Airport charges and the clawback regime

A review of the recent decision by the Milan Court of Appeal in a claw back action involving airport charges​.

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The Milan Court of Appeal recently ruled on the case involving GESAP SpA - the Management Company of the airport of Palermo (the Palermo Airport) on the one hand and Volare Airlines SpA (Volare) and Air Europe SpA (Air Europa) on the other side.

Both Volare and Air Europa were admitted to the Extraordinary Administration procedure which is a court driven proceeding generally aimed at restructuring an insolvent company. In 2012 they issued proceedings to claw back from Palermo Airport the aggregate amount of €4.4m. This amount represented the overall value of airport charges paid by Volare and Air Europe to Palermo Airport prior to their insolvency declarations.

According to Italian law in force at the time of the proceedings, payments of debts accrued in the year prior to the insolvency declaration can be clawed back, provided that the receiver is in a position to demonstrate the creditors’ so called “scientia decotionis”, that is to say, that creditors knew about the insolvency situation of the debtors at the time payment was received.

In the proceedings, Palermo Airport argued that the payments could not be clawed back since the airport’s position was similar to that of a monopoly, in that the airport was under a legal obligation to provide services to Volare and Air Europa who were in turn liable to pay airport charges.

The defendants claimed that according to Supreme Court precedent, even in case of services provided under a monopolistic regime, the service provider should refuse to perform its obligation, and hence to provide the relevant service, where the financial position of the other party may adversely affect the possibility of obtaining payment of the relevant consideration, which Palermo Airport did not do in this case.

In the circumstances, Palermo Airport could have decided not to provide Volare and Air Europa with the relevant airport services, given the fact that, based on the evidence, it was fully aware of the inability of the two companies to regularly meet their obligations.

As a result, the Court of Appeal confirmed the judgment issued by the Tribunal of Busto Arsizio that declared Palermo Airport under an obligation to return to Volare and Air Europa the overall amount of €4.4m.

The judgment is the first ever issued in this respect and could offer arguments to respond to a joint liability claim for payment of airport charges which is often raised by airports against aircraft owners pursuant to the provisions of the Airport Charges Act (Law 324/1976). Pursuant to this law an aircraft owner is jointly liable with the air carrier for payment of the airport charges provided for by the same law.

According to the principle established in the judgment of the Court of Appeal, a defence against the joint liability claim could be structured on the basis that, if the airport should have refused to provide services to the air carrier based on the airport’s knowledge of the carrier’s inability to regularly meet its obligations, it follows that it would be materially unfair to allow the airport to claim payment for airport charges against the owner of the aircraft. This is because the airport had the possibility to limit its financial exposure against the air carrier simply by refraining from providing the relevant services.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.