High Court delivers significant judgement in TUI Airways v Smartlynx Airlines contractual dispute

On 6 August 2025, the High Court of Justice's King's Bench Division delivered a significant judgement in the contractual dispute between TUI Airways Limited (together with TUI Airlines Belgium NV and TUI Airlines Nederland BV) and Smartlynx Airlines Malta Limited (alongside Smartlynx Airlines Estonia OU and Smartlynx Airlines Ltd). Mr David Railton KC, sitting as Deputy Judge, presided over the matter.

The case originated from TUI Airways' application for summary judgement against Smartlynx Airlines concerning outstanding sums allegedly due from business dealings conducted between 2022 and 2024. The dispute centred on aircraft provision arrangements where TUI had engaged Smartlynx to supply aircraft for operational requirements.

Contractual framework and disputed elements

The commercial relationship was governed by three principal agreements: the Aircraft Supply Agreement (ASA), the Aircraft ACMI Common Terms Agreement (CTA), and individual Aircraft Specific Lease Agreements (ASLAs). These instruments regulated aircraft provision, maintenance, crew, and insurance arrangements during the relevant summer seasons.

Five aircraft formed the subject matter of the disputes, with TUI's claims encompassing four primary elements: deposit recovery, block hours reconciliation, compensation for aircraft unavailability, and legal costs. The claims structure comprised a cash deposit made by TUI Nederland, reconciliation adjustments for utilised block hours, remuneration for underutilised aircraft periods, and service level agreement-related amounts.

TUI's position maintained that substantial sums were properly due under each claim category, presenting what appeared to be well-founded contractual entitlements based on the agreed commercial terms.

Defence strategy and set-off assertions

Smartlynx mounted a defence challenging the original claims as improperly pleaded whilst asserting set-off rights against TUI's demands. The defence strategy included counterclaims for amounts allegedly owed through various invoices, seeking deduction from TUI's claimed sums.

The defendants' submissions questioned the factual foundation of TUI's claims whilst emphasising their entitlement to offset outstanding liabilities. This approach reflected the interconnected nature of the parties' commercial relationship and the complexity inherent in ACMI arrangements.

Judicial analysis and determination

Mr Railton KC's detailed examination of both parties' submissions addressed the factual basis underlying the claims, particularly regarding communication protocols and reconciliation procedures mandated by the governing agreements. The court's analysis focused on contractual interpretation and the adequacy of evidence supporting summary judgement.

The judgement favoured TUI on several claim elements, notably the deposits and block hours reconciliation amounts where factual disputes appeared minimal. The court acknowledged substantial agreement between parties on key figures, though Smartlynx maintained justifications for their opposing position.

Balanced resolution and execution stay

Whilst ruling favourably for TUI on multiple counts, the court recognised legitimate counterclaims and potential cross-liabilities held by Smartlynx. This recognition led to a judicial determination that execution should be stayed for certain judgement aspects, reflecting the ongoing interconnectedness of claims and counterclaims arising from the parties' extended commercial dealings.

The balanced approach demonstrates judicial recognition of the complex financial relationships inherent in aviation leasing arrangements, where multiple obligations and entitlements often exist simultaneously between contracting parties.

Precedential significance

The judgement establishes important precedent regarding contractual disputes within commercial aviation, emphasising the necessity for precision in contractual drafting and effective inter-party communication. The decision provides valuable guidance on navigating summary judgement applications in complex commercial contexts where set-off rights and counterclaims feature prominently.

The case illustrates how courts approach multi-layered commercial relationships, balancing immediate enforcement rights against legitimate cross-claims whilst maintaining commercial certainty. The outcome reinforces the importance of clear reconciliation procedures and comprehensive dispute resolution mechanisms in ACMI agreements.