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Protecting the asset
07 October 2010
Financiers could decide the physical location of aircraft in deals under English law, say top aviation lawyers.
Read more:
Julie McLean
Paul Jebely
aircraft mortgage
Blue Sky One
English law
Financiers like English law -- also known as common law -- because of its stability, history and security. However, financiers and operators should take note of a recent court ruling to avoid getting surprised by extra costs, say top aviation lawyers.
The ruling, Blue Sky One Limited and Others -v-Mahan Air and Another [2010], provides that when an English law aircraft mortgage is granted the aircraft must be in England, or in a jurisdiction which recognizes the validity of an English law mortgage.
It means that lenders may stipulate the physical location of an asset when closing a financing under English law - which leads lead to cost and operational considerations for operators.
Civil vs English law
Most aircraft financings are done under New York or English law. For aircraft that are going to be located in Europe, English law has historically more typically been used.
"A key draw factor is the long...
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