Abandoned Aircrafts: Practical Legal Solutions in the UAE
Transport & Insurance Focus
Aircrafts are costly commodities. Passenger aircrafts are usually priced in the range of 70-150 million US dollars, with some private jets valued up to half a billion US dollars as in the case of the Airbus A380 Superjumbo Jet.
Law Update: Issue 366 - Transport & Insurance Focus
Wael ElgouhariSenior Associate,Transport & Insurance
Ameen Kim Associate,Transport & Insurance
Aircrafts are costly commodities. Passenger aircrafts are usually priced in the range of 70-150 million US dollars, with some private jets valued up to half a billion US dollars as in the case of the Airbus A380 Superjumbo Jet. Nonetheless, such aircrafts can be abandoned, generally due to the inability of the owner to handle the high maintenance and operating costs, or discontinued usage due to age or irreparable damage.
Abandoned aircrafts in the UAE pose a multifaceted challenge. Firstly, abandoned aircrafts tie up valuable real estate that could otherwise be utilized for active operations or revenue-generating activities. Additionally, there may be ongoing costs incurred for the service provider or airport authority responsible for the aircraft’s upkeep and security.
The general response for a service provider or airport management who have an aircraft left at their premises is to exercise a possessory lien over the aircraft to secure unpaid dues. However, this option is only viable until the unpaid dues eventually supersede the actual value of the aircraft, which is generally continuously decreasing in value due to age and lack of proper maintenance. Therefore, there are generally two viable options available for aggrieved parties to dispose of the aircraft in the UAE.
If parties cannot agree to an approach on dealing with the aircraft and a possessory lien on the aircraft no longer affords any commercial value, the aggrieved party (usually a service provider or airport authority) may seek an ex parte court order at the UAE Summary Court to scrap or auction sell an abandoned aircraft and recover losses as a last resort solution. The applicant will bear the burden to prove that the disposing the aircraft is a proportional and reasonable move in view of the risks and costs of keeping the aircraft. Should the aircraft present an environmental risk or affect the safe operation of the airport, this could also represent an additional ground for disposal.
The Summary Court will likely scrutinize the applicant’s submission, considering a variety of factors, such as the aircraft’s actual salvage value and the potential for alternative resolutions that minimize losses, among others. Furthermore, an expert will likely be appointed by the Summary Judge to assess the valuation of the aircraft for purposes of sale at a public auction. In case the disposal order is granted, one of the specialized companies will be appointed to carry out the technical dismantling operations.
Another action an aggrieved party could take is to commence a normal or expedited substantive legal proceedings against the aircraft owner at the UAE courts following a successful precautionary attachment of the aircraft. The proceedings will progress through the usual manner until a judgment on the merits is rendered. The aggrieved party can then file an application to the court to request the sale of the attached aircraft through execution proceedings based on the provisions of the Federal Law No. (42) Promulgating the Civil Procedure Code of 2022. Once the sale is completed, the sale proceeds, if any, will be deposited with the court treasury in favor of the aircraft’s owner.
It is essential to recognize that while some aircrafts may appear abandoned, they are not necessarily so. Rather, they may have been rendered inoperable and unable to take off due to airport regulations or other external factors may be involved, such as ownership disputes or lack of spare parts due to international sanctions. Despite the reasons, however, either of these options above are likely to be used as venues resolve the aircraft’s status. We note that opting for either of the above options carries the risk of triggering potential claims from the aircraft owner, or any other party having an interest over the aircraft, if they are wilfully resisting the court order to dispose of the aircraft. Nonetheless, when resorting to court orders to scrap or sell the aircraft becomes the only commercially viable path forward for the aggrieved service provider or the airport management, they must do so adeptly by pleading their case well for a justified removal before the UAE courts. As discussed thus far, addressing aircraft disposals in the UAE requires a strategic approach which are often multifaceted due to the number of that are likely to be stakeholders involved. Our distinguished Aviation team has extensive experience before the UAE courts in matters related to aviation incidents and claims, representing major airline and airport companies, as well as owners.
Al Tamimi & Co.’s Aviation team has extensive experience in advising airline and aviation companies in matters of UAE law. In addition, we have rights of audience before the courts across the MENA region as well as local insights have enabled us to represent clients in complex local and multi-jurisdictional claims, defences, and commercial transactions. For further information on this sector or for any inquiries for assistance, please contact our team (https://www.tamimi.com/client-services/sectors/transport-logistics/).
For further information,please contact Wael Elgouhari, Ameen Kim and Omar N. Omar.
Published in March 2024
