Civil Law and Aircraft Leasing Default Recovery Litigation in Europe

1. Introduction

Aircraft leasing default recovery litigation concerns disputes arising when an airline or other lessee fails to comply with an aircraft lease, particularly by:

• failing to pay rent;
• failing to pay maintenance reserves or supplemental rent;
• breaching financial covenants;
• failing to maintain insurance;
• failing to maintain the aircraft properly;
• entering insolvency;
• refusing to return the aircraft;
• failing to satisfy redelivery conditions;
• creating competing liens or security interests;
• refusing deregistration or export of the aircraft.

European aircraft-leasing disputes are legally complex because they combine contract law, property law, insolvency law, aviation-registration law, international security law and procedural law.

The most important international instrument is the Cape Town Convention 2001 and Aircraft Protocol, where applicable. However, its applicability is not uniform across Europe. For example, Germany had not ratified the Convention and Aircraft Protocol as of 2026, whereas France has a different framework for aircraft leasing and insolvency.

A second important distinction is between:

pure civil-law treatment in continental Europe

and

English-law aircraft-finance litigation, which is extremely influential in European aviation finance but is based on common law rather than continental civil law.

2. Nature of an Aircraft Lease

An aircraft lease normally involves:

Lessor → Aircraft → Lessee/Airline

The lessor retains ownership or a financing interest while the airline obtains possession and operational use.

Two principal forms are:

A. Operating lease

The lessor normally retains the economic ownership of the aircraft and leases it to the airline for a specified period.

B. Finance lease

The transaction is structured primarily as financing, with the economic risks and benefits allocated substantially to the lessee.

The distinction can affect:

• ownership;
• security rights;
• insolvency treatment;
• repossession;
• accounting;
• residual-value risk.

3. What Constitutes a Default?

Aircraft leases commonly contain detailed Events of Default.

Typical defaults include:

Payment default

Failure to pay:

• monthly rent;
• supplemental rent;
• maintenance reserves;
• insurance premiums;
• other contractual sums.

Operational default

Examples:

• unauthorised use;
• operation outside permitted jurisdictions;
• failure to maintain airworthiness;
• failure to maintain records.

Insurance default

Failure to maintain required:

• hull insurance;
• liability insurance;
• war-risk insurance.

Insolvency default

Examples:

• bankruptcy;
• administration;
• restructuring;
• insolvency proceedings;
• appointment of an administrator.

Redelivery default

Failure to return the aircraft:

• on time;
• to the agreed location;
• in the required technical condition;
• with required records;
• with required maintenance status.

4. Contractual Default Mechanism

A typical aircraft lease provides:

Payment failure

↓

Event of Default

↓

Default notice

↓

Cure period, if applicable

↓

Termination

↓

Demand for redelivery

↓

Repossession

↓

Deregistration/export

↓

Recovery of damages

The exact sequence depends upon:

• governing law;
• lease wording;
• Cape Town Convention status;
• insolvency law;
• registration state;
• location of aircraft.

5. European Legal Framework

A. Cape Town Convention 2001

The Convention creates an international framework for security interests in aircraft objects.

It is particularly important because aircraft are highly mobile assets.

A lessor may otherwise face the problem:

Aircraft owned by Lessor A → Airline B defaults → Aircraft moves to Country C → Airline becomes insolvent in Country D.

The Cape Town system attempts to make international interests more predictable.

6. International Registry

Aircraft interests can be registered through the International Registry established under the Cape Town system.

Registration is important because priority between competing interests can depend upon the Convention's registration system.

The principal benefits include:

• priority;
• international recognition;
• greater predictability;
• protection against competing interests;
• access to Convention remedies.

However, this regime applies only where the relevant State and transaction satisfy the Convention and Protocol requirements.

7. Cape Town Default Remedies

Where applicable, the Convention provides remedies following default.

Depending on the circumstances and declarations made by the relevant State, remedies may include:

• taking possession;
• obtaining custody or control;
• immobilising the aircraft;
• leasing the aircraft;
• selling the aircraft;
• collecting income;
• seeking judicial relief.

The Aircraft Protocol also contains special rules concerning deregistration and export.

8. IDERA

An Irrevocable Deregistration and Export Request Authorization (IDERA) is particularly important.

It is designed to facilitate:

1. deregistration of the aircraft;
2. export of the aircraft;
3. exercise of lessor/secured-party rights following default.

This is especially important because an aircraft cannot simply be treated like an ordinary movable asset.

The lessor must often coordinate:

• civil courts;
• aviation authorities;
• aircraft registries;
• insolvency administrators;
• airport authorities;
• maintenance organisations.

9. Insolvency

Insolvency is often the most difficult stage.

Suppose:

Airline fails to pay rent
↓
Lessor terminates lease
↓
Airline enters insolvency
↓
Aircraft remains in airline's possession.

The lessor must determine:

• whether repossession is stayed;
• whether the insolvency administrator can continue the lease;
• whether aircraft can be removed;
• whether rent accruing after insolvency must be paid;
• whether maintenance must continue;
• whether competing creditors have rights;
• whether Cape Town remedies apply.

10. French Civil-Law Treatment

France provides a useful example of continental European treatment.

French courts may generally recognise foreign governing-law and jurisdiction clauses in aircraft leases, subject to applicable private-international-law requirements.

French insolvency law also creates specific rules concerning leased aircraft.

Current French aviation-finance guidance notes that, for a French-registered aircraft, registration of the lease and the timing of insolvency can affect the lessor's rights to seek return of the aircraft. It also reports a French Supreme Court decision of 27 March 2024 concerning the requirement to revendicate ownership rights in certain circumstances.

This demonstrates that the practical effectiveness of a lease depends not only upon the contract but also upon French property and insolvency law.

11. German Civil-Law Treatment

Germany is particularly important as a contrast.

As of 2026, Germany had not ratified the Cape Town Convention or Aircraft Protocol.

Consequently, an aircraft lease involving Germany may require greater reliance on:

• German contractual law;
• German property law;
• German insolvency law;
• aircraft-registration law;
• security-transfer structures;
• aircraft mortgages;
• guarantees;
• pledges and assignments.

This means that a European aircraft-leasing transaction cannot automatically assume that Cape Town remedies are available everywhere in Europe.

12. Ireland and Aircraft Leasing

Ireland is one of Europe's major aircraft-leasing centres.

Aircraft leases involving Irish lessors frequently use sophisticated international contractual structures involving:

• Irish special-purpose companies;
• owner trusts;
• English-law leases;
• guarantees;
• security assignments;
• Cape Town registrations where applicable.

Irish lessors therefore appear frequently in international aircraft-leasing litigation.

13. Case Law

Because direct continental-European reported cases on aircraft-lease default are relatively fewer than English Commercial Court decisions, the authorities should be separated into:

• continental/civil-law authorities;
• Cape Town-related authorities;
• English-law comparative authorities.

This distinction is important.

Case 1 — French Supreme Court, 27 March 2024

Subject

Aircraft lease and French insolvency/property law

Principle

The French Supreme Court addressed the position of a lessor of a French-registered aircraft in insolvency and the circumstances in which the lessor must seek recognition/restitution of its ownership rights.

The decision is important because French law distinguishes between:

• ownership of the aircraft;
• contractual lease rights;
• insolvency proceedings;
• registration/publicity of the lessor's rights.

Current French aviation-finance analysis identifies this judgment as significant for aircraft lessors dealing with French insolvency.

Relevance

It demonstrates that:

Aircraft ownership and lease rights do not automatically translate into immediate physical recovery when the lessee enters insolvency.

Procedural steps can determine whether the lessor can recover the aircraft.

Classification: Direct civil-law authority.

Case 2 — AerCap Ireland Ltd v AIG Europe SA & Others

[2025] EWHC 1430 (Comm)

Facts

The litigation concerned aircraft leased to Russian airlines and aircraft that remained in Russia following the Russian invasion of Ukraine.

The lessors had issued default and termination notices but could not obtain physical return of the aircraft. They therefore made insurance claims concerning their aircraft and engines.

Legal issue

A major issue concerned the meaning of "repossession" and whether aircraft were in the "course of repossession" for purposes of insurance coverage.

Principle

The court distinguished:

demand for redelivery

from

actual repossession activity.

A mere demand that the lessee return an aircraft is not necessarily itself an act of repossession. The court considered physical steps directed towards regaining possession to be significant.

Relevance

This distinction is highly important for aircraft-default litigation.

A lessor may:

1. terminate;
2. demand return;
3. issue deregistration instructions;
4. locate the aircraft;

without necessarily having physically repossessed it.

Classification: Highly relevant comparative European authority.

Case 3 — Peregrine Aviation Bravo Ltd v Laudamotion GmbH

[2023] EWHC 48 (Comm)

Facts

Peregrine and other lessors had entered several aircraft leases with Laudamotion.

During the COVID-19 period, Laudamotion refused to take delivery of one aircraft.

The lessors argued that the refusal constituted defaults and triggered consequences under multiple aircraft leases.

Legal significance

The case demonstrates the importance of:

• lease delivery obligations;
• cross-default clauses;
• termination rights;
• contractual events of default;
• consequences of refusing aircraft delivery.

Relevance

Aircraft leasing liability is not limited to:

"Airline stopped paying rent."

A lessee's refusal to accept an aircraft can itself generate significant contractual consequences.

Classification: Comparative English-law authority.

Case 4 — AerCap Ireland Ltd v Hainan Airlines Holding Co Ltd

[2020] EWHC 2025 (Comm)

Facts

AerCap and related lessors brought claims concerning six aircraft leases.

The lessee had failed to pay rent and contractual interest.

The aggregate claim exceeded US$40 million.

Principle

The case illustrates the enforceability of contractual rent obligations under aircraft leases and the use of summary judgment where the underlying contractual obligations and payment defaults are sufficiently clear.

Relevance

It demonstrates that aircraft-leasing litigation may involve very substantial claims for:

• unpaid rent;
• contractual interest;
• contractual damages.

The case also illustrates the importance of carefully drafted default provisions.

Classification: Comparative English-law authority.

Case 5 — GASL Ireland Leasing A-1 Ltd v SpiceJet Ltd

[2023] EWHC 1107 (Comm)

Facts

The lessor brought proceedings concerning unpaid rent and alleged failure to satisfy aircraft redelivery conditions.

The lease was governed by English law and gave the English High Court exclusive jurisdiction. The court had previously granted summary judgment for more than US$5.3 million in outstanding rent, while the later proceedings addressed the remaining redelivery-condition claim.

Principle

Aircraft leases create obligations extending beyond rent payment.

At the end of the lease, the lessee may have to satisfy detailed Redelivery Conditions concerning:

• aircraft condition;
• maintenance status;
• records;
• configuration;
• airworthiness.

Relevance

A lessee can therefore remain financially liable even after possession of the aircraft is returned if the aircraft does not satisfy contractual redelivery requirements.

Classification: Comparative English-law authority.

Case 6 — VS MSN 36118 CAV Designated Activity Company v SpiceJet Ltd

[2023] EWHC 1146 (Comm)

Facts

The aircraft lease contained detailed remedies following an Event of Default.

These included:

• termination;
• repossession;
• deregistration;
• export;
• recovery of unpaid rent;
• default interest;
• legal expenses;
• redelivery expenses;
• restoration costs. 

Principle

Carefully drafted aircraft leases can provide an extensive contractual remedy structure following default.

Relevance

This case is useful for understanding the recovery package.

A lessor may potentially claim more than simply overdue rent.

Depending upon the lease, claims may include:

unpaid rent + interest + repossession expenses + restoration costs + legal costs + other contractual losses.

Classification: Comparative English-law authority.

Case 7 — CIT Group Finance (Ireland) Unlimited Company v SpiceJet Ltd

[2026] EWHC 1277 (Comm)

Facts

CIT was the lessor of two Boeing 737-8MAX aircraft.

SpiceJet failed to pay rent and supplemental rent over a period beginning in 2023. Default notices were issued.

The aircraft were ultimately repossessed in February 2024.

CIT claimed:

• unpaid rent;
• supplemental rent;
• recovery costs;
• restoration costs;
• replacement-engine leasing costs;
• reconfiguration costs;
• additional insurance;
• legal expenses. 

Principle

The judgment illustrates how an aircraft-leasing default can produce a large collection of post-default financial claims.

The contractual remedies clause permitted options including:

• court proceedings;
• termination;
• grounding;
• redelivery;
• repossession.

Relevance

This is an important modern authority because it demonstrates that default recovery may involve the entire economic consequences of the default rather than simply arrears.

Classification: Highly relevant modern comparative authority.

Case 8 — MSN 1364 Leasing Ltd v Big Charter Pvt Ltd

[2025] EWHC 3154 (Comm)

Principle

The court considered the consequences of aircraft-lease termination and the relationship between contractual financial consequences and the Cape Town Convention.

The judgment stated that unpaid rent, supplemental rent and late-payment charges arise independently of termination, while also considering the Convention's concept of commercially reasonable remedies.

Relevance

The case is particularly useful for the proposition that:

Cape Town Convention remedies do not necessarily replace ordinary contractual claims for accrued rent.

The Convention governs international interests and remedies concerning aircraft objects, while contractual payment obligations remain important.

Classification: Comparative English-law/Cape Town authority.

14. Commercial Reasonableness

The Cape Town Aircraft Protocol contains an important principle concerning commercially reasonable exercise of remedies.

A remedy exercised in accordance with the parties' contractual agreement will generally be regarded as commercially reasonable unless the relevant contractual provision is manifestly unreasonable.

This matters because a lessee may challenge repossession by arguing:

"The lessor exercised its contractual remedy unfairly."

The response may be that the remedy was expressly agreed in the aircraft lease and is consistent with the Cape Town framework.

The 2025 MSN 1364 Leasing litigation specifically discussed this concept.

15. Repossession vs Redelivery

These concepts must be distinguished.

Redelivery

The lessee voluntarily returns the aircraft according to the lease.

Repossession

The lessor takes steps to recover possession because the lessee has failed to return it.

This distinction can affect:

• insurance;
• contractual obligations;
• costs;
• possession;
• risk;
• timing;
• remedies.

The AerCap v AIG litigation provides a particularly useful illustration.

16. Deregistration

After termination, the lessor may need the aircraft removed from the existing aircraft registry.

Problems can arise where:

• the lessee refuses cooperation;
• insolvency proceedings intervene;
• aviation authorities require documentation;
• competing security interests exist.

The Cape Town system can significantly facilitate deregistration and export through the IDERA mechanism where the Convention and Protocol apply.

17. Aircraft Export

After repossession, the aircraft may need to be moved to another jurisdiction.

The lessor may need to arrange:

• deregistration;
• export;
• ferry flight;
• crew;
• insurance;
• maintenance;
• technical inspection;
• customs clearance.

These costs may potentially form part of a contractual claim if the lease permits recovery.

18. Maintenance and Condition

Aircraft are unusually valuable assets.

A defaulting airline cannot necessarily simply hand back an aircraft in whatever condition it happens to be.

Lease provisions frequently contain detailed obligations concerning:

• maintenance;
• engine condition;
• landing gear;
• life-limited parts;
• records;
• modifications;
• configuration;
• airworthiness.

Failure can create significant redelivery-condition damages.

19. Engine and Parts Disputes

An aircraft may consist of several legally and economically distinct objects:

• airframe;
• engines;
• auxiliary power unit;
• landing gear;
• components.

A default dispute can therefore become complicated if:

Aircraft returned but original engines missing.

or:

Engine replaced with a lower-value engine.

or:

Components removed during insolvency.

The lessor may then need to establish ownership, contractual rights and priority against other creditors.

20. Security Deposits

Aircraft leases frequently involve:

• security deposits;
• maintenance reserves;
• letters of credit;
• parent guarantees;
• insurance proceeds.

After default, the lessor may seek to apply a security deposit against:

• unpaid rent;
• damage;
• maintenance shortfalls;
• redelivery costs.

But the contractual terms governing each financial instrument must be examined separately.

21. Guarantees

A parent company may guarantee the airline's lease obligations.

Therefore:

Airline defaults → Lessor claims against airline → Lessor may also claim against guarantor.

The enforceability of the guarantee depends on:

• governing law;
• guarantee wording;
• insolvency;
• notice requirements;
• conditions precedent;
• limitation provisions.

22. Insolvency and Aircraft Location

Aircraft leasing has a special problem:

The debtor's insolvency forum and the aircraft's physical location may be different.

Example:

Irish lessor
↓
French airline
↓
Aircraft located in Spain
↓
Aircraft registered in another State
↓
Insolvency proceeding in France.

The lessor must potentially deal with:

• French insolvency law;
• Spanish possession law;
• aircraft-registration law;
• governing law of lease;
• Cape Town Convention;
• EU private international law.

This is why aircraft repossession is fundamentally a cross-border private-law problem.

23. Applicable Law

An aircraft lease may select:

• English law;
• Irish law;
• New York law;
• French law;
• another national law.

However, the chosen law does not necessarily determine everything.

Mandatory rules of:

• insolvency;
• registration;
• public law;
• aircraft operation;
• security interests;

may still apply.

24. Jurisdiction

Aircraft leases commonly contain exclusive jurisdiction clauses.

The parties may choose:

• English courts;
• Irish courts;
• French courts;
• arbitration.

But insolvency proceedings can complicate enforcement.

The lessor may therefore need:

1. contractual claim;
2. interim relief;
3. repossession order;
4. recognition in another country;
5. cooperation from aviation authorities.

25. Damages Following Default

A lessor may potentially claim:

1. Outstanding rent

Amounts already due.

2. Default interest

Interest arising under the lease.

3. Future losses

Subject to contractual and applicable legal limitations.

4. Repossession expenses

Including:

• aircraft recovery;
• ferrying;
• airport charges;
• technical personnel.

5. Restoration expenses

Returning the aircraft to contractual condition.

6. Maintenance shortfall

Where maintenance reserves are insufficient.

7. Reconfiguration costs

Where necessary to place the aircraft with a replacement lessee.

8. Legal expenses

Where contractually recoverable.

The 2026 CIT Group v SpiceJet litigation illustrates how extensive the claimed loss can become.

26. Mitigation of Loss

A lessor generally cannot treat default as an unlimited source of damages.

Questions can arise concerning:

• replacement leasing;
• sale of aircraft;
• mitigation;
• market rental rates;
• residual value;
• avoided costs.

The lessor's recovery must therefore be analysed together with the applicable governing law and contractual damages provisions.

27. COVID-19 and Aircraft-Lease Defaults

COVID-19 generated major aircraft-leasing disputes.

Airlines argued:

• extraordinary circumstances;
• government restrictions;
• aircraft groundings;
• inability to operate;
• financial distress.

Lessors generally relied upon:

• contractual rent obligations;
• Events of Default;
• termination provisions;
• repossession rights.

The Peregrine Aviation v Laudamotion litigation demonstrates how pandemic-related commercial circumstances interacted with aircraft lease obligations.

28. Geopolitical Sanctions and Aircraft Defaults

The Russia-related aircraft disputes demonstrated another dimension.

A lessor may terminate a lease because of:

• sanctions;
• inability to insure;
• regulatory restrictions;
• failure to return aircraft.

But termination does not necessarily mean immediate physical recovery.

The AerCap v AIG litigation demonstrates the enormous legal and insurance consequences where aircraft remain outside the lessor's control following termination.

29. Insurance

Aircraft leases normally require extensive insurance.

Potential policies include:

• hull all-risk;
• war-risk;
• liability;
• contingent lessor insurance;
• possessed insurance;
• repossession-expense cover.

A default may therefore create two parallel disputes:

Lessor v Lessee

and

Lessor v Insurer.

The 2025 AerCap v AIG litigation illustrates this distinction particularly clearly.

30. Civil-Law Property Issues

Continental civil-law systems may analyse aircraft ownership through concepts such as:

• ownership;
• possession;
• registration;
• security rights;
• restitution;
• revendication;
• insolvency estate.

This can differ from a purely contractual analysis.

A lessor may therefore have to prove:

"I own the aircraft."

rather than merely:

"The airline breached the lease."

This distinction becomes especially important during insolvency.

31. Product of the Lease vs Aircraft Object

Aircraft finance transactions can contain several legal interests:

A court must determine which interest is being enforced.

32. Evidence in Aircraft Default Litigation

Important evidence includes:

Financial

• rent statements;
• bank records;
• payment notices;
• maintenance-reserve accounts.

Technical

• maintenance records;
• aircraft condition reports;
• engine records;
• airworthiness certificates.

Contractual

• lease;
• amendments;
• side letters;
• waiver agreements;
• default notices.

Registration

• aircraft registration;
• deregistration request;
• IDERA;
• International Registry records.

Insolvency

• insolvency petition;
• administrator's orders;
• moratorium;
• restructuring documents.

Operational

• aircraft location;
• flight records;
• airport records;
• custody evidence.

33. Typical Litigation Strategy

A lessor generally needs to establish:

1. Valid lease

↓

2. Valid ownership/security interest

↓

3. Contractual Event of Default

↓

4. Proper default notice

↓

5. Failure to cure

↓

6. Valid termination

↓

7. Right to possession

↓

8. Right to deregistration/export

↓

9. Right to damages

↓

10. Enforcement against aircraft/lessee/guarantor

34. Key Defences by Lessees

A lessee may argue:

No default

Payment was made or properly deferred.

Waiver

The lessor previously accepted late payments.

Estoppel

The lessor represented that strict compliance would not be required.

Invalid termination

Contractual notice requirements were not followed.

Wrongful repossession

The lessor exceeded contractual or statutory powers.

Insolvency protection

Applicable insolvency law stayed enforcement.

Force majeure

Where recognised by the governing law and contractual terms.

Damages too high

The lessor failed to mitigate loss.

Redelivery standard disputed

The aircraft actually satisfied the contractual condition.

35. UK/Common-Law Authorities vs Continental Civil Law

This distinction is essential.

Continental civil-law treatment

Particularly relevant:

• France;
• Germany;
• other EU civil-law jurisdictions.

Focus:

• ownership;
• restitution;
• insolvency;
• property rights;
• registration;
• mandatory insolvency rules.

English-law treatment

The English Commercial Court has developed extensive aircraft-finance jurisprudence concerning:

• default;
• termination;
• repossession;
• redelivery;
• damages;
• guarantees;
• Cape Town remedies.

Cases such as AerCap v Hainan, GASL v SpiceJet, VS MSN 36118 v SpiceJet, CIT v SpiceJet and AerCap v AIG are therefore highly useful comparative authorities, but they should not be described as continental civil-law precedents.

36. Case-Law Revision Table

37. Key Legal Principles

Principle 1

Aircraft-lease default is primarily contractual, but enforcement is heavily affected by property and insolvency law.

Principle 2

The right to terminate does not always equal an immediate right to physically remove the aircraft.

Principle 3

Redelivery and repossession are legally distinct concepts.

Principle 4

Cape Town Convention protection depends on whether the Convention and Aircraft Protocol apply to the relevant transaction and State.

Principle 5

IDERA can be extremely important in cross-border aircraft recovery where the Convention applies.

Principle 6

Insolvency can substantially affect the timing and procedure of recovery.

Principle 7

Unpaid rent, maintenance shortfalls and redelivery costs can generate separate contractual claims.

Principle 8

An aircraft lessor may have claims against the lessee, guarantors and insurers simultaneously, depending upon the transaction structure.

Principle 9

Aircraft location, registration and insolvency jurisdiction can all be different, creating major private-international-law problems.

Principle 10

Continental civil-law analysis should not be confused with English common-law aircraft-finance jurisprudence.

38. Exam-Style Conclusion

Aircraft leasing default recovery litigation in Europe is a highly specialised form of cross-border civil and commercial litigation. The basic contractual relationship is straightforward—lessor provides aircraft, lessee pays rent and maintains/returns the aircraft—but default enforcement can involve several separate legal systems.

The principal sequence is:

Lease → Event of Default → Notice → Termination → Redelivery/Repossesssion → Deregistration → Export → Damages → Enforcement.

The Cape Town Convention and Aircraft Protocol, where applicable, provide an important international framework for aircraft interests and default remedies. However, European States do not all have identical Convention status; Germany, for example, had not ratified the Convention and Aircraft Protocol as of 2026.

Continental jurisdictions such as France require particular attention to ownership, registration, restitution and insolvency law, while English Commercial Court decisions provide extensive comparative guidance on contractual default, repossession, redelivery and damages.

The central litigation question can therefore be summarised as:

Has a valid contractual default occurred, has the lease been properly terminated, does the lessor possess an enforceable proprietary or international interest, can the aircraft lawfully be recovered, what insolvency restrictions apply, and what financial losses are recoverable?

For examination purposes, the simplest formula is:

Aircraft Lease + Default + Valid Termination + Enforceable Ownership/Security Interest + Lawful Recovery + Causally Connected Loss = Potential Aircraft-Leasing Default Recovery Claim.