Revaluating aircraft leasing contracts in the pandemic era: navigating the challenges of invoking force-majeure by applying hardship under international commercial law

Majority of aircraft are acquired on leasing agreements, and the financial burden is on the lessor due to financing heavy equipment for the lessee in these agreements. Therefore, to ensure that the lessee fulfils his lease payment to the lessor, Hell or High-water clause is drafted in the contract. This enforces payment by the lessee irrespective of any circumstantial change which makes it difficult for the lessee to pay. However, due to the pandemic, the airlines have suffered from a severe cash crunch making it difficult for them to honor their upcoming contractual obligations. The airline companies are debating to invoke Force Majeure in these contracts to excuse nonperformance and avoid damages, but considering the development in Private International Air Law and nature of the contract, taking such measures will be difficult. This paper proposes to apply Hardship codified in the UNIDROIT Principle of International Commercial Contracts so that airlines can renegotiate the contract with the lessors instead of completely avoiding their contractual obligation.  This will provide breathing space to the lessee and also ensure his obligation towards the lessor is maintained during the pandemic.