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Abstract
The majority of aircraft are acquired through leasing agreements, and the financial burden is on the lessor due to their financing of heavy equipment for the lessee in these agreements. Therefore, to ensure that the lessee fulfills their lease payment to the lessor, a “hell or high-water” clause is drafted in the contract. This enforces payment by the lessee regardless of any circumstantial changes that might make it difficult for them to pay. However, due to the pandemic, airlines have suffered from a severe cash crunch making it difficult for them to honor their upcoming contractual obligations. Airline companies are debating whether to invoke force majeure in these contracts to excuse non- performance and avoid damages; nevertheless, considering developments in Private International AirLaw and the nature of the contract, taking such measures will be difficult. This paper proposes to
apply the hardship clause codified in the UNIDROIT Principles of International Commercial Contracts so that airlines can renegotiate the contract with their lessors instead of completely avoiding their contractual obligation. This will provide breathing space for the lessee, while ensuring that their obligation towards the lessor is maintained during the pandemic.
Keywords:
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