Parliament Enacts Law to Protect Interests in Aircraft Objects and Implement Cape Town Convention

The Protection of Interests in Aircraft Objects Act, 2025, an Act of Parliament, received presidential assent on April 16, 2025, and was published on the same date. The legislation was enacted to provide for the protection of interests in aircraft objects and to implement the Convention on International Interests in Mobile Equipment and its Protocol on Matters Specific to Aircraft Equipment, both signed at Cape Town on November 16, 2001. The Act aims to integrate these international instruments into Indian law, thereby creating a robust legal framework for transactions involving aircraft. The legislation provided: “An Act to provide for protection of interests in aircraft objects and to implement the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment signed at Cape Town on 16th November, 2001 and for matters connected therewith or incidental thereto.”

Under the Act, the Convention and Protocol are given the force of law in India concerning aircraft objects, subject to specific declarations made by India. The Directorate General of Civil Aviation (DGCA) is designated as the registry authority and is empowered to issue directions for the implementation of the Convention and Protocol. Key provisions include obligations for debtors to maintain and submit records of dues related to aircraft ownership or use, and for creditors to notify the registry authority of any default before exercising remedies. The Act specifies that High Courts will serve as the relevant courts for certain provisions of the Convention. It also clarifies that its provisions will have an overriding effect in cases of inconsistency with other laws, while generally being in addition to existing statutes. Importantly, the Act stipulates that it shall come into force on a date to be appointed by the Central Government through a notification in the Official Gazette.

The legislative intent behind the Protection of Interests in Aircraft Objects Act, 2025, is to establish a harmonised legal regime for the creation, enforcement, and priority of international interests in aircraft objects, thereby reducing legal risks and transaction costs associated with aircraft financing and leasing. This framework is crucial for facilitating asset-based financing and leasing of high-value mobile equipment, such as aircraft, by providing greater certainty and predictability for creditors and investors. Prior to this enactment, the absence of specific domestic legislation implementing the Cape Town Convention meant that the full benefits of this international framework, designed to enhance the availability and reduce the cost of credit for aircraft, were not fully realised in India.

The Act addresses statutory gaps by formally adopting the Convention and Protocol, which define "international interest" (an interest held by a creditor in mobile equipment, like aircraft, under the Convention) and establish an international registration system for such interests. It introduces new rights and obligations, such as the creditor's right to specific remedies upon debtor default and the debtor's duty to provide information. The legislation also outlines enforcement mechanisms, including provisions for remedies on insolvency (legal processes for dealing with financial distress, such as bankruptcy or liquidation), de-registration, and export of aircraft objects. India's declarations under the Convention and Protocol, detailed in the Second Schedule, specify how certain provisions will apply domestically. For instance, India has declared that certain non-consensual rights, such as liens for unpaid airline employee wages or government taxes, will have priority or be registrable. Furthermore, it has adopted Alternative A for insolvency remedies, providing for a two-calendar-month waiting period, and has specified timelines for "speedy" interim relief (10 or 30 working days). The Act also clarifies that the Convention will supersede earlier international agreements like the 1948 Geneva Convention on International Recognition of Rights in Aircraft and the 1933 Rome Convention on Precautionary Attachment of Aircraft, as they relate to aircraft objects. The Central Government retains the power to make rules for carrying out the Act's provisions and to amend or withdraw declarations, ensuring adaptability to future needs.

Keywords: Protection of Interests in Aircraft Objects Act, 2025, Cape Town Convention, Aircraft Protocol, mobile equipment, international interests, aircraft financing, aircraft leasing, Directorate General of Civil Aviation, insolvency remedies, de-registration, export, India.

Geo Tags: Country: India District: Not Applicable