This blog is a random collection of information, partly in support of my quotations web site. Other topics include wine, military news, economics, history, libertarianism, and other random things which happen to strike my fancy. Backup site is at http://quotulatiousness.blogspot.com/ (if there are no posts showing, hit the backup blog for explanation). Comments have been turned off, as the spam was getting too much to handle. Comments can be emailed to me for posting.

June 09, 2006

Two wrongs don't make a right department

Perhaps I'm misreading this report, but this is a weird ruling:

The Supreme Court has affirmed a law that allows airport authorities to seize aircraft from bankrupt carriers — even if the planes are leased.

But in a ruling filled with technical twists and turns, the court says the leasing companies are not responsible for landing fees and other fees owed by airlines that go belly up.

In a unanimous 7-0 decision, the high court today ruled in favour of Nav Canada and a number of airport authorities across the country in cases involving the bankrupties of Canada 3000 and Inter-Canadian Airlines.

If that's a correct report, it's morally incomprehensible. How is a leasing company supposed to be responsible for the finances of a lessor? Why does the leasing company lose their assets — the planes in question — for debts contracted and defaulted upon by a customer? Does this not move the moral hazard from the defaulting contracting party to a non-contracting party? How is this right?

Posted by Nicholas at June 9, 2006 11:32 AM
Comments
I have not read the ruling yet but this may come from marine law in which ships themselves can be arrested and have liability sort of attached to them as a mobile asset of value. That being the nature of the trade (since the medieval) leasing companies and their clients would have indemnification clauses taking them into account. Didn't anyone tell you that transport law is neato? Posted by: Alan at June 9, 2006 12:09 PM
Thanks Alan. I did wonder . . . a lot . . . about the rights and wrongs of the case as reported. That might cover the area I was concerned with. Posted by: Nicholas at June 9, 2006 03:08 PM
It also cites a 1500's case on statutory interpretation. Boy oh boy is this going to be a fun weekend! Posted by: Alan at June 9, 2006 04:11 PM


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