Novus Aviation v Onur Air Tasimacilik as

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Lawrence Collins,Lord Justice Wilson
Judgment Date27 February 2009
Neutral Citation[2009] EWCA Civ 122
Docket NumberCase No: A3/2008/1346

[2009] EWCA Civ 122






The President of the Family Division

Lord Justice Wilson and

Lord Justice Lawrence Collins

Mr Justice Aikens

Case No: A3/2008/1346

CASE NO.2007–1342

Novus Aviation Limited
Onur Air Tasimacilik as

Mr Robert Howe QC (instructed by Mischon De Reya) for the Defendant/Appellant

Mr Bernard Eder QC and Miss Alison A Green (instructed by Jones Day) for the Claimant/Respondent

Hearing date: February 3, 2009

Lord Justice Lawrence Collins

I Introduction


This is an appeal, with the permission of this court, from a judgment of May 19, 2008, in which Aikens J refused to set aside an order made by Tomlinson J, without notice, giving permission to serve proceedings out of the jurisdiction in Turkey.


Novus Aviation Ltd (“Novus”), the claimant, is a Bahamian company. Novus is a part of the Novus Aviation group which carries on business dealing with and trading in commercial aircraft. It has offices in Switzerland and the Lebanon. Its two principal operating companies are Novus Aviation Services SA, a Swiss company, and Novus Aviation SAL (Offshore), a Lebanese company. The group does some business through the United Kingdom, although that is not significant in this case.


The defendant, Onur Air Tasimacilik AS (“Onur”), is a Turkish company. Its head office and principal place of business are in Istanbul. It has carried on business as an airline since 1992 and is the largest private airline in Turkey. It currently flies to 14 airports in Turkey, and to over 65 airports across countries in the Middle East, Africa and Europe. It has flights to England, but has no office here.


Neither Novus nor Onur has a place of business in England, and none of the facts and matters that give rise to the present dispute took place in England.

II The factual background


In or about May 1999, Novus entered into discussions with Onur with a view to Novus securing business for Onur from an airline known to Novus as having a need for additional passenger capacity, but the identity of which would be disclosed by Novus to Onur only on the making of an agreement between them.


Novus and Onur entered into an agreement (“the July 1999 Agreement”) which is recorded in a fax dated July 21, 1999 from Onur in Istanbul addressed to Novus in Geneva. The fax referred to discussions and correspondence regarding “wet-leasing” of aircraft by Onur to a client of Novus, whose identity was yet to be disclosed to Onur.


A “wet-leasing” arrangement is an arrangement whereby an aircraft is both provided and operated by an aircraft operator, such as Onur, on what is referred to as an “ACMI” (Aircraft, Crew, Maintenance, Insurance) basis. The aircraft, crew, maintenance and insurance are all provided as part of the package, but the “wet-lessee” is required to provide all other services and, in particular, the fuel for the aircraft.


In the July 1999 Agreement it was agreed as follows: in consideration of Onur agreeing to “non-circumvention” and other terms, Novus would agree to disclose the name of the client; Onur would not enter into direct relations with the client, and not circumvent Novus on the proposed transaction for 12 months; if Onur and the proposed client entered into the transaction, Onur would appoint Novus as its exclusive agent for three years from the date of the letter, and pay a commission of at least 5% of the contract value. The fax provided by paragraph 5 as follows: “This letter shall be governed by and construed with English law.”


The client airline was Saudi Arabian Airlines (“Saudia”). As the flag-carrying airline of Saudi Arabia, Saudia plays a major role in the provision of transport for Muslim pilgrims visiting Mecca and Medina during the Hajj. Because some 2 million pilgrims visit Mecca in this period Saudia has a shortfall of aircraft. This period is in Onur's low season, and its surplus aircraft (and crew) are available for leasing.


Thereafter, Onur entered into various wet-lease agreements with Saudia and paid commission to Novus pursuant to the July 1999 Agreement.


On March 28, 2002, Novus and Onur agreed that the commission would be reduced to a figure of not less than 4%, and that the appointment of Novus would be extended for a further term of 3 years “upon same terms and conditions herein mentioned”. The amendment to the commission arrangement and the extension were recorded on an endorsement to the original fax signed on March 28, 2002 on behalf of Onur and on behalf of Novus. The extended agreement's term, therefore, would continue until March 28, 2005.


The parties met on September 11 and 12, 2003. This meeting was held at Le Mirador Hotel, Mont-Pelerin, Switzerland. It was attended by Mr Bagana, the Chairman and Chief Executive of Onur, Mr Kuzbari and Mr Khouja of Novus, and Mr Ralph Severin of Air Trails GmbH. The meeting is evidenced by minutes prepared by Novus and signed by the participants.


The minutes state that the purpose of the meeting was to review and evaluate the latest developments since the last meeting and to set up a plan/strategy for the future Hajj movements business. The meeting discussed the relative merits of the A300–600 and B747 aircraft, and the level of Novus' commission.


The minutes end by stating that “in view of all above, the following resolutions were adopted unanimously”, including (as No 4):

“Onur and Novus maintain same terms and conditions of cooperation, as per the existing ones, for all aircraft leased by Onur to Saudia Airlines for the coming eight years term”.


The minutes were signed by all of the participants, although there is some dispute (not material on this appeal) as to when the minutes were signed by Mr Bagana. He accepts that he signed them, although he says that he signed them without reading them through carefully and doing so in a great hurry. He said he trusted what had been prepared by Novus as being accurate and he did not pay much attention to what he was signing.


Novus' claim is that at the meeting it was agreed by Novus and Onur that the July 1999 Agreement should be extended to apply to all wet-leasing agreements and for a further term of 8 years, and that that was agreed or evidenced by Resolution No 4 in the minutes.


Novus says that it was agreed in November 2006 that the commission was increased from 4% to 5.5% to enable commission of 1.5% to be paid by Onur via Novus to two former executives of Saudia.


By letter dated March 10, 2007, Onur wrote to Novus to say that it “…has started to negotiate and sign wet-leasing contracts with the Saudi Arabian Airlines directly and for this reason we would like to point out that our existing contract by this new arrangements [e]ffective by 04 Feb 2007 has terminated”.

III The dispute


Novus has not accepted the alleged repudiation, and claims damages for Onur's continuing failure to pay the commissions due under the July 1999 Agreement as extended, in particular the sums due in relation to the arrangements made in 2006 between Onur and Saudia for the 2007 pilgrimages.


Novus applied for, and obtained, permission to serve the proceedings on Onur in Turkey under CPR 6.20(5)(c) on the ground that “the contract is expressly stated as being both governed by and construed in accordance with English law.”


The essence of the dispute is this. Novus says that at the 2003 meeting the parties agreed to extend the July 1999 Agreement to apply to all wet-leasing agreements and for a further eight years, to September 11, 2011; that the agreement to extend was agreed in and/or evidenced by the minutes, and in particular by Resolution No 4; that the parties plainly intended the July 1999 Agreement as extended to continue to be governed by and construed in accordance with English law; and that the remuneration rate would continue to be not less than 4%.


Consequently, the particulars of claim allege that Onur has refused or failed to pay sums due in respect of aircraft wet-leasing transactions with Saudia in respect of all invoices submitted from January 10, 2007 onwards. Novus claims its remuneration at a commission basis of 4% on a total contract value of the wet-leases of about US$51 million. The commission claimed is some US$2 million as at the date of the particulars of claim. There is an additional small claim in respect of another outstanding invoice.


Onur's case will be that no extension was agreed and consequently the July 1999 Agreement terminated in 2005 in accordance with the terms of the 2002 extension. Its evidence is that what was discussed at the meeting was a new and distinct proposal that Saudia would lease planes from Onur for the whole of the year, rather than for the period around the Hajj; Novus said that Saudia would be prepared to enter into a eight-year contract on ACMI terms in relation to Airbus A300 planes, and also another contract in relation to Boeing 747 planes for several years. Onur says that because some of these planes would need to be secured by Onur from other airlines, it would make a significant alteration to the existing relationship between Onur and Saudia.


Mr Bagana says that he was sceptical because contracts were usually not concluded for more than 2 years in the industry. He was therefore not surprised when Novus did not revert to him with any further information about such a relationship with Saudia. He says that “this...

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