The Protection of Interests in Aircraft Objects Act, 2025

The aviation industry is a cornerstone of global connectivity, and its growth hinges on robust legal frameworks that protect investments in high-value mobile equipment like aircraft, engines, and helicopters. Recognizing this need, India has introduced the Protection of Interests in Aircraft Objects Act, 2025, which aims to provide legal certainty and enforceability for international interests in aircraft objects. This landmark legislation aligns India with global standards set by the Convention on International Interests in Mobile Equipment (2001) and its Protocol on Matters Specific to Aircraft Equipment (2001), collectively known as the Cape Town Convention and Protocol.

Why This Act Matters

India acceded to the Cape Town Convention and Protocol in 2008, signaling its commitment to creating a uniform international legal framework for asset-based financing in aviation. The Protection of Interests in Aircraft Objects Act, 2025 operationalizes this commitment by giving the Convention and Protocol the force of law in India, subject to specific provisions and declarations made by the country. This Act is a significant step forward in reducing creditor risk, facilitating financing, and ensuring legal predictability in cases of default or insolvency.

Key Features of the Act

Force of Law to the Convention and Protocol: The Act incorporates the provisions of the Cape Town Convention and Protocol into Indian law, ensuring their applicability to aircraft objects in India.
Registry Authority: The Directorate General of Civil Aviation (DGCA) is designated as the Registry Authority, responsible for implementing the Convention and Protocol, including maintaining records and issuing directions.
Obligations of Debtors and Creditors: Debtors are required to maintain and submit records of dues related to aircraft ownership or use, while creditors must notify the Registry Authority of defaults before exercising remedies.
Remedies on Insolvency: The Act adopts Alternative A under Article XI of the Protocol, which provides creditors with expedited remedies in insolvency cases, ensuring timely recovery of aircraft objects.
De-registration and Export Request Authorization: Provisions under Article XIII of the Protocol are applied, allowing creditors to request de-registration and export of aircraft objects in cases of default.
Jurisdiction: High Courts are designated as the relevant courts for disputes under Article 53 of the Convention, ensuring streamlined judicial processes.
Overriding Effect: The Act prevails over any inconsistent domestic laws, while retaining the power of the Central Government and other entities to arrest or detain aircraft objects for unpaid dues related to services provided.

Benefits for Stakeholders

For Creditors: The Act reduces risks associated with financing aircraft objects by providing enforceable remedies and priority rights in insolvency proceedings.
For Debtors: It facilitates access to asset-based financing, enabling airlines and operators to expand their fleets and improve operations.
For the Aviation Industry: By aligning with international standards, the Act enhances India’s attractiveness as a destination for aviation investments.

India’s Declarations Under the Convention and Protocol 

India has made several declarations to tailor the application of the Convention and Protocol to its domestic context. For instance:

Priority of Non-Consensual Rights: Liens for unpaid wages, taxes, and repair charges have priority over registered international interests.
Application of Remedies: Creditors can exercise remedies without court intervention, ensuring faster resolution of disputes.
Territorial Application: The Convention and Protocol apply uniformly across all territorial units of India.

A Step Towards Global Integration

The Protection of Interests in Aircraft Objects Act, 2025 is a testament to India’s commitment to fostering a globally integrated aviation sector. By adopting the Cape Town Convention and Protocol, India joins a league of nations that prioritize legal predictability and creditor protection in aviation financing. This Act not only strengthens the legal framework for aircraft financing but also positions India as a competitive player in the global aviation market.

Conclusion

The Protection of Interests in Aircraft Objects Act, 2025 is a transformative piece of legislation that addresses the complexities of financing high-value mobile equipment in the aviation sector. By providing legal certainty and enforceability, the Act paves the way for increased investments, operational efficiency, and growth in India’s aviation industry. As the Act comes into force, stakeholders can look forward to a more secure and predictable environment for aircraft financing and leasing.

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Source: Ministry of Civil Aviation

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