Saudi Arabian aircraft arrest: High Court upholds previous order on proper service for fractionally owned aircraft


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In Dubai Financial Group LLC v National Private Air Transport Services Company (National Air Services Limited) (2014 EWHC 4482 (Comm)), the Defendant (“NAS”) attempted to set aside a default judgment obtained by the Claimant (“DG”) in the English High Court in respect of a Gulfstream G450 aircraft following its arrest.

NAS, a Saudi Arabian company, had sold DG a share of a Gulfstream G450 aircraft, which NAS also operated on behalf of DG and was registered in Saudi Arabia. The dispute related to a sum of approximately USD$10m and was in respect of certain re-purchase terms and management fees for the aircraft.

Following a series of unanswered correspondence from DG to NAS, DG issued proceedings against NAS in December 2011. In addition to serving proceedings using the diplomatic channels in accordance with the English Courts’ Civil Procedure Rules, DG also attempted to serve NAS directly using a local Saudi Arabian lawyer after the process under the Civil Procedure Rules was exhausted.

NAS did not acknowledge service. DG applied and obtained judgment in default in the High Court in July 2013, including a declaration that there was nothing improper in the way it had served proceedings.

In October 2014, the aircraft landed at Luton airport and was arrested under an order executing the judgment in default.

In December 2014, NAS applied to the High Court to have the judgment in default set aside on the basis of irregular service and good arguable defence. The Court held that NAS had been properly served by DG, but did reduce the sum of the judgment in default by $750,000 in respect of the disputed management fees.

This case is important for both contentious and non-contentious practitioners when dealing with high value assets in exotic locations. Proper and complete transactional advice should be sought before an asset is acquired or disposed of.

Should an asset be subject of a dispute or proceedings, it is important that any dispute resolution procedure or rules set out in the transaction documents be followed, exhausted and respected.

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