UpdatePlaying for time – claiming to be a sovereign state

January 26, 2022

This matter stems from a settlement agreement entered into in June 2020. Surinam Airways (“SLM”) agreed to pay AELF MSN 242, LLC $4,125,000.00 by monthly instalments and in exchange, AELF MSN 242, LLC agreed to release its claim for breach of an aircraft lease agreement return conditions and a claim for a much larger amount.

SLM requested, and AELF agreed, that payments would begin in December of 2020, which gave SLM a payment “holiday” for six months, during Covid. SLM failed to make payments when due.

AELF issued proceedings in the Commercial Court in London.

In response to AELF’s claim, SLM raised a very technical argument that the airline was not served correctly under the English State Immunity Act because the airline is, according to the airline, a sovereign state.

This argument is wholly without merit.

SLM’s own evidence in support of its application, the witness statement of its chief legal officer, clearly states that SLM is an entity that is separate from the state.

Even if the airline were a state, it would not have immunity in relation to commercial activities.

The aircraft lease agreement, from which this dispute stems, contains an express waiver of sovereign immunity.

Even if SLM were a state and needed to be served in a specific way, the airline consented to service of process by the bailiff in Suriname.

It is clear that SLM is merely playing for time.

At the end of the day, regardless of whether service of process was or may need to be effectuated by a particular method, SLM breached its obligations to AELF. For that, SLM has offered no defence because it has none. To the contrary, the CEO has been quoted in the media as saying, “I’m going to solve the problem with the leasing company and this debt is just a legacy from the past of the previous management.

It has obligations, which it is continuously failing to meet.

AELF takes SLM’s breach of its contractual obligations and these delay tactics seriously: it has also instituted proceedings against SLM in Suriname to freeze assets in order to satisfy the judgment which AELF believes it will secure before the English court.

So far, the English Court has decided to “dismiss SLM’s application challenging the Court’s jurisdiction on the ground that it has submitted to the Court’s jurisdiction and, if applicable, on the ground that it has appeared in the proceedings within the meaning of section 12(3) of the State Immunity Act 1978.”

To deal with a further argument made by the airline that a state cannot submit to the jurisdiction by a common law waiver, the next stage of the proceedings is a hearing which will determine whether SLM is a state and, even if it is a state (which it is clearly not), whether it consented to service by collection of the documents initiating the proceedings from the bailiff in Surinam by the Manager of Legal Affairs of SLM pursuant to an appointment made by exchange of emails.

The judgment is AELF MSN 242, LLC (a Puerto Rico limited liability company) v. De Surinaamse Luchtvaart Maatschappij N.V. D.B.A. Surinam Airways Neutral Citation Number: [2021] EWHC 3482 (Comm)

It will be interesting to see how the tactics of SLM in this case impact on that company’s ability to transact future business with third parties.

Steven Loble of W Legal is representing AELF with Hannah Brown QC

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