Saudi Arabian Airlines Corporation v Sprite Aviation No. 6 DAC

In construing a contractual time limit, the question is whether time was intended to be essential for the particular term, viewed in the contract’s full context. A requirement to provide documents may be a condition precedent to claiming payment without making late provision permanently fatal to that right. That severe consequence requires clear wording or necessary implication. Modern analysis generally treats contractual obligations as innominate or intermediate unless a contrary intention is established. Commercial practice may be relevant evidence where competing constructions produce materially different consequences.

The claimant lessee sought maintenance contributions from the defendant lessor under an aircraft operating lease. The lease required the lessor to contribute to specified maintenance costs upon receiving, within six months after commencement of the work and before the expiry date, an invoice and supporting documentation reasonably satisfactory to it.

The court considered a preliminary issue directed by Foxton J: whether the lessor remained obliged to pay if the documentation was not received before expiry, including whether clause 15.6 made time of the essence. The maintenance work and adequacy of the paperwork were reserved for a later trial.

1. Preliminary issue not finally determined. The matter was allowed to proceed to a full trial, where construction arguments could be renewed and expert evidence on market practice considered if admissible.
2. Time of the essence. Whether time is essential concerns the particular contractual term, not the contract as a whole. The modern tendency is to construe obligations as innominate or intermediate terms unless the contract clearly indicates otherwise. Even where time is essential, the usual consequence is a right to terminate for untimely performance. Because the lessor had not terminated the lease, it was unnecessary at this stage to decide whether clause 15.6 made compliance with clause 7.2 essential (paras [47]-[48]).
3. Condition precedent. The provision of invoices and supporting documents was a condition precedent to any entitlement to claim reimbursement. It did not follow that late provision permanently extinguished the right. Treating substantial maintenance reserves as irrecoverable after a short delay was commercially unlikely and disproportionate absent clearer language. The closest analogy was the treatment of rent-review machinery in United Scientific v Burnley Council [1978] AC 904 HL (para [49]).
4. The court declined to reach a final construction because evidence of aviation-market practice might assist. The parties had advanced opposed accounts of the commercial context, and no evidence was then available to resolve them (paras [44], [50]).

The preliminary issue was directed by Foxton J on 9 June 2023. This was a first-instance Commercial Court decision; no appeal or earlier merits determination is stated.