The UAE Amends The Federal Civil Aviation Law To Secure Cape Town Convention Financing Benefits

On 28 August 2024, the United Arab Emirates ("UAE") enacted an amendment to Article 19 of the Federal Civil Aviation Law No. 20 of 1991 ("Federal Civil Aviation Law") to remove a key barrier to the full implementation of the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol (together, the "Cape Town Convention"). While the amendment was adopted last year, its practical effect became evident this year: as of 22 April 2025, the UAE is now officially included on the Cape Town Discount List maintained by the Aviation Working Group ("AWG") under the OECD ¹. The Cape Town Convention, acceded to by the UAE under Federal Decree No. (32) of 2006, provides a uniform framework for financing high-value mobile assets, such as aircraft or rolling stock, by creating internationally recognized rights and an international registry for these interests.

The previous wording of Article 19 of the Civil Aviation Law to a certain extent subordinated the Chicago Convention and other conventions to domestic law, stating that its provisions should be considered "complementary to the provisions" of the Civil Aviation Law and not at parallel or superseding to the designated aspects of the Civil Aviation Law. This previous Article 19 did not meet the criteria stipulated by 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.

The Amendment

Following extensive consultation with the AWG, the UAE General Civil Aviation Authority ("GCAA") along with other relevant industry stakeholders worked on the legislative amendment to Article 19 to reflect the UAE's revised eligibility as per the updated Cape Town Discount List of last April. The amended provision establishes the primacy of international conventions in the event of inconsistency with domestic law:

"1. The International Conventions, Protocols, and Agreements – related to the Civil Aviation Sector – shall be enforced in the State and deemed supplementary to the provisions of this Law.

2. In the event any provision of this Law contradicts with any provision stipulated in any of the International Conventions, Protocols, and Agreements related to Civil Aviation Sector and enforced in the State, the priority in implementation shall be for the provisions of the said Conventions, Protocols, and Agreements." (emphasis added)

This reform harmonises UAE law with the AWG 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.

Key Implications

Last year's amendment to the Federal Civil Aviation Law has enabled UAE airlines and operators to benefit from the Cape Town Discount this year, offering up to a 10% reduction on the premium rates charged by Export Credit Agencies. This measure reduces financing margins on aircraft debt and lease structures, significantly lowering the cost of capital and making financing more efficient and accessible. Consequently, operators are now better positioned to pursue fleet expansion and implement modernisation strategies. Overall, the reform strengthens the UAE aviation sector's global competitiveness and reinforces the country's position as a leading hub for international air transport and investment.

How We Can Help

We are closely monitoring the regulatory follow-through to assess how the amendment is implemented in practice and its impact on market behaviour in the UAE. Our team is well positioned to advise clients on the practical implications for both aviation transactional matters and disputes.

Footnote

1. CAPE TOWN LIST / LISTE CONVENTION DU CAP

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