aircraft repossession

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 which are favourable for Lessors/U.S. Trustee Lessors.

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 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.