1. Introduction
One of the major challenges of aircraft financiers and lessors is the recovery of their aircraft following a contractual default. Unlike many assets, aircrafts are sophisticated and highly mobile assets, often financed through intricate cross-border arrangements.1 Consequently, any uncertainty surrounding the ability of a creditor or lessor to recover, deregister and export an aircraft can significantly increase the risk and cost of fund associated with aviation financing and leasing transaction.
This concern is particularly relevant in Nigeria, where most commercial airlines rely substantially on aircraft leasing and external financing to acquire and expand their fleets. The willingness of international lessors and financiers to make aircraft available to Nigerian operators is therefore influenced, among other things, by the extent to which their proprietary and contractual interests are protected and enforceable in Nigeria whenever the need arises.
The Convention on International Interests in Mobile Equipment (the “Cape Town Convention” or “CTC”) and the Protocol thereto – The Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (the “Aircraft Protocol”) provide an international framework for protecting interests in aircraft financing transactions. Within this framework, the Irrevocable Deregistration and Export Request Authorisation (“IDERA”)2 provides an authorised party with a robust mechanism for procuring the deregistration and export of an aircraft following a qualifying default by the lessee. The implementation of these protections has contributed to improvements in Nigeria’s compliance with the Cape Town Convention, with Nigeria’s CTC Compliance Index score increasing from 70.5% to 75.5%3 in October 2024 following, among other reforms, the operationalisation of IDERA.
This compliance score resulted in Nigeria’s exit from the Aviation Working Group’s noncompliant watchlist.4 The effective implementation of IDERA has implications far beyond just compliance with an international aviation treaty. It reduces enforcement risks faced by aircraft owners, lessors and financiers and strengthens investor confidence. It facilitates access to aircraft financing and contributes to the further growth of Nigeria’s aviation sector. This article examines the role and impact of IDERA in building investor confidence in Nigeria’s aviation sector. We also consider the extent to which IDERA addresses the broader legal and commercial concerns affecting aviation investment in Nigeria.
2. Aircraft Financing and the Need for Investor Protection
The acquisition of aircraft represents one of the most significant financial commitments for an airline. Given the substantial cost of acquiring and maintaining aircraft, airlines commonly rely on leasing arrangements and other forms of external financing to obtain the aircraft necessary for their operations. Aircraft leasing therefore plays an important role in enabling airlines to expand their fleets without bearing the full financial burden associated with outright acquisition.
For lessors and financiers, making aircraft available to an airline involves considerable risk. Where an airline defaults on its obligations, the ability of the lessor or financier to recover the aircraft may consequently depend on the legal and regulatory framework applicable in the jurisdiction where the aircraft is located. It is therefore important that the predictability and effectiveness of the mechanisms of enforcement are considered when determining the risks associated with aircraft financing transactions.
The practical nature of this risk is illustrated in the case of Air Midwest Nigeria Ltd & Capt. Aigbokhan v Boeing 737-500 Aircraft.5 In this case, Air Midwest, a Nigerian airline, had leased a Boeing 737-500 from Celestial Aviation Trading 21 Limited, an Irish company, with an IDERA lodged with the Nigerian Civil Aviation Authority (NCAA). Following the lessee’s default, the lessor sought to deregister and repossess the aircraft. However, the lessee commenced proceedings before the Federal High Court in Nigeria and obtained an ex-parte order for the arrest and detention of the aircraft, notwithstanding the exclusive English jurisdiction clause in the lease. The proceedings reportedly took several months before the Nigerian court ultimately discharged the arrest and repossession order on jurisdictional grounds.6
The difficulties experienced in the Air Midwest case were also reflective of wider concerns regarding the enforcement of aircraft lessors’ rights in Nigeria. In 2018, the NCAA reportedly appealed to Nigerian judges to refrain from granting injunctions that prevented aircraft lessors from exercising their repossession rights, highlighting the potential effect of such orders on the implementation of the Cape Town Convention.7 These experiences demonstrate how judicial intervention and delays in recovering an aircraft increases the costs and uncertainty associated with aircraft financing. It is against this background that the Cape Town Convention and Aircraft Protocol, and particularly IDERA, become significant. By providing a framework intended to facilitate the deregistration and export of aircraft following default, IDERA seeks to reduce the enforcement risks that may otherwise discourage lessors and financiers from making aircraft available to Nigerian operators.
This makes the effectiveness of IDERA relevant not only to the protection of individual creditors, but also to the broader objective of creating a predictable environment capable of attracting aircraft finance and investment to Nigeria’s aviation sector.
3. IDERA under the Cape Town Convention and its Implementation in Nigeria
The Cape Town Convention and the Aircraft Protocol (“Aircraft Protocol”) establishes an international framework for the protection and enforcement of interests arising from aircraft financing and leasing transactions. Within this framework, Article XIII of the Aircraft Protocol provides for the IDERA.8 Where the relevant State has made the required declaration, an authorised party may procure the deregistration of an aircraft and facilitate its export and physical transfer following a qualifying default. Once properly recorded, the IDERA is to be honoured by the relevant aircraft registry, subject to the requirements of the Protocol and applicable aviation safety laws. IDERA therefore provides an authorized party with a specific mechanism for procuring the deregistration and export of an aircraft following default, thereby providing greater certainty to aircraft owners, lessors and financiers than reliance solely on regular domestic enforcement procedures.
In Nigeria, this international framework is given effect through the regulatory procedures of the NCAA. The NCAA’s Advisory Circular dated 10 September 2023, which provides for the recordation of IDERAs in Nigeria.9 The Circular requires an IDERA to be submitted in writing in accordance with the Cape Town Protocol, to identify the relevant aircraft and to be signed by the applicant. It further provides that recordation is to be completed within five days of receipt of the application, provided that there is no valid IDERA already recorded against the aircraft.
4. IDERA and Investor Confidence in Nigeria’s Aviation Sector
Nigeria’s improved compliance with the Cape Town Convention also demonstrates the significance of these reforms. Following the operationalisation of IDERA and other related reforms, Nigeria’s CTC Compliance Index score increased from 70.5% to 75.5% in October 2024, and Nigeria was subsequently removed from the Aviation Working Group non-compliant watchlist.10 These developments reflect progress towards a more predictable legal and regulatory environment for aircraft financing and may strengthen the confidence of international lessors and financiers in engaging with Nigerian operators.
Ultimately, the effective implementation of IDERA has the potential to strengthen investor confidence by reducing a significant element of the legal risk associated with aircraft financing in Nigeria. By providing greater certainty around the recovery and export of aircraft following default, IDERA can support access to aircraft leasing and financing and, consequently, contribute to the development and expansion of Nigeria’s aviation sector.
5. Conclusion
The availability of effective legal protection is an important consideration in attracting and sustaining investment in Nigeria’s aviation sector. Given the capital-intensive nature of aircraft acquisition and the reliance of Nigerian airlines on leasing and external financing, the ability of aircraft owners, lessors and financiers to enforce their rights following default is particularly significant. The implementation of IDERA under the Cape Town Convention and the Aircraft Protocol represents an important step towards addressing these concerns. By providing a mechanism for the deregistration and export of aircraft following default, IDERA has provided basis for reduction in enforcement uncertainty and greater assurance to international lessors and financiers. Nigeria’s subsequent improvement in its Cape Town Convention compliance score further reflects the progress made in strengthening its aircraft legal and financing framework.
* Becky Nwaroh, ‘Legal Framework for Aircraft Acquisition and Financing in Nigeria’ available at (https://www.mondaq.com/nigeria/aviation/1775796/legal-framework-for-aircraft-acquisition-andfinancing-in-nigeria#authors) accessed on 7th September 2026.
Footnotes
1. See, Article XIII of the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (“the Aircraft Protocol”).
2. Olasunkanmi Akinlotan, ‘AWG delists Nigeria from Watchlist’ Punch Newspaper (October 18, 2024) available at (https://punchng.com/awg-delists-nigeria-from-watchlist/) accessed on 10th September 2026.
3. Supra at n3.
4. With Serial No. 27354, GE Capital Aviation Services Ltd & Celestial Aviation Trading 21 Ltd, FHC/IK/CS/14/2010 (Federal High Court, Ikeja, 29 October 2010); Charles W. Mooney, JR, ‘The Cape Town Convention’s Improbable-but-Possible Progeny; Part Two: Bilateral Investment TreatyLike Enforcement Mechanism’ available at (https://paperzz.com/doc/6929834/doc?utm_source=chatgpt.com) accessed on 10th September 2026.
5. Essien E. Udom, ‘Cape Town Convention and Aircraft Protocol-Current Trends Relating to Aircraft Finance and Enforcement of Aircraft Security’ available at (https://udomandudom.com/wpcontent/uploads/2024/10/172012101440.pdf?utm_source=chatgpt.com) accessed on 10th September 2026.
6. Chinedu Eze, ‘Usman: Local Refining, Solution to High Cost, Scarcity of Aviation Fuel’, This Day Live (May 18, 2018) available at ( https://www.thisdaylive.com/2018/05/18/usman-local-refiningsolution-to-high-cost-scarcity-of-aviation-fuel/?utm_source=chatgpt.com#google_vignette) accessed on 14th September 2026.
7. UNIDROIT, Aircraft Protocol; Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (Cape Town on November 16, 2001) available at (https://www.unidroit.org/instruments/security-interests/aircraft-protocol/) accessed on 16th September 2026.
8. NCAA Advisory Circular (NCAA-AC-AWS001) available at (https://www.ncaa.gov.ng/media/gx1ejz0e/ncaa-ac-aws001.pdf) accessed on 16th September 2026.
9. FMINO, ‘Nigeria’s Aviation Score on CTC Compliance Index Rises to 75.5%, Country Removed from Watchlist’ available at(https://fmino.gov.ng/nigerias-aviation-score-on-ctc-compliance-indexrises-to-75-5-country-removed-from-watch-list/?utm_source=chatgpt.com) accessed on 23rd September 2026.
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