Fibula Air Travel SRL v Just Us Air SRL

A contractual audit condition is construed objectively in its contractual and commercial context. Where the agreement does not define the audit, the parties’ conduct may identify the audit intended. A successful audit means one that gives the relevant operator legitimate reassurance that the lessor complies with applicable regulatory requirements and permits an approval application to be made.

A regulatory approval clause may suspend performance of obligations dependent on approval without preventing the contract from coming into force. Clear wording is required before a condition is treated as preventing the contract’s formation. Payment obligations accrued after the successful audit remained payable, subject only to the contractual adjustment mechanism.

Fibula was the charterer under an aircraft wet-lease agreement with Just Us. Corendon Turkey and Corendon Malta were the lessees. Fibula disputed liability for the minimum guaranteed lease payments, relying principally on an alleged absence of a successful audit and the failure to obtain Turkish, Romanian and Maltese regulatory approvals.

The proceedings had followed earlier interlocutory and summary decisions, but the trial concerned Just Us’s counterclaim for the scheduled lease payments. The central issues were the meaning and effect of the audit and approvals clauses, allocation of regulatory responsibilities, whether the Lease came into force, and whether Fibula was estopped from advancing its defences.

1. Disposition. Just Us succeeded on its counterclaim. Fibula was liable for the scheduled Due Payment, alternatively for equivalent damages. Interest and consequential matters were left for agreement or further hearing.
2. Parties and regulatory responsibilities. “Lessee” meant Corendon Turkey and Corendon Malta, not Fibula. Fibula was the Charterer. Corendon Turkey was responsible for obtaining Turkish DGCA approval under SHT Leasing, and Corendon Malta was responsible for any Maltese approval. Just Us had to obtain from the Romanian CAA a letter containing the Operational Responsibilities Statement.
3. Audit. The pre-agreed audit was the audit conducted on 26 and 27 February 2020. A successful audit meant one which reassured Corendon Turkey that Just Us complied with the applicable SHT Leasing requirements and permitted an application to the DGCA with a legitimate expectation of approval. The audit was complete when the report was signed. Outstanding corrective action, the absence of a Turkish line-maintenance agreement, and further documents did not prevent success.
4. Approvals clause. The Lease came into force on execution. The approvals clause was a condition precedent to performance of obligations dependent on regulatory approval, not to the validity or formation of the Lease as a whole. Approvals had to be in place by 31 March 2020. Absence of approval meant that the relevant flights could not be performed, but did not undo accrued rights.
5. Payment. The payment obligation accrued on 27 February 2020 after the successful audit. The Due Payment was unconditional, subject to the contractual adjustment for block hours reduced by Just Us’s default. Fibula failed to establish that the absence of approvals or the Romanian CAA letter caused such a default or reduced its accrued liability.
6. Estoppel. Although the estoppel issue was unnecessary to the result, Fibula was not estopped. Just Us could not show that Fibula knew the facts founding the Audit Defence or Approvals Defence while making the alleged representations or participating in the common assumption.

The judgment itself was a first-instance trial decision. It records earlier interlocutory, summary and permission decisions in the same litigation, including [2022] EWHC 731 (Comm), [2023] EWHC 1049 (Comm) and other procedural decisions.