Acting contrary to the spirit and purpose of an injunction does not amount to criminal contempt

Events leading up the Contempt Application

FW Aviation (Holdings) 1 Limited (“FWA”) is part of FitzWalter Capital, a special situations fund. VietJet Aviation Joint Stock Company (“VietJet”) is a Vietnamese airline. The underlying dispute concerns four Airbus A321 aircrafts which VietJet originally leased under a complex financing structure (the Aircraft). In 2021, after VietJet fell into arrears on rental payments as a result of the COVID-19 pandemic and suspension of air travel in Vietnam, the FitzWalter group bought out the interest of the original lenders and lessors and sought to: (1) acquire the Aircraft; and (2) pursue substantial money claims against VietJet under the terms of the leases.

In August 2022, FWA commenced proceedings against VietJet seeking possession of the Aircraft and associated equipment. In November 2022, the parties agreed to a consent order which recorded VietJet’s agreement to FWA’s right to possession, custody and control of the Aircraft and its consent to the deregistration and export of the Aircraft. In November 2022, the Aircraft was in Vietnam.

During December and January 2023, FWA de-registered the Aircraft from the Vietnamese Civil Aviation Register and re-registered them in Guernsey. FWA then sought to export the Aircraft from Vietnam with a view of putting them back on the international aircraft leasing market.

In February – March 2023, some of the shareholders of VietJet brought proceedings in Vietnam against the Civil Aviation Authority of Vietnam (“CAAV”) and obtained an interim injunction suspending the de-registration of the Aircraft from the Vietnamese register and declaring that VietJet was entitled to have them re-registered so as to continue operating them (the “Vietnamese Proceedings”).

On 31 March 2023, and as a result of the Vietnamese Proceedings, FWA applied for an obtained a without notice injunction which prohibited VietJet from interfering with FWA’s right to possession, custody and/or control of the Aircraft (the “Injunction”). The Injunction was continued on 14 April 2023 and prohibited VietJet from:

(i) taking steps to reregister the Aircraft with the CAAV; and

(ii) taking possession of or operating the Aircraft either directly or indirectly or otherwise interfering with the Claimant’s right to possession, custody and/or control of the Aircraft’.

Discovery of VietJet’s letters

Following orders for specific disclosure, VietJet disclosed letters from May 2023 with the CAAV and the Vietnamese Customs Authority. Similar letters were sent in September and October 2023 (the “Letters”). In the Letters, VietJet challenged the ability of the Vietnamese authorities to issue and Export Certificate of Airworthiness where the Aircraft had been re-registered in Guernsey.

In the substantive trial on liability, Mr Justice Picken criticised VietJet for sending the Letters, which he characterised as an attempt to interfere with the export of the Aircraft and put pressure on FWA to sell or re-lease them to VietJet.

Amendment to the Contempt Application

On 13 August 2024, FWA issued an application to amend the Contempt Application. FWA alleged that in sending the Letters VietJet:

‘intentionally interfer[ed] with the administration of justice by attempting to circumvent the prohibition on VietJet from interfering with the Claimant’s right to possession, custody and/or control of the Aircraft under paragraph 1 of the Prohibitory Injunction.’

FWA made it clear that they were not asserting that VietJet had breached the terms of the Injunction. Rather, its case was that, by sending the Letters, VietJet indirectly undermined the rights conferred on FWA by the orders of the Court and that VietJet acted in attempted circumvention of the Injunction.

In response, VietJet argued that if could not be liable for contempt by attempting to circumvent the Injunction if what it had done was not alleged to be a breach of the Injunction.

The Court of Appeal thought that VietJet’s attempt to persuade the authorities in Vietnam to bar the export of the Aircraft might well, at least arguably, constitute an interference with FWA’s control of the Aircraft in breach of the terms of the Injunction. But this was not an argument advanced by FWA.

Distinguishing civil and criminal contempt

Contempts of court are classified as being either criminal or civil:

• Criminal contempt is an act which so threatens the administration of justice that it requires punishment from the public point of view.
• Civil contempt involves disobedience of a court order or undertaking by a person involved in litigation.

At the first instance hearing, FWA made clear that it did not contend that VietJet had infringed the Injunction by sending the Letters. On that basis, it could not be guilty of civil contempt. The case against VietJet was confined to an allegation of criminal contempt.

Criminal contempt

In some ways, the conduct which may amount to a criminal contempt is open ended. It potentially covers any conduct which intentionally impedes the administration of justice by frustrating the purpose of the Injunction.

The purpose of the Injunction was to protect FWA’s entitlement to possession, custody and control of the Aircraft. The Injunction prevented VietJet from interfering with that entitlement.

The Letters appeared to be a deliberate attempt to prevent the export of the specified Aircraft from Vietnam. The act was done with knowledge of the terms of the Injunction.

However, the case indicates that where the conduct complained of is limited to ‘a subversion of the purpose of the injunction’ without actually breaching its terms, there is no scope for holding an injunction respondent guilty of a criminal contempt.

Conclusion

The practical takeaway from this judgment is that applicants should cover all bases in the drafting of injunctions and include any action that would constitute a breach.  The rationale for this is obvious, given the serious consequences, including committal to prison, if contempt is established.

 If you would like further information and advice about acting contrary to the spirit and purpose of an injunction, please contact one of our Dispute Resolution solicitors via our online enquiry form.