Ukraine, Russian Sanctions – Once Again Highlight the Due Diligence Imperative

Hands of business people working with documents

As the war in Ukraine continues, Russian sanctions appear to be something that will be part of the international economic stage for the foreseeable future. These sanctions seem to make it more likely we will see private aircraft owned or operated in Russia become available for sale. Given that most private aircraft used in Russia are not on the Russian aircraft registry, understanding who the ultimate owner is and being able to show that a real effort was made to conduct due diligence related to any buy/sell transaction is critical.

These sanctions remind us that buyers should make sure they are doing everything possible to “Know Your Customer.” The due diligence necessary on aviation transactions has become more important in recent weeks, and this will continue. It is not enough to depend on a lender, or an escrow agent involved in the transaction to handle the due diligence process. Additionally, it is not advisable to only rely on a contractual provision. As a buyer, you need to make sure you are not negotiating with (and buying from) a sanctioned person, and as a seller ensure there is not an intent to export the aircraft to Russia or any other sanctioned country.