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The Cape Town Convention in the UAE

Aircraft financing continues to create a long-term challenge for operators, as securing a financier who is willing to provide liquidity to finance aircraft purchase or lease transaction requires that such financier ...

Aircraft financing continues to create a long-term challenge for operators, as securing a financier who is willing to provide liquidity to finance aircraft purchase or lease transaction requires that such financier (whether a bank, financing institution, seller or a lessor) has confidence and certainty, before providing such liquidity, that if his debtor defaults in payment or other performance, the relevant legal regime will respect the financier’s contractual and ownership rights pertinent to the aircraft especially due to the aircraft nature that it is always on the move and has no fixed location, which creates challenges in the context of widely differing national laws.

One of the most important and innovative international conventions in the field of transnational commercial law who furnish solutions for such issues, is the Cape Town Convention and its Aircraft Protocol.

The Cape Town Convention & the Aircraft Protocol both adopted on 16.11.2001, Entered into force on 01.03.2006

Contracting States:

  • The Convention: 77 + the European Union
  • The Protocol: 73 + the European Union
The Aircraft Protocol covers; airframes, aircraft engines and helicopters
The UAE has ratified the Convention and the Protocol on 29.04.2008 and entered into force on 01.08.2008


The principal objective of the Convention is to facilitate the efficient financing and leasing of mobile equipment. Such financing will assist in the development of cost-effective modes of transport and space assets utilizing modern technologies. The Convention system is designed to bring significant economic benefits to countries at all stages of economic development, and in particular to developing countries by bringing within their reach commercial finance for mobile equipment that has previously been unavailable or available only at relatively high cost.

Forms of Finance & Benefits:

The financing of aircraft objects takes three principal forms:

  • a loan secured by a security interest in the object;
  • a sale under an agreement (title reservation, or conditional sale, agreement) in which the seller reserves ownership until payment in full; and
  • a lease, which may be either a finance lease or an operating lease and may or may not include an option to purchase.

The huge outlays involved in the financing of objects of the kinds covered by the Convention make it essential for the creditor (the financier, seller or lessor) to be able to have confidence that if the debtor defaults in payment or other performance the relevant legal regime will respect the creditor’s contractual and proprietary rights and provide the creditor with efficient and effective means to enforce those rights, and to secure priority for its international interest against competing claimants.

The International Registry:

At the heart of its system of priorities lies an international registration facility established for the purposes of the Convention and its Aircraft Protocol; the International Registry. It is an asset-based electronic registry, where interests are registered against objects and not persons (debtors), and serves as a public notice system in order to establish priority. I believe the Convention would benefit a lot from replacing the centralized registry with a blockchain-based decentralized system of registration. It would be much cheaper to operate and would be free from errors or omissions caused by the registrar or its officers or employees.

The Situation in the UAE:

The United Arab Emirates declared that it will apply Article (11) of the Aircraft Protocol, Alternative A in its entirety to all types of insolvency proceeding and all other insolvency-related events.

  • The implications of this choice
  1. Upon the occurrence of an insolvency-related event, the insolvency administrator or the debtor, as applicable, shall give possession of the aircraft object to the creditor no later than the end of the waiting period (60 days in the UAE);
  2. The registry authority and the administrative authorities in the UAE shall make available to the creditor the default remedies provisions stipulated in Article (9) of the Protocol no later than five working days after the date on which the creditor notifies such authorities that it is entitled to procure those remedies, which include
  1. procure the de-registration of the aircraft; and
  2. procure the export and physical transfer of the aircraft object from the territory in which it is situated.


  • The UAE does not recognize “self-help” remedies; hence, it has declared that any remedies available to the creditor under the Convention which are not expressed under the relevant provision thereof to require application to the court may be exercised only with leave of the court.
  • The GCAA has developed a new procedure for the enforcement of IDERA which does not require court approval. Nonetheless, in practice, the GCAA would not execute an IDERA without a court order.


Work along with the GCAA to take initiative with the competent judicial authority to activate the Convention and the Protocol and stipulate an execution mechanism by which the IDERA is executed through a fast-pace special execution procedure without the need to go through all the judicial procedures before the civil court to obtain a judgment to do so.
Educate the judicial system regarding the Convention and Protocol, especially that there is a new Act.
Keep an eye on the updates in the blockchain technology’s effect on the aircraft leasing market, especially that aircraft manufacturers like Boeing and Airbus are active in this space and are moving into the ‘testing phase’.


Ihab is an Italian attorney-at-law and expert in the aviation sector. He has been engaged in commercial and regulatory law practice for many years, with a focus on aviation.

He has an extensive experience in high-profile litigation, aircraft financing and leasing, aviation regulation, aircraft accident investigations and policy & business aviation issues.

During his career, he has been actively involved in a full range of legal matters arising in the aviation industry, including drafting aviation legislations, participating in major Privatization and Public–Private Partnership projects, delivering regulatory consultations & proceedings, handling general aviation and commercial issues including sale, purchase and lease of aircraft transactions, aircraft & air navigation services’ insurance and reinsurance, and other environment, security & safety issues.

Ihab has addressed numerous conferences on aviation law and aircraft financing & leasing in the Middle East, Europe and Canada, and published on a variety of issues, including commercial aviation developments, environmental regulation impacting the aviation sector and the Cape Town Convention and its Aircraft Protocol.

He is a member of ICAO’s Commission of Experts of the Supervisory Authority of the International Registry (CESAIR) for the purposes of the Cape Town Convention (CTC) and the Aircraft Protocol.