The UAE’s Civil Aircraft Law contains the primary domestic rules that apply to aviation leasing and financing (Federal Law Number 20 of 1991). The general guidelines for the registration of civil aircraft are laid forth in the UAE’s Civil Aviation Regulations. The General Civil Aviation Authority (GCAA) is designated as the competent authority for the control and regulation of civil aviation in the UAE by the Aviation Authority Law of the United Arab Emirates (Federal Law Number 4 of 1996, as amended by Federal Law Number 20 of 2001). The Dubai Civil Aviation Authority’s authority and the terms of its collaboration with the GCAA are defined in Law Number. 19 of 2010. On December 18, 2019, Federal Law Number. (8) of 2018 (FL8) governing financing leasing became effective. On August 14, 2019, Cabinet Decision Number 5 6/2019 about the Record of Registration of Finance Lease Contracts on Movables was published.
There are no clear limitations on the transfer of interests in or the creation of security over aeroplanes on the choice of applicable law in contracts. As a general rule, the GCAA and the UAE courts would accept the parties’ selection of foreign law if the following conditions were met:
Such an option is expressly stated by the parties in the pertinent document, and it does not conflict with sharia law or public policy. According to the Protocol to the Cape Town Convention, the parties to a contract are free to select the law that will regulate their legal rights and obligations.
Two Or More Parties Can Transfer The Title To An Aeroplane By Signing A Legal Document That Meets The Requirements Listed Below:
Any document that satisfies these requirements, including a bill of sale, is valid for transferring title to an aircraft. Our knowledge indicates that, so long as the bill of sale is notarized, the buyer does not need to countersign a bill of sale that the seller has already executed.
what procedures must be followed in order to create an aircraft transfer agreement that is legally binding?
A true certified copy of the document establishing the owner’s property title must be submitted with a request to the GCAA for the registration of the transfer of title to an aircraft in accordance with Appendix 1 of Chapter 1 of Part V of the Civil Aviation Regulations. The following requirements must be met by the transfer document:
If a power of attorney was used to execute the transfer instrument, the GCAA should be given a copy of the original, notarized power of attorney. The GCAA may accept any other original documentary evidence of authorisation (it’s equivalent) giving full powers to submit the linked GCAA application and other necessary documentation relating to such party granting authorities if the power of attorney is not available. The GCAA has the discretion to request any extra information or supplementary supporting papers from the applicant in order to assess whether the owner of the aircraft may be legitimately registered in the UAE.
Describe the aviation-specific provisions of any captive insurance scheme in your jurisdiction. According to article 24(1) of Federal Law Number 6 of 2007, as amended by Federal Laws Numbers. 24 and 25 of 2020 (the Insurance Law), any of the following organizations that are licensed and registered with the Insurance Authority may conduct insurance activities in the United Arab Emirates (UAE):
Do the insurance and reinsurance documentation’s cut-through clauses have legal standing?
Cut-through clauses are quite typical in insurance and reinsurance policies, which are typically based on the London market wordings. An insured party or a third party cannot bring a direct claim against a reinsurer under the Law of Civil Transactions (the Civil Code). However, under some specific situations, such as where an insurance policy contains a cut-through clause, a UAE court may decide to permit a claimant to join the reinsurer in a claim made against the insurer.
are reinsurance assignments made by domestic or captive insurers legally binding? on leasing and financing deals in the aviation industry, are assignments of reinsurance often provided?
Assignments of insurance or reinsurance are not subject to any particular restrictions in accordance with UAE law. They would be enforceable legally against UAE reinsurers or insurers. Reinsurance arrangements, however, must be reported by insurers that are required to file reports.
can an owner, lessor, or financier be held responsible for how the aircraft is used or what the operator does?
According to Title 2, Book 2, Section 1 of the Civil Code (Hire in General), a lease (hire) grants the lessee the right to use the leased asset beginning on the date specified in the contract and for a predetermined duration in exchange for a predetermined fee. As a result, according to Article 763 of the Civil Code, possession is given to the lessee, who now bears responsibility. However, it is further stated that the lessor is responsible for ensuring that the lessee is able to enjoy the leased asset in its entirety and without interruption. If the lessee’s right to enjoyment is violated, including as a result of the lessor’s failure to make necessary repairs, the lessee may terminate the lease and become exempt from further obligations under the lease. In terms of the liabilities of owners, lessees, and financiers, these rules don’t seem to be consistent with the conventional liability and risk allocation clauses used in aircraft lease agreements. According to the recently passed legislation regarding finance leases, a lessee is nevertheless responsible for any harm done to the lessor or to third parties as a result of possessing or using an aircraft under a finance lease (article 18 of Federal Law Number 8 of 2018).
are owners, lessors, financiers, or other parties without an operating stake in the aircraft subject to a strict liability framework in the applicable jurisdiction?
According to article 157 of the Civil Code, which addresses sources of one’s personal responsibilities other than statutory laws or legal events, the Civil Code accords significant weight to the assessment of the parties’ obligations under contractual agreements that are stated first. On this basis, the courts of the UAE may, in the case of a dispute with the general rules of the Civil Code, give effect to the normal contractual terms agreed upon between a lessor and a lessee under an aircraft leasing agreement.
is there a minimum quantity of third-party liability insurance that must be present?
According to Federal Law Number 20 of 1991’s article 7(6), the aircraft’s crew, passengers, and third parties must be protected from ground injury in accordance with the relevant regulations. The UAE General Civil Aviation Authority’s Safety Decision 14/2016, which was released on December 4th, 2016, specifies the extent of third-party responsibility coverage. It is connected to the aircraft’s maximum take-off mass (MTOM) and expressed in special drawing rights (SDRs) under 10 categories. The following restrictions apply to the amount of insurance for travellers, their belongings, and their cargo:
Unless the aircraft in question is a non-commercial aircraft with an MTOM of 2,700kg or less, in which case the minimum insurance coverage is 100,000 SDRs per passenger, 1,131 SDRs per passenger for baggage, and 19 SDRs per kilogram for cargo, the minimum insurance coverage for passengers is 250,000 SDRs, and for baggage and cargo, it is 19 SDRs per kilogram.
The GCAA does not maintain a separate registry for leases for registration purposes. However, an aircraft lease can be registered under the provisions of Section 1 of Chapter 1 of Part V of the Civil Aviation Regulations if the aircraft is leased to or by a UAE national, a corporate body with its principal place of business in the UAE, or wholly owned by a UAE national. The lessee’s identity as a UAE-qualified person and the lessor’s identity as a lessor are both recordable with the GCAA’s aircraft registry. To be eligible for such lease registration, the applicant must submit to the GCAA a duly executed registration form as well as certified true copies of documentary evidence of the existence of both the owner, as lessor, and the lessee, as well as satisfactory evidence of each party’s signing authority (including, as applicable, notarised powers of attorney). Certified copies of the lease documentation, as well as any additional information or documents related to it, must be submitted to the GCAA as needed. If you need any legal advice reach out to the aviation lawyers in Dubai.