A longstanding financial and legal dispute between Tajikistan’s national airline, Tajik Air, and Lithuania’s SkyRoad Leasing has been resolved, Tajik Air head, Parviz Shodmonzoda, told reporters in Dushanbe on January 29.

According to him, a court ruling had determined that Tajik Air owed SkyRoad Leasing US$36.6 million, but under a settlement agreement, the airline will pay only US$2 million.

Shodmonzoda stated that US$500,000 has already been transferred, with the remaining US$1.5 million to be paid soon.

Once the full payment is made, two aircraft owned by SkyRoad Leasing and currently stationed at Dushanbe airport will become the property of Tajik Air.  However, both planes are currently non-operational and require repairs.

Background of the dispute

The conflict between Tajik Air and SkyRoad Leasing dates back to 2013, when the Tajik airline stopped paying a monthly leasing fee of $149,000 for two Boeing aircraft. As a result, SkyRoad Leasing imposed penalties totaling $20 million.

Legal proceedings took place in Dushanbe, Moscow, and the United States.

The Vilnius Arbitration Court ruled that Tajik Air must pay $20 million, but Tajikistan’s Economic Court refused to recognize the claim. Later, the Supreme Economic Court of Tajikistan upheld the Vilnius court’s decision.

SkyRoad Leasing accused Tajik Air of failing to comply with the arbitration ruling, while Tajik Air argued that the Lithuanian company had not followed proper notification procedures under the Foreign Sovereign Immunities Act.

During the dispute, one of Tajik Air’s aircraft was seized at Moscow’s Vnukovo Airport.

Shodmonzoda confirmed that, after settling the issue with SkyRoad Leasing, the seized aircraft will return to Tajikistan and undergo repairs in Uzbekistan.

He also acknowledged that Tajik Air still has debts to other organizations, but these are not as significant as the SkyRoad Leasing case, which had been one of the airline’s biggest challenges.

Recall, Tajikistan’s High Economic Court in July 2021 satisfied the claim filed by Lithuania’s SkyRoad Leasing against the Tajik national air carrier Tajik Air.  The court upheld Dushanbe Economic Court verdict’s which ordered Tajik Air in 2018 to pay an outstanding debt of 20 million U.S. dollars.

A court in the United States in June 2022 rejected Lithuanian company’s claims against Tajik Air as it lacked personal jurisdiction over Tajik Air.  The United States Court of Appeals for the District of Columbia Circuit noted on June 17, 2022 that the district court granted the motion, ruling that it lacked personal jurisdiction over Tajik Air under the Fifth Amendment’s Due Process Clause.

UAB SkyRoad Leasing (SkyRoad), a Lithuanian company, sought to enforce an arbitral award against OJSC Tajik Air (“Tajik Air”), an airline wholly owned by the Republic of Tajikistan.

The Vilnius Court of Commercial Arbitration issued a final award in Skyroad’s favor, which was affirmed by the Court of Appeal of Lithuania.  Tajik Air has not yet paid the arbitral award, and SkyRoad filed a petition to enforce the award in the district court pursuant to the Federal Arbitration Act, 9 U.S.C. § 207.

It is to be noted that Tajik Air in September 2009 entered into two identical lease agreements with a Lithuanian company called AB Avia Asset Management for the lease of two Boeing aircraft.  The agreements required Tajik Air to pay monthly rent of US$149,000 for each aircraft and to return the two aircraft at the end of the 60-month lease period.  On November 2, 2010, AB Avia Asset Management transferred all rights and obligations under the lease agreements to UAB AviaAM B03, which later became UAB SkyRoad Leasing.

In 2013, after Tajik Air started falling behind on the monthly lease payments, SkyRoad initiated arbitration proceedings pursuant to the agreements, resulting in an award of $2,824,000 plus interest.  When Tajik Air remained delinquent on payments and failed to return the aircraft at the end of the leases, SkyRoad initiated a second arbitration proceeding with the Vilnius Commercial Arbitration Court (VCCA) tribunal on September 5, 2017, whose ultimate award is the subject of this action.

After the Lithuanian court's decision, an appeal by the airline was rejected.  On top of the USD20 million, the court demanded USD84,000 from the airline in legal costs.

The only state-owned aviation company in Tajikistan, Tajik Air, has been experiencing economic difficulties for years.