Aviation: Financing And Leasing 2025

1. Aircraft and Engine Purchase and Sale

1.1 Sales Agreements

1.1.1 Taxes/Duties Payable Upon Execution of the Sales Agreement

Stamp Duty

In Nigeria, the execution of an aircraft or engine sale agreement will attract stamp duties at an ad valorem rate of 1.5%.

Capital Gains Tax

The gains realised from the sale will be subject to capital gains tax. Capital gains tax at the rate of 10% arises on gains accruing to domestic parties upon the sale of an aircraft or engine. This tax also arises from the sale of ownership interests in Nigerian companies for proceeds in excess of NGN100 million. A roll-over relief exists where the proceeds from the sale of the aircraft or engine are used to purchase a new aircraft or engine within 12 months before or after the sale.

For foreign sellers spending an aggregate of 183 days or more in Nigeria in the year of assessment, and for­eign companies managed and controlled from outside Nigeria during the year of assessment, capital gains tax will arise solely on any sums received or brought into Nigeria.

Other Duties

Where an aircraft or engine or other part is imported following a sale, it will be import-duty free. Notwith­standing the foregoing, the Finance Act 2023 imposes an additional 0.5% charge on goods (including air­craft) imported into Nigeria from outside the region. The Finance Act 2023 also mandates operators and lessors with income derived from Nigeria to file tax returns as a condition of continued operation.

VAT is applicable on goods physically present in or imported into Nigeria. However, VAT will not arise where an aircraft or engine is for commercial purpos­es. These incentives do not apply to private aircraft.

1.1.2 Enforceability Against Domestic Parties

It is advisable for a sale agreement to be profession­ally translated into English (the official language of Nigeria) where the sale agreement is not in English. The sale agreement as translated should then be certi­fied and/or notarised in the applicable manner for that country. Nigerian courts will not enforce an agreement made in a foreign language.

1.2 Transfer of Ownership

1.2.1 Transferring Title

The transfer of title of an aircraft or engine must be effected through a written agreement, and the parties to the agreement will specify the terms and conditions that must be met for title to pass to the buyer. This position also applies to all installed parts, such as an auxiliary power unit (APU).

The sale of ownership interests in an entity that owns an aircraft or engine will be recognised as a sale of such aircraft or engine once it is agreed in the sale instrument that all the interests in such entity are being acquired.

1.2.2 Sales Governed by English or New York Law

A transfer instrument, such as a bill of sale, may spec­ify that it is governed by English or New York law. Such clauses are recognised and enforced by Nige­rian courts, provided that the terms and basis of the agreement are not contrary to public policy, tainted with fraud or in any way illegal.

The minimum substantive requirements for such a bill of sale will be akin to the minimum requirements for a valid contract. These include:

• the correct identification of the parties (ie, the seller and the buyer);
• the consideration for the sale;
• a precise description of the aircraft or engine or other part being sold;
• the date of the transaction; and
• the signatures of the parties.

1.2.3 Enforceability Against Domestic Parties

A bill of sale, if executed in a language other than the Nigerian official language (which is English), should be translated into English. It should be certified or notarised, particularly if the document is to be ten­dered in a court proceeding.

1.2.4 Registration, Filing and/or Consent From Government Entities

A bill of sale showing evidence of ownership of an aircraft should be registered and filed with the Nigeria Civil Aviation Authority (NCAA). It is one of the docu­ments that the NCAA requests at the time of registra­tion of an aircraft.

Where the bill of sale is being registered and filed along with the aircraft, the formalities include the submission of an application to the NCAA in a form and manner acceptable to the NCAA. The application must:

• certify that the aircraft meets the eligibility criteria set out in Part 4 of the Nigeria Civil Aviation Regulations ("Nig.CARs");
• provide evidence of ownership; and
• be signed.

Where the bill of sale is being registered as an interest, the NCAA does not stipulate any formalities, but Part 4 of the Nig.CARs states that the requirements for the registration of legal interests in an aircraft must be as prescribed by the NCAA.

To be eligible for registration, an aircraft should be owned by any of the following persons:

• a Nigerian citizen;
• an individual citizen of another state who is lawfully a permanent resident in Nigeria;
• a corporation lawfully organised and doing busi­ness under the laws of Nigeria, where the aircraft is based and primarily used in Nigeria;
• a government entity of Nigeria or political subdivi­sion thereof; or
• a foreign person who has leased the aircraft to one of the above-mentioned persons, in which case, the leased aircraft –

1. may remain on the Nigeria registry only for as long as the lease remains in effect, and the certificate of registration must include the names and addresses of the lessee and, if different, the operator of the aircraft; and
2. may not also be registered under the laws of any other state and may not be more than 25 years old (if used for commercial air transport – cargo) and not more than 22 years old (if used for commercial air transport – passengers).

There is no period stipulated by law for completion of registration of a bill of sale or other instrument creating an interest in an aircraft.

No government applications or consents are prereq­uisite to the execution and delivery of a bill of sale in relation to an aircraft or engine registered in Nigeria.

1.2.5 Taxes/Duties Payable Upon Execution of a Bill of Sale

Stamp duties arise ad valorem on the execution of a bill of sale instrument. The documents may be in written or electronic form. The law provides that no bill of sale will be registered until the document has been duly stamped.

The obligation to pay duties arises on the bill of sale irrespective of the location of the aircraft or engine, as long as the place of performance is Nigeria.

2. Aircraft and Engine Leasing

2.1 Overview

2.1.1 Non-Permissible Leases

Operating, wet and finance leases are permissible and recognised in Nigeria. Leases concerning only engines or aircraft parts are also permissible.

2.1.2 Application of Foreign Laws

A lease involving a domestic party, or an asset situat­ed in Nigeria, can be governed by foreign law. Nigerian courts are inclined to respect the sanctity of contracts and uphold a foreign jurisdiction clause. However, Nigerian courts may in certain instances assume juris­diction over any matter subject to such a foreign law clause and have held that upholding such a clause is discretionary. Circumstances that the courts will take into consideration when faced with an application to stay an action filed in breach of a foreign jurisdiction clause, include the following:

• where the evidence on the issue of fact is situated or more readily available, and the effect of that on
• the relative convenience and expense of a trial as between the courts of each jurisdiction;
• whether the law of the foreign court applies and, if so, whether it differs from Nigerian law in any material respects; and
• to what country and how closely either party is connected, and whether the defendants genuinely desire trial in the foreign country or are only seek­ing procedural advantages – examples of such instances include:

1. where the defendant is resident within the juris­diction of the court;
2. if the subject matter of the suit is located within the jurisdiction; or
3. if the contract was entered into in Nigeria.

2.3 Parts Installed or Replaced After a Lease's Execution

Parties are free to amend the terms of their lease to cover engines and other parts installed or replaced on an aircraft after the execution of the lease.

2.4 Risk of Title Annexation

If the interest in an engine installed in an airframe is held by a person other than the person who holds interest in the airframe, the risk of title annexation does exist. The realisation of the interest in the aircraft engines is, however, subject to the registration of such an interest with the NCAA at the time it is created.

2.5 Recognition of the Concepts of Trust/Trustee

The concept of a trust and the role of an owner trus­tee under a lease is recognised in Nigeria. The legal framework for trusts in Nigeria is the received com­mon law of England. There is currently no specific statute governing private trusts in Nigeria.

3 Lease Registration

3.1 Notation of Owner's/Lessor's Interests on Aircraft Register

The interests of an owner (legal or beneficial) or a les­sor of an aircraft, including aircraft engine and propellers intended for use in Nigeria, are noted in the aircraft register maintained by the NCAA.

The notation of an owner or lessor's interest in the register establishes the priority of such interest in the aircraft in the event of any disputes or insolvency proceedings. The Civil Aviation Act (CAA) 2022 states that, upon the registration of such interest, no docu­ment affecting title to, or any interest in, such aircraft or engine or any other part will be valid – except between the parties to it – unless it is contained in the register.

Such notation also alerts potential buyers or other interested parties about the existing security interest.

3.2 Registration If the Owner Is Different From the Operator

An aircraft can be registered in Nigeria in the name of the operator or owner. Under the Nig.CARs' General Policies, Procedures and Definitions, an "operator" is defined as "the person, organisation or enterprise engaged in or offering to engage in an aircraft opera­tion (ICAO)" and "the person who causes or authorises the operation of an aircraft, such as the owner, lessee or bailee of an aircraft, or the PIC [pilot in command]". Thus, an owner is subsumed within the definition of an operator. It is usual to have the names of the operator and owner included on the certificate of registration if they are distinct entities.

3.3 Aircraft/Engine-Specific Registers

There is no specific register for leases concerning aircraft or engines. Such leases are noted in the air­craft register maintained by the NCAA. The NCAA is required to record in the national civil aircraft register any title to, or any interest in, any civil aircraft regis­tered in Nigeria and in any aircraft engine, propeller or appliance intended for use on any aircraft registered in Nigeria.

3.4 Registration of Leases With the Domestic Aircraft Registry

A lease and a lessor's interest must be registered and filed in the aircraft register maintained by the NCAA. Consequences for failing to do so are similar to the consequences for failure to register the title to an aircraft. Leases are not subject to consent from any government entity.

In many cases, a lease is registered at the time of registration of the aircraft. The formalities required for such a process include:

• an application in the prescribed form;
• a certificate or notice of deregistration from the previous state of registry (which is received by the NCAA directly from the state of registry) or, if the aircraft is new, a letter from the state of manu­facture confirming that the aircraft has not been registered in any other state;
• a document showing proof of aircraft ownership (eg, a bill of sale);
• if the aircraft is owned by a company, the names of the directors of the company owning or leasing the aircraft and their specimen signatures;
• if the aircraft is on lease, a certified copy of the lease agreement with evidence of stamp duty pay­ment;
• a certified copy of a current aircraft insurance cer­tificate; and
• proof of payment of the prescribed fees.

There is no statutory estimated period for completion of the registration of an aircraft/engine lease.

In Nigeria, no government applications or consents are prerequisite to the execution and delivery of an aircraft and/or engine lease.

3.5 Requirements for a Lease to Be Valid and Registrable

A lease need not be in a specific form to be valid and registrable in the aircraft register. However, where the lease or document transferring title is written in a lan­guage other than English, such document must be translated into English for it to be acceptable by the NCAA. The translated document must be certified, notarised or legalised in the manner legally recognised in the country where the transaction was conducted.

3.6 Taxes/Duties Payable for Registering a Lease

No taxes or duties are payable for registering a lease with the NCAA. However, registration of a lease will attract statutory fees as prescribed by the NCAA.

2.3.7 Registration of Aircraft in Alternative Countries

For private jets and charter aircrafts that are habitually based in Nigeria, popular alternative countries for reg­istration include San Marino and Bermuda. However, commercial aircraft habitually based in Nigeria must be registered in Nigeria.

2.3.8 Requirements for Documents Concerning Registration

The Nig.CARs do not specifically stipulate that any document be in its original form. However, if any rel­evant document is in a language other than English, such document must be translated and must comply with the process for authentication of documents in the jurisdiction in which it was issued and/or notarised.

2.4 Lessor's Liabilities

2.4.1 Tax Requirements for a Foreign Lessor

Foreign lessors are subject to withholding tax at the rate of 10% on lease payments. Where the lessor is from a country that has a DTA with Nigeria, the with­holding tax payable will be subject to the terms of the DTA. DTAs do not exempt the payee from the payment of withholding tax in its entirety; rather, they adjust the applicable withholding tax on each transaction based on the agreed maximum rate prescribed in the DTA. Therefore, where the domestic withholding tax rate is lower than the one prescribed in the DTA, the domes­tic rate will apply. However, where the domestic rate is higher than the rate in the DTA, the DTA rate will apply.

The tax withheld represents the final tax for non-res­ident lessors, and the obligation and liability to with­hold and remit lie with the local lessee.

2.4.2 Effects of Leasing on the Residence of a Foreign Lessor

The sole act of leasing an aircraft will not create tax residency in Nigeria. Tax residency arises for individu­als on the basis of the length of time spent in Nigeria within a period of assessment and, for companies, arises upon incorporation.

Foreign lessors may become liable for tax where such a lessor is a non-resident company and derives income from its Nigerian operation.

2.4.3 Engine Maintenance and Operations

There are no laws in Nigeria that impose liability on a foreign lessor in respect of aircraft or engine mainte­nance solely on the basis of such lessor being a party to the lease agreement. It is usual for the parties to specify in their lease agreements the extent of the liabilities of each party.

2.4.4 Damage or Loss Caused by an Asset

The doctrine of strict liability does not apply to a for­eign aircraft, engine owner or lessor under a lease, or financier financing an asset on lease, based on the fact that they hold such an interest. The Montreal Con­vention and the rules of that convention govern dam­age or loss occasioned by an asset in circumstances covered by the Montreal Convention. For other claims, the general law of tort will apply.

2.4.5 Attachment by Creditors

Only properties owned by the lessee may be attached in satisfaction of a debt. Creditors of a domestic les­see cannot therefore attach a leased aircraft owned by a different entity in satisfaction of a debt. It is, how­ever, important that an owner registers its interest with the NCAA as notice to third parties that the aircraft is not owned by the lessee.

2.4.6 Priority of Third Parties' Rights

Nigeria made declarations under Article 39 (1) of the Cape Town Convention on International Interests in Mobile Equipment and its Protocol (the "Cape Town Convention") to the effect that certain non-consensual rights will have priority over registered interests. These rights include:

• liens in favour of workers for unpaid wages aris­ing since the time of a declared default under a contract to finance or lease the subject object for services performed relating to that object; and
• liens in favour of repairers of an object in their pos­session to the extent of services performed on, and value added to, that object.

These third-party rights will have priority whether or not the lease/lessor is registered in the Nigerian air­craft register.

2.5 Insurance and Reinsurance

2.5.1 Requirement to Engage Domestic Insurance Companies

In Nigeria, even though it is mandatory for carriers operating air transport services to and from Nigeria to maintain relevant insurance, it is not mandatory for all the insurance coverage to be obtained from a domes­tic insurance company.

2.5.2 Mandatory Insurance Coverage Requirements

The CAA 2022 imposes mandatory insurance cover­age requirements. The specific range of insurance that should be maintained is set out in Part 18 of the Nig. CARs, which establishes the minimum insurance sums based on the maximum take-off weight (MTOW) of a fixed-wing aircraft or a rotary-wing aircraft. The mini­mum insurance cover for aircraft operating in Nigeria must correspond to the aircraft's available capacity.

2.5.3 Placement of Insurance Outside of Jurisdiction

Section 72 (1) of the Insurance Act 2003, which is applicable to the aviation industry, prohibits the insurance or reinsurance of a risk of a property in a Nigerian business except with a Nigerian insurance or reinsurance company. This provision is interpreted and enforced by the National Insurance Commission ("NAICOM") to bar the insurance or reinsurance of air­craft or aircraft equipment with a foreign company. The Insurance Act 2003 does not provide a percentage of the risk that is required to be mandatorily insured or reinsured in Nigeria.

However, there are circumstances whereby the NAI­COM may permit a risk to be insured or reinsured with a foreign insurer or reinsurer, following an application by a person seeking to maintain foreign insurance or reinsurance. In such circumstances, the applicant must satisfy NAICOM that as a result of the excep­tional nature of the risk, the risk cannot be placed with an insurer or reinsurer in Nigeria.

The Insurance Act 2003 does not restrict the insur­ance or reinsurance risk in Nigeria to any particular insurance or reinsurance company or group of com­panies. Thus, a person seeking to obtain insurance or reinsurance is at liberty to spread the risk among different insurance or reinsurance companies. In practice, a percentage of aviation risk is retained in the Nigerian market and is spread among insurance companies, while the bulk of the risk is reinsured with foreign reinsurance companies.

2.5.4 Enforceability of "Cut-Through" Clauses

Cut-through clauses in insurance/reinsurance agree­ments are enforceable in Nigeria.

2.5.5 Assignment of Insurance/Reinsurance

Assignment of insurance and reinsurance is permitted subject to the terms of the contract.

2.6 Lease Enforcement

2.6.1 Restrictions on Lessors' Abilities

There are no restrictions on a lessor's ability to termi­nate an aircraft lease or re-export the aircraft and/or sell the aircraft following such termination. Once the lessor terminates in line with the lease agreement, an application can be made to the NCAA for the deregis­tration of the aircraft and subsequent export.

There is also no requirement under the law that the aircraft must be physically located in Nigeria at the time of such action by the lessor.

2.6.2 Lessor Taking Possession of the Aircraft

Where the lease is constituted as an international interest under the Cape Town Convention and the les­see has executed an irrevocable deregistration and export request authorisation (IDERA), a court order is not required for the lessor to take physical possession of an aircraft subject to a lease. The lessor can take physical possession of the aircraft by presenting the IDERA to the NCAA and deregistering and exporting the aircraft out of Nigeria.

A lessor who has a deregistration Power of Attor­ney (DPOA) may also take physical possession of an aircraft without the lessee's consent and a court order. Notably, a DPOA does not carry the same legal authority or international recognition as an IDERA. Where these instruments do not exist, a lessor must obtain a court order to take physical possession of an aircraft without the lessee's consent.

2.6.3 Specific Courts for Aviation Disputes

Aviation and the safety of aircraft form part of the mat­ters which, by virtue of Section 251 of the Constitution of the Federal Republic of Nigeria 1999 (as amended), fall within the exclusive jurisdiction of the Federal High Court. Aviation matters that fall within the jurisdiction of the Federal High Court include matters falling within the Montreal Convention (ie, liability for the carriage by air of passengers and cargo as governed by that convention), as well as contractual disputes involving aircraft and/or interests in aircraft and aircraft parts.

2.6.4 Summary Judgment or Other Relief

A lessor may obtain equitable or other injunctive relief pending the final resolution of judicial proceedings to enforce an aircraft lease.

With regard to summary judgment, the lessor may be required to prove – among other things – that there is no genuine dispute of material facts regarding out­standing debt. Summary judgments in Nigeria are applicable to monetary claims.

Temporary restraining orders and injunctions are avail­able to a lessor to prevent the lessee from removing the aircraft from a particular jurisdiction or to allow the lessor to recover possession of the aircraft. In order to grant injunctions, courts usually require the lessor to prove that there is risk of irreparable loss and to give an undertaking in the event that the court finds that the application for temporary restraining orders was frivolously made.

Applications for summary judgments that are not contested could take between nine and 12 months to determine. Contested applications could last for 18 months.

Injunctions, particularly those for interim relief, could be applied for and obtained within days to a month.

2.6.5 Domestic Courts' Approach to Foreign Laws and Judgments

Nigerian courts recognise parties' choice of foreign law and jurisdiction and will, as a general rule, give effect to the parties' choice of a foreign governing law. However, Nigerian courts may assume jurisdiction over any matter subject to such a foreign law clause in certain instances and have held that upholding such a clause is discretionary.

Circumstances that a court will consider in deciding whether to uphold a foreign jurisdiction clause are listed in 2.1.2 Application of Foreign Laws.

A waiver of immunity by parties to a lease can be waived and this will be recognised by the courts.

2.6.6 Domestic Courts' Recognition of Foreign Judgments/Awards

Nigerian courts recognise and enforce a final judg­ment of a foreign court as well as foreign arbitral awards without examining the merits of the matter, except where a party is contesting an application to recognise and enforce on grounds such as the judg­ment or award being contrary to public policy.

2.6.7 Judgments in Foreign Currencies

A lessor under an aircraft lease, where the considera­tion is denominated in foreign currency, can obtain judgment in the foreign currency.

2.6.8 Limitations on Lessors' Actions Following Termination

Default interest is a matter of contract and is therefore subject to the agreement of the parties. However, any clause in a lease pertaining to default interest should be reasonable, as Nigerian courts generally do not enforce clauses that appear to be punitive.

2.6.9 Lessor's Requirement to Pay Taxes/Fees

No taxes arise from actions to enforce aircraft leases. However, the lessor must pay filing fees to the court if enforcement involves an application to the courts. Where the relief is monetary, filing fees will depend on the sum claimed up to the maximum limit where a claim exceeds the stipulated threshold.

2.6.10 Mandatory Notice Periods

There are no mandatory notice periods for the lessor to comply with if it terminates the lease, except as may be provided in the lease agreement. A reasonable notice period is, however, advisable.

2.6.11 Lessees' Entitlement to Claim Immunity

In general, private business entities do not have the privilege of claiming immunity from legal actions. How­ever, a lessee that enjoys sovereign or other immunity is entitled to claim immunity from suit except where such immunity has been waived. It is important that such a waiver of immunity by the sovereign entity is clearly stated.

2.6.12 Enforcement of Foreign Arbitral Decisions

Nigeria is a signatory to the Convention on the Rec­ognition and Enforcement of Foreign Arbitral Awards 1958 (the "New York Convention"). The New York Convention has been domesticated in Nigeria and has now been incorporated into local law by Section 60 of the Arbitration and Mediation Act 2023.

Nigerian courts will recognise and enforce an arbitral award.

2.6.13 Other Relevant Issues

It is possible that a lessee may approach the courts to obtain an injunction to stop the deregistration and export of an aircraft when an event of default occurs under the lease agreement. The lessor should there­fore ensure that adequate records are being kept of the performance of the lessee's obligations under the lease agreement. This is to ensure that evidence of a breach is not contestable.

2.7 Lease Assignment/Novation

2.7.1 Recognition of the Concepts of Contractual Assignment and Novation

Contractual assignment and novation are both recog­nised under Nigerian law.

2.7.2 Assignment/Novation of Leases Under Foreign Laws

An assignment or novation of an aircraft lease gov­erned by New York or English law will be considered valid under Nigerian law. The need for lessee's consent will be subject to the terms of the aircraft lease agree­ment as there are no laws in Nigeria that specifically require that a lessee's consent should be obtained for an assignment or novation. Generally, there are also no mandatory terms required under Nigerian law to be included in such agreements or deeds.

2.7.3 Enforceability of Lease Assignments/ Novations

If the lease agreement and the assumption/novation is in a language other than English, it is advisable that they be translated into English, certified and notarised if they are to be submitted before a court in Nigeria in respect of an enforcement proceeding.

2.7.4 Filing/Registration of Lease Assignments/ Novations

An aircraft or engine lease assignment and assump­tion/novation must be filed at the NCAA as required by the Nig.CARs. The assignment or novation is not subject to consent from any government entity.

The formalities required for registration are as follows:

• completion of the application form;
• where the aircraft is new with no prior registration, a letter from the state of manufacture is required – however, where there has been prior registration, a certificate or notice of deregistration is required from the previous state of registration;
• proof of aircraft ownership (eg, a bill of sale);
• the names of the directors of the company owning or leasing the aircraft and their specimen signa­tures giving authority to register or operate the aircraft in Nigeria and indicating who among them has the mandate to transact on their behalf on matters relating to aircraft registration or operation;
• means of identification (eg, a copy of a govern­ment-issued identification document, or passport or any other identification card approved by the NCAA if owned by an individual, or a certified copy of the certificate of incorporation if owned by a company);
• a certified copy of the lease agreement if the air­craft is on lease with stamp duties paid;
• a certified copy of the power of attorney from the owner or lessor and the lessee (or both) (if applica­ble);
• a certified copy of a current aircraft insurance certificate;
• proof of payment of the prescribed fees; and
• a certified copy of the air transport licence, air operating permit or permit for non-commercial flight.

There is no estimated period for completion. However, where all the required documents are submitted, the process should be completed within a two-to-three month period.

Government consent is not a prerequisite for the execution and/or delivery of an aircraft and/or engine lease assignment and assumption/novation.

2.7.5 Taxes/Duties Payable on Assignment/ Novation

Stamp duties will be assessable on an assignment agreement if an original or copy of it is brought into Nigeria physically or electronically.

2.7.6 Recognition of Transfer of Ownership Interests

Assuming that the ownership interest of the entity (or the beneficial interest in the trust) owning an aircraft is transferred with the legal title to the asset remaining with that entity, such instance would not be consid­ered as a transfer of title to the aircraft and there will be no requirement to notify the NCAA.

2.8 Aircraft Deregistration and Export

2.8.1 Deregistering Aircraft in This Jurisdiction

The holder of a certificate of registration, owner or lessor or their duly authorised attorney, the holder of a valid DPOA or an IDERA can apply to the NCAA to deregister an aircraft. The NCAA on its own, under certain conditions, may deregister an aircraft.

Generally, to deregister an aircraft, the applicant will complete the appropriate application form, which will be submitted to the NCAA along with a cover let­ter addressed to the director general of the NCAA requesting the deregistration of the aircraft, the origi­nal certificate of registration of the aircraft and other relevant documents. Where an applicant is seeking to deregister based on an IDERA, the authorised party or certified designee of an IDERA can request the dereg­istration of an aircraft by submitting a formal applica­tion letter stating the reason for the exercise of the IDERA, the official application form for deregistration, a copy of the IDERA, and evidence of payment of statutory charges.

2.8.2 Lessee's/Operator's Consent

An aircraft owner, mortgagee or lessor can apply for the deregistration of the aircraft and the consent of the operator to deregister is not required, except where consent is required in the relevant agreements.

2.8.3 Required Documentation

The requirements for deregistration of an aircraft are as follows:

• a formal application letter addressed to the director general of the NCAA requesting the deregistration of the aircraft and the official application form for deregistration;
• the operator's/lessor's/owner's copy of the current certificate of registration; duly endorsed on the reverse side;
• evidence of payment of statutory charges;
• a notarised DPOA duly executed by the owner if the applicant is not the owner or authorised opera­tor;
• a statement of the reason for deregistration; and
• evidence of the sale (if sold).

To discharge a security interest that has been regis­tered at the International Registry, the applicant will be required to obtain the written consent of the mortga­gee (if different from the applicant). The applicant will also be required to present an IDERA granted by the debtor, mortgagor or lessee.

2.8.4 Duration of Deregistration Process

The timeline for deregistration at the NCAA can vary but for simple uncontested cases, a timeline of cir­ca three weeks from the date of submission may be expected.

For the International Registry, it is typically 48 to 72 hours upon submission of the application.

2.8.5 Aviation Authority's Assurances

The NCAA does not provide advance assurances to an aircraft owner, mortgagee or lessor as to the prompt deregistration of the aircraft.

2.8.6 Costs, Fees and Taxes Relating to Deregistration

The fees applicable to the deregistration of an air­craft at the NCAA depend on the type of aircraft and the MTOW of the aircraft. For a fixed-wing aircraft, the cost of deregistration ranges from NGN45,000 to NGN450,000, depending on the MTOW of the aircraft, whereas for a rotary aircraft, the cost of deregistration ranges from NGN135,000 to NGN180,000, depending on the MTOW.

2.8.7 Deregistration Power of Attorney

The NCAA will recognise a DPOA. An irrevocable DPOA will be stamped ad valorem at the rate of 1.5%, whereas a revocable DPOA is stamped at the flat rate of NGN500.

A DPOA is usually registered at the NCAA along with the other documents required for the registration of a security interest in an aircraft. Where the DPOA is in a language other than English, it is advisable that the DPOA be translated and notarised in the manner required under the law of the jurisdiction in which it is issued and filed with the NCAA, to be enforceable against a domestic party.

2.8.8 Documents Required to Enforce Deregistration Power of Attorney

Part 4 of the Nig.CARs, which contains provisions for deregistration, does not specify the documents to be submitted when applying for deregistration. However, it absolves the NCAA (and also requests an indemnity) from any liability that may arise from defects in docu­ments, records and depositions submitted to it in sup­port of an application for deregistration. Supporting corporate documentation will therefore include similar (updated) documentation required for registration of the aircraft.

2.8.9 Choice of Laws Governing Deregistration Power of Attorney

A DPOA does not have to be governed by Nigerian law.

2.8.10 Revocation of a Deregistration Power of Attorney

Generally, an irrevocable power given for valuable consideration or for a fixed period not exceeding 12 months cannot be revoked by the grantor and will remain irrevocable until the consideration and/or inter­est is satisfied or until the term expires.

2.8.11 Owner's/Lessor's Consent

There is no legal requirement that prohibits an aircraft owner, mortgagee or lessor from exporting an aircraft without the lessee's consent.

Where deregistration and exportation out of Nigeria is sought by an owner, the owner may indicate its willingness for the aircraft to remain on the Nigerian registry. It is therefore necessary, where applicable, for a mortgagee to seek the consent of the owner or lessor to export the aircraft.

An owner, mortgagee or lessor should, however, ensure that clear terms permitting it to export the aircraft without the lessee's consent are included in the lease agreement. The aircraft need not be physi­cally present in Nigeria in order to be deregistered. For export, however, the aircraft needs to be in Nigeria.

2.8.12 Aircraft Export Permits/Licences

The NCAA issues an Export Certificate of Airworthi­ness for an aircraft registered in Nigeria upon being satisfied of the existence of certain conditions.

An application for an Export Certificate of Airworthi­ness is made in the required form and manner accept­able to the NCAA. Part 5 of the Nig.CARs sets out the information and references required when making an application for an Export Certificate of Airworthiness. There is no provision permitting the Export Certificate of Airworthiness to be obtained in advance.

2.8.13 Costs, Fees and Taxes Concerning Export of Aircraft

No taxes are charged in respect of the export of an aircraft, but fees are payable to the NCAA. The export fee varies based on the type, features and MTOW of the aircraft. Fees for a fixed-wing aircraft range from NGN54,000 to NGN2.88 million, whereas the fees for a rotary aircraft range from NGN360,000 to NGN1.08 million.

2.8.14 Practical Issues Related to Deregistration of Aircraft

It is usual for the NCAA to request a statement on the reason for the deregistration of the aircraft. The NCAA does not require the removal of registration marks from an aircraft before deregistration is granted.

2.9 Insolvency Proceedings

2.9.1 Overview of Relevant Laws and Statutory Regimes Governing Restructurings, Reorganisations, Insolvencies and Liquidations

In Nigeria, the statutes that govern restructuring and insolvency include:

• the Companies and Allied Matters Act 2020 (CAMA);
• the Insolvency Regulations 2022;
• the Companies Winding Up Rules 2012;
• the Federal Competition and Consumer Protection Act 2019;
• the Investment and Securities Act 2025;
• the Securities and Exchange Commission Rules 2013 (as amended in 2024); and
• the Asset Management Corporation of Nigeria Act 2010 (as amended in 2021).

2.9.2 Overview of Relevant Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership

The voluntary and involuntary restructuring, reorgani­sation and insolvency processes available in Nigeria include:

• members voluntary winding-up;
• court ordered winding-up;
• administration and company voluntary arrange­ment;
• arrangement and compromise;
• management buyout;
• M&A; and

A company may be wound up by the court if:

• the company has by special resolution resolved that the company be wound up by the court;
• default is made in delivering the statutory report to the Corporate Affairs Commission (the agency responsible for company oversight in Nigeria) or in holding the statutory meetings;
• the number of members is reduced to below two in the case of companies with more than one share­holder;
• the company is unable to pay its debts;
• the condition precedent to the operation of the company has ceased to exist; or
• the court is of the opinion that it is just and equita­ble that the company should be wound up.

2.9.3 Co-Ordination, Recognition or Relief in Connection With Overseas Proceedings

Nigeria is yet to adopt the UNCITRAL Model Law on Cross-Border Insolvency or any other law or conven­tion that mandates cross-border co-operation or pro­vides for judicial assistance for overseas insolvency proceedings. There are also no laws that specifically provide for the recognition and enforcement of cross-border insolvencies or reliefs sought therefrom.

The Nigerian courts under the Foreign Judgments (Recognition and Enforcement) Act may recognise and enforce a foreign judgment, provided that the judg­ment is final and conclusive, has no appeal against it, and there is reciprocity.

2.9.4 Effect of Lessee's Insolvency on a Deregistration Power of Attorney

An irrevocable DPOA or an IDERA granted by a lessee to a lessor, owner or mortgagee of an aircraft should not be voided by the liquidation of the lessee. How­ever, the IDERA will cease to operate where the lessee is dissolved.

2.9.5 Other Effects of a Lessee's Insolvency

A lease will not be set aside upon the lessee being put into liquidation – although it may be terminated by the liquidator. The lessor is entitled, under the lease agreement, to terminate said lease and repossess the aircraft from the lessee. However, the lease may be set aside if there is evidence to show that it was made for the purpose of avoiding obligations due from the lessee.

On termination of the lease, the lessor is permitted to submit the DPOA or the IDERA for the purpose of repossessing the aircraft. The liquidator may apply to restrain the lessor from repossessing, but such appli­cations must be made with clear evidence that the aircraft is an asset of the lessee.

The aircraft will not be deemed to be the lessee's property.

Nigerian courts recognise the rules of priority. The liq­uidator/administrator cannot impose the right of any other creditor in priority over the lessor's right because the aircraft asset does not belong to the lessee and the lessee could not have validly created an interest in the aircraft. In addition, registration of the lease with the NCAA gives the lessor priority over the aircraft above any other interest holder.

2.9.6 Risks for a Lender if a Borrower, Guarantor or Security Provider Becomes Insolvent

When a borrower or guarantor becomes insolvent, the main risks for a lender are potential loss or delays in recovering debts owed, and possible challenges to the validity of security arrangements.

2.9.7 Imposition of Moratoria in Connection With Insolvency Proceedings

Generally, the rights of secured creditors are not stayed by the commencement of insolvency proceed­ings. However, the CAMA imposes various moratoria for different actions that may be taken at the initiation of or during administration proceedings or a scheme of arrangements. The moratorium period is six months for a scheme of arrangement, whereas an administra­tion moratorium imposed to restrict the institution of proceedings to enforce security over company proper­ties, repossess goods under hire purchase agreement, or exercise a landlord's right to peaceful re-entry, has no fixed period and any action taken will be subject to the consent of the administrator.

2.9.8 Liquidation of Domestic Lessees

Under Nigerian law, a domestic lessee can be liquidat­ed by the appointment of a liquidator, or placed under administration or receivership through the appoint­ment of an administrator or receiver respectively, in accordance with insolvency laws.

The liquidator is appointed following an application made by a special resolution of the shareholders, or an application made by the directors or creditors of the company. An administrator may be appointed by the courts, or out of court, by holders of a floating charge or by the company's directors.

2.9.9 Ipso Facto Defaults

Defaults such as insolvency and liquidation are rec­ognised as the basis for termination and reposses­sion of aircraft. A lessor or mortgagee need not show performance defaults to be entitled to repossession of a leased aircraft.

2.9.10 Impact of Domestic Lessees' Winding-Up

If a domestic lessee is wound up through court or administration proceedings, this can have the follow­ing impacts.

• On the aircraft – the fate of the aircraft is largely dependent on the terms of the lease. The lessor's rights will usually include the right to terminate and repossess the aircraft if the lessee is wound up and this right will be exercised by the lessor, resulting in possession reverting to the lessor.
• On lease rentals – the lessee's obligation to pay lease rentals ceases. Any due lease payments will form part of the lessee's debt obligations.
• On the lease security deposit – the impact on the lease security deposit will depend on the terms of the lease agreement. If the deposit is agreed as payment towards lease rentals, then the lessor is entitled to apply the deposit towards any pending rent liability of the lessee.
• On the maintenance reserves – the treatment of maintenance reserves also depends on the lease agreement. If classified as reserves, they might be held in a separate account; if treated as sup­plemental rent, they could be affected similarly to lease rentals.

2.10 Cape Town Convention and Others

2.10.1 Conventions in Force

Nigeria is a signatory to the Cape Town Convention and the Aircraft Protocol. By virtue of Section 50 (2) of the CAA 2022, the Cape Town Convention and the Aircraft Protocol are in force in Nigeria.

It is not necessary to obtain authorised entry point (AEP) codes for registering international interests.

In Nigeria, it is not a requirement for local entities to apply for AEP codes before they can make Cape Town Convention filings. Local entities can make Cape Town Convention filings directly on behalf of lessors.

2.10.2 Declarations Made Concerning Conventions

Nigeria has made the following declarations under the following Articles of the Cape Town Convention.

Under Article 39 (1), in relation to non-consensual rights or interest:

• liens in favour of workers for unpaid wages aris­ing since the time of a declared default under a contract to finance or lease the subject object for services performed relating to that object; and
• liens in favour of repairers of an object in their pos­session to the extent of services performed on and value added to that object.

These have priority under Nigerian law over an inter­est in an object equivalent to that of the holder of a registered international interest and will have priority over a registered international interest, whether in or outside insolvency proceedings.

Under Article 40, in relation to non-consensual right or interest:

• rights of a person obtaining a court order permit­ting attachment of an aircraft object in partial or full satisfaction of a legal judgment;
• liens or other rights of a state entity relating to taxes or other unpaid charges;
• liens of a salvor for unpaid charges in respect of salvage services provided to an aircraft object when it is waterborne;
• liens of a person providing towage services to an aircraft object when it is waterborne in respect of unpaid charges; and
• liens of a bailee of an aircraft object in respect of unpaid charges for the bailment of said aircraft object.

These are registrable under the Cape Town Conven­tion as regards any category of object as though the right or interest were an international interest, and will be regulated accordingly.

Article 53 stipulates that the Federal High Court is the relevant court for the purposes of Article 1 and Chapter XII of the Convention.

Under Article 54 (2), a declaration that any remedies available to the creditor under the Cape Town Con­vention that are not expressed under the relevant pro­vision thereof to require application to the court, may be exercised without court action and without leave of the court.

2.10.3 Application of Article XIII of the Protocol on Matters Specific to Aircraft Equipment

The provision of the CAA 2006 (and 2022) incorpo­rated the Cape Town Convention and the Aircraft Protocol into Nigerian law. Section 50 (2) of the CAA 2022 provides that from the commencement of the Act, the provisions of the Cape Town Convention and the Aircraft Protocol will have the force of law in Nige­ria subject to the provisions of the Constitution of the Federal Republic of Nigeria. Incorporation into local law of an international convention such as the Cape Town Convention is a constitutional requirement nec­essary to make the convention enforceable.

An IDERA (as with a DPOA) can be submitted over an internal transaction and can be recorded, like any other interest, in the aircraft register.

2.10.4 Enforcement of Conventions

In most cases involving the Cape Town Convention and the Aircraft Protocol, the issue revolves around the request by a lessor/mortgagee seeking to dereg­ister and export the aircraft. The Federal High Court (which is the court with jurisdiction) rarely hears actions in relation to the other aspects of the Cape Town Convention and the Aircraft Protocol.

2.10.5 Other Conventions

Nigeria is a signatory to the Geneva Convention on the International Recognition of Rights in Aircraft (1948), having ratified this on 10 June 2002. Section 50 (1) of the CAA 2022 has incorporated the provisions of this convention into law in line with Nigerian constitutional requirements.

3. Aircraft Debt Finance

3.1 Structuring

3.1.1 Restrictions on Lending and Borrowing

Foreign lenders can provide financing and borrowers can use loan proceeds to purchase aircraft.

3.1.2 Effect of Exchange Controls or Government Consents

There are no specific exchange controls or govern­ment consents that are peculiar to the aviation sec­tor, and applicable exchange controls or government consents on financing or repatriation of proceeds will apply to an aviation-related transaction. It should be noted that foreign investors are allowed to take out their earnings and investment-related funds without facing significant obstacles, according to the provi­sions of Section 24 of the Nigeria Investment Promo­tion Commission Act.

3.1.3 Granting of Security to Foreign Lenders

Nigeria is a signatory to the Cape Town Convention, which allows for the creation of international interests in aircraft equipment, including granting security to foreign lenders. Thus, borrowers can use aircraft as collateral to secure loans from foreign lenders.

3.1.4 Downstream, Upstream and Cross-Stream Guarantees

Downstream, upstream and cross-stream guarantees are permitted in favour of lenders in Nigeria. Although there is no specific registration requirement for guar­antees under Nigerian law, Section 197 of the CAMA does require the registration of charges, which may include guarantees. Failure to register a charge within 90 days of its creation may render it void against liq­uidators and creditors.

3.1.5 Lenders' Share in Security Over Domestic SPVs

A lender can take a share in security over a domestic special-purpose vehicle (SPV) that owns a financed aircraft. This involves using ownership shares of the SPV as collateral for the financing provided. A pledge of shares is a recognised method of security in Nigeria and its registration has been provided for under Sec­tion 197 of the CAMA.

3.1.6 Negative Pledges

Negative pledges are recognised under Nigerian law and it is advisable for a lender to register the nega­tive pledge with the Corporate Affairs Commission to prevent future security interests that could undermine the existing security.

3.1.7 Intercreditor Arrangements

There are no laws in Nigeria with any material restric­tions or requirements on inter-creditor arrangements.

3.1.8 Syndicated Loans

The concept of agency and the role of an agent (facil­ity/syndicate agent) is recognised and utilised in syn­dicated loan arrangements in Nigeria.

3.1.9 Debt Subordination

Contractual subordination among creditors is legally recognised in Nigeria, enabling the modification of priority orders, the waiver of rights or the subordina­tion of security interests. However, its enforceability in insolvency proceedings may be limited, owing to bankruptcy laws treating unsecured creditors equally and granting secured creditors the right to enforce their security even during liquidation.

3.1.10 Transfer/Assignment of Debts Under Foreign Laws

The transfer or assignment of all or part of an out­standing debt under an English or New York law-gov­erned loan is generally permissible and recognised under Nigerian law. However, the terms of the loan agreement and any applicable legal requirements as to notice need to be considered.

3.1.11 Usury/Interest Limitation Laws

Interest rate limits are typically governed by various laws and regulations, including Sections 15 and 16 of the Moneylenders Laws, the Central Bank of Nige­ria Act 2007, and other relevant financial regulations. These laws aim to protect borrowers from unfair lend­ing practices and ensure that interest rates remain reasonable.

3.2 Security

3.2.1 Typical Forms of Security and Recourse

In a domestic aviation finance transaction, typical forms of security and recourse will include aircraft mortgages, charges and guarantees.

3.2.2 Types of Security Not Available

Due to their nature, it may be challenging or not fea­sible to take certain types of security over aircraft or related collateral, such as security solely on warranties and insurances. Although traditional forms of security often focus on tangible assets such as the aircraft itself, taking securities solely over warranties and insurances might be complex, owing to their intan­gible nature.

3.2.3 Trust/Trustee Concepts

The concept of a trust and a security trustee role are recognised in Nigeria and are quite popular in struc­tured finance in Nigeria. A parallel debt structure can be used, creating separate obligations between bor­rower and lenders and achieving similar security out­comes.

3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee

A borrower can assign to a security trustee its rights to the aircraft or under an aircraft lease (including rights related to insurances), pursuant to a security assign­ment or mortgage. This assignment allows the secu­rity trustee to hold and enforce those rights on behalf of the lender(s) in the event of default.

3.2.5 Assignment of Rights and Benefits Without Attendant Obligations

A lessor may assign the rights and benefits only with­out also assigning the attendant obligations under an aircraft lease. This type of arrangement is known as an "assignment of rights" or "assignment of benefits". However, it is essential to ensure that the assignment does not conflict with the terms of the lease agree­ment and that any required consent is obtained from the relevant parties.

3.2.6 Choice of Foreign Law

Security assignments or guarantees can be governed by English or New York law.

3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments

There are no unique formalities necessary for the crea­tion and perfection of a security assignment outside the recognised requirements for such agreements – for example, that the assignment must be in writing, clearly identify the collateral and state the intention to create a security interest. The security assignment must also be registered with the NCAA. Failure to comply with these formalities might render the secu­rity assignment unenforceable against third parties. Where such an agreement is to be tendered before a Nigerian court, it is necessary for it to be translat­ed (if in a language other than English) and certified/ notarised.

3.2.8 Domestic Law Security Instruments

It is advisable to consider taking a domestic law secu­rity instrument to cover any additional requirements under Nigerian law, if an English or New York law-governed security assignment is taken in respect of an aircraft registered domestically in Nigeria. Domes­tic law security instruments and local law filings are required for Cape Town Convention filings. The cost for such filings varies and is set out in the schedule of fees and charges issued by the NCAA.

3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws

An English or New York law-governed security assign­ment or a domestic law security instrument may be registered domestically. It is recommended to con­sider domestic registration to maximise the protection of the security interest in Nigeria where the aircraft is registered.

3.2.10 Transfer of Security Interests Over Aircraft/ Engines

The transfer of security interests, including mortgag­es, charges and assignments over an aircraft and/or engines, is recognised under Nigerian law.

3.2.11 Effect of Changes in the Identity of Secured Parties

The change in identity of secured parties under a security assignment does not usually jeopardise secu­rity interests if the assignment is properly documented and registered with the relevant authorities.

3.2.12 "Parallel Debt" Structures

Parallel debt structures can be used in Nigeria, allow­ing the security trustee to have an independent right to the secured debt and enabling separate enforcement of the security.

3.2.13 Effect of Security Assignments on Residence of Secured Parties

Becoming a secured party under a security assign­ment does not automatically result in residency, domi­cile, business presence or tax obligations. However, seeking tax advice is recommended based on the specific circumstances and Nigerian tax regulations.

3.2.14 Perfection of Domestic Law Mortgages

A domestic law mortgage can be perfected by draft­ing a mortgage agreement outlining the terms of the mortgage, including the amount secured, the parties involved, and the details of the aircraft or engine. Both the borrower and the lender should sign the mortgage agreement. The mortgage must be registered with the NCAA, and the necessary fees and charges for regis­tration must be paid.

If the mortgagor is a company registered in Nigeria, the charge created over the aircraft or engine (or both) as one of the assets of the company should also be registered at the Corporate Affairs Commission by fil­ing a Form CAC 9 (Particulars of Charge) – with addi­tional information setting out a high-level description of the asset being charged, including details such as the manufacturer's serial number and the NCAA reg­istration number of the charged asset.

The costs associated with the foregoing are calcu­lated as follows:

• stamping – 0.375% of the mortgage value;
• registration at the Corporate Affairs Commission – 0.35% of the mortgage value;
• registration with the NCAA –

1. on the first NGN100,000 of the secured sum, for each complete 10,000 – NGN1,000;
2. on the next NGN900,000, for each NGN100,000 or part thereof – NGN1,000; and
3. thereafter, for each NGN1 million or part thereof – NGN50,000.

However, the maximum charge for registration with the NCAA is capped at NGN250,000.

Upon successful registration, the NCAA will issue a perfection certificate, confirming the mortgage's reg­istration. In addition, if the aircraft or engine is cov­ered by the Cape Town Convention, the necessary international interest registration will be filed with the International Registry in compliance with the conven­tion's requirements.

3.2.15 Differences Between Security Over Aircraft and Spare Engines

There are no differences in the form of security (or perfection) taken over an aircraft and spare engines in Nigeria.

3.2.16 Form and Perfection of Security Over Bank Accounts

A "fixed charge" or "fixed security interest" is com­monly used to secure a bank account such as a lease receivables account. To perfect the security interest over the bank account, a security agreement is exe­cuted between the debtor and creditor, outlining terms and details. Notice is also given to the bank where the account is held, informing them of the security inter­est. Restrictions may also be placed on the account's use, and registration with the Corporate Affairs Com­mission is required.

3.3 Liens

3.3.1 Third-Party Liens

Third parties such as repairers, airports, and customs authorities can potentially take or register liens over an aircraft or engine for unpaid fees or charges.

• Repairers' liens cover work done on the actual secured asset for the value of the work performed, rather than the contract price. They may cover work done on other assets.
• Fleet liens, allowing third parties to detain an air­craft, have not been considered in Nigeria.

3.3.2 Timeframe to Discharge a Lien or Mortgage

There is no stipulated average timeframe to discharge a lien or mortgage over an aircraft. Where there are no contentions, a reasonable timeframe will be three months.

3.3.3 Register of Mortgages and Charges

There is no specific register of mortgages and charges maintained by the NCAA. The interests of an aircraft mortgagee or security trustee are noted in the aircraft register maintained by the NCAA. The NCAA is yet to establish the legal interest registry stipulated under the Nig.CARs.

The notation of the mortgage/charge interest on the aircraft register helps establish the priority of the mort­gagee's or chargee's claim over the aircraft in case of any disputes or insolvency proceedings. It also alerts potential buyers or other interested parties about the existing security interest, which can impact their deci­sions regarding the aircraft.

3.3.4 Statutory Rights of Detention or Non- Consensual Preferential Liens

Statutory rights of detention and non-consensual rights can arise over an aircraft and/or on a fleet-wide basis. There is no specific law prohibiting an applica­tion on a fleet-wide basis.

3.3.5 Verification of an Aircraft's Freedom From Encumbrances

To verify if an aircraft is free of encumbrances, a poten­tial purchaser of an aircraft in Nigeria could search the aircraft register maintained by the NCAA. The aircraft register includes information on all the interests that have been created over a specific aircraft.

A potential purchaser could also conduct a search at the Corporate Affairs Commission, the body that regulates corporate entities in Nigeria. Companies are enjoined to file notices of charges created over their assets.

3.4 Enforcement

3.4.1 Differences Between Enforcing Security Assignments, Loans and Guarantees

The key difference lies in the nature of the underlying assets and the mechanisms for recovery. Enforcing a security assignment is focused on the recovery of the specific collateral, which in many cases is the aircraft, whereas enforcing a loan or guarantee involves the recovery of debt and may – if the debt is of a certain amount – require application for summary judgment and, where summary judgment is given, garnishee proceedings to attach monies belonging to the debtor or guarantor.

3.4.2 Security Trustees' Enforcement of Their Rights

A security trustee may enforce its rights under a secu­rity assignment pursuant to a notice and acknowl­edgement executed by the lessor and lessee.

3.4.3 Application of Foreign Laws

Domestic courts will uphold foreign law as the gov­erning law of a finance or security document if the parties have validly chosen that law to govern their agreement. Similarly, submission to a foreign jurisdic­tion is respected if the parties have agreed to it in their contract. A court in Nigeria will, however, take certain factors into consideration when faced with a challenge of a suit filed in breach of a foreign jurisdiction clause. Such factors are listed in 2.1.2 Application of Foreign Laws.

3.4.4 Recognition and Enforcement of Foreign Judgments and Arbitral Awards

Domestic courts in Nigeria recognise and enforce foreign court judgments and arbitral awards without re-examining the matter.

3.4.5 Secured Parties' Right to Take Possession of Aircraft

To the extent that the right to take physical posses­sion of an aircraft is one agreed by the parties to be exercisable without the lessee's or operator's consent, a secured party can take physical possession of an aircraft to enforce a security agreement.

3.4.6 Domestic Courts Competent to Decide on Enforcement Actions

The Federal High Court in Nigeria is competent to determine enforcement actions under a security agreement/aircraft mortgage.

3.4.7 Summary Judgments or Other Relief

In Nigeria, a secured party can seek equitable or other injunctive relief pending final resolution of judicial proceedings. The facts necessary for the granting of such reliefs include showing that irreparable harm, that may not be compensated by monetary relief, will result if such relief is not granted. It is also important for the applicant in such a case to provide an undertaking as to damages – that is, to show that the applicant will be willing to pay damages if in the end such an order ought not to have been made. It is not mandatory that the applicant post a bond or provide a guarantee – although a court may make an order that such a bond or guarantee be provided.

A secured party can also obtain summary judgments where the claim is for a certain sum and the facts in support of the claim are not likely to be contested.

3.4.8 Judgments in Foreign Currencies

A secured party under a security agreement or aircraft mortgage can obtain a judgment in a foreign currency in Nigeria. The sum secured by the security agreement and to be recovered in the claim should, however, be denominated in the foreign currency.

3.4.9 Taxes/Fees Payable

Fees may be applicable in connection with the enforcement of a security agreement or aircraft mort­gage. These fees could include court filing fees or administrative fees.

3.4.10 Other Relevant Issues

Lenders should consider potential challenges in enforcement, such as potential insolvency proceed­ings by the borrower.

4. Other Issues of Note

4.1 Issues Relevant to Domestic Purchase, Sale, Lease or Debt Finance of Aircraft

Currently, there are no material court judgments that impact the purchase, sale, lease or debt finance of an aircraft registered domestically and/or involving a domestic party.

4.2 Current Legislative Proposals

The NCAA released an Advisory Circular outlining the procedure for recording an IDERA and de-registration of an aircraft under an IDERA. The NCAA will only accept and record an IDERA if:

• it is submitted in writing to the NCAA substantially in the form set out in the Protocol to the Conven­tion on International Interest in Mobile Equipment on Matters Specific to Aircraft Equipment 2001 (the "Protocol");
• it identifies the aircraft that is registered or to be registered in the Nigeria Civil Aircraft Register; and
• it is signed by an applicant.

Legislative and Regulatory Framework Shaping Aviation Financing in Nigeria

Introduction

The Nigerian aviation sector has witnessed a surge in strategic regulatory activities aimed at revitalising the sector's access to financing. Amid persistent chal­lenges, ranging from inadequate fleet sizes to limited funding, policymakers and regulators are turning to targeted reforms to enhance the legal framework gov­erning aviation finance.

Nigeria has significant domestic and regional air traf­fic and remains a pivotal market for aviation invest­ment. Airlines operating in the country have however struggled with access to affordable financing, weak infrastructure, and currency volatility. Several local airline operators are faced with high-interest loans, short leasing tenures, and frequent regulatory hurdles that impact capital inflow. The federal government, through the Ministry of Aviation, Aerospace Develop­ment and the Nigerian Civil Aviation Authority (NCAA), has responded with a reform agenda to improve the regulatory ecosystem and stimulate investors' confi­dence.

Cape Town Convention and IDERA enforcement

A central element of Nigeria's aviation financing reforms is the implementation of the Cape Town Convention on International Interests in Mobile Equip­ment and its Aircraft Protocol (the "Cape Town Con­vention"), which was ratified in 2006. The Cape Town Convention provides a harmonised legal framework for protecting the rights of creditors, lessors and finan­ciers of aircraft assets.

In a bid to reinforce compliance, the NCAA issued an Advisory Circular on Procedures for Recordation of IDERA and De-Registration of Aircraft Under an IDE­RA ("Advisory Circular") to ensure that IDERA filings by lessors and financiers are promptly registered and honoured. The directives emphasise:

• the mandatory registration of IDERA instruments with the NCAA immediately after lease execution;
• time-bound administrative compliance with dereg­istration requests made under IDERA; and
• streamlining the internal approval process to elimi­nate delays caused by legacy manual systems or ambiguous procedures.

These steps are crucial for reassuring creditors that, in the event of default, they can repossess and export aircraft without prolonged legal delays or enforcement obstacles.

In addition, Federal High Court Cape Town Conven­tion Practice Direction 2024 ("Practice Directions") was also issued to assist courts in dealing with cases involving transactions made under the Cape Town Convention. Further to the issuance of the Advisory Circular and the Practice Directions, Nigeria's Cape Town Compliance Index rating improved from 49% to 70.5% in 2025. This improved rating is expected to lower the risk ratios of Nigerian operators/carriers by foreign lessors and financiers and facilitate better financing terms from international lessors and export credit agencies.

Further, strengthened IDERA enforcement would encourage lenders and lessors to offer improved financing terms, extended tenors on aircraft leases, and more favourable security arrangements. It may also enhance Nigeria's eligibility for export credit agency (ECA) funding, which typically requires com­pliance with the Cape Town Convention.

Dry-lease framework and the Afreximbank facility

In January 2025, the African Export-Import Bank ("Afreximbank") Dry-Lease Financing Initiative was announced. The initiative, spearheaded by Afrex­imbank, will provide 25 dry-leased aircraft to Nige­rian airlines. Under the initiative, aircraft will be leased through a special-purpose leasing subsidiary domi­ciled in jurisdictions aligned with Cape Town Con­vention standards, and having lease agreements governed by English law or similarly recognised legal regimes.

It is expected that local carriers participating or intend­ing to participate in the initiative will be required to adhere strictly to IDERA protocols, which demands compliance with international standards. The ben­efits of the initiative for Nigerian operators include the elevation of the overall standard of aircraft operations and fleet management in Nigeria.

It is expected that the initiative will introduce Nige­rian carriers to a disciplined legal framework, which aligns with international standards and boosts cred­ibility with global lessors.

NCAA and ministry-level policy actions

The NCAA has embarked on a digital transformation towards creating and maintaining an efficiency-driv­en regulatory body. This initiative targets two major procedural bottlenecks – licensing and aircraft reg­istration. Manual inefficiencies in aircraft registration, operator certification and document authentication discouraged international lenders from engaging con­fidently with Nigerian carriers. Delays in confirming ownership, deregistering assets or verifying operator standing often resulted in higher transaction costs and extended lead times. These processes are of particular concern to aircraft financiers and lessors, as they form the backbone of legal and operational risk assessment.

To address these concerns, the NCAA launched a centralised e-portal in December 2024 – its Direc­torate of Air Transport Regulation (DATR) e-portal, a single-window digital portal for aircraft registration, deregistration, licensing, airworthiness reviews, and air operator certificate applications. This reform was part of the NCAA's 2024 project agenda, which also included aligning IDERA enforcement and compliance procedures with global leasing standards.

While the platform is still developing, it is a significant step towards transparency, traceability and regula­tory efficiency. From a financier's perspective, the availability of online records reduces dependence on physical document trails and in-person follow-up. It also improves the process of due diligence.

These digital reforms, although not yet comprehensive, represent an important structural shift that enhances the viability of aircraft leasing transactions in Nigeria. As the NCAA continues to fine-tune its systems and build inter-agency connectivity, lessors and lessees can expect an increasingly predictable environment for regulatory compliance and risk management.

Challenges

In Nigeria, a major challenge to aircraft financing and leasing is insurance cover. International lessors are typically concerned about the capacity of the Nigerian local insurance market to adequately underwrite the risks inherent in dry-lease arrangements.

Notably, the National Insurance Commission ("NAI­COM") requires that all insurable risks occurring within Nigeria must be underwritten by local insurance companies. However, given the substantial financial exposure associated with dry leasing, local insurers typically lack the capacity to carry the full risk and therefore need to obtain reinsurance from international markets. This reliance on foreign reinsurance arrange­ments results in increased insurance costs, which are ultimately borne by local airline operators, thereby increasing the overall cost of leasing aircraft in Nigeria.

Further, volatility in the foreign exchange market – particularly the persistent depreciation of the naira against the US dollar – has significantly increased both the cost and unpredictability of leasing arrangements for Nigerian airlines, given that most lease pay­ments are denominated in foreign currencies such as the dollar or euro.

Despite these challenges, the Afreximbank dry-lease initiative marks a strategic shift, as it is aimed at providing local carriers with access to new aircraft, addressing short-term fleet shortages and improving alignment with global standards to attract future inter­national partnerships.

Conclusion

The year 2025 marks a significant milestone in Nige­ria's aviation financing landscape. Strengthened enforcement of the IDERA protocol, and robust policy support from both Afreximbank and the Federal Minis­try of Aviation have collectively contributed to a more investor-friendly legal framework.

Nonetheless, the continued volatility of the foreign exchange market and the dependence of local insur­ers on international reinsurance remain key chal­lenges. Addressing these issues will be essential to ensuring a stable and sustainable aviation financing environment in Nigeria.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.