Seizing Aircraft to Enforce Money Judgments
There have been a number of high profile cases recently which serve to highlight the value of aircraft as a means of enforcing money judgments. Even if a private jet is heavily mortgaged the inconvenience of having it grounded or the loss of revenue to a company deriving income from an aircraft can be enough to force a settlement. It is, therefore, a valuable tool in the arsenal of a judgment creditor trying to get paid. This article looks at one of the most recent examples that illustrates the difficulty with enforcing against an asset that is highly mobile and inaccessible. It also gives ideas as to how aircrafts could be tracked and located.
The Midtown Case
In August 2017, Mr. Justice Blair in the High Court in London handed down judgment in Midtown Acquisitions LP v Essar Global Fund Ltd & Ors [2017] EWHC 2206 (QB). The case concerned the seizure at London Stansted Airport of a luxury private jet worth in excess of US$ 60 million as part of the enforcement of a US$ 195 million New York judgment.
Midtown ascertained that a valuable Boeing 737-700, which had been fitted out by Essar as a luxury private jet, was at Lasham Airfield in Hampshire. A High Court Enforcement Officer (HCEO) instructed by Midtown appeared without notice before Master Eastman on 27 July 2017 and obtained a writ of control pursuant to CPR Part 83 and a warrant of entry pursuant to paragraph 15 of Schedule 12 of the Tribunal, Courts and Enforcement Act 2007. The address on the writ of control and warrant of entry was Lasham Airfield.
While the HCEO was on his way to Lasham Airfield that same day, he learned that the aircraft was in fact at London Stansted Airport. Despite having no warrant entitling him to enter the private terminal at the airport, he was able to gain entry and handed the pilot a copy of the writ of control. The following day, at a second hearing before Master Cook, the HCEO obtained a second warrant of entry, this time specifying London Stansted Airport.
The judge in the case had to decide two issues. The first issue was whether the HCEO had in fact taken control of the aircraft on 27 July 2017, in circumstances where the address on the warrant of entry was Lasham Airfield. The judge held that the steps taken to take control of the aircraft were not valid.
The second issue was whether the warrants of entry should be set aside on the basis that it would be unreasonable to allow the aircraft to be taken into the control of the HCEO because its sale could not be expected to realise any money. The aircraft had been valued at US$ 60.62 million but was mortgaged to secure borrowing totalling US$ 101.5 million. Execution against the aircraft would have resulted in all its proceeds after costs of sale being paid to the lender. Nevertheless, the court held that it was not unreasonable for a judgment creditor to seek to take control of the aircraft when, absent such control, it would likely leave the jurisdiction.
Tracking and locating aircraft
It is all well and good knowing or suspecting that a judgment debtor owns an aircraft, but it is something else identifying, locating and enforcing against that aircraft. Below are some top tips for tracking and enforcing against aircraft.
Obtaining registration details and flight history
If you know that the judgment debtor owns an aircraft and you have the registration details for the plane (i.e., the tail number), it is much easier to locate it. However, if you don’t have registration details for the aircraft, there are various steps you can take to identify and locate it (for example, by finding out where it is registered).
It is not unusual, however, for companies or high net worth individuals to hold aircraft via special purpose vehicles, so it is important to check who the registered owner is. If you have the registration number of the plane, you can usually check who the owner is by going to the aviation authority website of the country where the plane is registered. If you do not have the registration number and do not know where the plane is registered, you may be able to find information on amateur plane spotting websites (which can be surprisingly useful).
In some jurisdictions, aircraft owners can apply to have their flight details kept secret (and many routinely do). Most plane tracking websites subscribe to the FAA’s ASDI data feed and are thus required to comply with the FAA’s block list. However, there are an increasing number of companies setting up websites and databases without utilising the FAA’s ASDI feed, using data obtained from other sources instead. A number of these sites are not observing the FAA’s block list. It is therefore becoming more difficult for aircraft owners to keep their flight details secret.
Enforcement
It is important to build up a picture of how the target aircraft is used, and whether there is a pattern of movement which will assist in executing against it. For example, if a private jet is used to attend regular board meetings in the same location, it is easier to then plan to enforce at that location, as a local team can be put in place in advance and local court orders obtained.
It is essential to put in place an experienced team to handle both the legal and practical aspects of enforcement. Aside from obtaining the necessary court orders, there are numerous practical issues to consider, including insurance, storage, maintenance, whether support from the police or border agencies is necessary, liaising with national aviation authorities, and so on. Getting a good team onboard from the outset will greatly enhance the prospects of successfully enforcing against an aircraft in a manner that will hold up in court.
Joseph McCormick, Dispute Resolution Partner
