Aerotree Defence and Services Sdn Bhd has initiated legal proceedings in the Kuala Lumpur High Court against the Malaysian government, the defence ministry and its secretary-general. The company is demanding RM353 million in compensation after authorities terminated a five-year lease for four US-built Blackhawk UH-60A helicopters. Filed through the law firm Messrs Hafarizam, Wan Aisha & Mubarak, the lawsuit also calls for the government to reinstate the contract based on an acceptance letter issued on 17 April 2023.

Should the deal not be revived, Aerotree seeks RM17.5 million in special damages, RM38.7 million in further damages and US$38.7 million (RM297.3 million) in compensation, in addition to general, exemplary and aggravated damages. It is also requesting a court order to prevent the government from using its RM1.87 million bank guarantee and a declaration that the 31 October 2024 termination was invalid.

Delays, Financing Issues and Ministry Response

Aerotree’s claim details a RM187.5 million lease under a private finance initiative in which it would own, operate and maintain the aircraft. Two helicopters were due within six months of the acceptance letter and the other two within nine months. The company had already lodged a RM1.87 million performance bond through Perwira Affin Bank.

The firm said it had arranged simulator training for 14 army pilots with Turkey’s Havelsan and agreements with Slovakia’s Training Academy to acquire and upgrade the helicopters. Delays arose from technical modifications, pilot training needs and global supply chain disruptions caused by the Russia–Ukraine conflict. It requested three deadline extensions to 30 October 2024 but remained subject to penalties.

Aerotree further accused the ministry of failing to support its SME Bank loan application during a board restructuring period. A change of defence minister, it said, also delayed paperwork. On 31 October 2024, the company received a termination notice citing failure to deliver the helicopters.

Allegations of Bad Faith and Reputational Damage

Aerotree contends the cancellation was unfair since the helicopters had already been registered with the US State Department and were awaiting export approval under the International Traffic in Arms Regulations. The firm argues that the contract terms provided for penalties rather than outright termination and required negotiations first.

It also alleged that a key financing document – a deed of assignment submitted to the ministry’s legal division in June 2024 – was ignored, and that the government subsequently seized its RM1.87 million bond while dismissing appeal letters sent in December 2024.

According to Aerotree, this has severely damaged its reputation and exposed it to potential legal action from its Slovakian supplier. The company noted that in August 2025 the ministry issued a new helicopter rental tender worth RM185.2 million, which closed on 23 September, but warned there was no guarantee of success even if it reapplied.

With export approvals now secured, Aerotree accuses the government of acting in bad faith, saying the termination caused major financial and reputational losses. The case is scheduled for management on 23 October.

Written By: 

*Dr Iqbal Survé

Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN

*Cole Jackson

Lead Associate at BRICS+ Consulting Group 

Chinese & South American Specialist

** MORE ARTICLES ON OUR WEBSITE https://bricscg.com/

** Follow https://x.com/brics_daily on X/Twitter for daily BRICS+ updates

Source link