The dispute in FW Aviation (Holdings) 1 Limited v VietJet Aviation Joint Stock Company1 has been decided through three substantial judgments of the English Commercial Court (“English Court”). Together, they address whether the aircraft leases were validly terminated, sums payable as a result of termination, and the extent to which damages could be claimed for losses arising from the condition, detention and delay in eventual export of the aircraft.
The first judgment2 dealt principally with termination and liability. (“Termination Judgment”). The second judgment3 decided the principal contractual payments following termination (“Contractual Payment Judgment”). The third and latest judgment considers the remaining claims in contract and tort. This article considers the reasoning in the three judgments.
Background
The proceedings concern two Airbus A321-271 NEO aircraft and two Airbus A321-211 CEO aircraft delivered to VietJet in 2018 and 2019 (together, the “Aircraft”). Each was leased through a Japanese Operating Lease with Call Option, or JOLCO. As with most JOLCOs, Japanese equity investors financed c.25% of the acquisition cost and syndicated lenders supplied c.75% as debt. Japanese special purpose companies owned the Aircraft and leased them to VietJet-controlled special purpose companies, which sub-leased them to VietJet. VietJet had options which, if exercised in accordance with the leases, would allow it to ultimately acquire the Aircraft.
Following the onset of the COVID-19 pandemic, VietJet missed a number of rental payments. The debt financing for the two aircraft types was administered separately. Natixis and BNP Paribas, acting as facility agent and security trustee for the NEO and CEO aircraft, respectively served termination notices. At the termination dates, unpaid rent across the Aircraft was c.US$8.1 million.
In October 2021, FitzWalter Capital Partners (Financial Trading) Limited (“FWC”), acquired the outstanding loans from the lenders. FWC thereafter assigned certain claims under the transaction documents to FW Aviation (Holdings) 1 Limited (“FWA”). Separate FitzWalter entities acquired title to the Aircraft.
VietJet disputed the terminations and assignments. FWA commenced proceedings before the English Court in August 2022. The Aircraft remained in VietJet's possession and operation for about a year after termination without rent being paid. Under a consent order possession was delivered to FWA in December 2022 on an “as is, where is” basis. Export took considerably longer, the Aircraft left Vietnam between June 2024 and March 2025.
Termination Judgment
The English Court held that the leasing of the Aircraft had been validly terminated, and that FWA had taken valid assignment of rights, such that it had standing to bring the claim. The judgment required payment of c.US$11.3 million in accrued debts, principally pre-termination rent.
An important issue was relief from forfeiture. VietJet sought equitable relief to prevent FWA from enforcing termination. VietJet argued that consequences of termination were disproportionate to the arrears particularly given the financing nature of the JOLCO arrangements and the purchase options over the Aircraft. The Court accepted that relief from forfeiture was available in principle but declined to grant any relief. The Court held that the termination consequences were part of the contractual bargain and emphasised the importance of commercial certainty in sophisticated aircraft leasing transactions.
Contractual Payment Judgment
The second judgment addressed the principal financial consequences of termination. The English Court held that the contractual termination amounts were payable for all four Aircraft.
VietJet argued that the termination payment provisions were unenforceable penalties because they entitled FWA to receive the termination sums and also recover the Aircraft. The English Court rejected the argument holding that the termination payment protected legitimate interests created by the JOLCO financing structure, including the interests of the lenders as well as the investors, and were not out of all proportion to those interests.
Remaining Contractual and Tort Claims
The third trial concerned a wide range of further losses said to have arisen after termination and redelivery, including repair and maintenance costs, storage and export expenditure, lost rent, claims in conversion and enforcement costs. The judgment is significant for its treatment of the relationship between specific contractual remedies, general indemnities, assigned rights and proof of loss.
Specific remedies and general indemnities
VietJet argued that the provisions dealing specifically with termination and redelivery formed a complete code, leaving no room for additional claims under the wider indemnities. The Court rejected the broad submission and held that specific termination remedies did not exclude remedies and indemnities expressly contemplated for different losses. At the same time, it emphasised that a general indemnity could not be used to enlarge a remedy which the contract had already fixed for the same loss. The leases permitted cumulative remedies, but not double recovery.
That distinction allowed FWA to recover losses which were genuinely additional to the termination values and post-termination rental, while preserving the contractual limits applicable to losses already awarded.
Assignment and the capacity in which loss was suffered
The outcome differed markedly between the NEO and CEO aircraft because FWA had acquired different rights. For the NEO aircraft it had acquired rights to the aircraft, including certain rights which were described as “Excluded Property”. These rights included, ability to pursue certain claims including for general indemnity, for putting the Aircraft in return condition, which it was not able to do in respect of the CEO aircraft, as FWA had not acquired the corresponding Excluded Property rights.
Export delay and causation
The Termination Judgment had found that VietJet sought to obstruct or interfere with the export process through shareholder proceedings and correspondence with Vietnamese authorities. The English Court nevertheless held that evidence at the third trial did not show that those actions materially caused the period of export delay. An intention to impede the process was not proof that the attempt produced the loss claimed.
That conclusion did not defeat the relevant NEO indemnity claims. The Court found that FWA had acted reasonably in dealing with the aircraft and rejected VietJet’s principal criticisms of its conduct. The delay was connected with matters including the condition of the aircraft, maintenance requirements, engine-shop availability and the regulatory and customs processes required for export. Given the indemnity's extended causal language, which did not require a proximate causal connection with VietJet’s conduct, losses relating directly or indirectly to deregistration and export were held to be recoverable.
Return condition and the measure of recovery
It was common ground that the NEO aircraft had not been returned in the condition required by the leases. The Court held that the contractual return-condition indemnity covered costs which had actually been incurred. It did not support an award for hypothetical work which had not been carried out. The recoverable heads included agreed repair expenditure and the cost of an engine shop visit, together with other maintenance-related items established at trial.
FWA also advanced diminution in value claim as an alternative measure of claiming actual cost of restoring the Neo aircraft to the contractual return condition. The claim was the difference between the aircraft in return condition and their actual condition they were on redelivery. The English Court accepted that such a measure was available in principle, subject to expert evidence being adduced and proved, while clarifying that this was an alternative to recovery of the relevant repair costs, not an additional award for the same physical defects. This approach was consistent with the Court's wider insistence that separate remedies could coexist but could not compensate the same loss twice.
Conclusion
Read together, the three judgments show how English law applies familiar principles of termination, penalties, relief from forfeiture, contractual interpretation, assignment, causation and proof of loss to a complex aircraft financing structure. The Court upheld the terminations and enforced substantial negotiated termination values because they protected the legitimate interests inherent in the JOLCO arrangements. It also recognised that further losses could fall within broad indemnities, provided they were distinct from losses already compensated and were claimed by the party holding the relevant right.
Market commentary has generally regarded the judgment as a significant decision on the scope of losses that may be claimed and recovered following lease termination, delayed repossession, and return condition breaches. The judgment is also seen as providing valuable guidance on the operation of broadly drafted indemnity provisions in aircraft leasing transactions. Commentators have noted that, while broad indemnities can afford substantial protection to lessors, a lessor must nevertheless demonstrate that the relevant loss falls within the scope of the contractual language, is not hypothetical, and that the amount claimed is supported by adequate evidence.
Footnotes
1. [2026] EWHC 1996 (Comm)
2. FW Aviation (Holdings) 1 Limited v VietJet Aviation Joint Stock Company [2024] EWHC 1945 (Comm)
3. FW Aviation (Holdings) 1 Limited v VietJet Aviation Joint Stock Company [2025] EWHC 928 (Comm)
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