Suppliers to troubled airlines increasingly seek security for their claims. Is temporary seizure of an aircraft an effective instrument?
Under Art. 78 of Poland’s Aviation Law, the operator of an airport has the right to temporarily seize an airplane in order to secure claims for payment of airport fees owed by the user of the aircraft or damage to the airport caused by the user. This instrument provides a unique opportunity to secure the airport operator’s claim before seeking relief from the court.
The wording of Art. 78 is terse, and it does not specify how the aircraft is to be seized. Paradoxically, this makes the regulation stronger. It is assumed that the creditor may exercise any lawful means to prevent the airplane from departing, e.g. by refusing to allow the airplane to refuel, but primarily by refusing to issue permission to take off. Until civil proceedings are commenced, the user of the aircraft is thus helpless to defeat the measures taken by the creditor. It may obtain release of the airplane only by providing appropriate security. Only after civil proceedings are commenced may the user demand that the seizure be lifted, or dispute an application by the creditor for an order for interim relief to secure the claim. The airport operator should bear in mind, however, that under general rules it may be liable in a separate proceeding for losses caused by seizure of an aircraft which later proved to be unwarranted.
A clear benefit of this solution is the speed with which the claim may be secured, as is the lack of definition of the procedure for seizure of the aircraft, which provides leeway to the creditor. With effective use of Art. 78, the creditor may protect against such events as removal of the aircraft to another jurisdiction, which could make it harder to enforce the claim. Unfortunately, the wording of Art. 78 also presents serious limitations.
When analysing this provision, it may quickly be noticed that the range of the subject matter and entities it covers is in fact very narrow. Temporary seizure of an aircraft may be used only by the operator of the airport, and only if the user of the aircraft is in arrears in payment of airport fees—the fees charged to airlines for using any types of services provided by the airport—or has failed to pay such fees altogether, or where the user has caused damage at the airport. Thus Art. 78 will not be applicable, for example, when the owner of the aircraft has a claim against the user (e.g. under a leasing agreement), or where the user of the aircraft has failed to make timely payment of navigational fees to the Polish Air Navigation Services Agency (PAŻP) or Eurocontrol (the European Organisation for the Safety of Air Navigation). In the case of navigational fees, in addition to pursuing claims under general rules, the agencies have the right to refuse to provide services to a user of the airspace who fails to comply with payment terms and conditions.
But the restrictions on use of temporary seizure of aircraft go further. Under Aviation Law Art. 156, temporary seizure may not be used even though the conditions set forth in Art. 78 are met, in the case of foreign aircraft as provided by international law and in the case of Polish aircraft serving regularly scheduled flights. This is based on the Convention for the Unification of Certain Rules Relating to the Preventive Seizure of Aircraft, signed at Rome on 29 May 1933, to which Poland is a party. Under this convention, aircraft intended only for state service (excluding commercial service), or operating regular lines of public transport, are not subject to seizure. These restrictions should no longer apply when an air carrier has been declared bankrupt.
It should also be borne in mind that the temporary seizure of an aircraft is just the beginning of the process of satisfying the creditor’s claim. If the user of the plane does not give in to pressure and pay the overdue fees or provide appropriate security, the operator of the airport should apply to the court for interim relief, and after obtaining a favourable ruling from the court, apply to the bailiff to conduct a proceeding to secure the asset, followed by execution. Nonetheless, the use of temporary seizure of the aircraft is the first step towards effective execution.
Other possibilities to seize an aircraft
Aviation Law Art. 78 is not the only instrument under Polish law permitting seizure of an aircraft to secure claims. The Civil Code and the Civil Procedure Code provide such tools to creditors who are excluded from the right to resort to Aviation Law Art. 78, such as airplane owners, lessors, flight coordinators and aviation agencies.
Firstly, the Civil Code provides a right of seizure to any person who is in possession of an airplane and is under an obligation to deliver it, if the person has made improvements on the airplane or the airplane has caused any damage. Another opportunity is to file an application with the court for interim relief to secure a claim, but this requires commencement of a civil proceeding. In the application, the party seeking interim relief must precisely identify the form of security, i.e. seizure of the airplane. Such relief may be sought by any creditor regardless of the legal title it holds. Moreover, in narrowly defined instances, the Aviation Law provides for the possibility of “administrative seizure” of an airplane. This right is vested solely in the President of the Civil Aviation Authority, who may seize an airplane if an inspection at the airport finds a violation of international law presenting an immediate threat to flight safety. In such case, the authority may secure the aircraft at the airport until it is brought back into compliance with international law.
Temporary seizure of an aircraft may provide an extremely useful instrument in the battle with a debtor who is an airline. For this reason, consideration should be given to amending Aviation Law Art. 78 to expand the set of entities who may use it as well as the types of cases in which it may be used, while at the same time protecting the principle of certainty of air transport. But whether or not this provision is amended in the future, all creditors of airlines should remember that in their battle against the debtor, they already have other commonly available procedural and substantive measures at their disposal, which may be equally effective.
Natalia Rutkowska, Dispute Resolution & Arbitration Practice, Wardyński & Partners