Freddy executed a purchase agreement with Airbus S.A.S., a French manufacturer of aircraft (the “Manufacturer”) in 2019 for the purchase of 10 A320 aircraft: Diploma In Aviation Leasing And Finance, Assignment, UOL, Ireland

Question 3

Freddy executed a purchase agreement with Airbus S.A.S., a French manufacturer of aircraft (the “Manufacturer”) in 2019 for the purchase of 10 A320 aircraft. One of the aircraft is due to be delivered in August 2024. The aircraft will be leased to Addis Air Limited (the “Lessee”) an airline incorporated in Ethiopia. The lessor will be a special purpose company incorporated in Bermuda and tax resident in Ireland, with a registered office in Ireland (the “Lessor”). The lease will be governed by English law and the aircraft will be registered in Ethiopia at delivery.

The acquisition of the aircraft will be financed by way of a loan from a bank incorporated in Germany (the “Lender”). The security package required by the Lender includes (i) an English law governed security assignment over the lease, (ii) an Ethiopian law governed aircraft mortgage, (iii) an English law governed security assignment over the lease, and (iv) an IDERA issued by the Lessee in favour of the Lender. Freddy’ lawyers have also explained that a Lessee Notice & Acknowledgement of the Lease Security Assignment & Quiet Enjoyment Letter will need to be prepared in connection with the financing of the aircraft.

Please assume that (i) the airframe and engines constitute “aircraft objects” for the purposes of the Cape Town Convention, (ii) each document which may constitute an international interest meets the requirements of the Cape Town Convention, and (iii) each document which may constitute an assignment of associated rights meets the requirements of the Cape Town Convention.

Please obtain an up-to-date list of Contracting States from https://www.unidroit.org/status-2001capetown-aircraft and please advise Freddy on the following:

(a) Specify who the “debtor” is for the purposes of the Cape Town Convention with respect to

(i) the operating lease,

(ii) the bill of sale, and

(iii) the Ethiopian law governed mortgage, and

(iv) the lease security assignment, to be entered into in the scenario outlined above.

(b) Outline the registrations that would be carried out on the International Registry based on the scenario above, specifying:

(i) the type of registration in each case;

(ii) the aircraft object(s) to which each registration relates; and

(iii) the likely order of priority of the registrations.

(c) Outline if you would make any changes to your answers at (b) above if the
Lessee was not situated in a Contracting State but the aircraft remained
registered in Ethiopia.

(d) Outline the purpose of (i) the IDERA, (ii) the Ethiopian law governed
aircraft Mortgage, (iii) the English law governed security assignment over
the lease, and (iv) the Lessee Notice & Acknowledgement and Quiet
Enjoyment Letter in the context of the secured aircraft financing
described above.