International recognition and execution of security rights in aircraft.

The international operation of aircraft, in combination with the high investment costs characterizing the aircraft finance sector, has as a consequence that creditors (both financial institutions and lessors of aircraft) need to scrupulously ascertain whether they are able to internationally enforce the security rights they have been granted. The security rights on aircraft are vested in accordance with the state of registration of the aircraft. Since states have divergent property law systems, these security rights are not automatically recognized outside the state in which it was vested. This is problematic, since if it so happens that aircraft are located outside of the state of registration at the time of insolvency of the grantor of the security rights, it could happen that the holder of these rights is not able to enforce them. Moreover, the international recognition of security rights is not the only issue, because the execution itself (such as precautionary arrest) is often even more difficult. This is both due to the fact that aircraft spend little time on the ground, where it is available for repossession or arrest, and to the functioning of a number of international treaties which limit arrest to a number of categories of aircraft. The lack of a transparant and functioning regime regarding recognition and execution of security rights in aircraft causes legal incertainty and inefficiency. The goals of this research is to analyse the weaknesses in the current regime and to form recommendations.