UK: Global Knafaim Leasing Limited ("GKL") and CGTSN Ltd v The CAA and Others (11 June 2010)

Last Updated: 6 July 2010
Article by Zohar Zik

Powers to impose a 'fleet lien', revisited.

In this recent case, a claimant leasing company failed to challenge the imposition of a statutory fleet lien against its aircraft on the basis that it was contrary to the Human Rights Act 1998 and anti-competitive.

The background facts

GKL owned and leased an aircraft (the "Aircraft") to the Canadian airline, Zoom Airlines Inc ("Zoom"). On 27 August 2008, Zoom collapsed and filed for Canadian administration owing substantial amounts for airport charges and air navigation charges. On 28 August 2008, the Aircraft was detained by BAA and the CAA for charges relating not only to the Aircraft but also to other aircraft in the Zoom fleet.

In order to release the Aircraft, GKL paid over US$2 million of which, it is estimated, only about 20 per cent related to charges incurred by the Aircraft. The balance related to charges incurred by aircraft in which GKL had no interest at all. It was that extension of the charges beyond the Aircraft which GKL considered to be unfair and unlawful.

The statutory framework

A 'fleet lien' is a statutory power. For BAA, this power is set out in Section 88 of the Civil Aviation Act 1982. For the CAA, an equivalent power is set out in Section 83 of the Transport Act 2000. Both statutes permit detention as against (i) the aircraft in respect of which the charges were incurred (whether or not they were incurred by the person who was the operator at the time the detention begins); or (ii) any other aircraft of which the person in default is the operator at the time when the detention begins.

In this case, the fleet lien was exercised under the second limb because GKL had not terminated the lease and Zoom was therefore still the operator of the Aircraft. Had GKL terminated the lease before the detention, it would have been liable only under the first limb to discharge monies owing in respect of the Aircraft. However, this did not happen and, because Zoom was insolvent, GKL had to pay all the fleet charges in order to have the Aircraft released and without having any realistic chance of recovering those amounts from Zoom (or anyone else, for that matter).

The claim

GKL challenged the detention of the Aircraft for charges incurred in relation to aircraft in the Zoom fleet that GKL did not own. It did not challenge detention for charges owed in respect of the Aircraft, nor did it question the detention power as against an operator for fleet debts under the second limb. Interestingly, the use of the words "either" and "or" in the drafting of both statutory provisions seems to suggest that the powers conferred there under are disjunctive. However, those powers have always been construed as conjunctive, giving power to detain more than one aircraft in respect of unpaid charges.

GKL argued that, given that Zoom was insolvent, it was unfair and disproportionate to detain the Aircraft as a means of compelling GKL to discharge all outstanding fleet charges, otherwise than in exceptional circumstances. As such, it was contrary to the Human Rights Act 1998, as well as anti-competitive. GKL sought to rely on a number of cases including R (FTO) v HM Treasury [2008] STC 2524, in which the court was concerned with the doubling of Air Passenger Duty on short notice.

The judge did not accept GKL's claim. Recognising that airports and air navigation authorities fund themselves primarily through the collection of airport and air navigation charges, it was considered to be in the public interest to ensure to the greatest possible extent that those charges are paid. The judge also emphasised that airports and air navigation authorities must allow airlines to access their facilities and managed air space but have no means for validating those airlines' solvency. This, he noted, was in stark contrast to the position of lessors who not only can monitor lessees' financial position by accessing public records and lessees' own financial information (as is standard, GKL had the power within the lease with Zoom to obtain information from Eurocontrol on outstanding charges, which GKL did not in fact use), but also can select which airlines they are prepared to deal with and negotiate appropriate security arrangements as part of their lease transactions.

Accordingly, the principle that lessors should pay rather than the airport or air navigation authority was considered by the judge to be perfectly reasonable. The circumstances of this case were not exceptional and, therefore, insufficient to render the exercise of the fleet lien power unfair or disproportionate.

GKL has, however, been granted permission to appeal.


Generally, this decision is bad news all around. Although history tells us that the imposition of a fleet lien is rare as against owners - according to the CAA, excluding this case, this has only happened once since 2000 - lessors are bound to recognise that the outcome of this case could have been much worse had the airline in question been larger than Zoom. Consequently, lessors would be advised to be more proactive in their financial monitoring of their lessees. They may well wish to extend their lease powers to obtain information from Eurocontrol and the like more frequently. This would add to the administrative burden on lease managers on both sides of the lease and would probably have cost implications as well (which, invariably, fall on the lessee). In addition, lessors may seek to increase the security deposit amounts they require from lessees and may seek to interfere with lessees' operational activities by preventing them from operating in locations where the 'fleet lien' powers are particularly potent. Most disconcertingly, however, lessors may from now on be tempted to terminate leases early, which could have a significant adverse impact on lessees, especially in cross default situations

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.