The Court of Appeal has upheld a ruling in favour of the liquidators of two Irish-based, Kremlin-owned, aircraft-leasing firms.
Last December, Mr Justice Rory Mulcahy ruled that the liquidators of GTLK Europe DAC and GTLK Europe Capital DAC were entitled to various declarations that effectively void several purported pledge agreements the firms’ parent claimed allowed it to take ownership of 37 aircraft worth some $2 billion.
The liquidators argued the parent, Joint Stock Company State Transport Leasing Company (JSC), had no legal entitlement to the aircraft, which belong to the firms in liquidation.
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Although it did not participate in the High Court case, JSC appealed the ruling. On Wednesday, the Court of Appeal held that JSC had no right to appeal, given it did not appear before Mr Justice Mulcahy.
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The court, comprising Mr Justice Seamus Noonan, Mr Justice Donald Binchy and Ms Justice Nuala Butler, decided to dismiss the entire appeal.
Giving the court’s decision, Mr Justice Noonan said the fundamental issue in the action was whether the appellant’s failure to appear “was deliberate, inadvertent or due to circumstances beyond its control”.
Liquidators Damien Murran and Julian Moroney, of Teneo Restructuring Ireland, opposed the appeal, arguing the failure to appear in the lower court was deliberate.
Their barristers, James Doherty SC and Stephen Byrne, submitted the appeal could not be maintained.
Lawyers for JSC rejected this argument and submitted that the company’s appeal should be allowed to go ahead. JSC claimed sanctions imposed on Russian companies made it extremely difficult to obtain the services of Irish lawyers to represent it in the High Court.
In its main appeal, JSC planned to argue the Irish High Court lacked the jurisdiction to consider the matters before it and therefore its decision to grant the declarations was flawed and should be set aside.
Mr Justice Noonan said the appeal court was satisfied the liquidators’ preliminary objections were valid and determinative of the appeal.
He added that he was “entirely satisfied” the appeal was not brought bona fide by JSC but was “tactical” and the clearest abuse of process.
The Court of Appeal said it was dismissing the appeal in its entirety and making a legal costs order in favour of the liquidators.
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In its decision last December, the High Court found the purported pledge agreements were void and unenforceable as a matter of Irish law. The judge ruled that the liquidators retain title to the aircraft.
The agreements were allegedly entered into in March 2022, two weeks before JSC became the subject of EU sanctions imposed after Russia invaded Ukraine.
The court noted the liquidators do not expect to recover the aircraft, which are all believed to be in Russia, and that the declarations will be used as part of insurance claims made by the liquidators.
JSC’s lawyers had said in correspondence that it would not get a fair hearing in this jurisdiction and argued the matter should be determined by the Russian courts. The High Court rejected these contentions.
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