The Protection of Interests in Aircraft Objects Bill, 2025, was introduced in the Rajya Sabha on February 10, 2025. The Bill seeks to provide a comprehensive legal framework for protecting interests in aircraft objects and aligns India’s domestic laws with the Convention on International Interests in Mobile Equipment and its Aircraft Protocol, both signed at Cape Town on November 16, 2001.
By incorporating these international standards, India aims to enhance the legal security of aircraft financing, leasing, and transactions.
Objectives of the Bill
The primary objectives of the Bill are:
To implement the Cape Town Convention and Aircraft Protocol in India.To establish a clear legal framework for recognizing and enforcing international interests in aircraft objects.To provide rights and remedies to creditors in cases of insolvency and default.To facilitate aircraft de-registration and export requests.To harmonize India’s aviation financing laws with global practices, enhancing investor confidence.
Key Provisions of the Bill
1. Definition and Scope
The Bill defines essential terms such as “agreement,” “aircraft objects,” “international interest,” “creditor,” and “debtor.” It applies to aircraft, aircraft engines, and helicopters, ensuring that financial interests in these assets are recognized under Indian law.
2. Application of Convention and Protocol
Under Section 3, the Bill provides that the Cape Town Convention and its Protocol shall have the force of law in India, subject to declarations made by India under these treaties.
3. Role of the Registry Authority
The Directorate General of Civil Aviation (DGCA) is designated as the registry authority under the Bharatiya Vayuyan Adhiniyam, 2024. The DGCA is empowered to issue directions for implementing the Convention and Protocol in India.
4. Obligations of Debtors and Creditors
Debtors must maintain records of financial dues related to aircraft ownership and use. Creditors must notify the registry authority in case of default before exercising remedies under the Convention and Protocol.
5. Remedies in Case of Default and Insolvency
The Bill incorporates provisions of Article XI of the Aircraft Protocol to regulate remedies in cases of insolvency. If a debtor defaults, creditors can enforce their rights, provided the international interest is registered and not excluded by agreement. The Bill allows for the deregistration and export of aircraft objects upon default.
6. Jurisdiction and Legal Remedies
The relevant High Courts will have jurisdiction under Article 53 of the Convention. The Bill has an overriding effect, ensuring that its provisions take precedence over other conflicting laws. The Central Government retains the authority to detain aircraft for unpaid dues related to public services.
7. Rule-Making Powers and Declarations
The Central Government is empowered to frame rules for carrying out the provisions of the Act. It may also amend declarations made under the Convention and Protocol through official notifications. Any difficulty in implementation can be addressed by the Government within three years of the Act’s commencement.
Significance of the Bill
The Bill is a crucial step in strengthening India’s aviation sector by:
Enhancing the ease of doing business in aircraft leasing and financing.Aligning India’s aviation finance laws with global best practices.Providing clarity and security to international creditors and lessors.Boosting confidence among international investors in India’s aviation sector.Streamlining legal procedures for resolving disputes in aircraft financing transactions.
Challenges
While the Bill aims to create a robust legal framework, certain challenges remain:
Implementation Issues: Ensuring effective enforcement of international interests may require substantial administrative efforts.Legal Conflicts: The Bill’s overriding effect could lead to conflicts with existing insolvency and contract laws.Operational Readiness: The DGCA must be adequately prepared to handle its role as the registry authority efficiently.Judicial Interpretation: The effectiveness of legal remedies will depend on how courts interpret and apply the provisions of the Bill.
Conclusion
The Protection of Interests in Aircraft Objects Bill, 2025, is a landmark legislation that enhances India’s credibility in international aviation finance. By implementing the Cape Town Convention and Aircraft Protocol, the Bill ensures that financial interests in aircraft objects are protected and that international creditors have enforceable rights in India.
However, successful implementation will require strong regulatory mechanisms, efficient dispute resolution frameworks, and proactive government action to align the new law with India’s broader aviation and financial policies. Once enacted, the Bill is expected to significantly boost the growth and sustainability of the Indian aviation industry by providing a secure and predictable legal environment for aircraft financing and leasing.
Click Here to Read the Protection of Interests in Aircraft Objects Bill, 2025
