Aeroflot case fixed for Order on Friday

The case related to the Russian aircraft which was grounded on 2 June on a court order granted by Hon. Justice Harsha Sethunge of the Commercial High Court, was taken up on 5 July for the interim injunction inquiry.

The Plaintiff who is the owner of the aircraft, Celestial Aviation Trading filed action seeking interim relief in the Commercial High Court to preserve their aircraft which is the subject matter of the dispute with Aeroflot, the Russian carrier, until the determination of the arbitration instituted in London, by seeking an enjoining order against Aeroflot preventing them from operating, handling, taking off the ground the identified aircraft and to prevent them from removing any parts, equipment systems and modules.

The enjoining orders were granted by Court on 2 June and given the urgency the said order was communicated via telephone and facsimile by the court registry as directed by Court, to the 2nd Defendant, Acting Head of Air Navigation, N.C. Abeywardena. The Defendant sought to have the enjoining orders suspended on 3 June however when the matter came up before Court on that date it was clarified that there was no enjoining Order against the 2nd Defendant.

On the second application made by the Defendants, the Enjoining Orders were suspended on 6 June and the aircraft left Sri Lanka soon thereafter. The case was thereafter fixed on 28 June for the Defendants to file their objections in relation to the interim injunction application of the Plaintiff.

The Attorney General appearing for the 2nd Defendant filed their objection in advance and sought to make submissions in Court on 28 June seeking a dismissal of the case. On 28 June Hon. Justice Harsha Sethunge accepted the objections filed by the Defendants and fixed the matter for inquiry on 5 July. 

On 5 July the case came up for the inquiry before Hon. Justice Sumith Perera who has recently assumed duties in the Commercial High Court. President’s Counsel appearing for the Plaintiff informed Court that a motion was filed in Court informing that the Plaintiff no longer wishes to pursue the interim injunction application and sought to have the case fixed for the Defendants to file Answer to proceed to the trial stage of the case. Counsel appearing for Aeroflot said he has no objection to the withdrawal of the interim injunction application subject to costs. 

Counsel appearing for the Defendants thereafter proceeded to make submissions on whether or not court has jurisdiction to hear and determine this case amidst the Plaintiff’s objection that they must follow proper procedure. Counsel for the Plaintiff submitted that if the Defendants wish to raise an objection, they may do so by first filing Answer and the matter could be gone into thereafter as the matter was only fixed for interim injunction inquiry on that date.

Court, however, was of the view that the Defendants’ submissions on the preliminary objection could be heard at that point and Counsel for the Defendants made submissions stating that the Commercial High Court has no jurisdiction to hear this matter referring to the legal provisions and decided cases.  Deputy Solicitor General also stressed that Sri Lanka is currently facing the darkest of times and further submitted that this matter is against the public policy of Sri Lanka whilst seeking a dismissal of the case.

After hearing both counsel for the Defendants court provided the opportunity to the Plaintiff’s Counsel to make his submissions on the point of jurisdiction. Plaintiff’s Counsel explained the background to the case and submitted that this is solely a matter between two entities, one incorporated in Ireland and the other in the Federation of Russia and that there is no involvement of the State in the matter before Court. Counsel further emphasised that there cannot be a state interference in a purely commercial matter between two contracting parties.

Countering the argument raised on public policy Counsel submitted that this is a matter between two foreign entities which has no bearing on the public policy of Sri Lanka. Counsel explained to Court the manner in which the commercial High Court is vested with jurisdiction to grant interim relief in order to preserve the subject matter of a dispute referred to arbitration until the constitution of the arbitration tribunal. 

Counsel also referred to the case law which has already decided this point of law. Counsel submitted that the aircraft was flying out of Russia carrying passengers only to Sri Lanka and what was sought in Sri Lankan court is a mareva injunction to secure the claim in the arbitration and such injunction could be sought where the asset was found in order to preserve it.

Referring to the relevant legal provisions that confer jurisdiction on local courts, Counsel also drew court’s attention to the Lease agreement between Aeroflot and Celestial Aviation where parties have expressly agreed to seek at any time from any court in any jurisdiction any provisional, interim or conservatory relief against the other including preservation, custody or detention of property and injunctive relief.  

After hearing submissions made by all the parties Hon. Justice Sumith Perera directed parties to file their written submissions on 8 July and informed that the order on whether or not court has jurisdiction to hear the matter will be delivered on 15 July.