Browsing by Subject "liens"

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  • Halonen-Manner, Susanna (Helsingin yliopisto, 2020)
    The field of international aviation has in the past decades had many regulatory changes and new international aviation treaties have been introduced. One example is the international private law instrument on property, signed on November 16 of 2001, the Convention on International Interests on Mobile Equipment, (Convention) along with the Protocol to the Convention on International Interests in Mobile Equipment on matters specific to Aircraft Equipment (Protocol), hereinaf-ter collectively called the CTC. The aim with the CTC was to create clear and uniform rules to facilitate international finan-cial transactions on aircraft objectives. CTC, as a modern instrument, provides for flexibility allowing states to make dec-larations in line with its national policies. A creditor friendly declaration by a state with less legal barriers at international level reduces the exposure of risk for the creditors. As a consequence, the cost of financing aircraft is reduced for the air carriers. This thesis examines the ultimate test of the instrument namely the main legal issues related with the exercising of credi-tor rights when the debtor defaults on the rental payments of e.g. operational leases of aircraft. The underlying presump-tion is that if a state has opted-in on “self-help” remedies such as the irrevocable deregistration and export request au-thorization (IDERA) then creditors financing aircraft in a CTC jurisdiction could rely on the declarations voluntarily made by the state in the event of a default of the debtor. This provides legal certainty. The IDERA is the core of the instrument. It effectively rules out the possibility for national aviation authorities and courts to use its discretion. Furthermore, clear rules on priority based on the established international registry for creation and perfection of an interest will support the process of exercising creditor rights. There is one exception to the priority order, the non-consensual rights and inter-ests (NCRI). A validly registered international interests would however have priority over the NCRI in case the lien de-clared under the Convention is not derived from the domestic law of the state. By using case study as method, the discussion ultimately concerns if the CTC provides an effective platform for the avia-tion industry to facilitate global aircraft financing. The results on the case law of Spice Jet in India provides that deregis-tration of aircraft as part of the scope of IDERA does not permit the exercise of discretion by the aviation authority. While the court adjudicated the case correctly and upheld the CTC rules it seems that India continues not to be effectively com-pliant to the CTC. The CTC is a complex instrument consisting of 99 Articles. The Aviation Working Group (AWG) offers education to states and other stakeholders. It has also recently established a new risk assessment tool, the Compliance Index. This tool provides a predictive assessment on future compliance by Contracting States. This case clearly shows the unfairness of the NCRI as a concept particularly in an operational lease transaction. Liens fit ill with the modern avia-tion industry of today. Leasing as a form of financing tend to be most common used form of financing. There are valuable guidelines for states in connection to liens and fleet liens. Deregistration as a concept is a process under the Convention on International Civil Aviation of December 7, 1944 (Chi-cago Convention) and relates to the Certificate of Registration (COR) of aircraft. All aircraft need to bear a nationality. The notion of registration and reregistration is regulated in the Chicago Convention, but there is no mention of deregistra-tion. This gap has consequences for the CTC. The International Civil Aviation Organization (ICAO) has previously facili-tated the process of Art 83bis with good results. ICAO could similarly take the lead and provide solutions and best prac-tice in order to close the gap between registration and re-registration. This would further enhance the global aircraft financing as an effective platform for the aviation industry.