Saudi Arabian Airlines Corporation v International Airfinance Corporation & Ors

On an application for an interim injunction, the court should ordinarily apply the conventional American Cyanamid approach and decide only whether there is a serious issue to be tried. Final determination of disputed contractual construction should be rare at this stage, particularly where the issue is novel, difficult, fact-sensitive or commercially complex. It may be undertaken only where the construction is sufficiently straightforward, simple and clear for safe resolution. Questions concerning contextual meaning, reasonable efforts, contractual materiality and the validity of default notices ordinarily require trial where they depend on factual and commercial analysis.

The claimant, a national airline, leased 49 aircraft from the defendants. It sought interim injunctive relief preventing reliance on, and further service of, notices of default under the leases, together with directions concerning the applicable notice period. The defendants did not resist some of the relief and accepted that damages would be an adequate remedy on the relevant assumptions.

The principal issues were whether the claimant had shown a serious issue to be tried concerning alleged breaches of the aircraft-part replacement provisions; whether those provisions were non-material covenants attracting 45 rather than 20 days’ notice; and what fortification should be required for the claimant’s cross-undertaking in damages.

1. Interim injunction principles. The court applied the conventional test established by American Cyanamid v Ethicon Ltd [1975] AC 396. The issue was whether the claimant had shown a sufficiently serious triable issue. The court did not finally determine disputed construction issues unless they were sufficiently straightforward, simple and clear for safe resolution at the interim stage.
2. Clause 9(e)(vi). The provision was permissory. It could provide the claimant with a factual defence to an alleged breach of clause 9(d), but a notice based on clause 9(d) was not defective merely because it did not address clause 9(e)(vi). Whether the claimant was using all reasonable efforts to replace temporary parts was fact-sensitive and realistically arguable.
3. Default notices. A composite notice supported by a spreadsheet was not invalid merely because it contained multiple complaints or because separate notices had not been served for each alleged breach. The notices supplied sufficient particulars for calculating the number of alleged breaches.
4. Reasonable efforts and materiality. Whether reasonable efforts required the claimant to order new parts, seek compliant pre-used parts, extend a scheduled maintenance check or use unplanned service stops required factual and commercial analysis. Whether clause 9(d) was a non-material covenant also required analysis of the lease as a whole and potentially aviation-industry evidence. These issues were not suitable for final resolution on the application.
5. The claimant therefore had serious issues to be tried concerning both the alleged breaches and the applicable notice period. The orders sought in paragraphs 2.5 and 2.6 of the draft order were granted. The question of fortification was considered in private and the judgment continued in private session.