NBAA is advising that the Russia/Ukraine conflict and the associated international sanctions highlight the importance of buyers, sellers, and air carriers to fully conduct due diligence before moving forward with transactions. Noting that the U.S. and many other countries are now focused on seizing aircraft and other assets of sanctioned Russian entities, NBAA said buyers must have accurate ownership histories to ensure they are not connected with such entities. Additionally, sellers need to be aware of who they are selling to, given restrictions on exports to Russia.
“Aircraft buyers and sellers need to focus on obtaining ultimate beneficial owner information that may not be apparent from cursory searches of public databases,” said Scott O’Brien, NBAA senior director for public policy and advocacy. “You may need to conduct additional research and engage with your aircraft transaction team.”
International trade and aviation lawyer Jonathan Epstein, who is a partner with Holland & Knight, told NBAA that “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.”
Epstein acknowledged that due diligence may not be 100 percent foolproof, but a party should have written records in case questions arise. Full due diligence could help protect a buyer’s rights, NBAA said.