The Application of Article 83bis in Malta: Legal and Commercial Advantages

Article 83bis of the Chicago Convention on International Civil Aviation (the “Chicago Convention”) provides that, where an aircraft registered in one contracting State (the State of Registry) is operated pursuant to a lease, charter, interchange or similar arrangement by an operator registered and validly holding an AOC, in another contracting State (the State of the Operator), the State of Registry may, by agreement with the State of the Operator, transfer to that State all or part of its functions and duties in respect of that aircraft. These may include responsibilities relating to the rules of the air, airworthiness, radio equipment and personnel licensing.

Crucially, Article 83bis agreements must be entered into and accepted by both the State of Registry and the State of the Operator. Malta has active Article 83bis agreements with several countries to transfer certain regulatory responsibilities, including some notable agreements with states such as Ireland, Italy and Greece.

Maltese Perspective

The Civil Aviation Directorate as the State of Registry provides a unique perspective, as the national register in Malta is an aircraft operator’s registry as opposed to an aircraft owner’s registry. This distinction is important, as it is typically the operator who acts as the registrant of the aircraft and not the owner.

Therefore, subject to the existence of an Article 83bis arrangement between two States (the State of Registry and State of Operator), the Malta Civil Aviation Directorate may allow for an aircraft to be registered under the name of a non-Maltese operator, whilst affording lessors and financiers the opportunity to have an IDERA and/or DPOA and/or Maltese law mortgage registered over the aircraft in their favour and in Malta. This thereby permits lessors and financiers to maintain Malta as their preferred jurisdiction in terms of security enforcement with a Cape Town jurisdiction, whilst enabling for the fluid transfer of the agreed oversight responsibilities/duties to the State of Operator.

A key advantage of Malta as a chosen jurisdiction even in an Article 83bis scenarios is the registration and enforcement of international interests. This provides enhanced legal certainty and strengthens Malta’s position as a creditor-friendly jurisdiction. It should be noted, however, that where the debtor is situated in a non-Contracting State, the registration-based Cape Town nexus may extend only to the airframe and not to the aircraft engines.

Commercial Flexibility and Security

The existence of Article 83bis offers additional flexibility to financiers/lessors who wish to lease their aircraft or provide financing to operators existing in other states, albeit, with the protection and reliability of Malta’s favourable security regime. This allows financier/lessors to benefit from Malta’s wide range of registered security instruments such as the Maltese Mortgage and/or IDERA and DPOAs, without limiting their clientele exclusively to Maltese aircraft operators.

Enhanced Safety and Compliance

Article 83bis enhances safety oversight by permitting the transfer of specified regulatory responsibilities from the State of Registry to the State of the Operator. In practice, this means that the aircraft becomes subject, in respect of those transferred functions, to the supervision of the jurisdiction in which it is actually operated and best placed to exercise effective oversight. This promotes stronger compliance with international safety standards and helps ensure that operational control and regulatory responsibility are aligned in a practical and efficient manner.

Strengthened International Co-operation

Article 83bis promotes stronger international co-operation and harmonisation of aviation safety standards. By clearly delineating the responsibilities between the State of Registry and the State of Operator, it reduces potential legal conflicts and ensures comprehensive oversight. This cooperation is essential for the global aviation industry, fostering a safer and more efficient environment for international air transport.

Regulatory Efficiency

One of the primary benefits of Article 83bis is the elimination of redundant regulatory processes. By transferring specific responsibilities, such as airworthiness and operational control, to the State of Operator, the administrative burden on both states is significantly reduced. This streamlining of procedures not only saves time but also reduces costs associated with regulatory compliance. It is important to note that within the Article 83bis agreement itself, the division of responsibilities and duties must be clearly outlined, otherwise, the agreement would risk creating additional ambiguity rather than improving certainty. Nevertheless, where there is a clear allocation of duties/responsibilities, this will assist in preventing duplicative oversight. As a result, greater clarity will contribute to improving the overall efficiency and effectiveness of the governance of foreign operating aircraft registered in Malta.

Conclusion

From a Maltese perspective, Article 83bis is particularly valuable because it enhances the practical utility of the Maltese register in cross-border leasing and financing structures. It allows aircraft operated by non-Maltese operators to remain within the Maltese legal and security framework while ensuring that operational oversight is exercised by the State best placed to perform it in practice. This makes Malta an especially attractive jurisdiction for lessors and financiers, who can continue to benefit from the protections afforded by Malta’s Cape Town implementation, including the availability of IDERAs, international interests and related enforcement mechanisms, without compromising regulatory effectiveness.

Malta’s commitment to aviation excellence is demonstrated further by its leading position in the Cape Town Convention Compliance Index. Malta is currently ranked first in Europe and second globally, with a near-perfect score of 95 out of 100. This top-ranking underscores Malta’s robust legislative framework and effective implementation of international aviation standards, certifying its position at the forefront of the aviation finance industry.