WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED & Ors v SPICEJET LIMITED

A stay of execution is exceptional where a contract contains a no-set-off clause. The party seeking the stay bears the burden of establishing strong, exceptional circumstances. A judge reconsidering an earlier stay is not bound to assume that exceptional circumstances continue to exist. The court must assess the circumstances as they stand, although it may also consider what has materially changed. Completion of a mediation without settlement may remove the principal basis for an earlier stay. Thin, unattributed hearsay evidence of prospective financial support, and pre-existing commercial difficulties, will not ordinarily overcome the high hurdle where the contract provides for immediate payment.

The claimants had obtained summary judgment against SpiceJet Limited, save for one element. The deputy judge, Ms Dias QC, ordered a stay of execution, principally because a mediation presented an exceptional opportunity. The claimants sought continuation of the stay to be refused. The defendant argued that the court should assume the original stay was correctly granted and ask only what had changed, relying on the possible revival of mediation, a prospective Indian government loan, the grounding of Boeing Max aircraft and potential enforcement difficulties.

The central issue was whether exceptional circumstances continued to justify a stay of execution in the presence of a no-set-off clause.

1. Application refused. The court declined to continue the stay of execution.
2. Where a no-set-off clause requires immediate payment, the court will ordinarily give effect to the parties’ bargain. A stay requires a strong reason and is likely to require exceptional circumstances. Granting a stay may defeat the commercial purpose of the clause: Continental Illinois National Bank & Trust Company of Chicago v John Paul Papanicolaou [1986] 2 Lloyds Rep 441 at 445; Credit Suisse v Ramot Plana [2010] EWHC 2759 (Comm) at [15].
3. The court was not bound to begin from the proposition that exceptional circumstances had existed at the earlier hearing. The earlier decision was merely one reasonably open to the deputy judge. The court therefore had to reassess the circumstances as a whole. Even on the defendant’s alternative approach, asking what had changed, the result was the same.
4. The mediation had taken place over some time and involved genuine engagement, but had ended without success. That was materially different from the earlier position and removed the principal basis for the stay. The termination was not shown to be in bad faith.
5. The evidence of a possible Indian government loan was thin, unattributed hearsay and lacked sufficient detail or source. It could not be given real weight. The defendant bore the burden of justifying the stay, and it was wrong to maintain the stay merely to allow a presently undischarged evidential burden to be discharged later.
6. The grounding of the Boeing Max aircraft was not an exceptional circumstance supporting continuation. It pre-dated the earlier judgment and was the type of commercial impediment which the contractual regime was intended to address. The high hurdle was not surmounted.

This was a first-instance decision on whether to continue a stay of execution previously ordered by Ms Dias QC following summary judgment. The court declined to continue the stay.