Introduction
The commercial and legal life of a modern aircraft rarely takes place within a single jurisdiction.
An aircraft may be manufactured in the United States or Europe, owned by an Irish leasing company, financed by banks in London or New York, operated by an airline incorporated in Türkiye, registered in another jurisdiction and maintained by an MRO provider located elsewhere.
Aircraft leases, purchase agreements, engine leases, sale-and-leaseback transactions and aircraft financing arrangements are therefore inherently cross-border transactions.
When a dispute arises, the relevant question is not merely:
“Which party breached the contract?”
Several preliminary questions may be equally important:
Which law governs the contract? Which law governs the arbitration agreement? Should the dispute be resolved before a national court or an arbitral tribunal? Should the seat be London, Paris, Singapore or Istanbul? And can the resulting award ultimately be enforced where the aircraft or the debtor’s assets are located?
In transactions involving aircraft worth tens or hundreds of millions of dollars, the dispute-resolution clause should therefore never be treated as routine contractual boilerplate.
Aircraft Lease and Purchase Agreement Disputes
Aircraft lease disputes frequently involve unpaid rent, but payment default is only one category of potential dispute.
Operating lease litigation or arbitration may concern maintenance reserves, security deposits, return conditions, engine performance, life-limited parts, technical records, airframe condition, mandatory modifications, insurance obligations, sanctions provisions, events of default, early termination and aircraft repossession.
At redelivery, for example, a lessor may allege that the aircraft fails to satisfy contractual return conditions. The remaining life of engines or LLPs, incomplete maintenance records or structural deficiencies may generate multi-million-dollar compensation claims.
Aircraft Purchase Agreement disputes often involve a different set of issues.
A purchaser may allege that an aircraft failed to comply with the agreed delivery condition despite an acceptance process. Disputes may involve title, airworthiness, delivery delay, deposits, acceptance certificates, purchase-price adjustments, technical warranties and undisclosed defects.
Accordingly, aircraft disputes are often both legal and highly technical. Expert evidence from engineers, valuation specialists, records experts and aviation professionals may be as important as conventional contractual interpretation.
Why Arbitration Is Attractive for Aviation Transactions
One major advantage of arbitration is neutrality.
A Turkish airline may be reluctant to litigate before the courts of the lessor’s home jurisdiction, while the foreign lessor may have similar concerns about proceedings before Turkish courts. Arbitration permits the parties to choose a neutral legal seat such as London, Paris, Singapore or Istanbul.
A second advantage is the ability to select arbitrators with relevant experience in aircraft leasing, aviation finance or complex international commercial transactions.
The third major advantage is international enforceability.
The 1958 New York Convention establishes an international framework for the recognition and enforcement of foreign and non-domestic arbitral awards, subject to the limited grounds for refusal provided by the Convention.
This feature is particularly important in aviation.
The lessor may be incorporated in Ireland, the airline in Türkiye, the financing bank in England and the relevant assets in multiple jurisdictions.
Winning the merits of a dispute is therefore only part of the legal strategy. The successful party ultimately needs an award capable of being enforced against assets.
Türkiye is a party to the New York Convention. It has declared that it applies the Convention on a reciprocal basis to awards made in another Contracting State and to disputes arising from legal relationships considered commercial under Turkish law.
Governing Law, Seat and Arbitral Institution Are Different Concepts
Three concepts must be distinguished.
The governing law of the contract determines the substantive law governing the parties’ contractual rights and obligations.
The seat of arbitration is the juridical home of the arbitration and generally determines the lex arbitri and the supervisory jurisdiction of the courts.
The arbitral institution is the organisation administering the proceedings, such as the LCIA, ICC, SIAC or ISTAC.
They need not point to the same country.
The parties might agree that the aircraft lease is governed by English law, that the arbitration is administered under ICC Rules and that Istanbul is the legal seat.
That structure is conceptually possible.
Similarly, the fact that the ICC is headquartered in Paris does not mean that every ICC arbitration is legally seated in Paris.
For aircraft agreements, confusing the institution with the seat may have significant consequences when a party later seeks interim relief, challenges jurisdiction or applies to set aside an award.
The Importance of Governing Law
A governing-law clause is one of the most important provisions in an aircraft agreement.
The selected law may determine whether an event of default has occurred, whether termination was valid, how damages are calculated, whether an indemnity is enforceable, how limitation-of-liability provisions are interpreted and whether contractual interest may be recovered.
Under Article 24 of the Turkish Private International Law Act No. 5718, contractual obligations are generally subject to the law chosen by the parties. In the absence of a choice, the statutory closest-connection analysis becomes relevant.
Within the European Union, Article 3 of the Rome I Regulation similarly recognises party autonomy by providing that a contract is governed by the law chosen by the parties.
Aircraft agreements should therefore normally address governing law expressly rather than leaving the issue to conflict-of-laws analysis after a dispute has arisen.
The Law Governing the Arbitration Agreement
A further distinction has become particularly important for London-seated arbitration.
The UK Arbitration Act 2025 came into force on 1 August 2025. The new Section 6A establishes a statutory rule under which the law governing the arbitration agreement is the law expressly chosen for that arbitration agreement or, in the absence of such an express choice, generally the law of the seat.
Crucially, choosing a governing law for the underlying contract does not by itself constitute an express choice of the same law for the arbitration agreement.
This matters in aircraft leasing.
Consider a contract stating:
Underlying lease: New York law.
Arbitration: LCIA.
Seat: London.
If the parties have not separately addressed the law governing the arbitration agreement, the English statutory framework may become directly relevant.
Sophisticated drafting should therefore consider whether the arbitration agreement should itself contain an express governing-law choice.
London and LCIA Arbitration
London remains a significant legal seat for complex international commercial arbitration, and the LCIA is one institutional option available to aircraft transaction parties.
As of August 2026, the LCIA’s principal rules currently in force are the LCIA Arbitration Rules 2020, effective from 1 October 2020. The LCIA commenced a consultation on a further revision of its rules in 2026.
The LCIA Rules contain mechanisms that may be particularly useful in aircraft disputes.
Article 30 establishes extensive confidentiality obligations concerning awards and arbitration materials. The Rules also provide an Emergency Arbitrator mechanism before the ordinary tribunal is constituted.
This may be particularly valuable where a lessor alleges that rent has ceased to be paid and fears that the aircraft or relevant assets may shortly be moved to a more difficult enforcement jurisdiction.
Nevertheless, an arbitral interim measure and a national court injunction are not necessarily equivalent. If relief must bind a registry, authority or third party, the law of the jurisdiction where the relief must operate remains critical.
Paris and ICC Arbitration: The 2026 Rules
The year 2026 brought an important change for ICC arbitration.
The 2026 ICC Arbitration Rules entered into force on 1 June 2026.
The revised framework includes changes relating to arbitrator disclosure, the removal of mandatory Terms of Reference in standard proceedings, revised expedited and emergency mechanisms, early determination and new opt-in Highly Expedited Arbitration Provisions.
The ICC describes the highly expedited mechanism as an opt-in process intended, in appropriate cases, to produce a final award within three months.
Such mechanisms may be particularly useful for narrowly defined aircraft finance disputes.
A dispute over the interpretation of a maintenance-reserve payment clause may be suitable for an accelerated process.
A technically intensive aircraft-redelivery dispute involving inspections, engine evidence, maintenance history and multiple expert reports may not be.
The dispute-resolution clause should therefore be drafted with the likely architecture of future disputes in mind rather than simply identifying a prestigious institution.
Singapore and SIAC Arbitration
Singapore is another important potential seat, particularly where aircraft transactions have significant Asia-Pacific connections.
Singapore’s International Arbitration Act 1994 provides the statutory framework for international commercial arbitration and is based upon the UNCITRAL Model Law structure. The current legislation also addresses the enforcement of foreign arbitral awards.
The seventh edition of the SIAC Arbitration Rules took effect on 1 January 2025. The Rules strengthened procedural tools including streamlined proceedings, expedited arbitration, emergency relief and other case-management mechanisms designed to increase procedural efficiency.
For transactions involving Asian airlines, financing institutions, lessors or manufacturers, Singapore may provide a neutral seat supported by a dedicated international-arbitration statute.
Again, SIAC and Singapore are not synonymous concepts. SIAC is an arbitral institution; Singapore is a possible legal seat.
Istanbul and ISTAC Arbitration
For aircraft transactions with significant Turkish connections, Istanbul and ISTAC may also be considered.
Türkiye’s International Arbitration Law No. 4686 provides the principal statutory framework for international arbitration where the dispute contains a foreign element and the seat is Türkiye, or where the application of the statute is otherwise selected under its terms.
ISTAC administers ordinary arbitration and also provides Fast Track Arbitration and Emergency Arbitrator mechanisms. It publishes its own model arbitration clause.
Selecting Istanbul as the seat may offer practical advantages where the airline, employees, maintenance records and other key evidence are located in Türkiye.
Importantly, selecting Istanbul as the seat does not require the underlying aircraft contract to be governed by Turkish law.
A structure such as:
Governing law: English law
Institution: ISTAC
Seat: Istanbul
Language: English
is conceptually possible.
The substantive contract and the procedural law of arbitration must simply be analysed as distinct layers.
The Cape Town Convention and Aircraft Leasing
Any sophisticated analysis of aircraft lease disputes should also consider the Cape Town Convention and Aircraft Protocol.
The Convention defines a leasing agreement as an arrangement under which a lessor grants possession or control of an object to a lessee in return for rent or other payment. Subject to the Convention’s requirements, the lessor’s interest under a qualifying leasing agreement may constitute an “international interest.”
Airframes, aircraft engines and helicopters are among the categories addressed by the Cape Town system.
The Aircraft Protocol also contains creditor remedies relating, in specified circumstances, to deregistration and the export and physical transfer of an aircraft object.
This creates an important distinction.
An arbitral tribunal may determine that the lease was validly terminated and that the aircraft must contractually be returned.
That does not necessarily mean that physical deregistration, export and repossession automatically follow from the award.
The relevant contractual law, arbitral law, Cape Town framework, aviation registry law and local enforcement procedures may all need to operate together.
Türkiye has also made declarations under the Cape Town Convention framework, including a declaration concerning qualifying internal transactions under Article 50.
Default, Termination and Repossession
Aircraft lease disputes become particularly sensitive when the airline experiences financial distress.
Rent may be unpaid.
Maintenance reserves may cease.
Insurance requirements may be breached.
A lessor may declare an Event of Default, terminate the lease and seek possession of the aircraft.
The lessee may respond that no default occurred, that a contractual cure period remained open or that the termination notice itself failed to comply with the agreement.
The arbitral tribunal may consequently have to determine both monetary claims and the contractual status of the aircraft.
However, actual physical repossession may require cooperation from national courts, aviation authorities or registries.
This produces one of the most important distinctions in aviation arbitration:
an arbitral tribunal can resolve contractual rights, but effective control of an aircraft may require the assistance of public authorities.
Interim Measures in Aircraft Disputes
Interim relief can be unusually important because an aircraft is a highly valuable and highly mobile asset.
An aircraft located in Istanbul today may be in another jurisdiction only hours later.
A party may therefore seek urgent relief to preserve evidence, restrict particular transactions, protect funds or maintain the status quo before a final award is rendered.
The LCIA provides an Emergency Arbitrator mechanism. ISTAC maintains Emergency Arbitrator Rules, and the ICC’s 2026 framework includes emergency arbitration provisions.
However, counsel should always ask a further question:
Who must comply with the requested interim measure?
If the requested relief must operate directly against an aviation registry, government authority or third party, assistance from the courts of the relevant jurisdiction may remain indispensable.
Multi-Contract Aircraft Transactions
Aircraft transactions are rarely documented by a single agreement.
A transaction may include the principal lease, guarantees, security assignments, financing documents, insurance assignments, maintenance agreements, side letters and warranty arrangements.
If those documents contain inconsistent dispute-resolution clauses, a single economic dispute may become fragmented across several proceedings.
For example, the lease may require LCIA arbitration while a related guarantee grants exclusive jurisdiction to English courts.
Such inconsistencies should ideally be addressed during drafting.
The LCIA Rules contain mechanisms for consolidation and concurrent conduct of related arbitrations in specified circumstances.
Nevertheless, contractual consistency at the transaction stage is usually preferable to attempting procedural consolidation only after the dispute has emerged.
Drafting the Arbitration Clause
An aircraft arbitration clause should identify much more than the fact that disputes are “subject to arbitration.”
The drafting should clearly address the institution and rules, arbitral seat, number of arbitrators, language and governing law.
For particularly valuable aircraft transactions, three arbitrators may provide additional comfort and specialist expertise. For more limited disputes, a sole arbitrator may offer significant cost and timing advantages.
Counsel should also consider the law governing the arbitration agreement, emergency relief, consolidation, confidentiality and the interaction between arbitration and Cape Town remedies.
The LCIA’s own recommended clause structure, for example, expressly encourages parties to address the number of arbitrators, seat, language and governing law.
Illustrative Aircraft Lease Arbitration Clause
Where the parties deliberately choose English law and London arbitration, a clause may be structured broadly along the following lines:
“Any dispute arising out of or in connection with this Agreement, including any question concerning its existence, validity, interpretation, performance, breach or termination, shall be finally resolved by arbitration under the LCIA Rules. The seat of arbitration shall be London, England. The tribunal shall consist of three arbitrators. The language of the arbitration shall be English. This Agreement shall be governed by the laws of England and Wales. The arbitration agreement contained in this clause shall also be governed by the laws of England and Wales.”
Such wording should not, however, be copied mechanically into every aircraft transaction.
The appropriate clause depends upon the lessor’s jurisdiction, the operator’s jurisdiction, registration of the aircraft, financing arrangements, Cape Town status, likely enforcement jurisdictions and transaction value.
Enforcement in Türkiye
Suppose a foreign lessor obtains an arbitral award in London, Paris or Singapore and later seeks to execute that award against the assets of a Turkish airline.
Recognition and enforcement in Türkiye will become a central part of the strategy.
Türkiye’s participation in the New York Convention provides the principal international framework. Because Türkiye has made reciprocity and commercial-relationship declarations, the precise application of the Convention should be confirmed for the particular award.
Where the New York Convention does not apply, the foreign-arbitral-award provisions of Turkish Private International Law Act No. 5718 may also become relevant.
The ultimate commercial objective is therefore not merely:
to obtain an award.
It is:
to obtain an enforceable award.
Asset location should be considered from the earliest stages of the dispute.
Conclusion
Arbitration is particularly well suited to aircraft lease, purchase and financing disputes because these transactions combine high value, technical complexity and multiple jurisdictions.
Nevertheless, successful arbitration strategy begins when the contract is drafted, not when the dispute arises.
Every aircraft agreement should separately answer four questions:
What law governs the underlying contract?
What law governs the arbitration agreement?
Which institution administers the arbitration?
Where is the legal seat of arbitration?
London, Paris, Singapore and Istanbul may each provide an effective framework depending upon the transaction.
There is no universally correct seat or institution.
The optimal structure depends upon the parties, aircraft registration, asset locations, technical issues, governing law, Cape Town Convention considerations and the jurisdictions in which the resulting award may ultimately need to be enforced.
Aircraft leasing also produces one particularly important practical lesson:
Winning an arbitration and recovering the aircraft are not necessarily the same thing.
An effective aviation dispute strategy must therefore integrate contractual remedies, arbitration, interim measures, the Cape Town regime, aircraft registration law and international enforcement.
For transactions involving aircraft worth tens or hundreds of millions of dollars, the dispute-resolution clause should accordingly be regarded not as boilerplate, but as a central component of transaction risk management.
No Responses