Airbus SAS v Generali Italia SPA & Or, Court of Appeal - Commercial Court, October 22, 2018, [2018] EWHC 2737 (Comm)

Resolution Date:October 22, 2018
Issuing Organization:Commercial Court
Actores:Airbus SAS v Generali Italia SPA & Or
 
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Case No: CL-2018-000013

Neutral Citation Number: [2018] EWHC 2737 (Comm)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS

OF ENGLAND AND WALES

COMMERCIAL COURT (QBD)

Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL

Date: 22/10/2018

Before :

MRS JUSTICE MOULDER

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Between :

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Akhil Shah QC (instructed by DLA Piper UK LLP) for the Claimant

Benjamin Strong QC (instructed by Steptoe and Johnson UK LLP) and Angus Rodger Solicitor Advocate for the First to Third Defendants

Hearing date: 9 October 2018

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JUDGMENTMrs Justice Moulder :

  1. This is the reserved judgment on the application of the first, second and third defendants (the ``defendants'') dated 22 March 2018 under CPR 11 for an order that the English court has no jurisdiction to try the claims brought by the claimant (``Airbus'').

    Background

  2. Airbus entered into a purchase agreement dated 31 October 2005 with Air One S.p.A (``Air One'') for the sale and purchase of a number of Airbus A320-200 including the aircraft with the serial number 4249 (the ``Aircraft'') from Airbus. Following amendment, the purchase agreement is governed by English law with an ICC arbitration clause.

  3. In April 2008 Airbus, Air One and HSH Nordbank AG (``Nordbank'') entered into a consent agreement whereby Airbus agreed to the partial assignment by Air One of certain rights under the purchase agreement to Nordbank as security for certain financing.

  4. By way of a novation agreement dated 23 December 2008 the purchase agreement was novated in part to Aircraft Purchase Fleet Ltd (``APFL'') such that APFL became the buyer of 50 of the aircraft (such purchase agreement, as novated and as amended the ``Purchase Agreement''). That agreement was expressed to be governed by English law with an ICC arbitration clause.

  5. In December 2008 Airbus, APFL and Nordbank entered into a consent agreement whereby Airbus consented to the assignment by APFL to Nordbank of certain of its rights under the purchase agreement relating to 15 aircraft.

  6. By an assignment agreement dated 8 July 2010 (the ``Assignment Agreement'') APFL assigned absolutely to Mainstream Aircraft Leasing Ltd (``Mainstream'') certain rights under the Purchase Agreement including its right to take title to the single Aircraft and the benefit of the warranties given by Airbus pursuant to Clauses 12 and 13 of the Purchase Agreement. The Assignment Agreement was expressed to be governed by English law and had a submission to the jurisdiction of the English courts.

  7. Mainstream then entered into a sale and leaseback transaction with Jetstream Aircraft Leasing Ltd (``Jetstream''). Pursuant to a sale and purchase agreement dated on or around 8 July 2010 and a lease agreement dated on or around 8 July 2010 Jetstream purchased the Aircraft from Mainstream and leased it back to Mainstream.

  8. By a sublease agreement dated 6 July 2010, Mainstream agreed to sublease the Aircraft to Alitalia Compagnia Aerea Italiana S.p.A. (``Alitalia'').

  9. Jetstream granted security over the aircraft under a security assignment dated 30 December 2008 entered into with Credit Agricole Corporate and Investment Bank (``Credit Agricole'') acting as a security trustee pursuant to a facility agreement.

  10. On 8 July 2010 Airbus entered into an Airframe Warranties Agreement (the ``Warranties Agreement'') with Jetstream, Mainstream, Credit Agricole and Alitalia.

  11. On 29 September 2013 there was an incident when the Aircraft's right-hand landing gear failed to lower and the pilot was required to make an emergency landing with the landing gear partially retracted. The Aircraft sustained considerable damage. Although there was no loss of life an Italian court ordered Alitalia to pay around €30,000 in compensation to one of the passengers for injuries sustained.

  12. Alitalia was insured by the defendants (together the ``Insurers''). The fourth defendant is understood to be insolvent and is not represented in these proceedings. Alitalia made a claim under its insurance policy for its loss. The Insurers paid the insurance claim and became subrogated to Alitalia's rights. The amount of the indemnity paid by the Insurers was in excess of US$11 million.

  13. On 24 July 2017 the Insurers started proceedings against Airbus in Italy (the ``Italian proceedings''). However the fourth defendant has now discontinued its claim in the Italian proceedings and reference in this judgment to the ``Insurers'' shall be construed accordingly. The Insurers' claim is brought in tort under Article 2043 of the Italian civil code.

  14. On 9 January 2018 Airbus brought a claim in the English courts seeking declarations (at paragraph 28.1 and 28.2 of the Particulars of Claim) that the Italian proceedings fall within the scope of the exclusive jurisdiction agreement contained in Clause 13.2 of the Warranties Agreement. Airbus also sought declarations (at paragraphs 28.3 and 28.4 of the Particulars of Claim) that Airbus does not have any liability to the defendants for claims of alleged negligence and the defendants are limited to the remedies set out in Clause 12 of schedule 1 to the Warranties Agreement.

    Evidence

  15. In support of the defendants' application challenging jurisdiction, the court had witness statements of Veronica Ganzitti dated 22 March 2018 and 10 May 2018 and of Enzo Fogliani dated 10 May 2018 and 13 September 2018.

  16. In response the court had evidence in the form of witness statements from Stefano Modenesi dated 19 April 2018 and 27 September 2018 and from Sophie Brophy dated 19 April 2018 and 8 October 2018.

    Jurisdiction Clause

  17. Clause 13.1 of the Warranties Agreement provides that the agreement and any noncontractual obligations connected with it shall be governed by and construed in accordance with the laws of England. Clause 13.2 reads:

    ``The parties hereto irrevocably agree that the courts of England shall have exclusive jurisdiction to settle any disputes arising out of or in connection with this Agreement or any non-contractual obligations connected with it (including a dispute regarding the existence, validity or termination of this Agreement).''

    Issues for the court

  18. It is the defendants' case that the jurisdiction clause in the Warranties Agreement (Clause 13.2) relates to disputes regarding the Warranties Agreement itself i.e. the mechanism by which the benefit of the warranties is transferred to persons who are not party to the Purchase Agreement and not to disputes regarding substantive rights and obligations under the Purchase Agreement.

  19. Even if the jurisdiction clause does extend to disputes between Airbus and Alitalia arising out of the warranties, it is submitted for the defendants that the jurisdiction clause in the Warranties Agreement does not extend to the tortious claim by the Insurers under the Italian civil code for the following reasons:

    i) the claim which is advanced in the Italian proceedings is not a claim which is ``connected with'' the Warranties Agreement as it is not a claim which is within the scope of the warranty claim in particular because it is not a claim that the right hand actuator was defective;

    ii) the Insurers could amend the existing pleadings in the Italian proceedings and advance an independent claim which is not based on subrogation to the rights of Alitalia.

    Warranties Agreement

  20. Although the parties to the Warranties Agreement are Jetstream, Mainstream, Credit Agricole, Airbus and Alitalia, the immediate effect of the agreement is that Alitalia obtains the benefit of the warranties. Clause 3.4.2 reads:

    ``Each of the parties hereto hereby agrees in favour of [Alitalia] and [Airbus] that until receipt by [Airbus] of a notice in accordance with Clauses 3.1 or 3.2, [Alitalia] shall have the exclusive benefit of and shall be entitled to exercise all rights in respect of the Warranties.''

  21. Prior to this agreement being entered into, Mainstream had the benefit of the warranties by virtue of the assignment from APFL. Clause 2 of the Warranties Agreement provides that Airbus will grant to Jetstream, Mainstream or Credit Agricole a package of warranties following service of a notice in accordance with Clause 3. Clause 2 provides:

    ``... [Airbus] agrees to grant by way of the Warranty Confirmation to any one of the Transaction Parties... as may be specified in any Notice duly served in accordance with Clause 3... a package of warranties equivalent to such of the Warranties which as at the date of the Notice shall remain available...''

    ``Transaction Parties'' is defined to mean Jetstream, Mainstream and Credit Agricole. Clause 2 does not include Alitalia as a beneficiary of the Warranty Confirmation; Alitalia has the benefit of the warranties pursuant to Clause 3.4.2.

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