Peregrine Aviation Bravo Limited & Ors v Laudamotion GmbH & Anor

The court rejected the Claimants' case that Laudamotion (and Ryanair as guarantor) were in repudiatory breach or otherwise in default of the 2019 leases for four A320 aircraft. Key legal principles applied were contractual construction of default and delivery provisions in the leases, the interplay between (i) Article 3.2 (consultation and reasonable notice of a Scheduled Delivery Date), (ii) Article 6.2 (Lessee's right to refuse delivery if it can demonstrate Material Deviations at delivery) and (iii) Exhibit B (the delivery condition, including the requirement for an export Certificate of Airworthiness and related EASA documentation).

The court held that Peregrine’s tender of MSN 3361 on 7 May 2020 was invalid because the Lessor had not complied with Article 3.2 (no adequate consultation and not reasonable notice). In addition, Laudamotion had validly asserted a Material Deviation at delivery in relation to Exhibit B §4 documents (notably the Export Certificate of Airworthiness, the EASA compliance letter and the CAT.IDE matters) which were not provided to Laudamotion by that date. The judge also construed Article 24.2(n) (insolvency/suspension of payments) narrowly: general or negotiatory statements by Laudamotion/Ryanair in March–April 2020 did not constitute the clear, continuing written threat or suspension of payment sufficient to trigger that Event of Default, especially in light of the parties’ subsequent conduct and attempts to negotiate amendments.

Because no Event of Default was established, the Claimants were not entitled to terminate any of the 2019 leases and their claims failed; consequential quantification and guarantor issues therefore did not arise.

The claim concerned four 60‑month aircraft leases entered in 2019 (the 2019 leases) between members of the AerCap group and Laudamotion (guaranteed by Ryanair in respect of certain leases). Delivery was planned in March–June 2020 but the Covid‑19 pandemic disrupted plans. The Claimants alleged (i) that Laudamotion’s correspondence of March and April 2020 constituted Events of Default entitling termination under Article 24.2(n); (ii) that Peregrine validly tendered MSN 3361 for delivery on 7 May 2020 and Laudamotion unlawfully refused to accept it (and could not demonstrate any Material Deviations under Article 6.2); and (iii) that Laudamotion’s refusal caused cross‑defaults and justified termination of the remaining 2019 leases, entitling the Claimants to accelerated rents and other losses.

The court set out the key contractual terms: Article 3 (place and date of delivery, consultation and reasonable notice), Article 6 (delivery and the right to refuse in case of Material Deviations), Article 7 (conditions precedent to be provided by Lessor), Exhibit B (detailed delivery condition including documentary requirements in §4 – export Certificate of Airworthiness, EASA/CAT.IDE documentation), Article 8 (disclaimers and acceptance consequences), and Article 24 (Events of Default and remedies including indemnities and mitigation obligations).

The principal issues were (i) construction and application of Article 24.2(n) (whether Laudamotion threatened suspension of payments); (ii) whether Laudamotion was obliged to take MSN 3361 on 7 May 2020; (iii) whether the other three aircraft could have been delivered by their Final Delivery Dates; (iv) quantification of loss; and (v) Ryanair’s guarantor liability.

On construction, the judge applied standard principles (Arnold v Britton; Wood v Capita) and concluded Article 24.2(n) should not be read broadly: it requires a clear and continuing suspension or written threat to suspend payments (or equivalent insolvency‑type step) affecting existing debts or a category of them and indicative of real risk of insolvency or curtailment of creditors’ rights. The March and April 2020 letters were, in the factual context and against the parties’ subsequent conduct (including attempts to negotiate amendments and payments made under other leases), commercial negotiation letters not amounting to written threats of suspension sufficient to trigger Art 24.2(n).

On delivery of MSN 3361 the court held (i) Peregrine’s late fixing/tender (1/5 or 5/5 notice for 7/5 delivery) did not comply with Article 3.2: the Lessor had not consulted and had not given reasonable notice, so the tender was invalid; and (ii) Laudamotion legitimately relied on Exhibit B §4 documentary failures: the export Certificate of Airworthiness and related EASA/CAT.IDE documentation were absent on tender and that absence constituted a demonstrable Material Deviation under Article 6.2, giving Laudamotion the contractual right to refuse to accept delivery. The court rejected the Claimants’ argument that the documents needed only be furnished after a tender or that co‑operation failures by Laudamotion excused provision of the documents.

The judge further found that Laudamotion had not demonstrated other alleged Material Deviations at the time of tender and that the Claimants had not established they could have delivered the other three aircraft by their Final Delivery Dates absent Laudamotion’s alleged defaults. On these bases the court concluded the Claimants were not entitled to terminate the leases and dismissed the claims. The court therefore did not make a final award of damages; it addressed quantification and guarantor issues only as part of the analysis but they did not alter the conclusion of no liability.

First instance judgment: The claim is dismissed. The court held that (i) Peregrine’s tender of MSN 3361 on 7 May 2020 was invalid because the Lessors had not complied with Article 3.2 (no consultation and not reasonable notice); (ii) Laudamotion validly refused to accept MSN 3361 because Exhibit B §4 documents (export Certificate of Airworthiness, EASA compliance/CAT.IDE documentation) were absent and therefore a Material Deviation had been demonstrated under Article 6.2; (iii) the Defendants’ March/April 2020 correspondence did not amount to an Event of Default under Article 24.2(n); and (iv) therefore the Claimants were not entitled to terminate any of the 2019 leases and their claims for accelerated rents and related losses failed.