Wilmington Trust Company and Another v Rolls Royce Plc and IAE International Aero Engines AG [2010] CSOH 157
Wilmington are the owners of and leased 2 Airbus A320-200 aircraft to an airline (“Mexicana”) which got into financial difficulties and was unable to pay sums due under the leases. The leases were terminated and an administrator appointed. Mexicana had contracted with IAE for the repair and maintenance of the engines relating to the aircraft, and IAE had in turn subcontracted the work to Rolls Royce. On IAE’s instructions, two engines were removed from the Airframes located in Mexico and shipped to Rolls Royce premises in East Kilbride for repair. Rolls Royce completed the work and was paid in full by IAE but asked to keep the engines on their premises on behalf of IAE who had asserted a lien over them in security for the sums due by Mexicana for the repair. The terms of the maintenance contract provided that once the engines were repaired Rolls Royce should return them to Mexicana.

Wilmington claimed that IAE was not able to establish a right of lien over the engines either because it did not have the appropriate degree of possession of them or because it did not obtain possession of the engines from a person who had entitlement to allow a lien to be created. Further they claimed that the law to be applied in determining whether there was a lien over the engines was Scots law as the lex situs, and there was not sufficient quality of possession by IAE itself to allow it to assert a lien under Scots law.

IAE and Rolls Royce claimed that the order being sought should not be granted if it would bring about a significant innovation of the parties contractual rights and there was no reason to depart from the status quo here. IAE was responsible for the maintenance of the engines and was responsible for the engines from when they were removed from the airframe. The laws of Connecticut should govern the position given it was the governing law of the maintenance agreement and IAE had an opinion from a lawyer in that jurisdiction to the effect that the laws of Connecticut would recognise IAE’s possessory lien.

The Judge refused the motion on the basis that if it was granted at this stage in proceedings, IAE would lose any claim to have a security for sums due to it by Mexicana, and also taking into account the fact that Wilmington didn’t offer to consign funds (in respect of the amounts due by Mexicana to IAE) in the event that Wilmington were proved wrong in their submissions. Rolls Royce was housing the engines safely and securely and that should continue until such time as IAE and Rolls Royce could look into the position further and lodge their defences.