UK court tells VietJet not to interfere with export of repossessed jets

By Tim Hepher

(Reuters) - A UK judge has ordered Vietnam's VietJet to refrain from interfering in the export of jets repossessed by a leasing firm in the latest twist to a dispute that has put one of the fastest-growing aviation markets under the spotlight.

FW Aviation (FWA) has taken possession of four Airbus A321 jets with the airline's agreement after claiming that the airline is in default for non-payment of rent since 2021.

But the lessor, part of London-based FitzWalter Capital, accused VietJet in an online hearing on Friday of seeking to thwart the process by interfering behind the scenes with efforts to export one of the passenger jets from Vietnam, where all four jets remain on the ground.

The dispute has been playing out in courts in London, Singapore and Hanoi and is seen as a test case for lessors' rights in Vietnam, which has hundreds of Airbus and Boeing jets on order, as well as for wider international leasing rules.

"We have a right to possession and control of this aircraft and that extends to the ability to export it," FWA's lawyer Akhil Shah told London's High Court.

VietJet lawyer Alexander Milner denied the airline was seeking to take proactive steps to block exports, and put forward detailed legal and jurisdictional arguments stating why VietJet could not be held accountable in the UK court for a matter between FWA and Vietnam's customs authorities.

Leasing represents about half the world's fleet and the ability of lessors to move planes from one place to another in the event of default is a key component of the 2001 Cape Town Convention, which underpins the aircraft leasing industry.

Airlines in member countries that are deemed to break the rules can face higher financing rates for their future fleets.

Granting the order, Judge David Foxton questioned whether a distinction could be drawn between possessing an aircraft and being able to export it, and drew comparisons with currency controls or restrictions on exports of Old Master paintings.

FWA claimed that VietJet had liaised behind the scenes with Vietnamese authorities and obtained unexplained photographs of letters between the lessor and Vietnam's customs authority.

Milner said the claimants had been quick to interpret innocent acts as attempted interference. VietJet could not immediately be reached for comment.

Vietnam is the latest battleground over lessor rights after disputes in India and Russia.

The Aviation Working Group, a UK-based entity that monitors financing laws on behalf of planemakers and lessors, last year placed Vietnam on a watchlist over its adherence to the Cape Town treaty and reaffirmed the move in October. India is also on watch amid a dispute between the airline Go First and lessors.

Airlines argue it is crucial for procedures to be carried out correctly as the export of a valuable jet is irreversible.

(Reporting by Tim Hepher; editing by David Evans)