Singapore: Aircraft Maintenance: Commercial Court ruling on ETOPS compliance

The matter involved a maintenance contract, originally conducted by Singapore Airlines Limited ("SIA") for a number of A310 aircraft being taken into the Middle East Airlines’ ("MEA") fleet. The agreement required compliance with ETOPS requirements which included the configuration of twinengined aircraft operating more than 60 minutes from the nearest airfield. The key factor in this case was that the maintenance rate was fixed, such that the MRO bore the costs of modifications necessary for ETOPS compliance.

ETOPS compliance status was, therefore, of interest to Sabena Technics ("SNT"), with whom MEA contracted on similar terms in in substitution for SIA. This was particularly so when a Service Bulletin (SB72-382) had been issued requiring the installation of new first stage turbine blades at the next HPT module exposure but in any event no later than 31 December 1999.

During the negotiations between MEA and SIA, the latter confirmed that the aircraft were ETOPS compliant at the date when the SIA maintenance agreement terminated. It was later established that of the six engines on the three aircraft, only two had incorporated SB72-382 even though the HPT modules had been exposed after the SB had been issued. From a technical perspective, the most interesting point was that although there was a long stop date for SB incorporation which had not passed, the Court concluded that SIA had failed to ensure ETOPS compliance.

The case involved a number of arguments as to whether the SIA letter had contractual effect, whether there was any legal misrepresentation, and whether, given MEA’s actual knowledge prior to acceptance of the last aircraft and/or the financial protection afforded by the SNT fixed rate contract, MEA had suffered any loss. Interestingly for the lawyers, the Court decided that even given "the marked reluctance of the English courts to treat independent statements of fact as warranties", SIA’s statement confirming ETOPS compliance constituted a warranty of which SIA was in breach.

As a result SNT, as assignee of MEA, was entitled to recover the cost of incorporation of SB72-382 on the other engines. The Court accepted that, with appropriate regulatory derogation, the aircraft could still be ETOPS operated without incorporation of the relevant SB, but held that ETOPS compliance required the modification to have been carried out at the earliest opportunity, not that its omission had been excused by the regulator.