NEO Sub-Leases (this claim amounts to some US$16.7 million).

However, shortly before the trial, in letters sent to King & Spalding (on VietJet's behalf) on 7, 8 and 9 January 2025, Quinn Emanuel (on FWA's behalf) informed VietJet's solicitors, King & Spalding, that the owners of the three of the Aircraft had the previous month taken steps to sell them to FWA, following which FWA no longer wished to pursue the relief identified in (3)(ii) and (iii). Accordingly, subject to potential costs argument at a later stage, those matters do not now fall to be considered. Subsequently, in FWA's written submissions for trial, FWA indicated that as to 3(i), the declaration sought was that "FWA is entitled to possession of the Aircraft as against VietJet, pursuant to either clause 19.2 of the Sub-Lease Agreements or reg. 21."

It is FWA's position: that, pursuant to Clause 19.3 of the Sub-Leases, VietJet was obliged to pay the various sums set out in that provision on the Termination Date; of those sums, the Court has already ordered VietJet to pay the rental outstanding as at the Termination Dates and (in the case of the NEOs) the swap breakage losses, in addition to the default interest outstanding; and, accordingly, the only sums payable to FWA under Clause 19.3 that remain outstanding in respect of each Aircraft are (a) the A Line Termination Value in the case of the NEO Aircraft, and (b) the Termination Value A in the case of the CEO Aircraft (collectively, the 'Termination Sums', in amounts that are agreed, namely: US$54,327,764 in respect of the 8906 Aircraft; US$53,380,272 in respect of the 8937 Aircraft; US$28,552,823 in respect of the 8577 Aircraft; and US$28,531,486 in respect of the 8592 Aircraft).

VietJet disputes this, arguing that these claims (if successful) would mean that VietJet would be required not only to hand over the Aircraft but also to pay sums tantamount to their value.

Furthermore, VietJet contends that the declarations sought should not be made for two reasons: first, that FWA has never had a contractual right to possession of the Aircraft under Clause 19.2(b) of the Sub-Leases since that right was expressly excluded from the rights assigned to FWA in November 2021, and, in any event, would have expired in January 2022 when the Aircraft were sold, over the head of the Lessors, to the 'Trustee Owners'; and, secondly, that FWA has no contractual right to export the Aircraft and is positively ineligible to exercise the remedy of export under the Cape Town Convention on International Interests in Mobile Equipment (the 'Cape Town Convention').

VietJet adds as regards issue (4) above that, although Clause 20.4(c) allows the Sub-Lessor to recover 150% of what Mr Steven Thompson KC (on VietJet's behalf) characterised as the 'usual' rent post-termination and, as such, VietJet accepts that FWA can rely upon the provision up to the date on which the Aircraft were sold (January 2022), thereafter nothing is payable since FWA cannot charge rent for the use of Aircraft that the (Sub-)Lessors themselves had no right to use and were owned by third parties.

Some further background

Although some of what follows has already been addressed in the earlier liability judgment and will be touched upon again later, it is worth at this stage setting out some further background.

Each of the Aircraft was leased to VietJet through a Japanese Operating Lease with Call Option ('JOLCO') which, as Mr Chrun (FWA's expert) explained, uses "certain Japanese tax provisions to generate financial benefits shared between the Japanese Investors and the Airline".

Specifically, the characteristics of a JOLCO arrangement are that: (i) the aircraft is purchased by a Special Purchase Vehicle ('SPV') (the Lessor) with equity capital supplied by Japanese investors (perhaps 25%) and debt to finance the remainder (75%); (ii) the aircraft is, then, leased to an airline for 8 to 12 years, possibly (as was the position in this case) through the interposition of a 'Sub-Lessor', such that in the transaction documents the airline becomes the 'Sub-Lessee'; (iii) the airline has one or more options to purchase the aircraft (the 'Purchase Option'), at a pre-agreed valuation, at agreed points during the leases, the parties' intention being that the operator of the aircraft do exercise that Purchase Option as and when available; (iv) if the airline does not exercise the Purchase Option, it has to return the aircraft at the end of the lease.

In the present case, VietJet had the option to purchase each Aircraft on a particular date (the 'Purchase Option Date') for an agreed price (the 'Purchase Option Price'), as follows:

Aircraft	Purchase Option Date	Purchase Option Price	Purchase Option Price
CEOs	8577	20 May 2027	US$20,000,000
CEOs	8592	21 May 2027	US$20,000,000
NEOs	8906	24 September 2028	US$28,000,000
NEOs	8937	27 July 2028	US$28,000,000

These amounts were based on the anticipated fair market value of the Aircraft on the Purchase Option Dates in 2027 and 2028.

Although VietJet's right to acquire the Aircraft under the Leases and Sub-Leases took the form of options as opposed to an obligation to purchase, it was the intention and expectation of the parties that the options would be exercised on the Purchase Option Dates. As Mr Chrun pointed out, "not exercising the Call Option and redelivering the aircraft is a possibility" but that possibility is remote given the financial incentives involved. Indeed, Mr Chrun said that he had "not experienced such an outcome" and that he was not aware of any specific occasion on which it had ever occurred, in view of the fact that the Japanese equity investors would have no interest in becoming asset managers or owners of used Aircraft and, therefore, intended and expected that the Purchase Options would be exercised.

In this case, the leasing arrangements were made in 2018 and 2019 and provided for the acquisition of four aircraft (the 'Aircraft') referred to as the '8906 Aircraft' and the '8937 Aircraft' (together, the 'NEO Aircraft') and the '8577 Aircraft' and the '8592 Aircraft') (together, the 'CEO Aircraft'). For each of the Aircraft, following the JOLCO model, the transactions included: a Loan Agreement under which the Lessors borrowed money from banks to finance approximately 75% of the cost of acquisition of the Aircraft; a (Head) Lease from the Lessors down to the Lessees, which were SPVs VietJet controlled; and a Sub-Lease from the Lessees (or Sub-Lessors) to VietJet (the Sub-Lessee). In each case, the borrowing under the Loan was supported by security, held by the Security Trustee (in the case of the NEOs) or Security Agent (in the case of the CEOs) (for the purposes of this judgment, in all cases, the 'Security Trustee'), which included: a 'New York mortgage' over the Aircraft granted by the Lessors in favour of the Security Trustee; the Lessee's assignment to the Lessor of its rights under the Sub-Lease (the 'Security Assignment (Lessee)'); and the Lessor's assignment to the Security Trustee of some of its rights both under the Lease and as acquired through the Sub-Lease Assignment (the 'Security Assignment (Lessor)'). As a result, and as is not in dispute, Japanese investors held the equity and banks held the debt element (in the ratio 1:3) of the interest in the Aircraft. The terms of the Leases and other transaction documents reflected that division of interest, so that many elements of the debts (and other sums) payable under those documents are referable to one or other of those interests.

As for the Security Assignment (Lessor) in particular, this was a partial assignment because it omitted what was described as the 'Excluded Property' (as defined in the Leases). Although the terminology is not the same in the CEO Leases and Sub-Leases as compared to the NEO Leases and Sub-Leases, the categories of rights defined as Excluded Property are similar: (i) for the CEO Aircraft the B Rental, Termination Value B, Special Termination Value B, Low Termination Value B and Purchase Option Price B were Excluded Property, whereas the A Rental and the Termination Value A were not Excluded Property; (ii) for the NEO Aircraft, the B Rental and each of the A, B and C Termination Amounts were Excluded Property as was the Purchase Option Price B, yet the A Rental and the Basic Termination Amount were not Excluded Property; (iii) for both CEOs and NEOs, claims under various provisions of the Sub-Leases (including, in particular, provisions concerning the return of the Aircraft) were Excluded Property - including any claims under Clause 20.

As Mr Thompson observed and Mr Chrun implicitly acknowledged, although it is not expressly stated in the Leases or Sub-Leases, the Excluded Property provisions operate to preserve the rights and expectation of the Japanese equity investors, and ensure that they are not available to meet lenders' claims. That is why the Excluded Property was not assigned as part of the security package provided to the lenders, but remained with the Lessors. In this respect, as Mr Chrun put it, liability under a JOLCO arrangement is limited to a defined "security package", involving what he termed "limited recourse" lending which sees the Borrowers/Lessors liable to the lenders only to the extent of the rental payments made by VietJet and the security rights over the Aircraft.

Coming on, then, to what VietJet paid for the Aircraft, the CEOs were delivered on 20 and 21 November 2018, whilst the NEOs were delivered on 25 July and 24 September 2019. At the time of their delivery to VietJet, the total cost of the Aircraft (referred to as the 'Lessor Cost') was US$219 million, namely US$58.0 million for each NEO and US$51.5 million for each CEO. Under the terms of the Sub-Leases, over the duration of the Sub-Leases (i) the rent due up until the Purchase Option Dates plus (ii) the Purchase Option Price would have amounted to over US$271 million in aggregate, which was about US$13 million more per Aircraft than their initial cost:

Aircraft	Rental	Purchase Option Price	Total	Total
CEOs	8577	US$44.4m	US$20.0m	US$64.4m
CEOs	8592	US$44.3m	US$20.0m	US$64.3m
NEOs	8906	US$43.0m	US$28.0m	US$71.0m
NEOs	8937	US$43.6m	US$28.0m	US$71.6m
Total	US$175m	US$96.0m	US$271m	US$271m

It follows, as Mr Thompson submitted, that, had there been no default or termination of the Leases, VietJet would have paid US$271 million between 2018 and 2028 to lease the four Aircraft and, then, acquire them outright.

This is not, however, what happened since on 18 October 2021 (in the case of the NEOs) and on 22/26 October 2021 (in the case of the CEOs) the Leases and Sub-Leases were terminated by the existing Security Trustees, BNP and Natixis.

In the meantime, FWC bought up the loans from the banks, which had an outstanding face value of US$138 million, and shortly after service of the Termination Notices, FWC took assignments of the banks' loans (on 26/28 October 2021 in the case of the CEOs) and 29 October 2021 in the case of the NEOs), with FWC appointing itself Security Trustee on 2/3 November 2021.

Under Clause 19.2 of the (Sub-)Leases, the (Sub-)Lessor (or rather, its assignee, the Security Trustee) had a choice, either (a) to "retake possession" or (b) to require the Sub-Lessee to "redeliver the Aircraft to the Sub-Lessor (or any other person specified by the Sub-Lessor) in the manner and condition required by, and otherwise in accordance with the provisions of, Clause 20 (Return of Aircraft) …". The Termination Notices chose the latter, stating:

"The termination of the leasing of the Aircraft is without prejudice to your continuing obligations under the Sub-Lease Agreement and the Head Lease Agreement. Furthermore, you are required to ground the Aircraft and redeliver it (which for the avoidance of doubt includes the Engines) in accordance with the Head Lease Agreement and the Sub-Lease Agreement."

VietJet was, therefore, required to redeliver the Aircraft to the Lessors in accordance with Clause 20 of each Lease.

FWC, then, sold its claims to its affiliate, FWA. Under the Claims Assignment Agreements of 8/9 November 2021, FWC sold FWA some (but not all) of its contractual rights for US$2.85 million, subject to three significant exclusions: (i) the 'Excluded Property', which had been excluded in the original assignment from the Lessors to the Security Trustee; (ii) the 'Aircraft Excluded Property' held by FWC, which was defined as "(a) the Aircraft, including the Airframe, the Engines and Parts and any Technical Records in respect of the foregoing (together, the 'Aircraft Assets'); and (b) any bill of sale relating to the Aircraft Assets, … provided that the Aircraft Excluded Property (x) is limited to those properties, rights, interests and privileges which comprise or derive from any redelivery, return, retaking of possession or sale of the Aircraft contemplated by the provisions of Clause 19 (Remedies) of the Lease and/or Sub-Lease or any other action in connection with the Aircraft …"; and (iii) as part of the definition of 'Aircraft Excluded Property', the termination sums payable under Clause 19.3(a)–(d) if (but only if) VietJet exercised the 'Default Purchase Option' and so acquired the Aircraft on default.

Accordingly, under the Claims Assignment Agreements, FWC retained its rights to the Aircraft themselves. However, in January 2022, FWC effected a transfer of the Aircraft to 'Trustee Owners', who paid c. US$138 million for the Aircraft.

Furthermore, under a 'Participation and Sale Agreement' dated 1 January 2022, FWA acquired (as FWC's nominee) the NEO 'Excluded Property' from the NEO Lessors – hence the fact that, whilst FWA brings claims in respect of the Excluded Property under the NEO Leases, it does not do so in respect of CEO Excluded Property.

Lastly, it is to be noted (importantly in the context of Issue 3, as will appear) that, as at the date of the January 2025 trial, three of the Aircraft had been exported: the 8592 Aircraft, the 8906 Aircraft and the 8577 Aircraft; and on 19 December 2024 FWA completed a financing in respect of each of the exported Aircraft as part of which: (a) legal title to each of the Aircraft was sold by the relevant Trustee Owners to FWA; (b) the trusts created by the Declarations of Trust and Beneficial Interest Transfer Deeds for each of the Aircraft were terminated; and (c) the historic international interests registered in respect of each of the Aircraft on the International Registry were discharged.

As explained by Quinn Emanuel in an email to the Court on 26 March 2025, on 13 March 2025, the fourth of the Aircraft, the 8937 Aircraft, was also exported; and similar financing arrangements have subsequently been entered into as were entered into in respect of the other three aircraft, such that: (a) legal title to the 8937 Aircraft has been sold to FWA; (b) the relevant Declaration of Trust and Beneficial Interest Transfer Deed was terminated on 25 March 2025; and (c) all international interests registered in respect of the 8937 Aircraft were discharged prior to the transfer of title.

I turn, next, to the issues that fall to be determined.

Issue 1: Whether VietJet is liable to pay FWA under Clause 19.3(a) of the Sub-Leases: (i) the 'A Line Termination Value' (for the NEOs, c.US$108 million); and (ii) the 'Termination Value' (for the CEOs, c.US$57.1 million)

The contractual framework

In each of the Sub-Leases, Clause 19.3 provides for the Sub-Lessee to pay, in the event of termination following an "Event of Default": the A Line Termination Value (for the NEO Aircraft)/the Termination Value (for the CEO Aircraft) as at the Termination Date; rental payable on the Termination Date, if the Termination Date is also a Rental Payment Date; any unpaid Rental outstanding at the Termination Date; and any other amount due and owing by the Sub-Lessee. These provisions in the Sub-Leases are 'back-to-back' with Clause 19.3 of each of the Head-Leases. Accordingly, insofar as the Sub-Lessee is liable to pay a sum under Clause 19.3 to the Sub-Lessor, the Sub-Lessor/Lessee will be liable to pay the same sum to the Lessor.

Specifically, as to the NEO Aircraft and so the A Line Termination Value:

(1) Clause 19.3(a) of the NEO Sub-Leases provides that on the Termination Date, VietJet shall pay to the NEO Sub-Lessor "the A Line Termination Value as at the Termination Date".

(2) The A Line Termination Value is defined as "the aggregate of the Basic Termination Amount and the A Termination Amount".

(3) The Basic Termination Amount is defined in Clause 1.1 of the NEO Sub-Leases as meaning "with respect to any date, the Dollar amount calculated and payable with respect to such date pursuant to and in accordance with the provisions of Exhibit 2 to Schedule 3 (Rental and Other Amounts)", which corresponds to the amount repayable by the NEO Lessors on the Termination Date to the NEO Lenders, namely the principal balance outstanding in respect of the Loans which (in part) financed the acquisition of the NEO Aircraft.

(4) The A Termination Amount is defined in Clause 1.1 of the NEO Sub-Leases as meaning "with respect to any date, the Dollar amount calculated and payable with respect to such date pursuant to and in accordance with the provisions of Exhibit 2 to Schedule 3 (Rental and Other Amounts)". Schedule 3 (as set out in the Sub-Leases) was subsequently replaced by the Lease Acceptance Certificates, which specify a different schedule of payments, though in the same format as Schedule 3 of the Sub-Leases.

As Mr Chrun explained, the A Termination Amount corresponds to the equity finance provided by the Japanese investors (via the NEO Lessors) to fund the purchase of the NEO Aircraft, in addition to their bargained-for return, which is discounted for early receipt but adjusted to reflect the loss of favourable tax treatment which they would have received but for early termination.

As for the CEO Aircraft and the Termination Value:

(1) Clause 19.3(a) of the CEO Sub-Leases provides that, on the Termination Date, VietJet shall pay to the CEO Sub-Lessor or Lessor "the Termination Value as at the Termination Date".

(2) The 'Termination Value' "means the aggregate of the Termination Value A and the Termination Value B".

(3) As previously pointed out, FWA only seeks to enforce Clause 19.3(a) insofar as it obliges VietJet to pay the Termination Value A. That is because FWA does not hold the CEO Excluded Property (i.e. the reserved rights of the CEO Lessors that were not assigned to the CEO Security Trustee, including the right to payment of the Termination Value B).

(4) Termination Value A is defined as meaning "with respect to any date, the Dollar amount calculated and payable with respect to such date pursuant to and in accordance with the provisions of Exhibit 2 to the Lease Schedule Supplement" and is the equivalent of the Basic Termination Amount under the NEO Transactions. It corresponds to the amount repayable by the CEO Lessors on the Termination Date to the CEO Lenders, which can be demonstrated by comparing the Termination Value A at any given date with the identical outstanding balance of the loan on the same date.

There is no dispute, indeed FWA positively pleads, that payment of the Termination Values (together with rent and other outstanding sums at the date of termination) would fully compensate the Sub-Lessor (and Lessor) for all and any loss that might be suffered on termination of the Leases. Thus, in its Re-Re-Amended Reply and Defence to Counterclaim at paragraph 26A.1.1, this is stated:

"The Basic Termination Amount (in the case of the NEO Sub-Lease Agreements) and the Termination Value A (in the case of the CEO Sub-Lease Agreements) corresponds to the amounts repayable by the Lessors (as Borrowers) to the NEO and CEO Lenders (as applicable) as at the Termination Date in respect of the Loans which (part) funded the acquisition of the Aircraft."

The following is, then, pleaded at paragraph 26A.1.2:

"The A Termination Amount (in the case of the NEO Sub-Lease Agreements) and the Termination Value B (in the case of the CEO Sub-Lease Agreements) is attributable to the equity finance provided by the Japanese investors that was used to fund the purchase of the Aircraft and the investors' bargained for return on that investment and/or compensation for early repayment."

This is, then, stated at paragraph 26B.2:

"The A Line Termination Value / Termination Value … reflects: (i) the liabilities the Lessor had assumed to the lenders and (ii) the expected distribution for equity that the Japanese investors had under the transaction at the date that it falls due."

It is also agreed that, in turn, the lenders and Japanese (equity) investors, would be fully compensated for any early termination of the Sub-Leases and Leases (occasioned by reason of a default by VietJet) by payment of the Termination Values and the other sums payable under Clause 19.3 in line with what would have been intended and expected had the Sub-Leases been performed without default - with ownership of the Aircraft transferring to VietJet on the Purchase Option Dates in 2027/28.

In addition to requiring payment of the Termination Sums (and other amounts), Clause 19.3 provides that, if the Sub-Lessor has received all the amounts payable thereunder, VietJet would be entitled to take title to the Aircraft within 30 days of the Termination Date upon the payment of the Termination Price (i.e. the Default Purchase Option). For these purposes, the Termination Price is defined as being "the amount (if any) by which (i) the Fair Market Value of the Aircraft as at the date of such termination exceeds (ii) the [A Line Termination Value/Termination Value] applicable to the Termination Date".

Clause 19.4 states that, upon the service of a Termination Notice, VietJet's obligation to pay and perform all duties required by Clause 19 shall not be reduced for any reason, including any sale of the Aircraft.

As for what the Sub-Leases provide in the event that VietJet performed its obligations without interruption, VietJet would have continued to be liable to make rental payments, but could (or in the case of the CEO Transactions, the CEO Sub-Lessors could) have exercised the Purchase Option (so long as no Event of Default had occurred and was continuing) on the single Purchase Option Date falling approximately nine years into the Lease Period. To exercise this option, VietJet was required to pay a Purchase Option Price, which was determined at the outset of the transaction and corresponded to the anticipated market value of the Aircraft as at the Purchase Option Date. If VietJet (or the CEO Sub-Lessor) never exercised its option, it would have been liable to pay rental to the end of the Lease Period. In each case, VietJet would also have been liable to redeliver the Aircraft in the contractual Return Condition pursuant to Clause 20 and Schedule 4 of the Sub-Leases at the end of the Lease Period. If, on the other hand, VietJet (or the CEO Sub-Lessor) had exercised the option, it would have paid: (a) all rental payable up to and including the Purchase Option Date; and (b) the Purchase Option Price, which - as has been seen - was US$28 million for each NEO Aircraft and US$20 million for each CEO Aircraft.

Legal principles applicable to penalties

The parties were substantially agreed as to the applicable legal principles concerning penalties. However, Mr Akhil Shah KC (on behalf of FWA) and Mr Thompson were not entirely agreed, since it was Mr Thompson's contention (not accepted by Mr Shah) that, whilst in Makdessi v Cavendish Square Holdings [2015] UKSC 67, [2016] AC 1172 the Supreme Court comprehensively reviewed the law relating to penalties, it did not overrule or disapprove the prior case law, including Dunlop Pneumatic Tyre Co v New Garage and Motor Co [1915] AC 79 to the effect that ascertaining whether a provision amounts to a penalty entails asking whether the stipulated remedy represents a genuine pre-estimate. It was Mr Thompson's submission that, accordingly, it remains appropriate to ask that question and that doing so in the present case should lead to the Court concluding that Clause 19.3 is a penalty.

I will address this submission, after first making certain preliminary observations.

The first of these is that the burden of proving that a clause is a penalty is on the party asserting that the clause is unenforceable: De Havilland Aircraft of Canada Limited v Spicejet Limited [2021] EWHC 362 (Comm) at [30].

Secondly, that burden will not be lightly discharged. As Lord Neuberger and Lord Sumption noted in Makdessi at [33]:

"The penalty rule is an interference with freedom of contract. It undermines the certainty which parties are entitled to expect of the law. Diplock LJ was neither the first nor the last to observe that 'The court should not be astute to descry a "penalty clause"': the Robophone case [1966] 1 WLR 1428, 1447. As Lord Woolf said, speaking for the Privy Council in Philips Hong Kong Ltd v Attorney General of Hong Kong (1993) 61 BLR 41, 59, 'the court has to be careful not to set too stringent a standard and bear in mind that what the parties have agreed should normally be upheld', not least because '[a]ny other approach will lead to undesirable uncertainty especially in commercial contracts'."

Thirdly, whether a clause is a penalty is a question of construction, to be decided upon the terms and the inherent circumstances of the particular contract, "judged of as at the time of the making of the contract, not as at the time of the breach": Dunlop at pages 86-87. Nonetheless, subsequent events (for example, the actual losses incurred as a result of breach) are "valuable evidence as to what could reasonably be expected to be the loss at the time the contract was made": Permavent Ltd v Makin [2021] FSR 26 at [87] per Zacaroli J (as he then was), quoting from Philips at [59].

Fourthly, the question whether a damages clause is a penalty falls to be decided, as a matter of construction, as at the time the contract was agreed: Makdessi at [9].

Fifthly, if, at the time of contracting, a secondary obligation could arise on a number of different breaches and give rise to a number of different potential liabilities, then, all the potential breaches and resulting liabilities must be taken into account in determining whether the provision is capable of having a penal effect, including both those which have as well as those which have not eventuated: Dunlop TA \s "Dunlop"  at 89; and de Havilland Aircraft of Canada Ltd v Spicejet Ltd [2021] EWHC 362 (Comm) TA \l "de Havilland Aircraft of Canada Ltd v Spicejet Ltd [2021] EWHC 362 (Comm)" \s "de Havilland" \c 1 at [33(ii)], quoting  TA \l "Chitty, 35^th ed, at §23-05, §30-217, §30-258, §36-001–36-002" \s "Chitty36-001" \c 3 Chitty at paragraph 30-217 ("The anticipated extent of possible mitigation of loss forms part of any assessment as to what the greatest loss could be").

Turning to Makdessi itself, in that case the Supreme Court took the opportunity to explain the true width of the principle. It is clear now that, where the challenged clause is susceptible to review as a penalty, the test is whether the clause: "imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation". This was the test as formulated by Lords Neuberger and Sumption at [32], Chitty commenting at paragraph 30-228 (in a footnote) that:

"As Lord Carnwath and, on this point, Lord Clarke (see at [291]) agreed with Lords Neuberger and Sumption on this point, this statement may be taken as the authoritative statement of the penalty rule. Lord Mance and Lord Hodge, with both of whom Lord Toulson agreed on this issue (see at [292]), each gave slightly different accounts but it is not thought that the differences between the judgments on this issue are substantial."

There are, accordingly, two parts to the test: whether the clause supports a legitimate interest; and if so, whether the clause imposes a detriment on the contract-breaker out of all proportion to such interest. It was Mr Thompson's submission, however, that, in describing the test in this way, the Supreme Court did not do away with what he described as the familiar 20^th century test (applicable in a case where the only legitimate interest of the innocent party in performance of the contract is pecuniary compensation for a breach) of whether the stipulated remedy represents a 'genuine pre-estimate' of loss, instead submitting that it was effectively reaffirmed.

Mr Thompson recognised that the Makdessi test is sufficiently widely drawn to cover cases where the non-defaulting party has a legitimate interest in the enforcement of a primary obligation other than pecuniary compensation for the breach, noting that in Makdessi TA \s "Makdessi"  itself the interest of the purchaser of a business was in ensuring the observance by the sellers of restrictive covenants in the sale agreement since the goodwill which the purchaser had acquired would be damaged if the sellers competed with the purchaser in breach of the sale contract. Similarly, in the conjoined case of ParkingEye v Beavis, a car park operator had a legitimate interest in levying a charge of £85 on motorists who overstayed the 2-hour period granted to them to park their cars for free in the car park, this interest was to encourage the prompt turnover of customers using the retail park which the car park served.

In such cases, Mr Thompson observed, it is necessary to identify the nature and extent of the legitimate interest in the performance of the primary obligation and, then, to assess whether the stipulated remedy is disproportionate in relation to that legitimate interest. However, in other (probably most) cases the non-defaulting party's interest will be limited to pecuniary compensation for financial loss caused by the breach. In such cases, Mr Thompson suggested, the assessment of whether the remedy is disproportionate to the interest which is protected will be determined by comparing the stipulated payment to the loss which could be expected to result from the breach.

For this reason, Mr Thompson submitted, Makdessi TA \s "Makdessi"  ought not to be taken as having overruled or disapproved the prior case law, which remains good law as guidance on the application of the test in Makdessi TA \s "Makdessi"  in cases where the interest of the claimant is limited to pecuniary compensation. As such, Mr Thompson went on to submit, it is appropriate to ask whether the stipulated remedy represents a 'genuine pre-estimate' of loss; indeed, as suggested in McGregor on Damages (22^nd Ed.) at paragraph 17-069), TA \l "McGregor on Damages", 22^nd ed. at §§17-048, 17-060, 17-061, §17-069" \s "McGregor" \c 3 that is likely to suffice to identify whether or not the clause is a penalty for the purpose of the Makdessi TA \s "Makdessi"  test.

More specifically still, Mr Thompson referred to certain pre-Makdessi TA \s "Makdessi"  authorities regarding hire-purchase arrangements, suggesting that these illustrate how the principles might be applied in the present case.

Cooden Engineering Co v Stanford [1953] 1 QB 86 TA \l "Cooden Engineering Co v Stanford [1953] 1 QB 86" \s "Cooden" \c 1 concerned the hire-purchase of a car for a term of 30 months. The agreed sum, payable in monthly instalments, was £412 7s. 6d. At the end of the term, the hirer had an option to purchase the vehicle for 10s. The contract provided that the owners could retake possession of the car in certain circumstances (including failing to make any payment under the agreement on the day it was due or demanded), and that, in such circumstances, the full balance of the remaining unpaid sum, together with all charges, costs, and expenses incurred in taking possession of the vehicle, would become payable. The majority in the Court of Appeal held the clause to be penal, Jenkins LJ dissenting on the basis that, in his view, the clause did not arise on the breach of an obligation under the contract. As Somervell LJ explained at pages 97-98:

"In the cases to which I have referred, the sum payable in similar circumstances was, as I have said, related to the number of instalments already paid. This seems logical. If the vehicle is in proper repair and 29/30ths of what is in effect the agreed purchase price have been paid, the owner would normally be more than covered for depreciation. Thirdly, the owner is getting back his car which he is free to sell, plus the agreed purchase price less the 10s. 0d. In other words, this will be excessive in all cases unless the car has become valueless. There is, I think, force in all these arguments. Although it cannot be said that the amount exceeds the greatest loss that could possibly follow on the breach … it will exceed it in all except the exceptional case where the car has become of no value …".

The same approach was adopted by the House of Lords in Bridge v Campbell Discount Co [1962] AC 600 TA \l "Bridge v Campbell Discount Co [1962] AC 600" \s "Bridge" \c 1 . In that case, the hirer under a car hire-purchase agreement made an initial payment of £105, followed by only the first monthly instalment towards the total hire-purchase price of £482 10s. The hirer then informed the finance company that he could not maintain the monthly payments and returned the car. Although there was an option in the agreement allowing the hirer to terminate the hire on notice, the majority decided that the case was really one in which the hirer was in breach of the terms of the hiring and the claim advanced by the owner was for liquidated damages arising out of the secondary obligation in clause 9, which provided that, if the agreement was for any reason terminated before the vehicle became the hirer's property, the hirer "shall forthwith … pay to the owners … by way of agreed compensation for the depreciation of the vehicle such further sums as may be necessary to make the rentals paid and payable equal to two-thirds of the hire-purchase price". There was no compensation or reduction for the value of the vehicle returned. All members of the House of Lords considered that clause to be penal, Lord Radcliffe explaining at page 625:

"The total hire-purchase price is called up to the extent of two-thirds, regardless of two considerations essential to any measurement of the owner's loss: the price includes a considerable interest element which the owner does not in the result forgo, so far as the compensation is paid immediately, and the vehicle comes back into the owner's possession with a realisable value that, in many circumstances, may exceed the one-third balance of the price which the owner has not got in. In my opinion, a clause of this kind, when founded upon a consequence of a contractual breach, comes within the range of the court's jurisdiction to relieve against penalties…".

Mr Shah did not accept that the pre-Makdessi authorities relied upon by Mr Thompson remain applicable. Mr Shah acknowledged, however, that, to the extent that a clause provides for payment of a genuine pre-estimate of loss, it will not be penal. That, indeed, is consistent with what Lord Neuberger and Lord Sumption themselves recognised in Makdessi at [25] when they said this:

"The great majority of cases decided in England since Dunlop have concerned more or less standard damages clauses in consumer contracts, and Lord Dunedin's four tests have proved perfectly adequate for dealing with those. … ."

What was made clear in Makdessi, however, is that Lord Dunedin's approach ought not to be regarded as of general application or as immutable. Thus, Lord Neuberger and Lord Sumption said this at [31]:

"In our opinion, the law relating to penalties has become the prisoner of artificial categorisation, itself the result of unsatisfactory distinctions: between a penalty and genuine pre-estimate of loss, and between a genuine pre-estimate of loss and a deterrent. These distinctions originate in an over-literal reading of Lord Dunedin's four tests and a tendency to treat them as almost immutable rules of general application which exhaust the field. In Legione v Hateley (1983) 152 CLR 406, 445, Mason and Deane JJ defined a penalty as follows:

'A penalty, as its name suggests, is in the nature of a punishment for non-observance of a contractual stipulation; it consists of the imposition of an additional or different liability upon breach of the contractual stipulation ...'

All definition is treacherous as applied to such a protean concept. This one can fairly be said to be too wide in the sense that it appears to be apt to cover many provisions which would not be penalties (for example most, if not all, forfeiture clauses). However, in so far as it refers to 'punishment' and 'an additional or different liability' as opposed to 'in terrorem' and 'genuine pre-estimate of loss', this definition seems to us to get closer to the concept of a penalty than any other definition we have seen. The real question when a contractual provision is challenged as a penalty is whether it is penal, not whether it is a pre-estimate of loss. These are not natural opposites or mutually exclusive categories. A damages clause may be neither or both. The fact that the clause is not a pre-estimate of loss does not therefore, at any rate without more, mean that it is penal. To describe it as a deterrent (or, to use the Latin equivalent, in terrorem) does not add anything. A deterrent provision in a contract is simply one species of provision designed to influence the conduct of the party potentially affected. It is no different in this respect from a contractual inducement. Neither is it inherently penal or contrary to the policy of the law. The question whether it is enforceable should depend on whether the means by which the contracting party's conduct is to be influenced are 'unconscionable' or (which will usually amount to the same thing) 'extravagant' by reference to some norm."

Lord Neuberger and Lord Sumption went on at [32] to say this:

"The true test is whether the impugned provision is a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation. The innocent party can have no proper interest in simply punishing the defaulter. His interest is in performance or in some appropriate alternative to performance. In the case of a straightforward damages clause, that interest will rarely extend beyond compensation for the breach, and we therefore expect that Lord Dunedin's four tests would usually be perfectly adequate to determine its validity. But compensation is not necessarily the only legitimate interest that the innocent party may have in the performance of the defaulter's primary obligations. … ."

As acknowledged by Mr Shah through the first of the submissions that he made, the pre-Makdessi genuine pre-estimate of loss approach comes within the ambit of the Makdessi test, but it does so as part of that test rather than as the entirety of the test because that requires a wider consideration of legitimate interest which includes considerations of the type highlighted by Mr Shah. There is, however, an issue as to whether, as Mr Thompson submitted, the relevant legitimate interest can appropriately extend beyond asking whether the clause represents a genuine pre-estimate of loss in circumstances where, on analysis, the only interest sought to be protected is a pecuniary interest. As to this, Mr Thompson placed particular reliance on what Lord Hodge had to say in Makdessi at [255], a passage agreed with by Lord Toulson expressly at [293], as follows:

"I therefore conclude that the correct test for a penalty is whether the sum or remedy stipulated as a consequence of a breach of contract is exorbitant or unconscionable when regard is had to the innocent party's interest in the performance of the contract. Where the test is to be applied to a clause fixing the level of damages to be paid on breach, an extravagant disproportion between the stipulated sum and the highest level of damages that could possibly arise from the breach would amount to a penalty and thus be unenforceable. In other circumstances the contractual provision that applies on breach is measured against the interest of the innocent party which is protected by the contract and the court asks whether the remedy is exorbitant or unconscionable."

Mr Thompson submitted that what Lord Hodge was here doing was distinguishing between, on the one hand, what Mr Thompson described as "a purely pecuniary situation" (the middle sentence of [255]) and, on the other hand, circumstances where there is a broader than purely pecuniary situation (the final sentence). In relation to the former, Mr Thompson suggested, Lord Hodge and the rest of the Supreme Court should be taken as intending no change to the Dunlop-type approach promulgated by Lord Dunedin.

I do not agree with Mr Thompson about this. It cannot be the case that wherever the innocent party has a pecuniary interest in performance, the genuine pre-estimate of loss test is to be applied. In this respect, Mr Thompson highlighted in the present case the fact that the Japanese investors and others who were involved were interested merely in making a financial recovery. However, I agree with Mr Shah when he submitted that Mr Thompson's submission creates something of a false dichotomy between cases where the innocent party has only a pecuniary interest in performance and cases where it has some other interest in performance since, in truth, everything can be expressed as a pecuniary interest, and it does not follow that because a party has a pecuniary interest in performance, it does not also have another interest in performance.

This was, indeed, recognised by Lord Neuberger and Lord Sumption in Makdessi at [28] when they said this:

"… A damages clause may properly be justified by some other consideration than the desire to recover compensation for a breach. This must depend on whether the innocent party has a legitimate interest in performance extending beyond the prospect of pecuniary compensation flowing directly from the breach in question."

It is also supported by what Lord Neuberger and Lord Sumption had to say a little earlier at [25], particularly the reference to The Scaptrade [1983] 2 AC 694:

"The great majority of cases decided in England since Dunlop have concerned more or less standard damages clauses in consumer contracts, and Lord Dunedin's four tests have proved perfectly adequate for dealing with those. More recently, however, the courts have returned to the possibility of a broader test in less straightforward cases, in the context of the supposed "commercial justification" for clauses which might otherwise be regarded as penal. An early example is the decision of the House of Lords in The 'Scaptrade', where at p 702, Lord Diplock, with whom the rest of the Appellate Committee agreed, observed that a right to withdraw a time-chartered vessel for non-payment of advance hire was not a penalty because its commercial purpose was to create a fund from which the cost of providing the chartered service could be funded."

As Lord Neuberger and Lord Sumption noted, in The Scaptrade the shipowners' interest in performance was payment of the rental but their interest went beyond this, and that was regarded as an appropriate legitimate interest.

Mr Shah also submitted that a legitimate interest in obtaining performance may include a party having a legitimate interest in deterrence. This, Mr Shah observed, is unobjectionable since a party has a legitimate interest in influencing the contract-breaker's conduct that is unsatisfied by merely recovering general damages. As Lord Neuberger and Lord Sumption explained in Makdessi at [82] (and also at [99]):

"… It seems likely that clause 5.6 was expected to influence the conduct of the Sellers after Cavendish's acquisition of control in a way that would benefit the Company's business and its proprietors during the period when they were yoked together. To that extent it may be described as a deterrent. But that is only objectionable if it is penal, ie if the object was to punish. But the price formula in clause 5.6 had a legitimate function which had nothing to do with punishment and everything to do with achieving Cavendish's commercial objective in acquiring the business. And, like clause 5.1, it was part of a carefully constructed contract which had been the subject of detailed negotiations over many months between two sophisticated commercial parties, dealing with each other on an equal basis with specialist, experienced and expert legal advice."

Deterrence is, therefore, a legitimate interest provided that the clause is not a penalty. To that extent, I agree with Mr Thompson when he submitted that, whilst deterrence does not equate to penalty, nor does it make what would otherwise be penal not a penalty. I agree with Mr Shah, however, when he went on to submit that an obligation to pay liquidated damages may serve a legitimate interest as an essential part of a lawful scheme. As Lord Mance put it in Makdessi at [152]:

"There may be interests beyond the compensatory which justify the imposition on a party in breach of an additional financial burden. The maintenance of a system of trade, which only functions if all trading partners adhere to it (the Dunlop case), may itself be viewed in this light".

Whether this is the position in the present case, as Mr Shah submitted but Mr Thompson did not accept, is a matter to which I will return.

Mr Shah also submitted - and I agree - that a legitimate interest may include a loss suffered by one or more third parties. In this respect, he noted that in ParkingEye v Beavis the Supreme Court held that the loss caused by a motorist overstaying two hours of free parking would be suffered not by the entity which was contractually entitled to the payment, namely ParkingEye, but rather by the operator of the retail park that the car park was attached to and by members of the public who wished to use it. Nonetheless, ParkingEye was able to recover the sum claimed, because its recovery went to the maintenance of the wider system of economic operators of which the parking provision was part. As such, it is not only the legitimate interests of the contracting party that count for this purpose. As Lord Mance explained, again at [152]:

"In my opinion, the development of the law indicated by the authorities … is a sound one. It is most easily explained on the basis that the dichotomy between the compensatory and the penal is not exclusive. There may be interests beyond the compensatory which justify the imposition on a party in breach of an additional financial burden. … What is necessary in each case is to consider, first, whether any (and if so what) legitimate business interest is served and protected by the clause, and, second, whether, assuming such an interest to exist, the provision made for the interest is nevertheless in the circumstances extravagant, exorbitant or unconscionable … ."

Mr Thompson acknowledged that it is appropriate to have regard to the interests of third parties. However, he submitted that the ParkingEye interest was very different since it involved making sure that cars did not overpark and so that there was a turnover of customers. The position, he submitted, is, therefore, not analogous to the present case. He might be right about that, but what matters is the principle which Mr Thompson accepted: that it is appropriate to have regard to the interests of third parties.

As to the second aspect of the Makdessi test, this requires the contract breaker to show that the agreed damages are "out of all proportion" to the legitimate interest sought to be protected. This is a high hurdle since Lord Neuberger and Lord Sumption described it as requiring the contract breaker to show that what was agreed should be paid is "out of all proportion" to the interest to be protected ([32]), Lord Mance described it as requiring it to be demonstrated that what was agreed is "extravagant, exorbitant or unconscionable" ([152]) and Lord Hodge considered that what is required is that the agreed damages are "exorbitant or unconscionable" and "wholly disproportionate" to the interest to be protected ([255] and [287]), adding (at [255]) that "an extravagant disproportion between the stipulated sum and the highest level of damages that could possibly arise from the breach" would amount to a penalty.

In this respect, it is material to note that, where a contract has been freely negotiated between parties of comparable bargaining power, it is significantly less likely that a clause will be deemed a penalty. As Lord Neuberger and Lord Sumption put it in Makdessi at [35]:

"In a negotiated contract between properly advised parties of comparable bargaining power, the strong initial presumption must be that the parties themselves are the best judges of what is legitimate in a provision dealing with the consequences of breach."

As such, even though the relevant clause in that case bore "no relationship, even approximate, with the measure of loss attributable to the breach" ([75]), it was not for the Court to assess what Cavendish would have been willing to pay in the absence of liquidated damages:

"They were matters for the parties, who were, on both sides, sophisticated, successful and experienced commercial people bargaining on equal terms over a long period with expert legal advice and were the best judges of the degree to which each of them should recognise the proper commercial interests of the other."

What Lord Mance had to say at [152] is also instructive in this respect:

"… In judging what is extravagant, exorbitant or unconscionable, I consider (despite contrary expressions of view) that the extent to which the parties were negotiating at arm's length on the basis of legal advice and had every opportunity to appreciate what they were agreeing must at least be a relevant factor."

Discussion

It is with these principles in mind that I now turn to the parties' submissions.

The starting point is that it is not in dispute that Clause 19.3 (including the obligation to pay the A Line Termination Value/Termination Value and the conditionality imposed in respect of the Sub-Lessor's ability to acquire the Aircraft) is a secondary obligation. Thus, Clause 19.3 applies to a "Default Termination" (i.e. termination where an "Event of Default" occurs), with Clause 18 in each case setting out the relevant "Events of Default"; and the NEO Sub-Leases, indeed, provide expressly that each of the Events of Default is "a repudiatory breach by the Sub-Lessee", the first identified "Event of Default" in each case being non-payment by the Sub-Lessee of sums due to the Sub-Lessor (Clause 18(a)).

The question, in such circumstances, is whether Clause 19.3 constitutes a penalty. It was Mr Thompson's submission that the penal nature of Clause 19.3 is clear for five reasons.

First, Mr Thompson submitted that this is a case in which the pecuniary compensation which would be required to make the Lessor and Sub-Lessor whole in the event of an early termination is not just calculable but was actually calculated in advance: in the form of the Termination Values which were designed to represent, as FWA itself put it in the Re-Re-Amended Reply, the full sum required to repay the Lessors and provide the Lenders with their "bargained for return on that investment" and "compensation for early repayment". Accordingly, Mr Thompson submitted, insofar as Clause 19.3 provides for any transfer of value from VietJet to the Lessor over and above the Termination Values (and sums outstanding under the Sub-Leases at the Termination Dates), it necessarily entails over-compensation of the Lessor and (corresponding) penalisation of the Sub-Lessee.

Secondly, Mr Thompson submitted, Clause 19.3 gives rise to the likelihood that, on its application following an Event of Default, the Lessor will be able to retain ownership of the Aircraft whilst the Sub-Lessee will not just lose the Aircraft but also remain liable to pay the full compensation for the Lessor's bargained for return for sale of the Aircraft, with no set-off for the value of the Aircraft. Specifically, Mr Thompson explained, as at the time of the contract, the parties agreed that for all of the four Aircraft the combined Lessor Cost of the Aircraft was US$219 million, and the combined Purchase Option Price was US$96 million. As a result, he suggested, the projected over-compensation of the Lessor (ultimately) by the Sub-Lessor would be between those two figures – at a level substantially (or, as Mr Thompson put it, radically) in excess of the Lessor and Sub-Lessor's legitimate interest in being compensated for their financial loss. This, Mr Thompson observed, makes the present case similar to the hire-purchase cases, Cooden and Bridge since (like those cases) this case entails a clause which requires both payment of the outstanding contract value and return of the asset which the payments would have leased and (ultimately) acquired, without adequate set-off of the value of the asset returned.

Thirdly, in Mr Thompson's submission, the penal nature of Clause 19.3 is not undermined by the (post-Termination) Default Purchase Option which it contains, since that option is only available if the Sub-Lessor can (and does) pay the whole of the outstanding Rental and the A Line Termination Value/Termination Value within 30 days. If this is not done, precisely on time and in the full amount, then, Mr Thompson submitted, the only mechanism for avoiding the over-compensation of the Lessor is lost.

In this respect, as Mr Thompson reminded the Court, the primary obligation of the Sub-Lessor is to pay rent. As such, Mr Thompson suggested, non-payment is the most likely scenario in which Clause 19.3 is engaged. However, in such a case, it is highly unlikely that the Sub-Lessee would be able to find the money to pay all outstanding Rental and the A Line Termination Value/Termination Value within 30 days. If that is right, then, Mr Thompson submitted, the option is largely illusory. Similarly, noting that another Event of Default is "Insolvency" in which "any Lessee Party is unable to pay its debts as they fall due or is insolvent", Mr Thompson again observed that, if the Sub-Lessee became insolvent and thereby triggered a Termination, the presence of an option which could only be exercised on making a payment of US$59.4 million within 30 days would be one which could never be exercised, with the insolvent Sub-Lessee finding itself liable for both the Clause 19(3) sums and the return of the Aircraft amounting to liabilities vastly in excess of what would have been payable under the Sub-Lease. Accordingly, in such circumstances, Mr Thompson submitted, the post-Termination Default Purchase Option to be found in Clause 19(3) is rendered nugatory: the Sub-Lessee cannot exercise the option to purchase the Aircraft but ends up saddled with the punitive liabilities expressed in Clause 19.3.

Fourthly, Mr Thompson submitted that, if the Sub-Lessee is unable to exercise the option to acquire the Aircraft post-Termination, it, then, comes under a further liability either to incur the costs of placing the Aircraft in the Return Conditions or to pay the sums due under Clause 20.4 as compensation for failing to place the Aircraft in the Return Conditions, which, it is common ground, would entail substantial cost so as to incentivise exercise of the Purchase Option at the Purchase Option Date, yet that expenditure also has to be paid following Termination should the Sub-Lessee be unable to exercise the Default Purchase Option. The effect of the obligation, therefore, Mr Thompson suggested, is that the Sub-Lessor is guaranteed to recover the Aircraft in either a pristine condition or with compensation to put it into a pristine condition, so underscoring the penal nature of Clause 19.3.

Fifthly, Mr Thompson submitted that Clause 19.3 does not protect any interest other than pecuniary compensation, and so cannot be justified on some other basis, meaning that it should be regarded as penal. In any event, Mr Thompson went on to submit, even if the provision did protect some other interest, it would be grossly disproportionate to the protection of that interest in circumstances where the Lessor is an investment vehicle, incorporated for the purpose of providing funding (through debt and equity) and achieving returns from that funding for the banks and its investor, and (as noted previously) FWA's own pleaded case is that the A Line Termination Value/Termination Value A provides that compensation in full, exclusive of the value of the Aircraft.

I am not persuaded by these submissions. On the contrary, the conclusion that I have reached is that Clause 19.3 is not penal: in short, the protections built into Clause 19.3 were legitimate and were neither "extravagant, exorbitant or unconscionable" nor "wholly disproportionate" to the interests sought to be protected; instead, they represented the balancing of the interests of the financing parties (who had risked their capital) and VietJet (who had not) in light of a wide range of uncertain and unpredicted downside scenarios. This represents the answer to each of the arguments advanced by Mr Thompson on VietJet's behalf because, in my view, they all fail to take properly into account the nature of the JOLCO arrangements that apply in the present case and in other such cases, and the fact that central to those arrangements are interests that require to be taken into account in addition to VietJet's own particular interest.

Context is important in this respect. First, although I make it clear that I do not base my conclusion on this alone, VietJet is, as Mr Shah put it, a sophisticated commercial actor with significant experience in aircraft financing. Thus, its 2018 Annual Report records that VietJet occupied a leading position in the Vietnamese domestic market with a 46% market share, and that it had a market capitalisation equivalent to US$3 billion; indeed, it was apparently "ranked 22nd among the world's 50 best airlines for healthy financing by Air finance Journal". Not only that, but VietJet is also very experienced in the leasing of aircraft, since there is reference in the 2018 Annual Report and in VietJet's 2019 Annual Report to VietJet signing: in 2014, a contract to purchase 200 aircraft from Airbus; in 2016, a contract to purchase 20 new A321 CEOs and NEOs from Airbus; and in 2018, a Memorandum of Understanding to purchase 100 new Boeing aircraft and a contract to purchase 50 new Airbus aircraft. It appears also that, in 2019, VietJet entered into a purchase order for 20 further A321XLR Airbus aircraft.

Unsurprisingly, in the circumstances, the 2019 Annual Report indicates that key personnel had extensive experience in the aircraft industry, including with respect to financing arrangements. Madam Nguyen Thanh Ha, the Chair of the Board of Directors, is there described as being "an expert with extensive experience in the aviation industry in Vietnam", who before joining VietJet worked as the Deputy Head of the CAAV and, before that, held the role as the Head of the Planning and Investment Department in Vietnam Airlines. She was not alone, however, in having such experience since the same report also explains that Mr Donal Boylan, a member of the Board of Directors from April 2019, was at that time the CEO of a company which owned Avolon (the world's third largest aircraft leasing company) and, before that, was CEO of CDB Aviation Lease Finance (a company listed on the Hong Kong Stock Exchange with a value of US$25 billion). Furthermore, Mr Ta Quang Ngoc, VietJet's fleet manager since 2014, worked previously for the Vietnam Aircraft Leasing Company (a subsidiary of Vietnam Airlines) with responsibilities at both companies which included purchasing, leasing and financing aircraft.

Secondly, although related to the previous point, Mr Shah was clearly right when he submitted that VietJet was familiar with JOLCO arrangements, including the rationale that lies behind such arrangements. Thus, Mr Ta's own evidence was that a JOLCO "is a common transaction structure and is often implemented by parties in the leasing of an Aircraft" and that VietJet had entered into other JOLCO arrangements. He explained in paragraph 24 of his witness statement that:

"It was VietJet's intention that all of these aircraft were financed under a JOLCO structure to establish a modern and cost-efficient aircraft fleet owned by VietJet … We considered the JOLCO arrangement better for us compared to other debt finance or sale & leaseback structures".

VietJet was also aware that JOLCO agreements are structured to incentivise certain behaviours by the lessee parties since Mr Ta said this in paragraph 27:

"It has always been and remains my understanding of industry practice that, compared to a normal operating lease, the return conditions in a JOLCO agreement are onerous in that they require the lessee to refurbish the used aircraft to the condition effectively the same as those of a new aircraft. The JOLCO return condition is known in the industry as a security mechanism to avoid the circumstance where the lessee refuses to activate the purchase option."

In the circumstances, I agree with Mr Shah when he submitted that VietJet should be regarded as having entered into the Sub-Leases in full knowledge of the nature and terms of JOLCOs and knowing, therefore, that by entering into them it would be able to achieve what otherwise would not be achievable.

That said, and as Mr Thompson pointed out by reference to what was stated by Lord Neuberger and Lord Sumption in Makdessi at [35], whilst such circumstances are "not entirely irrelevant" to the assessment of whether the effect of a secondary obligation is penal, they simply support an "initial presumption" that the stipulated consequences of default are commercially proportionate and, accordingly, not penal. Mr Thompson was right also when he made the point that the rule barring the enforcement of penalty clauses under English law applies to all contracts, irrespective of who they are made between or the characteristics of the contracting parties. The doctrine is not limited in its application to contracts on one party's standard terms or contracts in which there is some disparity in the bargaining power of the parties.

However, here it is not merely VietJet's general commercial sophistication that is relevant but its specific awareness of JOLCO arrangements. It is those arrangements specifically that are significant when determining whether Clause 19.3 is penal since they (and the associated interests which the arrangements were designed to protect) are what need to be looked at when considering whether Clause 19.3 is a penalty. I agree, furthermore, with Mr Shah when he made the point in oral argument that the parties expressly negotiated and agreed Clause 19.3, in particular the Default Purchase Option in a default scenario, and so it must be the case that they saw some value in what was agreed at the time.

It is critically important in this connection to have in mind that, as previously explained, under a JOLCO structure, the purchase of the aircraft is not financed using the airline's own capital but by money provided by Japanese investors, who invest (via an SPV) in the structure for tax reasons and have no expertise or desire to be involved in the business of aircraft leasing, and by way of a commercial loan, under which the SPV liability is limited and the lender's recourse is via a security package in place over the aircraft that includes the proceeds derived from the sale of the aircraft and from the intended lease.

As Mr Chrun explained, the cost of equity finance under a JOLCO structure is much lower than any commercial financing that might be available to the airline. That is because the tax advantages enjoyed by the Japanese investors are shared with the airline. As such, a JOLCO represents a highly beneficial form of financing for the airline in which it can acquire an aircraft without the use of its own capital and at a lower blended cost of funding than would otherwise be available, with the full equity risk being borne by the Japanese investors.

In the event of an early termination of the leasing, the airline may be required to pay termination sums and all other amounts due under the lease (or sub-lease as applicable). The reason why there are two different 'lines' of termination sums payable upon termination is clear (and would have been well-known to VietJet): one 'line' of termination sums corresponds to the repayment of the outstanding balance of the relevant Loans, whilst the other concerns the repayment of the Japanese (equity) investors' contributions. As to the latter in particular, as pointed out in the earlier judgment concerned with liability at [14], "early interruption of the JOLCO is very damaging to the economic benefits expected by the Japanese investors", which is why the termination sum payable upon early termination will include a sum compensating those investors for the reduced tax benefit and also a sum to reflect the expected return on the equity investment for the investors.

Moreover, as also pointed out previously, during the term of the JOLCO, on the specified purchase option date(s), the airline may have one or occasionally more purchase options upon the exercise of which it may purchase the aircraft. The airline is not obliged to exercise the purchase option, but, if it does, it will be obliged to pay the purchase option price. The purchase option price includes an equity portion which will be an amount sufficient to repay the original equity investment by the Japanese investors, plus a pre-agreed return on investment for those investors. As Mr Chrun explained and as mentioned earlier, the purchase option price is determined at the outset of the transaction and corresponds to a predicted market value for the aircraft on the specified purchase option date. The expectation of the transacting parties is that the airline will exercise the option, and that title will pass to the airline. Indeed, as I explained in the liability judgment at [340]-[341], the objective of the JOLCO transaction structure is to make it very improbable that the option will not be exercised. That is why, again as previously noted and as Mr Chrun explained, if the airline does not exercise its purchase option at the specified purchase option date, then, in addition to the contractual rental payments to be made to the end of the term, the airline is also required to redeliver the aircraft in a contractually agreed return condition at the end of the lease period. In a default scenario, if the airline does not exercise the purchase option (where it has the benefit of one), it must pay a liquidated amount and return the aircraft in full compliance with the return conditions set out in the lease agreement.

These are all typical aspects of JOLCO arrangements. As I put it in the judgment on liability at [18], the arrangements in the present case "mirrored the JOLCO norm". As such, they are, importantly for present purposes, therefore, to be regarded as aspects with which VietJet would have been entirely familiar and which VietJet would have understood were fundamental to the JOLCO financing that VietJet sought and obtained and which meant that VietJet could do what it wanted to do with the Aircraft.

Seen against this background, it is clear, applying the Makdessi approach, that there was in this case a legitimate interest and that Clause 19.3 does not impose a detriment on VietJet that is out of all proportion to that interest.

I say this for reasons which I shall now develop and without recourse to any presumption (initial or otherwise, and evidential or otherwise) against VietJet. However, in short and simplifying matters somewhat, focusing on the rental payments that had to be made, the Lessors depended on these to make their loan payments. Accordingly, their interest was not merely payment of the rentals but prompt payment of the rentals, and the entire viability of the JOLCO structures depended on such prompt payment because of the way that the payments flowed up the structure. If VietJet defaulted in relation to its rental obligations, the Lessors would, in turn, default in their obligations under their loans. That would lead to their acceleration and enforcement against the Aircraft which would, in turn, collapse the whole structure leading to the loss of the tax benefits, as well as immediate cash flow problems, for the investors. It follows that Clause 19.3 was intended to protect those wider interests in the case of default and, if the Termination Sums were paid on time, VietJet could take title to the Aircraft.

As to legitimate interest in particular, the scheme established by Clause 19.3 reflected the parties' (including VietJet's) expectation that there should be protection for the parties whose capital was at risk in the transaction (namely the Lenders and the Japanese (equity) investors) whilst allowing VietJet to fund the acquisition of the Aircraft without the use of its own capital and at a significantly lower cost than other forms of commercial financing. Given this and bearing in mind my earlier rejection of Mr Thompson's submission concerning the suggested dichotomy between a purely pecuniary interest and a wider legitimate interest, it is obviously appropriate, when considering the legitimate interest issue, to take into account other interests. This is because, whilst it is right that the various banks and investors want to recover their loans and investments respectively, and as such have a pecuniary interest in performance, they also have a wider (and legitimate) interest in performance, namely to ensure that they secure their tax benefits and preserve the JOLCO structure which achieves those benefits and the ultimate discharge of the security mortgages over the Aircraft.

As to the Japanese (equity) investors, in particular their vulnerability in the case of default, the obligation to pay the Termination Sums served the legitimate interest of mitigating the risks to the Lessors of early termination. As I put it in the earlier judgment on liability at [355], there was no "windfall" to FWA. Rather, the termination provisions represented a "consequence of the contractual bargain that VietJet voluntarily agreed under the Sub-Leases", because:

"The payment of those sums, which is a common feature of JOLCO transactions, was negotiated for the legitimate commercial purposes of incentivising VietJet to exercise its option to purchase the Aircraft and mitigating the risks of early termination of the transaction, which, for the Japanese investors, would have included the failure to obtain the intended tax benefits and the unexpected need to remarket and re-lease the Aircraft".

More specifically, the Japanese (equity) investors (through the Lessors) invested their own capital to finance (in part) the acquisition of the Aircraft, in part to take advantage of tax incentives from which, as Mr Chrun explained in paragraph 29 of his report, VietJet also benefitted in the form of a lower blended cost of funding. If VietJet were to default, those tax advantages would be at risk since, aside from the investors' recovery of their investment and return being at risk, it is inevitable that they would also face an acceleration of their tax liabilities – with likely consequential cashflow issues. That is why, as I noted in the judgment on liability at [14], payment of the Termination Sums was intended to mitigate the "very damaging" effects of early termination.

I agree with Mr Shah that there is a further consideration here. This is that early termination accelerated for the Lessors and the equity investors the risks of ownership of the Aircraft since, if the Default Purchase Option were to be exercised, VietJet would acquire the Aircraft having compensated the Lessors for the consequences of early termination but, if the option was not exercised, the Lessors would have to mitigate the risks of ownership of the Aircraft by themselves either re-leasing or selling the Aircraft. In either of these scenarios, as observed in the judgment on liability at [10], the equity investors would find themselves having to do something for which they had "no expertise or desire to be involved" and which JOLCO arrangements are not intended to result in.

The obligation to pay the Basic Termination Amount/Termination Value A also protected the Lenders, who were third parties to the Sub-Leases. This, in circumstances where the Lessors had obtained the Loans from the Lenders to finance the balance of the purchase price of the Aircraft, the Loans becoming repayable immediately on the Termination Dates. As a result, the Lessors required immediate payment in cash from VietJet of the amounts owing under the Sub-Leases. This was because they needed to satisfy their liability to the Lenders for the outstanding principal and accrued interest. It follows that payment would simultaneously compensate the Lessors for their liability to the Lenders and protect the Lenders as third parties to the Sub-Leases. On that basis, consistent with the observations made by Lord Mance in Makdessi at [152], this is an instance of there being "maintenance of a system of trade, which only functions if all trading partners adhere to it".

The payment obligation enforced compliance with the terms of the JOLCO arrangements. In essence, these could only be effective if VietJet made the rental repayments that it had agreed to make. Without such payments being made, there would be no funds with which to repay the Lenders, who did not have recourse to the Lessors/Borrowers other than enforcing against the Aircraft. It should be borne in mind that this is all in circumstances where, as the price for having to pay the Termination Sums, VietJet was able to enjoy highly beneficial financing that included financing the purchase of the Aircraft without the use of its own capital and at a significantly lower cost than other forms of commercial financing.

As Mr Shah put it, in the absence of adequate protections for their interests (such as the obligation to pay the Termination Sums), the Lenders and equity investors would have been unlikely to accept the risks inherent in these JOLCOs or would not be willing to do so other than at a significantly higher cost to VietJet. It would not be right, in these circumstances, to treat the Lessor as having an interest only in pecuniary compensation. Mr Thompson's submissions in this respect - he suggested in oral submissions that there could not be "much more of a stark case when the only interest in performance from the parties behind the Lessor is a pecuniary interest" - overlook the point that it is necessary to look at the position from more than one side, and the fact that it would not have been possible for VietJet to have entered into the arrangements that they did without the Japanese investors and the tax advantages that those investors were attracted by through their entry into such arrangements. Nor, similarly, do I agree with Mr Thompson when he submitted that incentivising VietJet to exercise its option to purchase the Aircraft or mitigating the risks which arise in the event that, contrary to the expectation of the parties at the time of entry into the contract, VietJet failed to exercise its option to purchase the Aircraft, cannot amount to a legitimate interest for Makdessi purposes. In Mr Thompson's submission, that is because it remains the position that the interest being protected is a pecuniary interest and FWA's only purpose is in making more money in circumstances where it is accepted by FWA that the liability to pay the A Line Termination Value/Termination Value already compensates the Lessor in full for what it would receive if the Purchase Option were exercised and the Aircraft were not returned. Again, it is important to bear in mind in this context, as in others, that the Lenders and the Japanese (equity) investors would have been unlikely to accept the risks inherent in these JOLCOs or would not be willing to do so other than at a significantly higher cost to VietJet but for the inclusion of Clause 19.3.

Turning to proportionality and specifically VietJet's case that payment of the Termination Sums results, as it is pleaded in the Defence at paragraph 38A(7)(b), in "a very substantial and unjustified windfall for the Sub-Lessors" because "[t]he Sub-Lessors would effectively recover the value of the Aircraft twice (in addition to all other sums payable pursuant to the Sub-Leases)", that case ignores (or, at a minimum, underplays) the tax advantages within the JOLCO structure. Again, this is an area which has been touched upon already, but it is worth dealing with in a little more detail.

The A Termination Amount/Termination Value B compensates the Japanese (equity) investors for equity finance provided by them (via the Lessors) to fund the purchase of the Aircraft, in addition to their bargained-for return, discounted for early receipt but adjusted to reflect the loss of the tax advantages which they would have received but for early termination. It was Mr Chrun's evidence, in paragraph 52.1 of his report, that the tax advantages can equate to between 150% and 190% of the initial equity contribution. This equates to between US$22,620,000 and US$28,652,000 for the 8906 Aircraft, based on an equity contribution of US$15,080,000; between US$21,532,500 and US$27,274,500 for the 8937 Aircraft, based on an equity contribution of US$14,355,000; and between US$19,312,500 and US$24,462,500 for each of the CEO Aircraft, based on an equity contribution of US$12,875,000 in each case.

It follows that the majority of the equity investors' return was not to be recovered from the payments made by VietJet, but from the tax advantages that the equity investors would have received had the transaction run to term. It follows also that, if the JOLCO were to be terminated early, not only do those investors lose the return that they had expected, but their tax liability may be increased or brought forward through the loss of the accelerated depreciation that the investors would otherwise have enjoyed under the JOLCO. The Termination Sums, accordingly, compensate the equity investors for the losses that they incur as a result of early termination. Therefore, as previously noted, the tax advantages are fundamental to the JOLCO structure: it is for this reason that payment of the A Termination Amount/Termination Value B is necessary in order to compensate the equity investors for their loss of investment. I agree with Mr Shah when he submitted that it is understandable, in these circumstances, for there to be built into the liquidated sum an amount to compensate the equity investors for the loss of the tax advantages which it was intended that they would receive.

The second reason why I do not agree that what was agreed would be payable is disproportionate is that VietJet assumes that, other than in respect of the breach which led to the default termination, VietJet would have complied in full with the terms of the Sub-Leases, including as to redelivery and compliance with the Return Conditions. This, however, is problematic for a variety of reasons.

The first of those reasons is that I agree with Mr Shah when he made the point that, at the time that Clause 19.3 was agreed, it is reasonable to assume that the Lender and the Lessors would have been concerned to accommodate all realistic risks and eventualities, including the risk that VietJet was unwilling or unable to comply with the provisions of the Sub-Leases concerning the return and maintenance of the Aircraft – as has turned out, indeed, to be the position.

In any event, secondly, Mr Shah was right when he submitted that VietJet assumes that enforcement against the Aircraft would be sufficient in and of itself to protect the interests of the Lenders and equity investors in the absence of the Termination Sums, yet there could be no certainty that the proceeds of such action would be sufficient to make both the Lenders and the equity investors whole given that, in a default situation, the Lenders and the Japanese (equity) investors are left with two options: either to sell the Aircraft on an 'as is where is' basis or to recover the Aircraft and restore it/them to a condition to permit its sale or re-leasing, and both scenarios are replete with difficulty.

As to those alternatives, selling 'as is where is' requires the purchaser to take the risk of both the condition of the Aircraft and the costs and risks of exporting it, so meaning that any buyer is likely to want to receive a discount in whatever price is sought. Mr Shah noted, correctly in my view, that the degree of risk involved will narrow the pool of potential buyers because not every buyer is going to be willing or able to take that risk. It follows that in such a sale it is unlikely that the equity investors would recover their initial investment.

As for the second option, this would require extensive further capital investment, in recovering the Aircraft from Vietnam and restoring it/them to a condition in which it/they could be sold or re-leased. This would, accordingly, require the Lenders to take a decision to risk injecting further capital and assume all ownership responsibilities, essentially (as Mr Shah put it in the course of his oral submissions) throwing good money after bad. What happened in the present case illustrates this since not only did VietJet refuse to redeliver the Aircraft and continued to use them in commercial operations for over a year after service of the Termination Notices, but (as explained in the judgment on liability at [369] and [377]), following the return of the Aircraft, VietJet "conducted and orchestrated a campaign in Vietnam" which was "egregious" and "designed to interfere with FWA's efforts to export the Aircraft from Vietnam". Recovering the Aircraft is not, therefore, an easy task, and the parties are likely to have had that in mind when agreeing Clause 19.3.

Nor is the task of readying the Aircraft for re-lease or resale likely to have been regarded as straightforward in view of the fact that there could be no guarantee that a defaulting lessor would return the aircraft in accordance with the contractual conditions, and there is also the potential for unforeseeable costs due to extraneous events. Again, Mr Shah was right to remind the Court of what happened in the present case in which the 8937 Aircraft was returned by VietJet in a non-airworthy condition with no engines installed and multiple other parts removed from the Aircraft. One of the engines (the 'Removed Singapore Engine') required repair before it could be installed. However, repair of the Removed Singapore Engine was delayed by, first, delays at the repair workshop and, subsequently, an announcement by the manufacturer in 2023 that the engine type was suspected to have undetected defects that require premature removal of the engine, which led to both a backlog for repairing these engines as well as a global shortage of spare engines.

Indeed, on VietJet's own quantum expert evidence, prepared for use at the further quantum trial which is due to be heard next year, the costs of restoring the NEO Aircraft to a condition in which they could be re-leased would have been in the region of US$13,558,113.57, comprising: US$12,010,789 in Aircraft maintenance costs; US$150,212 in loss of component utility across both NEO Aircraft; US$444,155 in project management costs; US$552,955 in parking, storage and preservation costs; US$20,037.57 in aircraft re-registration and regulatory compliance costs; and US$379,965 in respect of the costs of returning the Aircraft to flight ready condition. This equates to a total cost of US$6,779,056.76 for each NEO Aircraft on Mr Brown's conservative estimate, and it takes no account of any equivalent costs in respect of the CEO Aircraft.

In short, as Mr Shah observed, the parties would have known that recovery by way of either a sale or a re-leasing of the Aircraft was likely to involve a substantial additional capital commitment which, if not recoverable from VietJet, would need to be provided by the Lessors, alternatively recouped by the Security Trustee from any proceeds of sale in the event of an enforcement – thereby reducing the funds available to the Lenders and the Japanese (equity) investors.

VietJet's case also assumes that VietJet would meet its obligations to indemnify the Lessors should it fail to return the Aircraft in an appropriate condition. However, as Mr Shah submitted, this could not be certain and could not be depended upon by the contracting parties at the time that the contractual arrangements were entered into. Again, what happened in this case can hardly be overlooked since, as previously mentioned, following termination of the leasing in October 2021, VietJet continued to use the Aircraft extensively in its commercial operations for a further 14 months, in breach of the terms of the Sub-Leases. That use, which earned VietJet revenue, in turn, caused the Aircraft to depreciate through wear and tear, yet VietJet is disputing that it had any liability in that regard – in particular, that it is liable to indemnify FWA for the reasonable costs of putting the Aircraft in the Return Condition.

These were not the only risks, however, since I agree with Mr Shah that there is also the point that aircraft values depreciate over time, and so there is no certainty that the net proceeds of any sale of the Aircraft would be sufficient to both repay the Loans, and for the equity investors to recoup in full their investment, in addition to their bargained for return and the necessary compensation for their tax losses. It is also the case that the income to be derived from re-leasing the Aircraft might not have been sufficient to discharge the Lessor's liabilities under the Loan since - at least as regards the CEO Aircraft - the parties' valuation experts agree that the available market rates are lower than the contractual rate of rental under the CEO Sub-Leases. Accordingly, even if the Lessors had not been immediately required to repay the Loan Agreements, the contracting parties would have had no certainty that the income to be derived from the Aircraft (were it to be re-leased after repossession) would be sufficient to permit repayment of the Loan and/or recovery of the investors' equity contribution. Mr Thompson submitted in relation to this that it needs to be borne in mind in this scenario that VietJet no longer has the Aircraft and that, accordingly, the duty to mitigate comes into play in the sense that credit should be given for the benefit that early recovery of the Aircraft could give the Lessors. What matters, however, for present purposes is the uncertainty which exists. I agree, in short, with Mr Shah when he submitted that there would have been uncertainty as to the extent to which the proceeds of any realisation from the Aircraft would have been sufficient to discharge the outstanding liabilities and secure a return on the equity investors' investment were VietJet to default at any point in time.

For these various reasons, and without having to make any "strong initial presumption" that, by agreeing to Clause 19.3, the parties agreed something which was both legitimate and proportionate, my clear view is that that is precisely what they, in fact, did. It is not right to view matters in the way suggested by Mr Thompson, which is to suggest, in effect, that if the lenders and investors recover their capital contributions, that represents full compensation as compared to full performance of the Sub-Leases since this ignores the aspects to which I have referred in the previous paragraphs – in particular (but not limited to) the tax advantages that would have accrued over the lifetime of the JOLCOs had they not been terminated. The simple fact is that the investors entered into the arrangements that they did, not because of any particular interest in the airline industry, but because of those tax advantages that they expected to achieve. Without those tax advantages, there would have been no equity investors and the JOLCOs would not have been entered into in the first place. What was required for the JOLCO arrangements to be viable was timely payment of the rentals. Without that, the whole structure would collapse, leading to the loss of the tax benefits, as well as immediate cash flow problems. That is why Clause 19.3 provided as it did, and it is why - taking account of the wider interests to which I have referred – it does not amount to a penalty provision.

The answer, therefore, to Issue 1 is "yes" in both respects.

Issue 2: If the 'A Line Termination Value' is not payable in respect of the NEOs, whether VietJet is liable to pay FWA the 'Basic Termination Amount'

In the alternative to its primary claim, FWA's position is that, if the A Line Termination Value under the Sub-Leases is unenforceable, the Basic Termination Amount (the balance repayable under the Loan Agreements) can be enforced independently regardless.

This issue does not arise in view of the answer to Issue 1, and, indeed, Mr Shah described the argument as "very much an alternative fallback". However, it is right that I address it, in any event.

The question that arises is whether, where a clause is found to be penal, the Court has the power to sever in the sense not that the provision is severed in its entirety from the rest of the contract (which it is common ground is possible) but that the Court takes a blue pencil to the clause and excises the objectionable parts from the unobjectionable. Mr Shah submitted that this is possible; Mr Thompson submitted that it is not.

In support of his submission, Mr Shah pointed to Vivienne Westwood Ltd v Conduit Street Development Ltd [2017] L&TR 23 in which Timothy Fancourt QC (as he then was) considered the point, albeit that it was ultimately unnecessary for him to decide it. In his view, there was "…no error in seeking to identify the particular words of a single or composite obligation that result in the obligation being unenforceable and severing them if the conditions for severance are otherwise satisfied": see [69]. As such, he would have held it permissible to delete an offending sentence from a contractual clause, leaving the rest of the clause intact, on the basis: that the offending part could be removed without adding to or modifying what remains (the 'blue pencil' test); the remaining terms continued to be supported by consideration; the removal of the unenforceable provision did not so change the character of the contract that it became "not the sort of contract that the parties entered into at all"; and severance did not conflict with the public policy making the offending part unenforceable.

Mr Shah also cited Blu-Sky Solutions v Be Caring Ltd [2022] 2 All ER (Comm) in which HHJ Stephen Davies (sitting as a High Court Judge) observed (again obiter) at [118] that the clause in that case:

"… could quite easily be broken down into four separate sub-clauses, each dealing with the different factual situation (cancellation, disconnection, downwards migration and upgrading) without difficulty. It follows that it would make no sense for the court to ask whether the clause as a whole is penal, as opposed to asking whether the clause as it applies to each specified situation is penal, since if it is then it can be severed from the remainder of the clause."

Mr Shah submitted that the approach in Vivienne Westwood is correct as a matter of logic and principle and should be followed. He submitted, in particular, that there is no reason why severance should only operate in respect of a clause in its entirety and not also aspects of the clause since, as he put it, not all contracts will be written in formal clauses and sub-clauses, and indeed some sub-clauses may contain multiple elements which could reasonably have been written in further sub-clauses (or, indeed, sub-sub-clauses). In such circumstances, he suggested, to impose a strict rule that clauses must be avoided in their entirety or not at all would be arbitrary.

As such, Mr Shah submitted, it is appropriate in the present case to proceed on the basis that, to the extent that Clause 19.3 is not penal and can be preserved without adding to or modifying the words of what remains, it is a provision that should be maintained. Mr Shah noted, in particular, that the A Line Termination Value is defined as comprising two distinct parts: "the aggregate of the Basic Termination Amount and the A Termination Amount". Given this, he submitted, if for any reason the A Line Termination Value is not recoverable in full under Clause 19.3(a), then, it should be open to FWA to recover the Basic Termination Amount independently by inviting the Court simply to remove from Clause 19.3 the reference to the A Termination Amount. Since it is not suggested by VietJet that the agreement in respect of the Basic Termination Amount is penal, it being the sum that is required to satisfy the Lessors' liability to repay outstanding balance of the Loans which were accelerated upon termination of the leasing, Mr Shah's submission was that there ought to be no bar to its recovery. All that is required, Mr Shah submitted, is what he described as the application of a blue pencil to Clause 1.1 in this way: "the aggregate of the Basic Termination Amount ~~and the A Termination Amount~~". This, he observed, involves "simply a deletion" which meets the Vivienne Westwood test for severance since the proposed deletion requires nothing to be added or any modification of the remaining wording. He added that this, he suggested, reflects the distinction drawn throughout the Head/Sub-Leases between those payment streams that are to accrue ultimately for the Lenders (which include the Basic Termination Amount) and those that are to accrue ultimately for the Lessors. He further submitted that the remaining terms continue to be supported by consideration and that the removal of the unenforceable provision does not so change the character of the Sub-Leases that they become "not the sort of contract that the parties entered into at all".

I do not agree with Mr Shah about this. I am clear that Clause 19.3 cannot be, and ought not to be, severed in the way that he suggested. Specifically, I agree with Mr Thompson that, even if the severance proposed would be possible as a matter of law, it would, in effect, result in the re-writing of the provision. I say this for a number of reasons.

First, as I put to Mr Shah in argument, the revision Clause 1.1 required, if there were to be severance as he suggested, would, in fact, also require the crossing out of the words "the aggregate of" as well as the words "and the A Termination Amount". This demonstrates, to my mind, the fact that what is proposed is more than the type of simple deletion that Mr Shah described it as being.

Secondly, the Basic Termination Amount is one of two components (along with the A Termination Amount) forming part of the A Line Termination Amount.

Thirdly, the liability under Clause 19.3(a) does not set out separate constituent obligations; there is but a single obligation to pay a single sum (the A Line Termination Amount) which is calculated by combining those two figures.

Fourthly, deleting or re-writing the obligation to pay the A Line Termination Value would make a nonsense of Clause 19.3 as a whole because of the option. It is payment of the A Line Termination Value which is said to trigger the right to exercise the option to acquire the Aircraft. It cannot be right that the Court can rewrite the clause so that the option to purchase is capable of being triggered by payment of some other (and smaller sum) which is (necessarily) not identified in Clause 19.3. To do that would entail the Court substituting into the payment obligation under Clause 19.3 an obligation to make a payment which would not trigger the option if paid within the specified period. This would be entirely contrary to Clause 19.3's clear and express terms.

Lastly and in any event, removal of the obligation to pay the A Termination Amount but retaining the obligation to pay the Basic Termination Amount does not address the penal effect of Clause 19.3 since, as Mr Thompson pointed out, there is still no credit given for the value of the Aircraft, and it is not even FWA's case that the A Termination Amount represents a proxy for the value of the Aircraft on the relevant Termination Date. That is, no doubt, for a simple reason: because the A Termination Amount for all of the Aircraft is very substantially lower than the Purchase Option Price for the Aircraft.

It follows that, even assuming that the approach applied in Vivienne Westwood and Blu-Sky Solutions is right as a matter of law, it would not in the present case be appropriate to permit FWA to advance the claim for the Basic Termination Amount that it does.

In the circumstances, I need not decide whether what Mr Fancourt QC had to say in Vivienne Westwood was right. I am, however, sceptical that severance of the type envisaged here would be possible as a matter of law. In this respect, I note that Vivienne Westwood has been doubted in Chitty on Contracts (35^th Ed.) at paragraph 30-258. I note also that in Makdessi Lord Neuberger and Lord Sumption disapproved of the approach adopted by the Court of Appeal in Jobson v Johnson [1989] 1 WLR 1026, in which it was held that in equity a penalty was enforceable pro tanto or on a "scaled down" basis, namely only to the extent of any actual loss suffered by the breach. At [86], Lord Neuberger and Lord Sumption said this:

"The difficulty about this approach was pointed out by Mason and Wilson JJ in the High Court of Australia in AMEV-UDC (1986) 162 CLR at pp 192-193:

'At least since the advent of the Judicature system a penalty provision has been regarded as unenforceable or, perhaps void, ab initio: Citicorp Australia Ltd v Hendry (1985) 4 NSWLR 1. In all that time it has been thought that no action could be brought on such a clause, no doubt because the courts should not lend their aid to the enforcement in any way of a provision which is oppressive. However, this is not the only reason why the courts would refuse to lend their aid. In the majority of cases involving penalties, the courts, if called upon to assist in partial enforcement of the kind suggested by the appellant, would be required to undertake an unfamiliar role. They would need to rewrite the clause so as to permit the plaintiff to recover the loss he has actually sustained. Penalty clauses are not, generally speaking, so expressed as to entitle the plaintiff to recover his actual loss. Instead they prescribe the payment of a sum which is exorbitant or a sum to be ascertained by reference to a formula which is not an acceptable pre-estimate of damage. In either case the court, if it were to enforce the clause, would be performing a function very different from that which it undertakes when it severs or reads down an unenforceable covenant, such as a covenant in restraint of trade. In the ultimate analysis, in whatever form it be expressed, the appellant's argument amounts to an invitation to the court to develop a new law of compensation, distinct from common law damages, which would govern the entitlement of plaintiffs who insist on the inclusion of penalty clauses in their contracts.'"

Lord Neuberger and Lord Sumption, then, said the following at [87]:

"Even if the course taken by the Court of Appeal in Jobson had been right, it would not be available to Mr Makdessi because clause 5.6 cannot sensibly be analysed as a mere security for the performance of the restrictive covenants. But in our opinion the analysis of Mason and Wilson JJ was correct, and so far as it related to the form of relief, Jobson was wrongly decided. In the first place, the treatment of a penalty clause as partly enforceable, although supported by some turns of phrase in old cases concerned with other issues, is contrary to consistent modern authority. So, with respect, is the treatment of its enforcement as discretionary according to the circumstances at the time of the breach. If, as the authorities show, the penal consequences of a contractual provision fall to be determined as at the time of the agreement, and a provision found to be a penalty is unenforceable, it is impossible to see how it can be enforceable on terms. Secondly, the Court of Appeal accepted that the court could not rewrite the parties' contract by specifically enforcing the retransfer of the shares to the vendors at a higher price or enforcing the retransfer of some only of the shares: see p 1037 (Dillon LJ), p 1042 (Nicholls LJ). Yet that is in reality what they did, by refusing to enforce the retransfer unless the vendor agreed to vary its effect. Third, the Court of Appeal interpreted the provision for the retransfer of the shares as a 'security' for the payment of the outstanding instalments. They placed the word 'security' in inverted commas because the obligation was purely personal. But the Court of Appeal's order treated it as if it was an equitable mortgage of the shares, which it manifestly was not. It appears to us that the Court of Appeal were, as a matter of legal analysis, treating the clause in question as a forfeiture and not a penalty, and granting relief from forfeiture on appropriate terms, although in doing so they purported to be treating it as a penalty clause, because they were constrained to do so in the light of the pleadings. So far as the relief granted in Jobson is concerned, the decision was entirely orthodox if it is treated as a forfeiture case, but it was wrong in principle if it is treated as a penalty case."

In the circumstances, had it been necessary to decide whether it is possible, as a matter of law, to sever in the manner described in Vivienne Westwood, I would have probably decided that it is not possible. In the event, however, that is not the basis on which I determine Issue 2 as I do, which is to answer it "no".

Issue 3: Whether FWA is entitled to a declaration that FWA has the right to immediate possession, custody and control of the Aircraft

I turn now to Issue 3.

The declaration sought in the prayer to FWA's Re-Re-Amended Particulars of Claim is in these terms:

"confirming FWA's right to immediate possession, custody and control of the Aircraft under clause 19 of the Sub-Lease Agreements and/or reg. 21 of the Regulations and granting the Claimant such right;"

As previously explained, however, in FWA's written submissions for trial the proposed declaration was trimmed down in the following way:

"FWA is entitled to possession of the Aircraft as against VietJet, pursuant to either clause 19.2 of the Sub-Lease Agreements or reg. 21."

In his oral submissions, Mr Richard Lissack KC, who addressed the Court along with Mr Shah on Issue 3, further clarified that FWA would be content with a declaration which was trimmed still further, namely:

"FWA is entitled to possession of the Aircraft as against VietJet".

As will appear, this was probably in part because by the time of trial things had moved on, at least in relation to the 8577 Aircraft, the 8592 Aircraft and the 8906 Aircraft, although at that stage FWA's case in respect of the 8937 Aircraft was still one which was focused on an alleged entitlement to possession either under Clause 19.2 of the Sub-Leases or under the Cape Town Convention.

Be that as it may, at least as presented to the Court by the parties in their written submissions, there are three aspects to Issue 3: first and of most direct relevance, whether FWA has a present right to possession of the Aircraft; secondly, whether, if so, it is appropriate that declaratory relief is granted essentially saying that this is the position; and thirdly, whether FWA previously had right to possession of the Aircraft. It will be obvious, however, on analysis, that the third aspect does not arise since what matters for the purposes of Issue 3 is whether FWA has a present entitlement to immediate possession of the Aircraft, not what the historic position was. As Mr Shah explained during the course of his oral submissions, and I agree, if the third aspect has any relevance, it is in relation not to Issue 3 but to Issue 4 – although, as will appear, given the view that I have formed in relation to Issue 4, whether FWA had a right to immediate possession of the Aircraft in the past is also not relevant in relation to that issue either.

I can deal with the remaining (the first and second) aspects in relatively short order since I am quite clear that it is appropriate that the declaration sought ought, indeed, to be granted.

FWA's present entitlement

As to the first aspect, the position here is straightforward. Indeed, in his oral submissions, Mr Thompson effectively acknowledged this to be the case in respect of the three Aircraft which by the time of trial had been exported and in respect of which FWA had acquired legal title, namely the 8577 Aircraft, the 8592 Aircraft and the 8906 Aircraft. He queried nonetheless what the point of granting the declarations sought would be given that those Aircraft are already in the possession of FWA and given also that the Court has previously declared that VietJet has no rights in them. His focus, in such circumstances, in the submissions that he advanced orally, was on the 8937 Aircraft which as at the time of trial had still to be exported and legal title in which FWA had yet to acquire.

Things have now moved on, however, since, as previously explained, the 8937 Aircraft has now also been exported and FWA now owns it. It follows that the position is the same in relation to all four of the Aircraft, as to which the position is clear: FWA is quite obviously entitled to immediate possession of the Aircraft because FWA now has legal title in them.

Specifically, as Mr Shah explained during his oral submissions and as Quinn Emanuel explained in their letter to King & Spalding dated 7 January 2025 (in relation to the 8577 Aircraft, the 8592 Aircraft and the 8906 Aircraft) and in their more recent email to the Court on 26 March 2025 (in relation to the 8937 Aircraft), not only have each of the Aircraft now been exported but also in respect of each of them FWA has completed a financing as part of which: (a) legal title to each of the Aircraft was sold by the relevant Trustee Owners to FWA; (b) the trusts created by the Declarations of Trust and Beneficial Interest Transfer Deeds for each of the Aircraft were terminated; and (c) the historic international interests registered in respect of each of the Aircraft on the International Registry were discharged.

A number of aspects should be mentioned here, the first of which is that it was VietJet's position (through an amendment made to its Re-Amended Defence and Counterclaim after the consequentials hearing that took place in October 2024 following the handing down of the judgment on liability) as follows (at paragraph 22(8):

"Paragraph 66.6 is admitted. The effect of the sales was to extinguish the title of the Lessors in the Aircraft and (it follows) to extinguish any right of FWA (as the Lessors' assignee) to the Aircraft (whether at common law or under the Cape Town Convention) (see further paragraph 33(2) below)."

This was in response to a plea in the Re-Re-Amended Particulars of Claim at paragraph 66.6 as follows:

"The Head Lease Agreements and the Sub-Lease Agreements were terminated by reason of and upon the sale of the Aircraft to the Trustee Owners."

Paragraph 33(2) of the Re-Re-Amended Defence and Counterclaim (another amendment made after the consequentials hearing) went on to say this:

"In any event, FWA had no right to possession of the Aircraft:

(a) At the date of Termination:

(i) the Lessors had a reversionary right to the Aircraft, which they could have (but chose not to) exercise (in circumstances where, as set out above, the demand was for VietJet to redeliver the Aircraft in accordance with the contractual arrangements); and

(ii) FWA had no relevant rights at all."

These pleas represented a change in VietJet's position compared with the position adopted at the liability trial because at that trial VietJet's case was that the sales to the Trustee Owners were not effective to pass clear title in the Aircraft to them. That, indeed, remained VietJet's position at the consequentials hearing in October 2024.

Mr Thompson explained in his oral submissions at the trial in January 2025 that the change in position was adopted only in the light of the judgment on liability (albeit that that judgment made no determination on this issue) and subject to whether the appeal against that judgment is successful. For present purposes, however, what matters (and all that matters) is that VietJet now accepts that the Trustee Owners had legal title in the Aircraft, and so it must follow that the Trustee Owners were entitled to do what they have done in the last few months (in December 2024 in the case of the 8577 Aircraft, the 8592 Aircraft and the 8906 Aircraft, and in March 2025 in relation to the 8937 Aircraft), which is to sell the Aircraft to FWA (and to wind up certain trust declarations which they made in August 2022, having acquired title to each of the Aircraft, in favour of FWA).

Thus, taking the 8577 Aircraft by way of example, the relevant bill of sale dated 19 December 2024, subject to English law, was entered into between FWA and FW Aviation (Holdings) 8577 Ltd and was in (inter alia) these terms:

"BY THIS BILL OF SALE, FW AVIATION (HOLDINGS) 8577 LIMITED (the Seller) does hereby with full title guarantee, sell, grant and transfer all its rights, title and interest in and to the Aircraft specified below to FW AVIATION (HOLDINGS) 1 LIMITED (the Buyer) for all good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by Seller …".

Moreover, again taking the 8577 Aircraft as an example, on the same date FWA (described as the 'Beneficial Owner') and FW Aviation (Holdings) 8577 Ltd (described as the 'Initial Trustee') entered into a 'Notice of Termination of Trust', which referred to the trust deed entered into on 23 August 2022 before stating as follows:

"3. For the avoidance of doubt, with effect from the date hereof, the Trust Deed shall have no further force or effect and any and all rights, obligations, duties and liabilities of either party arising out of the Trust Deed shall also terminate other than i) those arising on or before the date hereof and ii) those expressly stated in the Trust Deed to survive termination.

4. We confirm, by signing and countersigning below, that both the Beneficial Owner and the Initial Trustee agree and hereby evidence in writing their existing historic agreement, that - at all relevant times for the duration of the Trust Deed (and without prejudice to the Beneficial Owner's separate contractual rights in respect of the Sublease Agreement and other documents) - the Beneficial Owner has been, and remains, entitled to possession of the Aircraft and entitled to enforce its right to demand and recover possession of the Aircraft from VietJet, which had unlawfully used and retained the Aircraft under the Sublease Agreement, as referred to in clause 3.3(c) of the Trust Deed."

It follows, as Mr Shah submitted and Mr Thompson was in no position to dispute, that not only was the 8577 Aircraft sold to FWA but also that the Trustee Owners no longer have any interest in the Aircraft. Nor, it should be noted, are the Trustee Owners in any shape or form calling for possession of the Aircraft.

The same applies to all the other Aircraft.

It follows, FWA having previously obtained a declaration from the Court (in the wake of the judgment on liability) that VietJet "does not have the benefit of any rights or interests in the Aircraft", that it must obviously be the case that FWA (and FWA alone) has the right to possess the Aircraft. The fact that, as Mr Thompson pointed out, FWA has not sought to amend its pleadings in order to refer to these recent developments is not, in the circumstances, important. To require FWA to do so would be to elevate procedure over substance. In truth, whilst he suggested that there might be issues concerning applicable law and jurisdiction which, had the sales been pleaded, could have been ventilated in the statements of case, Mr Thompson did not elaborate on this and did not ultimately suggest that FWA should be precluded from advancing the case that it did notwithstanding the absence of a new plea. In particular, and sensibly, despite criticising FWA (and Quinn Emanuel) for not informing VietJet straightaway about the sales of the 8592 Aircraft, the 8906 Aircraft and the 8577 Aircraft, Mr Thompson did not suggest that VietJet and its legal team were unable to deal with matters.

It is unnecessary, in the circumstances, to deal with the submissions made on both sides concerning the alleged entitlement to possession either under Clause 19.2 of the Sub-Leases or under the Cape Town Convention – although, as will appear, when addressing Issue 4 I shall briefly deal with the latter.

Appropriateness of declaratory relief

Coming on to the second aspect that arises in relation to Issue 3, I am wholly satisfied that it is appropriate in the present case to afford FWA the declaratory relief that it seeks for reasons which I shall now explain.

Mr Thompson was right to remind the Court that, as made clear by Neuberger J (as he then was) in FSA v Rourke [2001] EWHC 704 (Ch) at page 10, declarations are not granted "merely because the rights, facts or principles have been established and one party asks for a declaration", that the Court asks whether they "would serve a useful purpose" and, as noted by Marcus Smith J in BNY Mellon v Essar Steel India Ltd [2018] EWHC 3177 (Ch) at [22], that caution should be exercised if they "will have an effect on a foreign process".

I bear these considerations in mind, along with the following well-known guidance given by Aikens LJ in Rolls-Royce Plc v Unite the Union [2009] EWCA Civ 387, [2010] 1 WLR 318 at [120]:

"For the purposes of the present case, I think that the principles in the cases can be summarised as follows: (1) the power of the court to grant declaratory relief is discretionary. (2) There must, in general, be a real and present dispute between the parties before the court as to the existence or extent of a legal right between them. However, the claimant does not need to have a present cause of action against the defendant. (3) Each party must, in general, be affected by the court's determination of the issues concerning the legal right in question. (4) The fact that the claimant is not a party to the relevant contract in respect of which a declaration is sought is not fatal to an application for a declaration, provided that it is directly affected by the issue. (5) The court will be prepared to give declaratory relief in respect of a 'friendly action' or where there is an 'academic question' if all parties so wish, even on 'private law' issues. This may particularly be so if it is a 'test case', or it may affect a significant number of other cases, and it is in the public interest to decide the issue concerned. (6) However, the court must be satisfied that all sides of the argument will be fully and properly put. It must therefore ensure that all those affected are either before it or will have their arguments put before the court. (7) In all cases, assuming that the other tests are satisfied, the court must ask: is this the most effective way of resolving the issues raised. In answering that question it must consider the other options of resolving this issue."

Principles (2), (3), (6) and (7) are of particular relevance in the present case, and each is applicable, in my view. Thus, firstly, there is clearly a real and present dispute as to whether FWA is entitled to the possession of the Aircraft. Had there not been, the Court would not have had to make the determination that it has made.

Secondly, although this merely follows from the fact that there was the argument that there was, FWA and VietJet each stands to be affected by the Court's determination on possession. Accordingly, the declaration has utility but, the more so, given what appear to be VietJet's continued efforts to thwart FWA in its efforts to exercise its entitlements in respect of the Aircraft. As to this, I refer to what I had to say in the judgment on liability at [369], when dealing with a relief from forfeiture issue that entailed looking at VietJet's conduct:

"It is with these principles in mind that I approach this issue. Doing so, my conclusion, as I shall explain, is that Mr Lissack KC was right when he submitted that VietJet has conducted and orchestrated a campaign in Vietnam since it delivered the Aircraft to FWA pursuant to the various orders made by this Court that has been designed to interfere with FWA's efforts to export the Aircraft from Vietnam and, in turn, both to permit VietJet to raise and maintain its claim to relief from forfeiture and to compel the re-leasing of the Aircraft to VietJet. This misconduct is not only so closely connected with VietJet's application for relief from forfeiture, but also so egregious, that VietJet should be precluded from the relief sought."

It was with this in mind that I concluded in the first ruling, which I made at the consequentials hearing in October 2024, that it was appropriate to grant the declaratory relief that was then sought: [2024] EWHC 2519 (Comm). As I put it at [13], having referred to the judgment on liability at [369]:

"It seems to me that I have to have regard to reality here, and that reality involves an understandable concern on the part of the Claimants that VietJet should be dissuaded from suggesting, outside of this jurisdiction, that the position arrived at, as a result of my judgment, is anything other than (at least subject to the outcome of any proposed appeal) final and dispositive."

The type of conduct complained about by FWA at the liability trial has continued since the liability judgment was handed down. Indeed, it continued after the consequentials hearing, since at the pre-trial review that took place in December 2024 it was drawn to my attention that in November 2024 VietJet had made a misleading public statement in disclosures to the State Securities Commission of Vietnam and Ho Chi Min City Stock Exchange where its shares are listed.

Mr Lissack submitted that VietJet has continued to behave in a manner which, as I put it in the ruling where I addressed this episode ([2024] EWHC 3225 (Comm)), at [8], entails VietJet doing "its best to frustrate things". He referred, for example, to an application that was heard before Bright J on 17 and 18 December 2024 ([2024] EWHC 3337 (Comm)) involving various banks. I need not, however, decide whether Mr Lissack was right to attribute to VietJet the motivations that he did. This is because, whilst Mr Thompson was at pains to reject the allegation that VietJet has acted inappropriately, nonetheless what is abundantly clear is that, given the history of this matter, a declaration is not only desirable but necessary in order to ensure that there is no doubt at all as to what it is that the Court has decided. That, as Mr Lissack described it, is the overarching purpose of the declaration now sought. I agree with him that there needs to be certainty as to the legal position – without room for any lacuna or ambiguity which might be exploited by VietJet in Vietnam or anywhere else.

Thirdly, all sides of the argument were fully and properly put to the Court.

Fourthly, a declaration is the most effective way of resolving the issues raised, namely the question of how best to ensure compliance by VietJet with this Court's judgments and to prevent interference by VietJet in FWA's dealings with third parties consequent on such judgments. It is worth bearing in mind in this context, having regard to the point made by Mr Thompson that there is nothing to be gained by making the declaration given that the Aircraft are now no longer in Vietnam, that it is important that FWA should be able to deal with the Aircraft (for example, sell or lease) without third parties being uncertain as to what FWA's legal entitlement as regards the Aircraft is.

Furthermore, the English Court is the sole tribunal with jurisdiction over these matters, pursuant to the exclusive jurisdiction clauses in the various JOLCO agreements which have already been subject to separate litigation in the anti-suit injunction proceedings which were before Bright J. There is no other Court which is legally entitled to take decisions relating to the rights over the Aircraft and the subject matter of the declaration. It is, accordingly, only right that the English Court should provide the clarity sought. Nor, in the circumstances, can there be any question of this Court making any declaration that will have an effect on any foreign process since the declaration sought by FWA is not sought to bring about any such interference. The declaration would merely, but importantly, prevent the misuse and misrepresentation of this Court's judgment(s) by VietJet.

For all these reasons, this is a case in which it is obvious to grant the declaratory relief sought. It follows that the answer to Issue 3 is, accordingly, that FWA is entitled to a declaration that FWA has the right to immediate possession of the Aircraft.

Issue 4: The extent to which VietJet is liable to pay to FWA pursuant to Clause 20.4(c) of the NEO Sub-Leases

Issue 4 concerns Clause 20.4(c) of the NEO Sub-Leases, which is in these terms:

"Non-Compliance

If at the time of Final Inspection the Sub-Lessee has not fully complied with any of its obligations under this Agreement (including without limitation the Return Conditions), or the Sub-Lessee fails to make the Aircraft available to the Sub-Lessor on a timely basis for inspection and redelivery pursuant to Clause 20.1 (Return of Airframe and Engines) and the Return Conditions (whether such failure is due to any act or omission of the Sub-Lessee or any other circumstance whatsoever), the Lease Period shall be extended or if the Lease Period has already ended be deemed to be extended until the time when the Aircraft has been redelivered to the Sub-Lessor in full compliance with this Agreement, for the sole purpose of enabling such non-compliance or failure to be promptly rectified, and during such extension or deemed extension period:

…

(c) the Sub-Lessee shall pay the Sub-Lessor the Rental for such extension period on demand at the rate of one hundred and fifty per cent. (150%) of the Rental payable on the next scheduled Rental Payment Date or the Expiry Date (as applicable), calculated on a per diem basis.

…. Without limiting the generality of the foregoing, the Sub-Lessee's Rental obligation under paragraph (c) above shall be without prejudice to the rights of the Sub-Lessor to terminate the leasing of the Aircraft, to indemnification and to receive any amounts in each case in accordance with the provisions of this Agreement.

The Sub-Lessor may, at its sole discretion (and shall not be obliged to) elect (either on first tender of the Aircraft by the Sub-Lessee or at any time during the said extension or deemed extension period) to accept redelivery of the Aircraft notwithstanding noncompliance with Clause 20.1 (Return of Airframe and Engines) or the Return Conditions, in which case the Sub-Lessee will indemnify the Sub-Lessor in respect of the cost (as reasonably determined by the Sub-Lessor following consultation with the Sub-Lessee) of putting the Aircraft into the condition required by this Agreement."

There is in the present case no dispute that VietJet failed to redeliver the NEO Aircraft as required by Clause 20.1 in the Return Condition. Nor is it in dispute that VietJet is liable to pay 'Rental' to FWA up until the dates on which the NEO Aircraft were sold to the NEO Trustee Owners, and that this amounts to US$1,822,974 in respect of the 8906 Aircraft and US$1,826,573 in respect of the 8937 Aircraft.

What is in dispute is that anything more (US$13,087,658 to be precise) is due - up until the Aircraft were redelivered - pursuant to Clause 20.4(c) in circumstances where, upon the sale of the Aircraft to the NEO Trustee Owners on 18 January 2022, as Mr Thompson put it, the Lessors' titles were extinguished. VietJet also says that the claim for further 'Rental' fails for circuity of action because, as it is put in VietJet's Defence at paragraph 40(3), there would be "an equal and opposite claim in unjust enrichment, there being a total failure of consideration if the lessee is paying the lessor for a right to possession the lessor cannot himself give the lessee". Specifically, Mr Thompson submitted that, if the Sub-Lessor had no possessory or reversionary interest in the Aircraft, it could neither extend the leasing term (as Clause 20.4 contemplates) nor decide from time to time whether to accept the Aircraft back in a non-compliant state or maintain it on lease while the Sub-Lessee puts it into return condition (as Clause 20.4 also contemplates).

In these respects, Mr Thompson repeated submissions made in the context of Issue 3 in relation to FWA's past entitlement (or lack of entitlement) to possession of the Aircraft, adding that there is no basis in law for the contention that rent can be claimed in the absence of title. As to this, he cited Palmer on Bailment (3^rd Ed.) at paragraph 4-042, as follows:

"Since hire purchase is in essence a contract of deferred purchase, and since the hirer clearly expects and bargains for the ultimate transmission of title, the law permits this variety of bailee to invoke the lack of property in the lessor as a defence against actions for payment and as a cause of action in its own right.

Comparable rights are enjoyed by the bailee under a contract of hire. Such a bailee, while not someone to whom property is intended to pass under the contract, is entitled to redress if the lessor either lacks the right to hire the goods, or fails to confer quiet possession on him. A want of ownership in the lessor will probably represent the commonest cause of a breach of these obligations."

He relied also on what Palmer goes on to say at paragraph 21-019:

"Where the lessor never had a right to transfer possession of the goods [to the bailee], the rentals paid by the hirer are likely to be recoverable on the ground of a total failure of consideration, even in the case where the hirer has enjoyed substantial use of the goods hired to him."

Mr Thompson noted that, whilst these paragraphs refer to certain terms implied by statute (excluded from the Head Leases and Sub-Leases by Clause 6.1(a)), the Sub-Leases expressly stated at Clause 15.1:

"Throughout the Lease Period, title to the Aircraft shall remain vested in the Lessor subject to the Mortgage".

It was Mr Thompson's submission that this should be treated as an express warranty in the same way as was done in Warman v Southern Counties Car Finance Corporation [1949] 2 KB 576, where the Court held that a plaintiff, who had entered into an agreement for the hire-purchase of a car with the defendants, was able to recover all moneys paid by him for breach of warranty (before and after he had knowledge of the claim) when it transpired that the Defendants were not the true owners of the car for breach of warranty, Finnemore J observing at page 582 that:

"I should have thought it was quite plain that if A purports to hire a car to B, and in fact delivers to B a car which belonged not to himself but to C, to which he had no right whatever in law, and during the currency of the agreement C intervenes and asserts his right to the car, and if, in those circumstances, B does not pay the hiring charges, A would have no possible claim for them…I cannot think that any court would direct B to pay A money for the use of somebody else's car. I do not see here how the defendants, because they delivered to the plaintiff somebody else's car, can claim any kind of money from him for the use of that car. That is, it seems to me, in plain English, what the claim comes to."

On this basis, Mr Thompson submitted, FWA's claim, therefore, fails for circuity of action, in that VietJet would have equal and opposite claims for the payments sought.

I do not agree with Mr Thompson about this since his submissions proceed on the basis that Clause 20.4 is not a liquidated damages provision, yet it is FWA's case (with which I agree) that that is the position – and that the liability on VietJet's part arises on its default and continues to apply even where the leasing has been terminated. The fact that Clause 20.4 refers to payment of 'Rental' does not mean that the obligation on VietJet's part is one which arises in debt; on the contrary, in my view, the 'Rental' reference is merely shorthand to identify the amount payable by way of liquidated damages. It follows that the fact that the Aircraft are no longer available for use by the Lessors as a result of their sale to the Trustee Owners is nothing to the point: the right to be paid pursuant to Clause 20.4 is a right that does not depend on there being a right to possession.

That Clause 20.4 is a liquidated damages provision is clear for a number of reasons.

First, Clause 20.4 triggers on VietJet's default. This is made clear by the fact that the first sentence provides that the extension of the lease period giving rise to the obligation under Clause 20.4 comes about where the Sub-Lessee has not fully complied with any of its obligations under the agreement or where it has failed to make the Aircraft available under Clause 20.1.

Secondly, the extension arises automatically. Neither party has any say in the matter. There is an extension until such time as there has been a redelivery. It follows that VietJet's argument that, if the Sub-Lessor had no possessory or reversionary interest in the Aircraft, then, it could not extend the leasing term is based on a misconstruction of Clause 20.4 because the extension is not dependent on any act or entitlement of the Sub-Lessor.

Thirdly, Clause 20.4 applies even if the leasing has been terminated – and so at a point where rent has stopped being paid. In this case, the lease period was terminated in October 2021, and so it is the deemed extension that applies.

Fourthly, VietJet does not, by paying the 'Rental', obtain rights of possession properly so-called because it is not free to use the Aircraft as it wishes but is, instead, only permitted to retain the Aircraft solely for the purpose of enabling performance of the obligation in respect of which VietJet is in default. Clause 20.4 is, accordingly, not intended to confer rights and entitlements of possession on VietJet. It can be seen from Clause 20.4(b) that what is preserved are the Sub-Lessee's obligations and covenants, but nothing is said about the covenants of the Sub-Lessor. It, therefore, makes no sense for VietJet to suggest that there was any warranty that the Sub-Lessor would have title throughout the lease period. Clearly, there was no such warranty following termination.

Fifthly, as previously indicated, the fact that Clause 20.4 refers to the 'Rental' ought not to be treated as meaning that Clause 20.4 is anything other than a liquidated damages clause. Rather, it is a shorthand description of what is payable as liquidated damages, covering not just rental simpliciter but rather a percentage of rental - 150% - to achieve level of compensation for the Sub-Lessor for the fact that, on termination, the Aircraft is not in an appropriate redelivery condition, meaning that there is going to be a delay whilst the Aircraft is being put into the correct redelivery condition. This, bearing in mind that these were long term leases, and so it may be that the market will have moved in the meantime. This, therefore, is an attempt to try and estimate where the market might be at a future date as well as seeking to encourage compliance.

It follows, for all these reasons, that Clause 20.4 is to be regarded as a liquidated damages provision and, as such, not concerned with money which is payable by VietJet because it as consideration for the exercise of any right to retain the Aircraft beyond the lease period. Instead, what Clause 20.4 does is to set the sum payable on VietJet's default that compensates for VietJet holding over effectively following termination of the leasing, so incentivising VietJet to return the Aircraft in accordance with the terms of the Sub-Leases as promptly as possible.

In these respects, I agree with Mr Shah when he submitted that there is an analogy (although no more than that) with the demurrage/charterparty position. As to that, Mr Shah referred to the very well known decision of the House of Lords in President of India v Lips Maritime (The 'Lips') [1988] 1 AC 395, in particular this passage in the speech of Lord Brandon at page 422E-H:

"It is essential to the decision of that question to have in mind the legal nature of demurrage: both what it is and what it is not. I deal first with what demurrage is not. It is not money payable by a charterer as the consideration for the exercise by him of a right to detain a chartered ship beyond the stipulated lay days. If demurrage were that, it would be a liability sounding in debt. I deal next with what demurrage is. It is a liability in damages to which a charterer becomes subject because, by detaining the chartered ship beyond the stipulated lay days, he is in breach of his contract. Most, if not all, voyage charters contain a demurrage clause, which prescribes a daily rate at which the damages for such detention are to be quantified. The effect of such a clause is to liquidate the damages payable: it does not alter the nature of the charterer's liability, which is and remains a liability for damages, albeit liquidated damages. In the absence of any provision to the contrary in the charter the charterer's liability for demurrage accrues de die in diem from the moment when, after the lay days have expired, the detention of the ship by him begins. . ."

I acknowledge that, as Mr Thompson observed, demurrage is a particular type of liquidated damages species with its own historical standing. I appreciate also, again as Mr Thompson observed, that in the case of demurrage the charterer has chosen, in effect, to extend laytime, whereas in the present case the extension envisaged by Clause 20.4 is not an option for VietJet to choose. This does not change the analysis, however, as to what a liquidated damages provision is. It is in this respect that what Lord Brandon had to say is instructive and why the analogy that Mr Shah sought to draw with the present case is helpful.

This is not a case such as Triple Point Technology Inc v PTT Public Co Ltd [2021] AC 1148, in which the Supreme Court was concerned with a provision requiring a supplier to pay liquidated damages for delayed performance "from the due date for delivery up to the date PTT accepts such work" and where Lord Leggatt observed at [86] that "it is ordinarily to be expected that, unless the clause clearly provides otherwise, a liquidated damages clause will apply to any period of delay in completing the work up to, but not beyond, the date of termination of the contract". It is clear that Clause 20.4(c) survives termination of the Sub-Leases, given that the 'Rental' is stated to accrue "until the Aircraft has been re-delivered to the Sub-Lessor in full compliance with this Agreement" and redelivery is likely to occur only after termination, and given also that Clause 20.4(c) is expressed to be "without prejudice to the rights of the Sub-Lessor to terminate the leasing of the Aircraft".

Furthermore, in view of the decision I have reached, since VietJet's liability arises pursuant to Clause 20.4(c), there is no scope for an unjust enrichment claim: any benefit in the form of the 150% 'Rental' is transferable in discharge of a contractual obligation, and so does not count for unjust enrichment purposes. This was made clear by Carr LJ (as she then was) in Dargamo Holdings Ltd & Anor v Avonwick Holdings Ltd & Ors [2021] EWCA Civ 1149, and is summarised in Goff & Jones, The Law of Unjust Enrichment at paragraph 3-12 in this way:

"General principle Where a benefit has been transferred pursuant to a contract which remains open, or has been discharged by performance, no claim in unjust enrichment will generally lie. The principle is based on the fundamental premise that the law should give effect to the parties' own allocations of risk and valuations, as expressed in the contract, and should not permit the law of unjust enrichment to be used to overturn those allocations or valuations."

In the circumstances, as in relation to Issue 3, albeit for different reasons, I need not address the submissions which were advanced by both Mr Shah and Mr Thompson concerning whether FWA had a previous right to possession of the Aircraft - whether as a matter of contract or under the Cape Town Convention. However, in case this matter were to go further and because (unlike the contractual aspect) the Cape Town Convention issue can be addressed relatively briefly, I set out my views in relation to that issue in what follows. In doing so, it is important to note that the position in respect of the Cape Town Convention or, more particularly for the purposes of this jurisdiction, The International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015 (the 'Regulations') does not depend on whether there is a contractual right of possession; it is a freestanding matter.

Under the Regulations, "associated rights" are defined, in paragraph 5, as meaning "all rights to payment or other performance by a debtor under an agreement which are secured by or associated with the aircraft object", whilst "debtor" is defined, again in paragraph 5, as meaning "a chargor under a security agreement, a conditional buyer under a title reservation agreement or a lessee under a leasing agreement".

Regulations 27 and 28 (under the heading "Assignment") are, then, in these terms:

"Effect of assignment

27.-(1) Except as otherwise agreed by the parties, an assignment of associated rights made in conformity with regulation 28 also transfers to the assignee –

(a) the related international interest; and

ii) all the interests and priorities of the assignor under these Regulations and the Cape Town Convention.

(2) Nothing in these Regulations prevents a partial assignment of the assignor's associated rights.

(3) In the case of a partial assignment the assignor and assignee may agree as to their respective rights concerning the related international interest assigned under paragraph (1) but not so as adversely to affect the debtor without its consent.

…

Formal requirements of assignment

28.-(1) An assignment of associated rights transfers the related international interest only if it –

(a) is in writing;

(b) enables the associated rights to be identified under the contract from which they arise; and

(c) in the case of an assignment by way of security, enables the obligations secured by the assignment to be determined in accordance with the Aircraft Protocol but without the need to state a sum or maximum sum secured.

…".

There is no issue as to the requirements of Regulation 28 since the Claims Assignment Agreements relied upon by FWA satisfy them, and nor did Mr Thompson suggest otherwise. The issue is whether Mr Shah was right when he submitted that FWA has (or had) an entitlement to possession as a creditor under the Regulations. In particular, Mr Shah submitted that the Claims Assignment Agreements were assignments of associated rights, namely "rights to payment to or other performance by a debtor under an agreement which are secured by or associated with the aircraft object" for the purposes of the Regulation 5 definition: in this case, the rights to payment under the Sub-Leases which included the right to be paid rental.

It was Mr Shah's submission, in such circumstances, that the Claims Assignment Agreements were effective in transferring to FWA, as the ultimate assignee, "the related international interest" and "all the interests and priorities of the assignor under these Regulations and the Cape Town Convention" (see Regulation 27(1)). As such, Mr Shah contended, FWA stepped into the shoes originally worn by the Sub-Lessors qua creditors and was entitled, for as long as it held what was originally their international interest, to exercise the remedies arising pursuant to the Regulations that would have been available to the Sub-Lessors – including an entitlement to "take possession or control" of the Aircraft where there was a "default" under the Sub-Lease Agreements, given that Regulation 21(2)(a) (under the heading "Remedies of conditional seller or lessor") provides in these terms:

"(1) This regulation applies in the event of default under a title reservation agreement or under a leasing agreement.

(2) The conditional seller or the lessor, as the case may be, may –

(a) subject to any declaration that may be made by the United Kingdom under Article 54 of the Cape Town Convention, terminate the agreement and take possession or control of any aircraft object to which the agreement relates; … ."

Mr Shah observed that it has been determined already, in the judgment on liability at [101] and [188], that there were subsisting defaults at the time of the Claims Assignment Agreements because there were subsisting Events of Default under the Sub-Leases. Accordingly, he submitted, the position is plain: the Court should find that FWA held an entitlement to possession for at least the period between the dates of the Claims Assignment Agreements and the dates of each of the sales of the Aircraft.

I agree with Mr Shah about this. I do not consider Mr Thompson to have been right when he submitted that, for the purposes of the Regulations, a creditor cannot be entitled to possession if it (or its ultimate assignee) lacks title to the aircraft object. There are a number of reasons why I have formed this view.

First, as Mr Shah pointed out, it makes sense, in circumstances where there is a delinquent lessee refusing to redeliver the aircraft, for there to be such an entitlement, and the fact that the lessor may have sold the aircraft in the meantime cannot alter this because the remedy of repossession is one to be exercised by the creditor against its debtor.

Secondly, again as Mr Shah pointed out, that a creditor need never have held title to the aircraft object is confirmed by the fact that, in order to amount to an international interest, the creditor must have held, at the time of the creation of its international interest, a "power to dispose" see Article 7(b) of the Cape Town Convention). The Official Commentary at paragraphs 2.82-2.84 explains that a "power to dispose" may be contrasted with the concept of a right to dispose which is held by the owner of the aircraft object. At paragraph 2.84, this is stated:

"Most legal systems have rules which in given conditions enable a non-owner who is lawfully in possession to pass a good title to an innocent buyer. A power to dispose thus exists whenever the transferor is able to transfer a better title than the transferor itself possesses. Exceptions to the principle nemo dat quod non habet may arise either under the applicable law or under the Convention itself as a consequence of its registration and priority rules. For example, under the applicable law (usually the lex situs):

(1) the person making the disposition, though not having actual authority to do so, may have an agency power, such as apparent authority, which under many legal systems gives that person a power of disposal;

(2) many legal systems protect the bona fide recipient of goods obtaining possession from a transferor who is himself lawfully in possession but has no power of disposal or exceeds his authority to do so.

Even a debtor without a right to dispose under the applicable law must, if in possession of the object, be considered as having a power to dispose under the Convention itself, and thus to agree to grant a security interest, sell or sub-sell under a title reservation agreement or grant a lease or a sub-lease, for if the position were otherwise there would be little point in making the interest of the (head) chargee, conditional seller or lessor registrable as an international interest, given (a) that it is the debtor in possession who is usually in the best position to grant a competing interest and (b) that Article 29(2) makes knowledge of an earlier unregistered interest irrelevant to the priority of the first to register. Most legal systems, even those that adopt the possession vaut titre principle, limit the protection of the buyer to one who acquires in good faith and without knowledge of the prior interest. Accordingly if "power to dispose" were limited to dispositions under national law Article 29(2) would in most cases be deprived of effect and Article 29(1) would be redundant. It is therefore implicit in Article 29(2) that the debtor has a power to dispose derived from the Convention itself. It may be noted that a person lacking a right to dispose will not have a power to have under the applicable law. …".

This makes it clear that a "power to dispose" is a broader concept which can be held by parties that do not hold title to the aircraft object.

Thirdly, it is clear also that an international interest does not terminate upon the holder or original assignor of the interest divesting any title that it might have held in relation to the aircraft object. Again, reference to the Official Commentary is instructive since at paragraph 2.96 (under the heading "Termination of an international interest") Professor Goode says this:

"An international interest in an object terminates when (a) the agreement creating or providing for it comes to an end (whether under the Convention or under the applicable law) and (b) the creditor has been paid in full or has recovered possession or control of the object and/or any proceeds and has exhausted all other default remedies conferred on it by the Convention in relation to the object (see paragraph 2.97). Only then is any other interested person entitled to apply for registration of the international interest to be discharged (see paragraph 2.97). Rules of the applicable law may also come into play so far as these are consistent with the mandatory provisions set out in Article 15 and do not restrict the right of termination of a title reservation agreement or leasing agreement given by Article 10."

It follows that any loss of title is irrelevant to the survival of an international interest.

Had I decided, therefore, that Mr Thompson was right as to his submission that Clause 20.4 is not a liquidated damages provision, then, still I would have determined Issue 4 against VietJet on the basis that FWA enjoyed rights under the Regulations which mean that VietJet's objections to FWA's claims to further monies under Clause 20.4 fall away.

It follows that the answer to Issue 4 is that, pursuant to Clause 20.4(c) of the NEO Sub-Leases, VietJet is liable to pay 'Rental' to FWA not only up until the dates on which the NEO Aircraft were sold to the NEO Trustee Owners, but also after the dates of those sales up until redelivery of the Aircraft.

Conclusion

In conclusion, therefore, the answers to the various issues are these:

(1) Issue 1: Is VietJet liable to pay FWA under Clause 19.3(a) of the Sub-Leases: (i) the 'A Line Termination Value' (for the NEOs, c.US$108 million); and (ii) the 'Termination Value' (for the CEOs, c.US$57.1 million)?

Yes - in both respects.

(2) Issue 2: If the 'A Line Termination Value' is not payable in respect of the NEOs, is VietJet is liable to pay FWA the 'Basic Termination Amount'?

No.

(3) Issue 3: is FWA entitled to a declaration that FWA has the right to immediate possession of the Aircraft?

Yes.

(4) Issue 4: to what extent is VietJet liable to pay to FWA pursuant to Clause 20.4(c) of the NEO Sub-Leases?

VietJet is liable to pay 'Rental' to FWA not only up until the dates on which the NEO Aircraft were sold to the NEO Trustee Owners but also after the dates of those sales up until redelivery of the Aircraft – totalling US$8,315,992 in respect of the 8906 Aircraft and US$8,421,213 in respect of the 8937 Aircraft.

The precise form of the relief that is appropriate will need to be considered separately. I ask that the parties do their best to reach agreement on this.

I end by (again) thanking counsel and solicitors for the assistance which they gave me.

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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> FW Aviation (Holdings) 1 Ltd v VietJet Aviation Joint Stock Company [2025] EWHC 928 (Comm) (17 April 2025) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2025/928.html Cite as: [2025] EWHC 928 (Comm)

		Royal Courts of Justice Strand, London, WC2A 2LL
		17 April 2025