Legalflyer
July 2012

Aircraft financing in the debt capital markets

As the European sovereign debt crisis and new regulations continue to cripple bank lending to the sector, airlines and operating lessors are increasingly looking to the debt capital markets for an alternative source of finance.

There are a number of reasons why the debt capital markets may be a viable source of finance for the aircraft industry. First, European banks, which have been the main source of aviation funding in recent years, are scaling back their activities and restructuring operations to meet new regulatory guidelines imposed by the banking authorities. Banks must also reduce risk-weighted assets in order to comply with tier one capital requirements set down by the Basel III accord. Since spring 2011, a number of European lenders have retreated from the aviation finance market. The gap is being filled in part by Asian lenders like Development Bank of Singapore, with export credit agencies (“ECAs”), which supply government support for aircraft financing, continuing to take a large role. The continued participation of the ECAs and banks will, however, come at a higher price as new Aircraft Sector Understanding (“ASU”) rules and Basel III have made the provision of government guarantees and bank finance, respectively, more expensive than in the past.

At the same time, pension funds and insurance companies are looking for high quality, long term assets to invest in and this opens the door for more capital markets transactions as the airline industry is generally thought to be a growing sector and commercial aircraft a relatively safe, high quality asset against which to lend.

There are a range of debt capital markets options available to airlines and operating lessors, from plain vanilla unsecured corporate bonds to bonds secured over pools of aircraft assets. The size of financing provided can range from small financings for the purchase or refinancing of a single aircraft to large multi-airline and multiaircraft portfolio securitisations. The different options are examined in more detail below.

Corporate bond

The corporate bond market has long been used by airlines and operating lessors to raise funds both in the public and private markets. This is notably the case in the U.S. market where capital markets funding is well established but also increasingly in the European market.

Bonds may be issued by airlines directly or through a special purpose vehicle; they may also be issued by lessors or in some cases used by lenders active in the aircraft lending sector to raise funds in order to lend to aircraft owners or purchasers. Examples of these borrowers in the last year are Emirates (U.S.$1 billion public issue), Aircastle (U.S.$800 million private placement) and DVB Bank SE (€500m public issue).

Bonds may be unsecured or secured over aircraft and/or associated lease agreements. To date, many of the bonds issued for the purchase or refinancing of aircraft have been in the private placement market in the U.S. Private placements offer the flexibility often associated with bank lending as the ability to secure waivers or amendments typically is easier and quicker with banks or one or a small number of institutional bond investors.

Compared to traditional bank debt, corporate bonds offer a number of advantages to airlines and operating lessors, including:

• access to a wider and more diverse pool of international investors;
• ability to raise finance at potentially cheaper rates of interest;
• longer tenors, which can be advantageous to companies with longterm capital expenditure needs;
• lighter covenants; and
• no encumbrance over the assets of the issuer as investors will in most cases not require security.

Bond financing may, however, involve higher upfront costs, particularly if the bonds are sold to a large number of investors and/or listed on a stock exchange as this will generally require the production of an offering document containing financial and other information about the airline/lessor and any assets being used as security for the bonds. In addition, issuers may find the process of obtaining waivers and amendments more cumbersome as they will typically have to negotiate with a bond trustee acting on behalf of bondholders some or all of whose identities are not readily known. As noted above, this is less of an issue in the case of smaller capital markets issues which are often privately placed with a small number of investors in the U.S.

Convertible Bonds

Convertible bonds have also frequently been used by airlines in the past.

Convertible bonds are bonds that give the investor the right to convert the debt it holds (i.e. the principal amount it has advanced to the issuer) into newly issued shares of the issuer or of another company within the issuer’s group. If and when converted, the principal amount of the bond is repaid to the investor in the form of shares instead of cash as would be the case for a nonconvertible bond.

Convertible bonds can be an attractive financing option for airlines because offering investors an equity component would normally result in the convertible bonds bearing a lower coupon rate while allowing the investors to benefit from a potential capital appreciation if the underlying shares perform in the market.

On the other hand, the approval process can be more cumbersome for an issuer and the issuer may need to obtain, amongst other things, shareholder approval.

An example of an airline-issued convertible bond is Air Berlin’s €150 million issue in 2011.

ECA-guaranteed bonds

These are bonds supported by guarantees given by ECAs and have become a popular financing tool for airlines and operating lessors in recent years. The first ECA-guaranteed bond financing was closed in 2009 and since then there have been a number of ECA-supported bond issues for aircraft worth more than $3 billion, including one supported by a European ECA. Most ECA-supported bonds have in the past been sold to large U.S. institutional investors through the private placement route although a European market is also a possibility in light of the ongoing decline in bank lending and the exit of traditional lenders from the aircraft financing market.

ECA-guaranteed bonds may be secured over aircraft and/or associated lease agreements or unsecured (though, in this event, the ECAs will need the relevant security directly). In most cases, the bonds are used to refinance ECA-backed loans often as part of the lending bank’s exit strategy; while, in other cases, the bonds are issued as part of a new financing.

Previous users of the ECA-guaranteed bond market include Aercap, Gol, LAN, GECAS, DAE, and Emirates. The Export-Import Bank of the United States (“Ex-Im Bank”) has been particularly active and over the past year has supported bonds issued by non-U.S. airlines such as Ryanair, Air China and Lion Air.

EETCs and aircraft securitisations

Enhanced equipment trust certificates (“EETCs”) and aircraft lease securitisations are widely used in the United States for financing aircraft purchases and leases, although they have only occasionally been used outside the U.S. An EETC is essentially a secured bond backed by aircraft although, in addition, EETCs are usually also supported by certain structural enhancements, such as debt tranching and liquidity facilities. In an aircraft lease securitisation, the cash flows from a pool of aircraft and/or associated leases are securitised and the securities sold to investors. In both EETCs and aircraft lease securitisations, the value of the assets is at least as important in the credit evaluation of the transaction as the credit quality of the borrowing airline or lessor. Both types of transactions are structured financings that use special purpose vehicles (“SPVs”) to hold ownership of the aircraft being financed. In a EETC, the SPV leases the aircraft to the airline. Investors receive certificates from the SPV entitling them to revenue from the lease of the asset. When the notes mature, ownership of the aircraft passes to the airline. An aircraft lease securitisation involves pooling aircraft leases and securitising them. Most EETCs and aircraft lease securitisations are rated by one or more of the major credit rating agencies.

In the U.S., EETCs are the predominant capital markets vehicle for U.S. airlines to finance aircraft. EETCs are seen to be more cost effective than bank lending in the U.S. due to the larger deal size as they allow airlines to fund numerous aircraft in one transaction, as well as pre-fund deliveries and even refinance aircraft at fair prices. Non-U.S. airlines, however, have had limited success in raising finance through EETCs. Thus far only Air France in 2003, Iberia in 2000 and 2004, and Doric/Nimrod, which has just completed its first EETC with Emirates as an end user (the “DNA/Emirates EETC”), have succeeded. This has mainly been due to the fact that, in the United States, lessors and secured creditors of U.S. certificated airlines benefit from protection under Section 1110 of the U.S. Bankruptcy Code, which enables creditors to repossess collateral if the borrower does not resume debt service or lease rentals, and cure any past due amounts, within 60 days of filing for bankruptcy. Creditors of foreign airlines, even if they were to file for bankruptcy protection in the U.S., would not have the benefit of Section 1110. The availability of Section 1110 protection enables rating agencies to rate EETCs higher than the airline’s corporate credit rating, based on enhanced prospects for full recovery following a default.

The ratification by over 40 countries of the Cape Town Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (together, the “Cape Town Convention”) has renewed interest in extending this form of financing to non-U.S. airlines. The Cape Town Convention allows a signatory state, by declaration, to opt in to Article XI(A) of the Protocol, which exports “Section 1110 protection” worldwide to financiers of carriers in signatory states who have made the appropriate declaration. To date, there has been no judicial interpretation of these provisions in the context of an actual insolvency proceeding and this lack of case law limits the rating enhancement that the rating agencies currently are prepared to extend. Nevertheless, Article XI(A) is now law in many jurisdictions and directly addresses recovery periods in a manner comparable to Section 1110. This development provides a strong basis upon which to construct an EETC for a non-U.S. airline from one of these countries. Airlines from other countries (a number of which, having ratified the Cape Town Convention, have not implemented it into domestic law) will likely find EETCs more difficult to structure.

A very recent example of a EETC issued by an airline from a country which has ratified the Cape Town Convention is the DNA/ Emirates’ EETC. Doric/Nimrod has just issued the first non-U.S. EETC since the financial crisis. The $587.5 million issue, in two tranches, by Doric Nimrod Air Finance Alpha will be used to purchase four A380s, which will then be leased to Emirates. The $433.8 million Class A Notes carry a 10.4 year maturity and were rated A3 by Moody’s. The $153.7 million 6.9 year maturity Class B Notes were rated Baa3. A layer of first-loss equity below the B Notes provides noteholders with additional support. The operating leases will be subject to English law, and the operating leases and equipment notes will be subject to the Cape Town Convention following ratification by the United Arab Emirates of the Convention in 2008.

Other non-U.S. airlines could soon follow in the footsteps of Emirates. For example, Air Canada has been reported to be considering issuing EETCs.

Conclusion

As bank lending continues to weaken, airlines and operating lessors will increasingly turn to the capital markets, with or without the support of ECAs, to plug the funding gap. In the move towards capital markets funding, further innovation is likely such as the repackaging of banks’ existing loan portfolios using covered bonds and securitisation programmes. In addition, the development of a European aircraft securitisation market, with standardisation of documents as in the U.S., will help the move to capital markets funding gather speed. It will be interesting to see how capital markets structures continue to evolve in response to the changing financial and regulatory environment.

For further information contact:

Sandrine Sauvel, Partner, Norton Rose LLP

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Fasten your seatbelts… turbulence on the radar from competition law damages actions

Airlines have been - and continue to be - targets for damages actions based on competition law (antitrust) infringements, most notably following the various investigations into the alleged global air cargo cartel. Indeed, given the large number of potential claimants that might be affected by any competition law violation - whether air freight users or airline passengers - the threat of damages actions to airlines is serious and a strong deterrent to the industry breaching competition law.

Notwithstanding the risks associated with such claims around the world - and particularly in the US - to date, the UK courts have not proven fertile ground for collective actions. However, new proposals for a more claimant-friendly UK damages regime suggest this is likely to change with the UK government proposing to introduce an “opt-out” collective damages regime for competition law claims, making claims easier to bring against cartelists.

Another significant change to the threat facing airlines is the level of willingness of UK courts to order disclosure of leniency (or “whistle-blowing”) documentation. To date, there have been clear incentives for airlines (or others) which discover anticompetitive conduct to confess to the authorities in return for immunity. Although claimants have long sought access to leniency material and other documents on the competition authority’s case file to support their claim, until recently this was without success. However, whilst the EU competition authorities remain opposed to such disclosure fearing this will discourage “whistle-blowers”, the UK High Court has recently allowed the limited disclosure of some leniency material in a prominent damages action. This shift may influence the incentives to blow the whistle for those who discover anti-competitive behaviour and make the position far less certain.

We describe below these two significant developments that might tip the balance in favour of claimants against defendants in such cases.

BIS consultation on competition law private actions

On 24 April 2012, the UK Department for Business Skills and Innovation (BIS) announced a consultation on proposals to reform the UK regime for private damages actions in competition law cases.¹ These proposals complement the wider UK competition framework reforms announced in March 2012², and aim to encourage victims of anti-competitive behaviour to obtain redress and support access to justice.

The core proposals are to:

• Introduce an “opt-out” collective actions regime for competition law infringements, under which collective claims could be brought on behalf of defined groups without identifying each individual member of the group, and without them needing to actively join the action. All who fall within the group could then benefit from any damages award unless they have chosen to opt-out, with the award calculated on the basis of the loss caused to all qualifying claimants.³ The government’s aim is that “opt-out” collective actions make it easier and less costly for claims to be brought on behalf of victims of cartels whose individual losses would not necessarily make individual damages claims worthwhile.
• Allow the Competition Appeal Tribunal (CAT) to hear the full range of competition cases and create a “fast track” mechanism for SMEs to more quickly and cheaply take action against anti-competitive conduct by competitors or suppliers.
• Promote alternative dispute resolution in the CAT so that litigation is the option of last resort.
• Ensure that private actions do not undermine the public enforcement regime - in particular, by protecting the incentives for companies to “blow the whistle” on cartels.

“Opt-out” collective actions

BIS’s proposal regarding “opt-out” actions is potentially the most significant, and reflects a number of issues with existing proceedings for collective actions in the UK, which have not been successful in practice:

• In Emerald Supplies and anor v British Airways Plc, Emerald - a cut flower importer who used BA’s air freight services - brought a claim on behalf of itself and all direct or indirect purchasers of air freight services affected by BA’s involvement in the alleged cargo cartel. However, the Court of Appeal dismissed the “representative” element of this action (under CPR Rule 19.6 - the closest thing the UK regime currently has to a US-style “opt-out” class action) on the basis that all members of the represented class must have the same interests - and that such interests should be more clearly defined than having all been customers of the cartelist during the relevant period (the possibility that some victims could have passed-on their losses to customers downstream was critical here). BA’s exposure had the representative action succeeded would have been far greater.⁴
• Under the Competition Act 1998 (section 47B) certain “specified bodies” can bring a follow-on action for damages in the CAT relying on an infringement decision of the UK’s Office of Fair Trading (OFT) or the European Commission on behalf of two or more individuals. However, this “opt-in” procedure raises difficulties in identifying and obtaining authority from potential claimants. This was shown in the 2003 “replica kits” case by the mere 600 claimants who participated in the action brought by Which?, the consumer association - much lower than the believed two million affected consumers.⁵ The exposure of the cartelists in this case was a small fraction of what it could have been under an “opt-out” regime.

Although this proposal is only at the consultation stage, where BIS should be mindful of the dangers associated with US-style class actions, the introduction of any “opt-out” regime is likely to result in far more collective damages actions in the UK and far larger claims.

Disclosure of case file

A further recent development is in relation to disclosure of leniency documents from whistle-blowers. In damages actions claimants may attempt to obtain access to leniency material and other documents on the competition authority’s case file to help them quantify their damages claim. In common law jurisdictions, this usually involves a request from the defendants themselves under disclosure rules. Alternatively, access can be sought from the European Commission or another relevant competition authority using freedom of information legislation or by applying to the court.

There is a tension between victims of cartels having sufficient information about the infringement to bring a damages action and the importance of preserving incentives for cartelists to seek leniency (and thus reduce cartel behaviour). The fact leniency applications are very often the source of cartel investigations complicates this, and those aware of anti-competitive conduct must now balance the significant upsides of seeking leniency in terms of avoiding or minimising corporate fines and personal sanctions for relevant individuals, against downsides such as adverse publicity of an infringement which may otherwise not come to light, and the related greater exposure to damages actions.

In a significant development in June last year the EU’s Court of Justice held – in Pfleiderer AG v Bundeskartellamt – that:

• The EU competition rules do not preclude a party seeking damages from accessing leniency documents relating to a perpetrator of the infringement.
• However, such access must be permitted or refused on conditions to be determined by EU national courts according to national law and considering the need to ensure the effectiveness of both leniency programmes and damages claims as a means of detecting EU competition law infringements, on a case-by-case basis, taking into account all the relevant factors of the case.⁶

This ruling gives significant discretion to national courts. So, while the German court in the Pfleiderer case refused to grant access, in the UK, the High Court has recently allowed a limited disclosure of some leniency material in another case (the insulated switchgear cartel⁷).⁸

There are several other cases in which damages claimants are challenging the European Commission’s refusal to grant access to its case file under the access to information regulation (Regulation 44/2001), notably in relation to the Commission’s November 2010 air cargo cartel decision.⁹ If successful, this could have a significant impact on damages calculations in that case and attract more claimants. The European Commission also recently failed with an argument that it should not have to disclose 1,900 documents on its file where it claimed the work required to remove confidential information was excessive. The EU General Court found that the Commission had not done enough to explore its options given the restrictions on the claimant’s rights if it refused access.¹⁰

Despite these challenges, the European Commission and the EU national competition authorities remain committed to protecting leniency documents from disclosure, as shown through a recent joint resolution¹¹ confirming that, while damages recovery is important, the protection of leniency material is fundamental for effective cartel enforcement given the secretive nature of cartels and difficulty of detection without whistle-blowers.

Comment

Should the proposed “opt-out” regime (with claims heard before the UK specialist competition court) come into force it will likely result in the UK becoming the obvious forum in the EU for competition law collective damages actions, with the scale of damages in relation to markets with numerous small volume customers (e.g. consumer markets such as air travel) potentially massive. The potential willingness of UK courts to order disclosure of leniency material will be a further incentive for claimants to bring actions in the UK. While such developments may enable victims of cartel behaviour to recover their losses more efficiently, without sufficient safeguards, there are potentially serious adverse consequences for the wider enforcement of competition law across the EU. In particular, companies contemplating making a leniency application within the EU will need to give even greater consideration than they already do before deciding to offer up information to cooperate with the competition authorities. The balance between avoiding corporate fines and personal sanctions and the prospect of damages actions aided by the information given as the whistle-blower is likely to become even more difficult.

For further information contact:

Ian Giles, Senior associate, Norton Rose LLP

Footnotes

1. The consultation runs until 24 July 2012.
2. Briefing on the reforms
3. Under the BIS proposals, any unclaimed damages would be awarded to the Access to Justice Foundation.
4. The 2008 British Airways and Virgin Atlantic class action settlement in the US of $200 million regarding the passenger fuel surcharge case shows how significant such claims can be.
5. In August 2003, the OFT found that several sportswear retailers (including Allsports and JJB Sports), Manchester United, the Football Association and Umbro had arranged to fix prices for replica football kit. Which? and JJB Sports settled the subsequent damages action with an award of £20 to each of the 600 claimants, and the possibility of vouchers of £5-10 for those who came forward within a limited timeframe.
6. Case C-360/09 Pfleiderer AG v Bundeskartellamt. The decision
7. National Grid Electricity Transmission Plc v ABB Ltd and Others [2012] EWHC 869 (Ch), judgment of 4 April 2012.
8. See also Case T-164/12 Alstom and Others v Commission, where Alstom has challenged the European Commission’s decision to transfer certain documents to the High Court on the basis that this will result in the disclosure of leniency material.
9. See the challenge by Schenker AG (Case T-534/11 Schenker v Commission) relating to the 8 November 2010 European Commission decision to fine 11 air cargo carriers a total of €799 million.
10. Case T-344/08 EnBW Energie Baden-Württemberg v Commission, again relating to the switchgear cartel.
11. See the joint resolution of the European Competition Network of 23 May 201:

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South Africa seeks alignment between domestic laws and the Cape Town Convention

In the current economic climate, obtaining finance – even asset-backed financing – is no easy task. This is particularly true should the asset be a mobile one, such as an aircraft. In an instance like this, the asset becomes an uncertain source of security for a potential financier.

After all, repossessions in general are logistically and administratively demanding. When a debtor defaults, the financier or lessor wants to be able to terminate the contract and recover the asset as quickly as possible, in order to satisfy the debt. However, repossessing an asset that is situated in another country entirely becomes more difficult in light of local laws and in some jurisdictions it is necessary to approach that country’s courts in order to obtain the asset.

It was for this very reason that the Cape Town Convention was brought into being, says Heather Wilmot, a director at law firm Norton Rose South Africa. The convention, she adds, and the aircraft protocol is designed to bring speed, certainty and cost savings to the process of repossessing moveable assets such as aircraft.

“In effect, an option under the Convention affords financiers and lessors a self-help option. Instead of having to go through the local courts and the interminable processes that may come along with this, the injured party can claim the aircraft and fly it out of the country.”

“The Cape Town Convention was created to overcome the highly diverging legal principles and systems of law in the various countries in which these aircraft operate. Its goal is to provide a greater level of certainty to financiers and lessors, by ensuring that they will be able to quickly recoup their losses in the event of a debtor defaulting,” she says.

Moreover, to provide added incentives for countries to sign the Convention, the Organisation for Economic Co-operation and Development (OECD) announced a 10 per cent discount on the minimum premium rate under the 2011 Aircraft Sector Understandings (ASU). This is music to the ears of those airlines already struggling under the burden of the economic slowdown, says Wilmot.

Meeting OECD criteria

However, the OECD has set some stringent criteria for this 10% discount, and very few signatories to the Convention have fulfilled these requirements. More than 40 nations have signed the Convention, yet only 15 have currently been ratified by the OECD.

The importance of both the 10 per cent discount and the certainty that comes with having an international convention governing asset repossession in Africa is incalculable. Therefore, it is little wonder that the Cape Town Convention received plenty of attention at the recent Norton Rose African Aviation School.

According to Wilmot, the Aviation School was one of the first times in Africa that a conference focused on African-specific issues was attended by people from across the continent’s aviation industry. “We had delegates from many of the major airlines, as well as representatives of a number of banks, lenders, lessors and the insurance industry, not to mention aircraft manufacturers, attending,” she says.

Stephen Boikanyo, also a director at Norton Rose, adds that while a whole host of issues impacting on the aviation industry across Africa were discussed, the matter of OECD qualification was high on everyone’s agenda.

“Obtaining the OECD qualification is in the main a two step process. The first is naturally to enact the Convention and implement its declarations. The second part is more difficult, as it entails altering domestic laws to align with the Convention. There is no room for ambiguity or conflict between a complex but well established body of law and one created under the Convention. It is thus vital that the Convention is able to interact comfortably with domestic laws,” he says.

“From a South African perspective, the process to harmonise the provisions of the Convention and analogous provisions of South African law is well underway with the Convention having being enacted and the various declarations having been made. There are ongoing discussions with the relevant stakeholders to ensure that the provisions of the Convention are properly implemented and given effect to in the manner that was intended.

Making it work

Despite this, Norton Rose South Africa already has clear experience regarding the benefits that the Cape Town Convention offers to financiers. Wilmot explains that he company has already assisted one of its clients in the repossession of an aircraft, under the auspices of the Convention. “Our client – an Ireland-based financier – wanted to facilitate the repossession of an aircraft from a Nigerian client that had defaulted on their lease. Thanks to the selfhelp facility provided for by the Convention, the repossession, which took place at OR Tambo airport, was simple and successful,” she says.

“Norton Rose South Africa, with the co-operation of the Airports Company of South Africa, successfully grounded the aircraft after it landed in Johannesburg, before sending it back to Ireland. This was the first repossession of its kind in South Africa, using clauses outlined in the Convention.”

Wilmot adds that there was very little opposition to the process from the Nigerian owners. So the interaction between the convention and South African law has not been fully tested. “Nonetheless, there is little doubt that this successful repossession highlights the benefits that the Cape Town Convention can offer the global aviation industry.”

Boikanyo suggests that it is only a matter of time before South Africa is able to meet the stringent criteria laid down by the OECD in respect of the Convention.

“The local aviation industry clearly understands the benefits of the Convention – as was indicated by the overwhelmingly positive statements made to this effect at our recent Aviation School. Government, too, realises the potential here and progress is definitely being made in aligning the domestic legislation to the terms of the Convention.”

“The advantages are plain to see. Financiers and lessors obtain more security; the industry gains the financial means to access the latest aircraft and technologies, at discounted prices; and government gets a more effective and modernised industry that opens the door to increased tourism and business opportunities. South Africa’s legislation is brought in line with the Cape Town Convention, we will have laid the foundation for a bold new era in aviation history,” Wilmot concludes.

Article republished by kind permission of World Airnews (July 2012)

For further information contact:

Heather Wilmot, Director, Norton Rose South Africa

Stephen Boikanyo, Director, Norton Rose South Africa

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Jet2.com Ltd v Blackpool Airport Ltd [2012] EWCA Civ 417 - Update

The Court of Appeal recently upheld a High Court decision which confirmed that Blackpool airport‘s obligation to use best endeavours to promote Jet2’s services gave rise to an obligation on the airport to allow arrivals and departures of the low cost carrier’s flights outside the airport’s usual opening hours.

Although there was no specific contractual obligation dealing with operating hours and Blackpool airport made a loss each time it was required to accept flights outside of normal operating hours, the Court of Appeal still considered Blackpool airport to have breached its contractual obligation to use best endeavours to promote Jet2’s services when it refused to accept further out of hours flights.

The fact that the airport had agreed to use best endeavours presupposed that they would be put to some financial cost and the fact that the cost was more than they had anticipated was not sufficient reason to excuse them from that obligation. The Court of Appeal did however accept that if it became apparent that Jet2 could never expect to operate low cost services from Blackpool profitably, the airport would not be obliged to incur further losses in promoting a failing business.

A further point of interest was that the contract included a reference to both “best endeavours” and “all reasonable endeavours” and it was accepted by both parties that no distinction should be drawn between the two. Care should be taken when including all reasonable endeavours in relation to a contractual obligation as it is likely to be considered to be equivalent to best endeavours. 

Lewison LJ gave a dissenting judgment, on the basis that he considered that the object of the best endeavours obligation was too vague to be enforceable. However, the case has not been appealed.

A link to the article in our November 2011 edition of Legalflyer is here.

For further information contact:

Charlotte Winter, Of Counsel, Norton Rose LLP

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