Ryanair has been accused of behaving unethically in refusing to pay back more than $3 million (€2.56 million) to the exchequer arising from State indemnities provided to the airline in the wake of the September 11th terror attacks.

The Master of the High Court said the Government had stepped in and now the airline was saying it would not pay any premium.

That was "unethical", Master Edmund Honohan said. The Master added that he had read the papers in the case against Ryanair and he believed it had no defence.

Master Honohan was dealing yesterday with the discovery of documents for a case brought by the Minister for Transport against Ryanair in which the Minister is seeking $3,171,192 due on foot of charges levied on the airline under the provisions of the Air Navigation and Transport and Indemnities Act 2001.

The Government Indemnity Scheme was set up after 9/11 to provide air carriers and ground handling companies with temporary protection and to restore insurance cover to the levels which had operated prior to the attack on the World Trade Center in New York.

Airlines across the EU would not have been able to fly if Governments had not stepped in to provide temporary cover. The scheme ended on October 31st, 2002.

The Minister for Transport had provided Ryanair with an indemnity for the period October 24th, 2001 to March 23rd, 2002 and it is claimed the airline failed, refused and neglected to make any payment in relation to that cover. The amount deemed to be owed by Ryanair was calculated on the basis of fixed charges, combined with passenger numbers from the Ryanair website. The first demand for the money went out on March 1st, 2002, and a further demand was issued in October of that year.

In court yesterday, Master Honohan noted the State was prepared to pay Ryanair's costs of the discovery application and wondered why. On consent of both sides, he granted the discovery application.