The Netherlands – Right of retention on airplane engine by forwarding agent (defendant) due to impending fine based on Regulation (EU) 2023/1529 concerning restrictive measures in light of Iran’s military support of the Russian war of aggression against Ukraine
Charlotte J. van Steenderen, Van Steenderen Mainport Lawyers, Rotterdam
Ref: Judgment of the North-Holland District Court 19 February 2025, ECLI:NL:RBNHO:2025: 1538 in the interim relief proceedings between Nona Trade Corporation GmbH, claimant and Air Cargo Consultants B.V., defendant.
- Summary
Right of retention on airplane engine by forwarding agent (defendant) due to impending fine based on Regulation (EU) 2023/1529 concerning restrictive measures in light of Iran’s military support of the Russian war of aggression against Ukraine. For the time being, insufficient likelihood that a fine cannot or will not be imposed. What is not in dispute between the parties is that the claimant is liable to the defendant for the imposition of a fine on the basis of the agreed provisions in the Fenex conditions. The judge in interim relief proceedings is of the opinion that the interest of the defendant in upholding the right of retention outweighs the interest of the plaintiff in lifting it and releasing the airplane engine. This results in the rejection of the claim.
- The facts
2.1. Nona Trade trades in second-hand aircraft parts for private (passenger) aircraft.
2.2. On 21 May 2024, Nona Trade purchased a second-hand aircraft engine with the number CFM56-3C1 (hereafter referred to as: the aircraft engine) from the Irish company Falcon Wings Ltd., with the intention of reselling it to a party based in Iran.
2.3. The Engine Purchase Agreement of 21 May 2024, includes the following:
2.4. Nona Trade then instructed the shipping agent ACC to transport the airplane engine to Iran.
2.5. On 1 July 2024, Dutch customs stopped the transportation of the aircraft engine to investigate a possible violation of (Article 2 paragraph 1 of) Regulation (EU) 2023/1529 (hereafter: the Regulation)[1]. ACC informed Nona Trade of this in a letter dated 3 July 2024.
2.6. In a letter dated 1 October 2024, ACC held Nona Trade liable for all damages it may suffer as a result of possible violations of applicable laws and regulations relating to aircraft engines – including the Regulation and the US Export Administration Regulations (hereinafter: the EAR) – and wrote to Nona Trade, among other things:
“We kindly request Nona, ultimately on October 8, 2024, COB, to confirm in writing that:
(i) Nona acknowledges liability vis-à-vis ACC for all damages including any fines imposed on ACC resulting from the violations set out in this letter; and
(ii) Nona indemnifies ACC / holds ACC harmless against all third-party claims, including any fines imposed on ACC resulting from the violations set out in this letter.”
2.7. Also by letter dated 1 October 2024, ACC sent a Notification of Voluntary Self-Disclosure to (1) the U.S. Department of Commerce, Bureau of Industry and Security’s (BIS) Office of Export Enforcement (OEE) and (2) the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), regarding the possible violation of the EAR.
2.8. Nona Trade terminated the agreement with its Iranian counterpart at some point thereafter and found an interested buyer for the aircraft engine in Lithuania.
2.9. On 28 November 2024, with regard to the aircraft engine, Dutch customs wrote the following to ACC, among other things:
“In consultation with the Public Prosecution Service, Air Cargo Consultants B.V. is being warned of the aforementioned violation. If it is determined that Air Cargo Consultants B.V. is once again not complying with the regulations set forth in or pursuant to the Sanctions Act 1977, an official report can be drawn up.”
2.10. In a letter dated 10 December 2024, (the lawyer of) Nona Trade wrote to ACC – in short – that in this case, laws and regulations from the United States are not legally enforceable within the EU and therefore Nona Trade cannot comply with the requests under (i) and (ii) as referred to in the letter from ACC dated October 1, 2024 (see here above in 2.6), but that Nona Trade is willing “to make a declaration that it will not ship the Engine to Iran or sell it to an Iranian person as long as the relevant EU and UN sanctions are in place, and that it will only sell the Engine if the buyer makes a similar declaration”.
2.11. In the same letter, Nona Trade asked the ACC to release the aircraft engine by 17 December 2024 at the latest, a request that the ACC has not yet complied with.
- The dispute
3.1. Nona Trade requests the court to issue a judgment that is immediately enforceable and states:
- to order the defendant to release the CFM56-3C1 engine in its possession upon further instructions from the plaintiff;
- declare that the defendant acted unlawfully towards the plaintiff by not releasing the engine in question;
- order the defendant to pay the costs of these proceedings, including the attorney’s fees and additional costs.
3.2. In summary, Nona Trade bases its claim on the fact that a violation was prevented by no longer delivering the airplane engine to the Iranian company, as a result of which there can be no question of sanctions for which Nona Trade is liable towards ACC. ACC therefore has no (further) basis for enforcing its right of retention, according to Nona Trade.
3.3. ACC’s defence is, in short, that ACC has a right of retention on the aircraft engine under the applicable Fenex terms and conditions for all claims it has now and will acquire in the future against Nona Trade as a result of violations of applicable sanctions and export control legislation. The shipments ordered by Nona Trade from ACC involved (parts of) the aircraft engines that fall under the EAR, among other regulations. These regulations apply because the applicability of American law follows the origin of the goods. Both the BIS and the OFAC (see 2.7) can impose civil sanctions on ACC for violations of the EAR, which fines can potentially amount to millions of euros. Because Nona Trade has wrongfully denied its liability for these fines to ACC, ACC is therefore entitled to and has an interest in invoking its right of retention, according to ACC.
- The assessment
Jurisdiction and competence
4.1. Now that Nona Trade is a legal entity under foreign law and is based in Germany, the claim has an international character. First of all, the interim relief judge must therefore answer the question of whether the Dutch judge is competent to hear the claim and, if so, which law applies to the claim.
4.2. The interim relief judge determines that he must determine his international jurisdiction based on the recast Brussels I Regulation[2]. Based on Article 4, paragraph 1 of this regulation, those who reside in the territory of a member state, regardless of their nationality, are summoned to appear before the courts of that member state. Furthermore, Article 21, paragraph 2 of the Fenex terms and conditions, which have been declared applicable between the parties, states that the place of settlement and damage settlement is the place where the Freight Forwarder is established. As ACC is based in Hoofddorp, the interim relief proceedings is therefore authorized to take cognizance of this dispute under application of Dutch law (Article 21, paragraph 1 of the Fenex conditions).
Urgent interest
4.3. This concerns a provisional remedy claimed in summary proceedings. The judge must therefore first assess whether Nona Trade has an urgent interest in this injunction at the time of this judgment. In addition, the judge in these interim relief proceedings must assess whether the claims in the main proceedings have a sufficient chance of success to justify granting the preliminary injunction. Furthermore, as a general rule, there is no room for the presentation of evidence in these proceedings.
4.4. As long as the airplane engine is still subject to ACC’s right of retention, Nona Trade cannot dispose of it and cannot freely (re)sell it to third parties. ACC has not (sufficiently substantiated) refuted Nona Trade’s assertion that the aircraft engine represents a relatively high value for its business operations, corresponding to a significant portion of its annual turnover. This establishes the urgency of the matter.
Substantive
4.5. It is not disputed between the parties that the Dutch Forwarding Conditions (hereinafter: the Fenex conditions)[3] apply to the order given by Nona Trade to ACC to ship the aircraft engine. The (Dutch version of the) Fenex conditions include the following:
“Article 11. Liability
(…)
- The Client is liable towards the Freight Forwarder for all damage
– including but not limited to material damage, immaterial damage, consequential damage, fines, interest, as well as penalties and forfeitures, including the consequences of failure to clear customs documents or to do so in time and claims based on product liability and/or intellectual property rights – that the Freight Forwarder may suffer, directly or indirectly, due to the Client’s failure to fulfil any obligation under the Agreement or under applicable national and/or international laws and regulations , as a result of any incident that is located in the Client’s sphere of risk, as well as a result of the fault or negligence in general of the Client and/or its subordinates and/or third parties engaged and/or working for it.
- The Client shall indemnify the Freight Forwarder at all times against third-party claims, including claims from employees of both the Freight Forwarder and the Client, relating to or arising from the damage referred to in the preceding paragraph.
(…)
Article 17. Securities
(…)
- The Freight Forwarder shall have a right of retention in respect of all goods, documents and funds which he holds or will hold for any reason and for whatever purpose, for all claims the Freight Forwarder has or will have against the Client and/or the owner of the goods, also with regard to claims that do not relate to the said goods.
(…)
- The Freight Forwarder may also exercise the rights referred to in this article (right of pledge, right of retention and right to refuse delivery) for that which is still owed to him by the Client in connection with previous orders and for that which weighs on the goods by way of cash on delivery.”
4.6. It is assumed that ACC’s right of retention referred to in (Article 17 paragraph 2 of) the above quotation is very broadly defined under the Fenex conditions and is therefore comprehensive. In the opinion of the judge in summary proceedings, a penalty to be imposed on ACC by the BIS or the OFAC can therefore be understood as “claims that the Freight Forwarder has or will have against the Client” by virtue of “fines”. At the hearing, Nona Trade (and its lawyer) also acknowledged that if such a fine were to be imposed on ACC for violating the EAR, ACC could hold Nona Trade liable under the Fenex terms and conditions. ACC can also invoke its right of retention with regard to future or “previous orders”. Furthermore, it is not disputed between the parties that ACC has previously shipped aircraft engines to Iran on behalf of Nona Trade.
4.7. Nona Trade’s defence that it has never seen an (sample) fine imposed by ACC in the context of those previous shipments of aircraft engines to Iran, so that it is not likely that one will be imposed in the present case, is ineffective. During the hearing, the lawyer for ACC argued, and was not contradicted, that fines have already been imposed in Germany for violating the same sanctions regulations. The chance that such fines can be imposed in the Netherlands is therefore not at all inconceivable. In addition, (the lawyer for) ACC also stated without contradiction at the hearing that a statement of opinion has since been submitted to the BIS or the OFAC, for which a response period of 180 days is now running. As things currently stand, it is not sufficiently plausible that a fine cannot or will not be imposed. What is not in dispute between the parties, as mentioned above, is that if a fine is imposed on ACC, Nona Trade will be liable to ACC under the agreed provisions in the Fenex terms and conditions. ACC has invoked the right of retention to secure the (possible) fine(s). Furthermore, it became apparent during the hearing that Nona Trade is unable to offer replacement security to cover (the risk of) the possible imposition of fines.
4.8. Based on the above, the judge in chambers is of the opinion that ACC’s interest in upholding the right of retention outweighs Nona Trade’s interest in its annulment and the release of the airplane engine. This means that Nona Trade’s claim will be rejected.
4.9. Nona Trade has been found to be in the wrong and must therefore pay the legal costs (including additional costs). ACC’s legal costs are estimated at:
| Court fees | EUR 714 | |
| Lawyer’s fees | EUR 1,107 | |
| Costs after the judgment | EUR 178 | (plus the increase as stated in the decision) |
| Total | EUR 1,999 |
- The decision
The interim relief judge:
5.1. dismisses the claims,
5.2. orders Nona to pay the legal costs, on the part of ACC estimated to date at EUR 1,999, to be paid within fourteen days of being served with the order, plus EUR 92 and the costs of service if Nona Trade does not comply with the orders in time and the judgment is served at a later date,
5.3. declares this judgment provisionally enforceable with regard to the awarding of costs.
Notes:
[1] Council Regulation (EU) 2023/1529 of 20 July 2023, concerning restrictive measures in light of Iran’s military support for Russia’s war of aggression against Ukraine.
[2] Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Brussels I-bis”).
[3] Dutch Expedition Conditions of 1 May 2018, as filed with the court in Amsterdam under number 23/2018 and with the court in Rotterdam under number 16/2018.