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Thuý Hường wrote this article in Vietnamese and published it in Luat Khoa Magazine on March 18, 2025. Đàm Vĩnh Hằng translated it into English for The Vietnamese Magazine.

The legal dispute between Vietnamese budget airline Vietjet and UK-based FW Aviation (FWA) serves as a stark reminder of the enduring financial aftershocks of the COVID-19 pandemic on the global aviation industry. Though air travel has recovered, the legal and financial turmoil from the lockdown era continues to reverberate.

The lawsuit, brought by FWA against Vietjet, underscores complex issues of international commercial law, judicial authority, and transparency. It also raises a broader question: Do clear legal procedures and the recognition of international commercial norms bolster the authority of courts in resolving cross-border business disputes?

Summary of the Dispute At the heart of the case are four Airbus A321 aircraft operated by Vietjet under a complex financing arrangement known as a Japanese Operating Lease with Call Option (JOLCO). Instead of a direct purchase, Vietjet leased the planes from four Japanese investment entities, known as Special Purpose Vehicles (SPVs), which were funded by French banks BNP Paribas and Natixis.

When the COVID-19 pandemic struck in 2020, travel restrictions in Việt Nam disrupted Vietjet’s operations, causing the airline to fall behind on its lease payments. By October 2021, the banks had sold their financial positions in the leases to UK-based FitzWalter Capital (FWC).

As the new controlling party, FWC issued several termination notices and requested that the aircraft be returned to Australia. Vietjet dismissed the notices as invalid and continued to use the aircraft until September 2022 without paying rent. In response, FWC's subsidiary, FWA, filed suit in the Commercial Court of England and Wales on Aug. 26, 2022, seeking repossession of the aircraft and compensation exceeding $275 million.

As of March 2025, the court had ruled in FWA’s favor five times across 96 procedural actions, with a final ruling on the exact damages owed by Vietjet still pending. The complex case revolved around five pivotal legal issues:

Was the lease termination legal? Does FWC qualify as a “financial institution” under the lease agreement? Did Vietjet’s actions obstruct the export of the aircraft? Does the Cape Town Convention apply? Is Vietjet entitled to immunity from liability? Was the Termination Legal? During a hearing from June 4 to June 14, 2024, Judge Picken addressed the first key legal question: Was FW Aviation’s termination of the leases legal? FWA argued it had the right to do so after Vietjet breached its payment obligations, while Vietjet’s counsel cited contractual provisions and case law limiting this right.

Judge Picken's analysis focused on the nature of the deal itself. He emphasized that the aircraft lease was a Japanese Operating Lease with Call Option (JOLCO) transaction, a widely accepted norm in the aviation industry. He noted that these types of contracts are specifically designed to protect the investor's right to their money and that FWA's right to terminate should be interpreted broadly within this commercial context.

Ultimately, Judge Picken sided with FWA, concluding that their right to terminate the lease did not depend on a specific "event of default" but was a broader power to protect their investment. He dismissed the case law cited by Vietjet as only addressing procedural matters, not the substantive rights of the lessor. He further ruled that because FWA had the right to terminate, the notices it sent to Vietjet were automatically legally valid, a conclusion he supported with relevant case law to ensure comprehensiveness.

What Constitutes a "Financial Institution"? The second major legal battle in the case centered on whether FitzWalter Capital (FWC) could legally act as the security trustee for the leases. After the original banks sold the loans, they appointed FWC to this role. Vietjet objected, arguing that FWC was not a "financial institution" as required by the contract.

Judge Picken dedicated a significant portion of his ruling (Sections 194-317) to this complex question. His analysis sought to determine two things: whether FWC qualified as a contractual lender, and whether it was established primarily to exploit the UK-Japan double taxation agreement. Relying on international trade principles, OECD guidelines, and relevant case law, the judge carefully weighed the arguments from both sides.

Ultimately, Judge Picken concluded that FWC did satisfy the requirements. He based his decision on a broad definition of a "financial institution," citing the UK Court of Appeal case Essar Steel Ltd v The Argo Fund Ltd [2006]. That case defined a financial institution as any legally recognized entity conducting business in "finance and commerce," understood in a broad sense. Judge Picken ruled that FWC fit this definition, even though it is not a traditional bank or lending institution.

Did Vietjet Block Aircraft Export? The third major legal issue centered on whether Vietjet actively obstructed FW Aviation's attempts to repossess and export the aircraft. The dispute began after Judge Bryan issued an order on November 16, 2022, recognizing FWC's ownership and right to export the planes from Việt Nam.

After FWC notified Vietjet and the Civil Aviation Authority of Vietnam (CAAV) of the impending export, a minority shareholder of Vietjet, Silver Star (Singapore), filed a petition with the Hà Nội People’s Court. The petition questioned the legality of the CAAV cancelling the aircraft's registration, a necessary step for export. FWC accused Silver Star of having a special financial relationship with Vietjet and of using the Vietnamese legal system to deliberately delay the export.

At a hearing on May 17, 2024, the FWC requested that the court take temporary emergency measures to prevent Vietjet's actions. While Justice Christopher Hancock recognized FWC’s right to apply for such measures, he did not ultimately order interim relief.

However, after reviewing additional documents, Judge Picken delivered a definitive conclusion during the June 2024 hearing. He confirmed that Vietjet had indeed conducted a campaign to prevent the export of the aircraft from Việt Nam, intending to force FWC to lease the planes back to them.

Does the Cape Town Convention Apply? FWA sought to invoke the Cape Town Convention, an international treaty designed to expedite the recovery of aircraft, to seek damages. However, Judge Picken declined to apply the treaty in this case, ruling that there were already sufficient contractual grounds to adjudicate the dispute.

Is Vietjet Immune from Liability? Vietjet argued that FWC’s legal action was aimed at securing a windfall profit. The court flatly rejected this claim, affirming that FWC was merely enforcing its contractual rights. The judge noted that Vietjet had continued to fly the four aircraft for 390 days, completing 4,320 flights, all while failing to pay over $21 million in rent. Therefore, the court ruled that Vietjet was not entitled to any immunity from liability and that FWC had no obligation to resume business dealings with the airline.

The Authority of Law and the Courts The case raises important questions about legal authority and judicial transparency, particularly when comparing the British and Vietnamese systems.

In the UK, court proceedings are public, decisions are published in full, and the judge's reasoning is clearly laid out. The entire Vietjet-FWA case, for example, can be tracked in real-time via the British and Irish Legal Information Institute (BAILII), reflecting the UK judiciary’s commitment to procedural integrity. A UK judgment is methodical, detailing the facts, legal issues, arguments from both parties, and the judge's final analysis. Evidence is presented with specificity. For example, the precise amount of aircraft rental Vietjet owes FWC is listed as follows:

No.

Aircraft Registration Number

Total Flight Days

Number of Flights

Amount Owed (USD)

1

VN-A653

390 days

1,071 flights

$5,283,047.88

2

VN-A656

390 days

1,095 flights

$5,283,047.88

3

VN-A657

390 days

1,091 flights

$5,350,464.76

4

VN-A658

390 days

1,063 flights

$5,350,464.76

TOTAL

4,320 flights

$21,267,025.28

By contrast, Việt Nam’s judiciary provides very limited public access. A search of the Hà Nội People's Court website, for instance, yields no information on the case, and verdicts that are published domestically often lack the detailed legal reasoning and evidence found in UK judgments.

This difference in transparency extends to corporate disclosure. While FWC must adhere to strict UK disclosure laws—publishing audited financial reports and refraining from emotive language—Vietjet’s public statements to investors in Việt Nam have included inflammatory accusations against FWA. This reflects looser requirements under Việt Nam’s securities laws and an absence of clear standards for corporate public information.

Law or Policy? A Broader Legal Culture Clash The case highlights a fundamental clash in legal cultures. The UK court’s approach was rooted strictly in legal principles, contractual interpretation, and precedent, with no reported intervention from UK government agencies. In contrast, Vietnamese media coverage revealed the deep involvement of multiple government ministries in Vietjet’s dispute, reflecting a long-standing, state-led approach to market regulation that often blurs the line between law and policy.

This state-led approach has created persistent challenges for Việt Nam’s aviation industry, including administrative red tape and a lack of alignment with international legal frameworks. As the global aviation industry evolves towards more modern dispute resolution, the pressure to adapt is immense.

Now, as the parties await a final ruling on damages from the Commercial Court of England and Wales, the outcome of this case may serve as a major precedent for post-pandemic aviation finance disputes worldwide. More than that, it stands as a litmus test for the strength and reliability of international legal institutions in resolving complex, cross-border commercial conflicts.

Vietjet vs. FW Aviation: Disputes in Global Aviation and International Law

Thúy Hường

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