Ukraine Crisis Places Renewed Emphasis on Due Diligence in Aircraft Transactions, Operations
International Trade and Aviation Law attorney Jonathan Epstein was interviewed by the National Business Aviation Association (NBAA) for an article discussing how sanctions against Russia are affecting aircraft transactions. With the situation in flux and countries focused on seizing the assets of Russian entities, aircraft buyers and sellers need to carefully conduct due diligence to ensure an accurate ownership history and avoid connections to sanctioned individuals or entities. Mr. Epstein recommended parties include a condition precedent in a contract under which the seller agrees to provide information about a beneficial owner early in the process, adding that searching online flight tracking sites can also provide helpful information.
"Just having a sanctions clause [in the purchase contract] where the other party says, 'I'm not a sanctioned party' is not a get out of jail free card and does not replace due diligence," he explained. "There's no way that due diligence is going to be 100% foolproof, but you should be able to demonstrate that you conducted reasonable diligence, based on the facts and circumstances, should questions regarding past-ownership arise – and you should have contemporaneous written records of the diligence performed."