Remedies under Cape Town Convention and Aviation Protocol in Russia: Are they still available?
Following Western sanctions against Russia’s civil aviation, the Russian government is planning to introduce restrictive countermeasures that could adversely affect lessors and mortgagees of aircrafts operated or owned by Russian carriers. On 10 March, the Russian Ministry of Transportation published a draft regulation targeting lessors of aircrafts owned by entities of foreign states and territories exercising unfriendly activities towards Russia. The draft regulation prohibits Russian operators of such aircrafts from returning them to their owners following termination of leasing agreements without approval of a special governmental commission. The list of “unfriendly states and territories” includes, among others, the US, all member states of the EU, the UK (alongside with Jersey, Anguilla, British Virgin Islands and Gibraltar). The Isle of Man and Bermuda are not on the list, at least for the time being.
The regulation, if adopted, will come into conflict with Russia’s obligations under the Cape Town Convention and the Aviation Protocol. Their binding force for the Russian authorities is based on the priority of international treaties over national legislation (article 15(4) of the Constitution of Russia). In case of conflict between a law and an international treaty to which Russia is a party, Russian courts must apply the international treaty. The Russian Federation may denounce the Cape Town Convention, but denunciation does not release it from obligations in respect of international guarantees that originated prior to the effective date of the denunciation.
Russian laws contain only few provisions on the implementation of the Cape Town Convention and the Aviation Protocol. Russia declared that any dispute relating to the Cape Town Convention and Aviation Protocol is to be resolved by the commercial courts, and that any remedy available to the creditor under any provision of the Cape Town Convention which is not there expressed to require application to the court may be exercised without application to the courts. In a separate declaration under the Aviation Protocol Russia pledged to apply its provisions on the choice of law and on de-registration and export request authorization. The administrative regulation of state registration of civil aircrafts (order of the Ministry of transportation of 5 December 2013 No. 457) was supplemented with provisions on filing of an irrevocable de-registration and export request authorisation. There are very few precedents of application of the Cape Town Convention by the Russian courts.
The primary practical challenge that the current situation poses for foreign lessors and mortgagees of aircrafts used by Russian operators is how they could make use of the remedies under the Cape Town Convention (e.g., procure de-registration of aircrafts and export and physical transfer of aircraft objects from the Russian territory) without consent of their Russian operators. While the actual reaction of the Russian authorities under current political circumstances cannot be predicted, the legislation in force contains several options for exercising these remedies.
The holder of an irrevocable de-registration authorization could apply to the Russian civil aviation authority (Росавиация) for de-registration of the aircraft, take possession of it and organize its transfer from Russia. Many Russian operated aircrafts still are registered abroad (Bermuda and Ireland are the two most popular jurisdictions). According to article XIII(4) of the Aviation Protocol the Russian authorities are obliged to assist a holder of an irrevocable de-registration authorization with regard to an aircraft registered by an aviation registry of any other state party to the Aviation Protocol.
If the leasing or mortgage agreement provides for judicial remedies, the lessor/mortgagee will have to apply to a commercial court. The Cape Town Convention (articles 42 and 43) and the Aviation Protocol (article XXI) provide for concurrent jurisdiction: a plaintiff may apply to a court chosen by the parties of the transaction, or to a court of a Contracting State on the territory of which the aircraft object is located, or where the aircraft is registered, or at the debtor’s place of business. The Cape Town Convention does not contain provisions on the recognition and enforcement of a judgment of a competent court of a foreign Contracting State by the authorities of the Contracting State on the territory of which the aircraft object is located. However, one may argue that article 42 of the Cape Town Convention imposes an obligation on the Contracting Parties to recognize a judgment made by a court of the Contracting State chosen by the parties of the transaction.
Russian courts provide remedies under the Cape Town Convention in accordance with the general rules of procedure in the Commercial Procedure Code (the CPC – АПК РФ). In addition to the rules of procedure in the domestic laws, the Cape Town Convention provides for a “speedy” relief pending final determination (article 13). Russia has not made a declaration on the specific number of working days for obtaining of the relief. We expect that the court will follow the general rules on interim relief measures. According to article 93 of the CPC, a court must rule on an application for interim relief within one working day after its filing.
If the draft regulation mentioned above is adopted, a decree of the governmental commission which prohibits a Russian lessee to return an aircraft to its foreign owner after termination of the leasing agreement will be in violation of the Cape Town Convention and the Aviation Protocol.
Daniel Marti / Nikolai Bobrinsky