Conflict of Law Rules in Contract Obligations in International Private Air Law

Anna Tsirat, Doctor of Laws | JVS Law

The parties signed a sale, lease or mortgage agreement over an aircraft — and chose no governing law. Which law decides the dispute? The answer sits scattered across national statutes, the Rome I Regulation, and the Warsaw and Montreal Conventions, and in several places these sources point in different directions.

Published in the peer-reviewed collection Derzhava i Pravo (V. M. Koretsky Institute of State and Law, National Academy of Sciences of Ukraine), issue 57, pp. 493–498. Full text in Ukrainian.

Contractual relations in private international air law carry a structural peculiarity: they almost always involve more than one foreign element. The aircraft is registered in one state, owned from a second, operated by a carrier from a third, and the dispute is heard by a court in a fourth. Absent a choice of law by the parties, the court must find the applicable law itself.

General questions of conflict rules have been examined in Ukrainian doctrine by A. Dovgert, V. Kysil, I. Zabara, O. Serohin and O. Vyhovskyi. None of that work addressed relations whose subject matter is an aircraft. This article fills that gap.

• The shifting status of an aircraft. Ukrainian law first extended the immovable-property regime to aircraft, then withdrew it in under six months. The practical consequence: an aircraft mortgage is governed by the law of the mortgagor’s country.
• What this means for the Ukrainian register. Aircraft on the Ukrainian civil register are predominantly foreign-owned. In a dispute over such a mortgage, the applicable law is therefore the owner’s law as mortgagor — not Ukrainian law.
• Leasing seen through hire. The Civil Code treats leasing as a sub-type of hire (Chapter 58) but refers to the general provisions on sale and on supply. In a finance lease dispute the court may therefore apply either the seller’s law or the lessor’s law, depending on the facts.
• Notarial form. Aircraft mortgages fall under the Law on Mortgage: mutual rights and obligations arise upon notarial certification, which under the Law on Notariat takes place at the location of the property.
• The Blue Sky case. The English court held the mortgage non-compliant with Danish requirements as to form and content and applied the lex situs of the aircraft at the time of execution rather than the lex registrii — without applying the conflict rules of that same lex situs, which referred back to the place of registration. The case is cited as an illustration of how illusory aircraft mortgages remain absent an operative international instrument.
• lex fori under the Warsaw Convention. The Convention refers to the law of the forum at least four times: limitation of carrier liability where the claimant contributed to the damage (Art. 20); payment of compensation in instalments (Art. 22(1)); award of costs (Art. 22(4)); and computation of the limitation period (Art. 29).

The article was written in the summer of 2012 — the statutes it cites are given as at 20 August 2012. That date matters. Its central caveat — that aircraft mortgages remain illusory “absent an operative international instrument” — ceased to hold within months of the text going to press.

Ukraine ratified the Aircraft Protocol to the Cape Town Convention by Law No. 4904-VI of 6 June 2012, and it entered into force for Ukraine on 1 November 2012. The article therefore captures the position precisely at the turning point — and the conflict problems it describes are exactly what the Cape Town Convention was built to remove.

The remaining conclusions still hold: the dual nature of leasing under the Civil Code, the mortgagor’s law for foreign-owned aircraft, and the Warsaw Convention’s recourse to lex fori.

Tsirat A. V. Conflict of Law Rules in Contract Obligations in International Private Air Law // Derzhava i Pravo: Collection of Scientific Works. Juridical and Political Sciences. — Issue 57. — Kyiv: V. M. Koretsky Institute of State and Law, NAS of Ukraine, 2012. — pp. 493–498.