A British judge has referred a dispute between Helice Leasing and Garuda Indonesia to the jurisdiction of the London Court of International Arbitration, rather than litigation in the courts.
“If there is a dispute as to whether an event of default has occurred, that is something which must surely be resolved under the arbitration clause”, said the judge.
Helice is claiming more than $5.1 million in unpaid Boeing 737-800 lease rentals.
Helice said that Garuda ceased paying the contractually agreed rent for the 737 in early 2020, at the onset of the Covid-19 pandemic.
Last year Garuda acknowledged its lease defaults but stressed that it was seeking amicable arrangements with its lessor creditors.
In the Helice case, Garuda argued that the case had no jurisdiction in the UK and that it should be heard in Indonesia instead. The judge threw out that objection, noting that the lease agreement between Helice and Garuda is governed by English law.
Helice is represented by James Cutress of Clifford Chance; Garuda by Aaron Taylor of Baker McKenzie Wong & Leow.
Other lessors that are seeking redress under UK law for owed aircraft rent from Garuda include Aercap and SMBC Aviation Capital.
In late 2020, Garuda chief executive Irfan Setiaputra expressed frustration with some lessors for objecting to lease restructurings. He said: “Whatever the past agreements, we respected them, we carried them out. But today the conditions are like this. If you don't want to know and stay ignorant, just take the plane. If you want to take it to court, let’s face it together.”
Setiaputra said the flag carrier had already managed to shave some $144 million off its annual lease bill through successful negotiations with lessors, but that it is targeting approximately $172 million in total for 2021.
Jakarta-based Garuda aims to achieve approximately 50% of its 2019 revenues in 2021.