Jurisdiction(s):
United Kingdom

Exercising assigned rights pre-enforcement and LMA 'financial institution' meaning: Vietjet v FW Aviation, Court of Appeal (England and Wales)

Published on: 14 July 2025

Published by a LexisNexis Banking & Finance expert

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Article summary

Vietjet Aviation Joint Stock Company v FW Aviation (Holdings) 1 Ltd [2025] EWCA Civ 783

What are the practical implications of this case?

In this Court of Appeal decision, the judges drew a firm line between a lender’s use of rights transferred to it by a security document and the separate power to enforce that security. A clause permitting an assignee to enforce the security only once an enforcement event has occurred did not, absent contrary wording, bar the lender from exercising the contractual rights that had been assigned. Accordingly, the contractual mechanism for assignment operated independently of the enforcement regime. On these facts, a lease termination notice issued to the contractual counterparty by the lender in its capacity as assignee was effective, even though no ‘enforcement event’ under the loan agreement had yet arisen. The ruling underscores the need for security documents to spell out clearly whether the lender can rely on assigned rights before the security becomes enforceable (or before any other specified trigger, such as an event of default, takes place). This serves as a reminder to draft with precision and to delineate clearly the scope and timing of any rights exercisable by the lender...

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