Banks and other leasing companies are holding security interest in aircraft owned by Norwegian Air Shuttle ASA (“NAS”). A protection of these creditors is regulated in the Cape Town Convention on International Interests in Mobile Equipment of 16 November 2001 and its Protocol on Matters Specific to Aircraft Equipment (collectively referred to as the “CTC”). The CTC has been implemented under Norwegian law in 2011. The Norwegian Government has now proposed to the Parliament a Temporary reconstruction law to remedy financial problems as a result of outbreaks of covid-19 (“Reconstruction Act”).
The provisions in the Reconstruction Act will be favourable for the ongoing restructuring efforts in NAS and the question is whether the Reconstruction Act will affect the creditors rights under the CTC.
The CTC is a treaty to which the Norwegian state is bound. Various legislation has been modified to implement CTC under Norwegian law. It is e.g. stated in the Enforcement Act that anyone who has an international security interest under CTC may request cover under the rules of the CTC or according to the rules of Enforcement. Furthermore, the Civil Aviation Act states that for aircraft CTC will prevail in relation to Civil Aviation Act’s rules on security rights in aircraft.
The Reconstruction Act does not mention the CTC and nor is the CTC mentioned in the proposal presented to the Parliament. As far as I can see will this fact not have any influence on the result. As CTC is a treaty to which Norway is bound, the CTC will continue to protect the creditors as before, hereunder their rights to a maximum stay period of sixty days in case of insolvency.