Securing the Skies: The Cape Town Convention’s Role in Aircraft Financing Across GCC Countries and Egypt

8 min 52 sec January 15, 2026 (Edited)

The aviation industry is a cornerstone of global trade and travel. Given the mobile nature of aircraft, which operate across multiple legal jurisdictions, creditors often face challenges due to differing secured transaction laws, creating uncertainty in protecting their interests. This makes streamlined and secure aircraft financing essential, especially in fast-growing markets like Gulf Cooperation Council (GCC) countries and Egypt.

The Convention on International Interests in Mobile Equipment (2001), commonly known as the Cape Town Convention (CTC), along with the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (2001) (the Protocol, and together with the CTC, the Convention), provides a critical legal framework that facilitates financing. It enhances the protection of creditors’ interests in aircraft assets (i.e. security over airframes, engines and related rights), making it a key instrument in international aviation financing.

The GCC region and Egypt are home to some of the world’s leading airlines, such as Emirates, Qatar Airways, and Etihad Airways, as well as leading low-cost carriers such as FlyDubai, Air Arabia, Jazeera and Flynas. As these airlines expand their fleets, they typically rely on cross-border financing and leasing arrangements to acquire aircraft. The Convention plays a pivotal role in facilitating this process by providing legal certainty and reducing risk for lenders and lessors.

All six members of the GCC — the Kingdom of Saudi Arabia (KSA), the United Arab Emirates (UAE), Oman, Bahrain, Kuwait, and Qatar — are parties to the Convention. Although not part of the GCC, Egypt also acceded to the Convention in 2014.

This article explores the impact of the Convention across GCC countries and Egypt, comparing the different declarations made by each nation. It aims to inform stakeholders about the implications of the Convention (as legislated in the above states), how it safeguards creditors’ rights, and how it has driven broader investment growth within the GCC countries and Egypt.

Aim, function and effects of the Convention

The Convention aims to facilitate asset-based financing and leasing of high-value mobile equipment, such as aircraft, by establishing a uniform system of rights and remedies for creditors across multiple jurisdictions. It provides several benefits for both creditors and debtors involved in aircraft financing and leasing, including:

• a single international online registry, where lenders can record their rights to a particular aircraft or aircraft objects, ensuring priority over other creditors;
• a set of default and insolvency-related remedies that creditors can exercise in the event of a debtor’s breach or insolvency, such as taking possession, selling, or leasing the aircraft object;
• a choice of law provision that allows parties to an agreement to choose the law that governs their contractual rights and obligations; and
• an irrevocable de-registration and export request authorisation (IDERA) that enables creditors to de-register and export the aircraft object from the debtor’s jurisdiction without interference from local authorities, where applicable.

However, the Convention permits contracting states to make specific declarations that modify or limit the application of certain provisions, in accordance with their national laws and policies. These declarations can significantly influence the level of protection and predictability available to creditors, lessors, and debtors under the Convention, and can result in divergent levels of legal certainty across contracting states.

A key concern arises when a jurisdiction restricts or opts out of the Convention’s self-help remedies — particularly the ability to repossess an aircraft without court intervention. Where a contracting state requires judicial leave (pursuant to Article 54(2)), creditors lose the efficiency and speed the Convention is designed to deliver, which may discourage financing in that jurisdiction. This inconsistency fragments the Convention’s intended harmonisation and may reduce creditor confidence and financing availability.

Nonetheless, the Convention has delivered significant economic benefits by enhancing lender security, which has expanded the pool of lenders available to airlines and catalysed growth in the travel industry across the GCC countries and Egypt.

To understand the Convention’s practical impact in these regions, we  examine the specific declarations made by the GCC countries and Egypt. These declarations reflect each country’s attempt to balance creditor protection with domestic legal and policy considerations. Understanding these declarations enables stakeholders to assess the enforceability of remedies and the level of risk within each jurisdiction.

Country-specific declarations

UAE

The UAE, which acceded to the Convention in 2008, made six declarations under the CTC and seven under the Protocol, reflecting a balanced approach between protecting creditors’ and debtors’ rights. For example, the UAE recognises certain non-consensual rights and interests, such as liens for unpaid wages, taxes, and repair services, which have priority over registered international interests. This protects local service providers and authorities, but may reduce the certainty for secured creditors.

The UAE also made a declaration under Article 54(2) requiring court approval for any remedies under the CTC, including self-help remedies. This may delay enforcement and increase costs for creditors, even when such remedies have been contractually agreed. Conversely, the UAE adopted the creditor-friendly Alternative A under Article XI of the Protocol, granting creditors a right to repossess an aircraft (as opposed to a judicial auction) after a defined waiting period in insolvency scenarios, thereby reducing exposure to protracted local insolvency proceedings.

UAE law further supports Convention-based enforcement. Under the UAE Aviation Authority Law (Federal Law No. 20 of 1991), the General Civil Aviation Authority is the designated authority and recognises IDERA, strengthening lessors’ ability to control their aircraft and enhancing creditor security.

We also note that in 2024, Federal Law No. 20 of 1991 Issuing the Civil Aviation Act was amended for the first time. The amendment was limited to Article 19, which governs the relationship between domestic aviation law and international conventions, protocols, and agreements. Previously, Article 19 provided that the Chicago Convention, along with protocols and agreements to which the UAE had acceded, would be deemed complementary to the law but could not conflict with its provisions. This previous Article 19 did not meet the criteria stipulated by the Aviation Working Group (the AWG) in assessing eligibility for inclusion in the Cape Town Discount List and, as a consequence, effectively disqualified UAE operators from accessing aircraft financing discounts.

Following the amendment, Article 19 now reflects the UAE’s revised eligibility as per the updated Cape Town Discount List as of last April and establishes the primacy of international conventions in the event of inconsistency with domestic law. This reform harmonises UAE law with the AWG’s requirements for inclusion on the Cape Town Discount List and further establishes additional assurance to international creditors that Cape Town Convention remedies (in accordance with the UAE Declarations) will be enforceable in the UAE.

KSA

The KSA ratified the Convention in 2008 and made only one declaration — under Article 54(2) — requiring court approval before creditors may exercise any remedies under the Convention. Since the KSA did not make any declarations under the Protocol, none of the opt-in provisions under Article XXX of the Protocol, such as choice of law, interim relief, insolvency remedies (including Alternative A), IDERA, or cross-border insolvency assistance, are applicable.

This absence of declarations introduces practical uncertainties and limitations for financiers operating in the KSA. Potential challenges include:

• difficulty in establishing governing law in financing agreements, increasing conflict-of-law risks;
• no guaranteed access to interim relief, limiting creditors’ ability to protect their interests promptly;
• ambiguity over remedies in insolvency, which default to local procedures that may not reflect global norms;
• lack of judicial cooperation with foreign insolvency proceedings, complicating cross-border enforcement; and
• non-recognition of IDERA, restricting lessors’ ability to deregister/export aircraft without debtor cooperation (and reliance on deregistration powers of attorney).

As a result, financiers may view the KSA as a less creditor-friendly jurisdiction compared to others in the region. Nevertheless, the General Authority of Civil Aviation has been actively reforming regulatory frameworks as part of the KSA’s Vision 2030. In May 2024, the KSA announced a $100 billion investment plan in aviation, including $40 billion for new aircraft acquisitions — suggesting potential future alignment with international best practices.

Oman

Oman acceded to the Convention in 2005 and made six declarations under the CTC and six under the Protocol, largely mirroring the UAE’s declarations. A key distinction is that Oman did not make a declaration under Article 54(2), allowing creditors to exercise remedies, including self-help repossession, without prior court approval. This enhances enforcement efficiency and is favourable to creditors.

However, this approach also increases the risk to debtors, who may be subject to unilateral actions without judicial oversight. While this legal flexibility improves the attractiveness of Oman to international lessors, it places a heavier burden on contractual protections and responsible creditor conduct.

Bahrain

Bahrain acceded to the Convention in 2012 and made four declarations under the CTC and five under the Protocol. These are generally aligned with those of the UAE and Oman but contain unique elements, such as recognition of liens for salvage and detention, in addition to the standard non-consensual rights recognised by the UAE.

Bahrain also adopted Alternative A under Article XI of the Protocol with a 60-day waiting period and does not require court approval for remedies under Article 54(2). These features enhance the legal certainty and enforcement efficiency for creditors, while maintaining a degree of protection for certain domestic interests.

Kuwait

Kuwait acceded to the Convention in 2013 and made four declarations under the CTC and three under the Protocol, broadly similar to those of the UAE. Kuwait has opted for a more conservative approach by requiring court approval for all remedies, including self help, through an Article 54(2) declaration. While this provides legal oversight and protections for debtors, it may slow down enforcement, reduce predictability, and increase the administrative burden for creditors.

Qatar

Qatar acceded to the Convention in 2020, making five declarations under the CTC and five under the Protocol, largely mirroring those of the UAE. It recognises non-consensual rights and liens, including for unpaid fees, and does not require court approval under Article 54(2), allowing for self-help enforcement. The declaration regime offers a relatively high level of protection for creditors.

However, Qatar’s inclusion of strict enforcement timelines and additional lien categories could create challenges for debtors, especially during financial restructuring. The balance in Qatar’s approach indicates a commitment to international norms, while retaining some safeguards for domestic service providers.

Egypt

Egypt acceded to the Convention in 2014 and has made three declarations under the CTC and four under the Protocol, following subsequent amendments. Its declarations align closely with those of Oman and Bahrain. Egypt does not require court approval for self-help remedies and has adopted Alternative A with a 30-day waiting period, providing a relatively high level of creditor protection.

However, despite the legal framework, creditors may still face procedural delays or judicial inconsistencies in Egypt’s domestic enforcement environment. While the Convention’s framework exists, its effectiveness depends on local courts’ familiarity with and willingness to enforce its provisions.