The primary purpose of an IDERA is to protect the rights of the party holding an interest in the aircraft (such as a mortgagee or lessor) by allowing them to remove the aircraft from the register without the consent of the aircraft owner in cases of non-payment or breach of contract. This provides a level of security to financial institutions, ensuring that they can take swift action to recover their assets if necessary.
On 6th July 2021, amendments to the Aviation Registration Act (Chapter 503 of the Laws of Malta) came into effect, aligning Maltese legislation with EU Regulation 2018/1139 and clarifying aircraft registration procedures. The key changes included:
These amendments aim to improve the efficiency and clarity of aircraft registration and related procedures in Malta.
A few months after the introduction of these amendments, in a landmark ruling on 8th November 2021, the Maltese First Hall, Civil Court, presided by Hon. Justice Robert G. Mangion, upheld the enforceability of IDERAs under Maltese aviation law. The case involved Air X Charter Limited and Air X Aircraft Finance I Limited (the plaintiffs), who sought to block the de-registration of their aircraft, which were subject to IDERAs held by Avmax Aircraft Leasing Inc. and the Bank of Utah due to unpaid lease obligations caused by the COVID-19 pandemic.
The court confirmed that the Maltese Aircraft Registration Act, in alignment with the Cape Town Convention, mandates the implementation of IDERAs, which give creditors (such as Avmax and the Bank of Utah) the irrevocable right to de-register aircraft without the debtor’s consent. The court emphasized that even if the de-registration harms the business or employment of third parties, this does not justify obstructing the creditor’s rights.
The plaintiffs failed to prove they had met the terms of a Memorandum of Understanding (MOU) with Avmax and did not demonstrate valid grounds to block the IDERAs. The court also refused to honour an interim Canadian court ruling, as it was not bound by non-EU decisions. The decision reinforced the rights of creditors under IDERAs, highlighting their special status in aviation law, and rejected the plaintiffs’ request for a prohibitory injunction.
This landmark judgement strengthens the legal framework around IDERAs, emphasizing their enforceability and the limited ability of debtors to challenge their exercise in Malta.
In a decree delivered on 24th May 2023, the Maltese First Hall, Civil Court, presided by Hon. Justice Audrey Demicoli, reinforced this ruling. The 2023 case involved Hi Fly Limited (the Operator), Flypop Limited (the Sub-Lessor), and UMB Bank (the Owner Trustee), where the Owner Trustee sought to de-register an Airbus A330 under an IDERA due to the sub-lessor’s termination of the lease agreement following the Operator’s default on payments.
The Operator challenged the de-registration, claiming the Sub-Lessor acted in bad faith and that the termination was unjustified. The Operator sought a warrant of prohibitory injunction to prevent the Maltese Transport Authority from proceeding with the de-registration.
However, the court, following the precedent set in the Air X Charter case (2021), reaffirmed that once an IDERA is granted, the holder (or their certified designee) has the legal right to enforce the de-registration, regardless of the Operator’s claims of bad faith or the negative impact on its business. The court emphasized that the Cape Town Convention and the Aircraft Protocol, incorporated into Maltese law, require strict adherence to the enforcement of IDERAs. The court rejected the request for an injunction, asserting that the de-registration of the aircraft was not within the Operator’s rights to obstruct, even if it harmed its interests.
This ruling further solidifies Malta’s position as a jurisdiction that adheres to the Cape Town Convention, upholding the rights of creditors under IDERAs, and reinforcing Malta’s reputation as a leading jurisdiction for aircraft registration and enforcement of international aviation agreements. The court acted swiftly by lifting the provisional injunction within two weeks, showing Malta’s commitment to its legal obligations under international aviation law.
For more information on securities that can be registered over a Maltese registered aircraft, contact us on [email protected]
Dr. Ciantar-Barbara is an experienced lawyer specialising in corporate and commercial law. She graduated with a Doctor of Laws degree from the University of Malta in 2012 and went on to obtain a Master of Laws (LL.M.) in Corporate and Commercial Law from Queen Mary, University of London in 2014.
With over a decade of experience at a leading Big Four firm, Dr. Ciantar-Barbara has advised a wide range of local and international clients on complex company law matters. Her practice covers all stages of a company’s lifecycle, including formation, continuation, restructuring, cross-border mergers and divisions, acquisitions, and liquidations. She also assists clients with their day-to-day corporate governance and compliance obligations, including beneficial ownership requirements and statutory reporting.
In addition to her core focus on corporate law, Dr Ciantar-Barbara has handled various employment law matters, offering guidance on issues such as employment contracts and workplace policies.
Proud member of the Chamber of Advocates and the Institute of Financial Services Practitioners.
As the Office Administrator at Vaia Legal, Valeriia ensures that the firm’s operations run smoothly and efficiently. She specializes in administrative coordination, office management, and business support, allowing the legal team to focus on delivering top-tier services to clients.
Holding a degree in Marketing from Kyiv University, she brings strong organizational and communication skills to her role. Since moving to Malta in 2022, she has been actively involved in office administration, supporting the firm with structured processes and strategic planning. Her ability to anticipate operational needs and implement effective solutions makes her an invaluable part of the Vaia Legal team.
Giovana Cauchioli joined Vaia Legal as a Legal Administrator, bringing a strong background in legal operations and compliance. She graduated with a Bachelor of Law degree from Universidade Presbiteriana Mackenzie in 2019 and was admitted to the Brazilian bar in the same year. With several years of experience in litigation and general contracts, Giovana has developed a solid understanding of legal frameworks and regulatory processes.
Her professional experience covers various legal sectors, allowing her to provide valuable support in legal administration, contract management, and compliance-related matters. Throughout her career, she has refined her ability to assist in structuring efficient legal processes and ensuring that regulatory requirements are met.
At Vaia Legal, Giovana plays a key role in facilitating legal operations, ensuring that the firm’s work is carried out smoothly and efficiently. Her analytical approach, attention to detail, and commitment to excellence contribute to the firm’s ability to deliver high-quality legal services to its clients.
Seasoned Lawyer, specializing in Maritime and Aviation Law, having graduated from the University of Malta in 2013. Experienced in yacht and aircraft sale and purchase transactions as well as ownership structures, customs importations, and registration. Successfully assisted several companies in acquiring a Maltese Air Operator’s Certificate, as the key link between the applicant and local authorities, while also consulting on regulatory matters.
Specialties: Commercial Agreements, Sale and Purchase Transactions for Vessels and Aircrafts, Regulation of Aircraft Customs and VAT Status, Importation and Registration matters, AOC applications, Ownership structures and others
Proud member of the Chamber of Advocates, Malta Business Aviation Association, Malta Maritime Law Association and the Advocacy Committee of the European Business Aviation Association.