Business

GTLK parent company unlikely to partake in Irish proceedings, court told

Lawyers claim it will not get a fair hearing here

GTLK is Russia’s largest leasing business in the transport sector. Photograph: Damien Meyer/AFP

Aodhan O'Faolain
Tue Dec 5 2023 - 16:57

The parent company of the Russian State-owned transport leasing firm GTLK is unlikely to participate in proceedings brought against it in Ireland by liquidators appointed over its Dublin-registered subsidiary because its lawyers claim it will not get a fair hearing here.

Damien Murran and Julian Moroney, who are the joint liquidators to Dublin-registered subsidiary GTLK Europe DAC, and GTLK Europe Captial DAC, have brought a High Court action aimed at preventing Joint Stock Company State Transport Leasing Company from “seizing ownership” of dozens of 37 aircraft.

The liquidators say the aircraft belong to the firms in liquidation, and the parents have no legal entitlement to the assets.

On Tuesday James Doherty SC, for the liquidators, told Mr Justice Mark Sanfey that the parent company’s Russian lawyers have informed his clients that it will not take part in the proceedings before the Irish courts citing various reasons.

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Counsel, appearing with Stephen Byrne BL, said that the defendant’s lawyers have said the dispute over the aircraft should be determined by the Russian courts, and that it doesn’t believe it would get a fair hearing in Ireland.

Counsel said his side does not accept any contention that it would not get a fair hearing, adding that Russian companies have taken part and have been represented in actions brought before courts in the UK.

Mr Justice Sanfey agreed that any contention by the defendant’s lawyers that it would not get a fair trial in Ireland was “without foundation”.

He acknowledged the urgency of the matter, and fixed the hearing of the action to a date later this month.

He said that the option of taking part in the proceedings, where it could contest the liquidators claim that the action should be determined by the Irish courts, remains open to the Russian parent.

The liquidator’s proceedings have been brought over an attempt by the parent to register itself as the legal owners of aircraft, based in Russia.

GTLK’s parent, which is owned by the Russian Federation, says it is entitled to be registered as the legal owner under “pledge agreements” governed by Russian law, allegedly entered into between it, GTLK Europe and nine other GTLK Europe group companies registered in Ireland.

The “pledge agreements” were allegedly entered into in March 2022, two weeks before the parent became the subject of EU sanctions imposed over Russia’s invasion of Ukraine, it is claimed.

The parent claims that the pledge agreements were made to secure the repayment of loans from the parent to GTLK Europe between 2017 and 2022.

The liquidators claim the parent will seek to rely on the pledge agreements to wrongfully “seize the title over the aircraft”, “secure payment under the loan agreements” and “declare itself the owner of the aircraft under an out of court enforcement of the pledges in the Russian Federation”.

The liquidators do not accept that the parent is entitled to legal title to the aircraft through the enforcement of the pledge agreements.

In their action the liquidators seek various orders including one setting aside the pledge agreements. They also seek a declarations that said agreements are void and unenforceable as a matter of Irish law. and that the liquidators retain title to the aircraft.

Several subsidiaries of the GTLK group are notice parties to the proceedings, which the liquidators says should be heard and considered by the Irish courts.

While the pledge agreements are governed by Russian law, the liquidators and the notice parties are based in Ireland.

The firms, which are part of the wider GTLK group, were wound up earlier this year following an application by four creditors who claimed they were owed more than US$178million (€162.5 million) by the firms.

The firms’ financial difficulties arose from the economic sanctions imposed on Russian entities following last year’s invasion of Ukraine.

GTLK is Russia’s largest leasing business in the transport sector, and leased ships and aircraft to customers all over the world.

GTLK’s Europe Group’s international leasing business is headquartered in Dublin.

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