Successful aircraft repossession in Aruba: Aruba a registry and a judicial system of choice!

This Registry of Aruba was the first privately managed Category-1 aircraft registry in the world as rated by the FAA. Aruba was also the first off shore aircraft jurisdiction to adopt the Cape Town Convention, as early as in 2010. Aruba’s sound legal system and sophisticated courts can also offer even more value to the business aviation community. The Courts of Aruba just evidenced the latter through recent decisions.

Aruba’s sound and efficient legal system – combined with proper application thereof – allowed for an internationally operating lessor to arrest a YV-(Venezuelan) registered aircraft in Aruba and within days obtain a favorable decision by the court ordering the lessee to release the aircraft and records and to de-register the aircraft from the YV-registry. To encourage compliance with the courts decision the court awarded an immediately payable penalty of US$ 100,000. — per day or per portion thereof up to a maximum amount of US$ 6,000,000.–.

It is noteworthy that the decision was scheduled for 2 weeks following the hearing, however in the interest of both lessor and lessee to obtain certainty over the status of the aircraft and to preserve the integrity of the aircraft the Court of First Instance of Aruba issued the decision in 1 week!

The swift process evidences that the courts realize the importance of these aircraft related matters and is consistent with the Declarations as to the meaning of the word “speedy” in articles 13(1) of the Convention and X of the Protocol although the Convention was not applicable to the lease in question since the debtor was a Venezuelan entity and Venezuela is not a party to the Convention. This shows that the Court of Aruba is reliable and efficient.

The aircraft lessee was a Venezuelan start-up airline who during the certification process had been in default for almost 2 years. The lessor was a U.S. Owner Trustee and the beneficial owner a Canadian leasing company. The aircraft came to Aruba on a test flight and the lessor was able to use Aruba as forum arresti. New York law was the law governing the lease and the Court upheld the application on NY law including the default(s) of the lessee and the termination of the lease.

I would also like to point out that the recent decision of the Court was the second issued in 2015, as earlier in the year the Court ordered, arrested and liberated a foreign registered and stolen (!) aircraft when it landed in Aruba. The difference with the earlier case is that it was a judgment by default, which would allow certain critics (and surely the skeptics) to claim that the court in these matters remains “untested”.

Well in this case the proof of the pudding is in the eating and in the opinion of the lessor and the lessor’s Aruba based attorney – yours truly – the pudding is/was delicious.

#arubaguy #thearubaguy #arubalawyer #lincolngomez

10 things (plus 1) lenders/lessors should know about aircraft finance in Aruba

Q1: What necessitates a lender or a lessor to opt for Aruba as an aircraft registry of choice?

A1: Because Aruba has ratified the Cape Town Convention and the Aircraft Equipment Aircraft Protocol. As of September 1st, 2010, Aruba is one of the very few off-shore aircraft registries having adopted these instruments. Moreover, Aruba has made the necessary Declarations under the Cape Town Convention to safeguard the interests of the lessors and lenders. Besides, Aruba provides for a legal insolvency regime, which provides these parties with more extensive rights than the Cape Town Convention.

Q2: What security rights are available to protect the interests of the lenders?

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