“The Lessee’s obligation to pay rent and make other payments in accordance with this Agreement shall subject to clause 21.3 (Payment of Rent) be absolute and unconditional irrespective of any contingency whatever”
“any unavailability of the Aircraft for any reason, including any lack or invalidity of title or any other defect in the title, airworthiness, merchantability, fitness for any purpose, condition, design or operation of any kind or nature of the aircraft or the ineligibility of the aircraft for any particular use or trade or for registration or documentation under the laws of any relevant jurisdiction, or the Total Loss of, or any damage to, the Aircraft”
“An injunction preventing payment by the bank or restraining presentation of documents by the beneficiary interferes with the letter of credit and prevents it from being treated as the equivalent of cash. The following factors affect the answer to question (c). (1) It is inherent in the provision of a letter of credit that subject to presentation of conforming documents,it is to be the equivalent of cash. Part of its purpose is to implement an agreement between buyer and seller that the seller gets paid and questions of defects in quality and other such disputes are resolved outside of the payment transaction. The buyer has agreed to this and equity will not intervene so as to enable him to go back on what he has agreed. (2) The bank itself has made a contractual promise as a banker. It is an essential part of its business that it honours its word. The court should not restrain payment when to do so could be to cause the bank to dishonour its engagement undertaken as a banker, and thereby to damage its reputation for contractual and commercial probity (3) Letters of credit are relied upon as a means of raising finance. To allow payment to be restrained would threaten the future use of letters of credit as an available mechanism for raising credit to fulfil commercial transactions. Such instruments are regarded as the ‘lifeblood’ of commerce. Merchants rely upon them as being the equivalent of cash. (4) The buyer faces ‘an insuperable difficulty’ on balance of convenience. The buyer is seeking to prevent the bank from paying and debiting the buyer’s account. If payment would be in accordance with the contract, the buyer has no basis for an injunction. Alternatively, if the threatened payment is in breach of contract, then the buyer would have good claims for damages against the bank, and the bank would be facing damage to its reputation which could not be compensated for in damages. For these reasons, as a general principle, the court will not grant an injunction interfering with performance by the bank under the banking contract.”
“In the view of the Board the expression ‘seriously arguable’ is intended to be a significantly more stringent test than good arguable case, let alone serious issue to be tried. As Mance LJ put it, a case of established fraud known to the bank, is, by its nature, one which, if it is good at all, must be capable of being established with clarity at the interlocutory stage. In summary, the Board concludes that it must be clearly established at the interlocutory stage that the only realistic inference is (a) that the beneficiary could not honestly have believed in the validity of its demands under the letter of credit and (b) that the bank was aware of the fraud.”
“If instruments such as letters of credit and performance bonds are to be treated as cash, they must be paid as cash by banks to beneficiaries. The courts in the Harbottle and Edward Owen cases emphasised this, and, in my view, set a higher standard than ‘a real prospect of success’ in relation to all these situations.”
“The same considerations of policy do not apply where the beneficiary has not yet made a demand upon the bank and where, as here, injunctive relief is sought to stop the beneficiary from making such a demand pending the trial of the action in which the issue of his fraud will be determined. In such a case I see no reason why the ordinary principles for the grant of interlocutory injunctive relief should not apply”
“In my judgment, the application of the doctrine of frustration requires a multifactorial approach. Among the factors which have to be considered are the terms of the contract itself, its matrix or context, the parties’ knowledge, expectations, assumptions and contemplations, in particular as to risk, as at the time of the contract, at any rate so far as these can be ascribed mutually and objectively, and then the nature of the supervening event, and the parties’ reasonable and objectively ascertainable calculations as to the possibilities of future performance in the new circumstances. Since the subject matter of the doctrine of frustration is contract, and contracts are about the allocation of risk, and since the allocation and assumption of risk is not simply a matter of express or implied provision but may also depend on less easily defined matters such as ‘the contemplation of the parties’, the application of the doctrine can often be a difficult one. In such circumstances, the test of ‘radically different’ is important: it tells us that the doctrine is not to be lightly invoked; that the mere incidence of expense or delay or onerousness is not sufficient; and that there has to be as it were a break in identity between the contract as provided for and contemplated and its performance in the new circumstances. What the ‘radically different’ test, however, does not in itself tell us is that the doctrine is one of justice, as has been repeatedly affirmed on the highest authority. Ultimately the application of the test cannot safely be performed without the consequences of the decision, one way or the other, being measured against the demands of justice. Part of that calculation is the consideration that the frustration of a contract may well mean that the contractual allocation of risk is reversed. A time charter is a good example. Under such a charter, the risk of delay, subject to express provision for the cessation of hire under an offhire clause, is absolutely on the charterer. If, however, a charter is frustrated by delay, then the risk of delay is wholly reversed: the delay now falls on the owner. If the provisions of a contract in their literal sense are to make way for the absolving effect of frustration, then that must, in my judgment, be in the interests of justice and not against those interests. Since the purpose of the doctrine is to do justice, then its application cannot be divorced from considerations of justice. Those considerations are among the most important of the factors which a tribunal has to bear in mind.”
“any other cause which, but for this provision, would or might otherwise have had the effect of terminating or in any way affecting any obligation of Lessee under this Agreement”
“I have already set out the terms of the lease of most relevance when considering the possible application of the doctrine of frustration. They are found in the context of a ‘dry’ lease pursuant to which possession of the aircraft is transferred to the lessee who is the operator of the aircraft. In such a lease, particularly one where the lease is for a substantial period of 5 years, the parties would expect the lessee to assume the risks inherent in operating an aircraft. One such risk is that the aircraft authority might withdraw the certificate of airworthiness and impose certain conditions before it is reinstated. Whilst such events might occur only rarely it is an obvious risk of operating a passenger aircraft. Clause 5.14 emphasises the risk assumed by the lessee because it provides that the lessee’s obligations are absolute and unconditional irrespective of any contingency whatever. The examples given of matters which are not to affect the lessee’s obligations, and hence of which it is envisaged that the lessee will take the risk, are not obviously limited to ‘a temporary period of unairworthiness which could be remedied by some relatively simple maintenance process’. Rather, the examples contain no words of limitation (‘any unavailability of the Aircraft for any reason, including … any prohibition or interruption of … Lessee’s use, operation or possession of the aircraft’ and ‘any lack … of airworthiness’). Since the clause includes the words ‘irrespective of any contingency whatever’ it is not possible, in my judgment, to imply words of limitation. This is emphasised by the inclusion within the list of examples of ‘any other cause which, but for this provision, would or might otherwise have the effect of terminating or in any way affecting any obligation of Lessee under this Agreement.”