AMC InsightsNovember 14, 2023

Cyprus Ratifies Cape Town Convention and Aircraft Protocol

The Republic of Cyprus acceded to the Convention on International Interests in Mobile Equipment of 2001 (the Cape Town Convention) as of 1 November 2023.

The primary aim of the Cape Town Convention and the Protocol is to resolve the problem of obtaining certain and opposable rights to high-value aviation assets, namely airframes, aircraft engines and helicopters. The risk of aircraft financiers and parties involved in aircraft purchasing and leasing is reduced under the Convention, which establishes an international interest recognised in all States parties.

At the time of the deposit of its Instrument of Accession, the Republic of Cyprus lodged the following declarations under the Cape Town Convention.

Declaration with respect to Article 39 (Rights having priority without registration)

Cyprus declared:

  • pursuant to Article 39(1)(a) that all categories of non-consensual rights or interests which under the laws of the Republic of Cyprus have and will in the future have priority over an interest in an object equivalent to that of the holder of a registered international interest, will take priority over a registered international interest, whether in or outside insolvency proceedings and whether registered before or after its accession.
  • pursuant to Article 39(1)(b) that nothing in the Cape Town Convention will affect its rights or that of any State entity, any intergovernmental Organisation or other private provider of public services, to arrest or detain an object in accordance with the Cyprus law for payment of amounts owed to it or to any such State entity, Organisation or provider directly relating to the services provided by it in respect of that object or another object.
  • pursuant to Article 39(4) that all categories of non-consensual rights or interests covered by the declaration lodged pursuant Article 39(1)(a) of the Cape Town Convention will take priority over a security interest registered prior to the date of its deposit of its instrument of accession.

Declaration with respect to Article 40 (Registrable non-consensual rights or interests)

Cyprus declared the following categories of non-consensual right or interest as registrable under the Cape Town Convention as regards aircraft objects as if the right or interest were an international interest and shall be regulated accordingly:

  1. rights of a person obtaining a court order permitting attachment of an aircraft object in partial or full satisfaction of a legal judgment;
  2. liens or other rights of the Government of the Republic of Cyprus relating to taxes or other unpaid charges of any type whatsoever (which is not covered by the declaration under Article 39(1)(a) of the Cape Town Convention);
  3. liens or other rights of the Government of the Republic of Cyprus relating to taxes or other unpaid charges arising from or related to the use of an aircraft object and owed by the owner or operator of that aircraft object, and arising prior to the time of a declared default by that owner or operator under a contract to finance or lease that aircraft object;
  4. notifications of bankruptcy orders when the bankruptcy estate includes objects covered by the Convention in order to protect the rights of the bankruptcy estate; and
  5. any other non-consensual right or interest which is not covered by the declaration under Article 39(1)(a) of the Convention.

Declaration pursuant to Article 53 (Determination of courts)

Cyprus declared that the District Courts of the Republic of Cyprus, are the relevant courts for the purposes of Article 1 (Definitions) and Chapter XII (Jurisdiction) of the Cape Town Convention.

Declaration pursuant to Article 54(2) (Regarding remedies)

Cyprus declared that all remedies available to the creditor under the Cape Town Convention which are not expressed to require application to the court may be exercised without leave of the Court.

Declarations made by Cyprus pursuant to the Aircraft Protocol – Deregistration and export of Aircraft

At the time of the deposit of its Instrument of Accession, the Republic of Cyprus lodged a declaration under Article XXX (1) of the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment (Aircraft Protocol). Cyprus declared that it will apply Article XIII (De-registration and export request authorisation) of the Aircraft Protocol.

Under Article XIII of the Aircraft Protocol, irrevocable deregistration and export request authorizations (DERAs) issued and submitted for recordation to the registry authority by debtors in the form annexed to the Aviation Protocol, such DERAs must be so recorded. The person in whose favour the authorisation has been issued is deemed the “authorised party” (the AP). A DERA cannot be revoked by the debtor without AP’s written consent and the registry authority must remove a DERA from the registry at the request of AP.

Furthermore, under Article XIII of the Aircraft Protocol, AP is deemed the sole person entitled to exercise the remedies specified in Article IX(1) of the Aircraft Protocol, including:

  • the remedies specified in Chapter III of the Cape Town Convention;
  • the right to procure the de-registration of the aircraft; and
  • the right to procure the export and physical transfer of the aircraft object from the territory in which it is situated.

AP may exercise the above remedies only in accordance with the DERA and applicable aviation safety laws and regulations.

Please contact our aviation practice for more information.

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