On January 2, 2025, Minister of Aviation Festus Keyamo celebrated a breakthrough: a Nigerian court allowed Export Development Canada (EDC) to repossess a CRJ 1000 aircraft from Arik Air. This marks Nigeria’s first successful use of the Cape Town Convention, a milestone for the country’s aviation sector.
The Federal High Court ruled in favor of EDC on November 27, 2024, in a case involving Captain Samuel Caulcrick and others versus the EFCC. The ruling followed a legal battle in which the EFCC had blocked aircraft repossession in 2023, citing a violation of the Cape Town Convention. Despite this, Arik’s shareholders denied any default or repossession issues, claiming they had no role in the dispute.
The Cape Town Convention, which Nigeria signed, aims to streamline aircraft financing and repossession. Nigeria has struggled with non-compliance in the past, resulting in blacklisting by global aviation companies. This led to domestic airlines being denied international aircraft leases. However, recent reforms boosted Nigeria’s compliance score to 75.5% in 2024, allowing it to exit the Aviation Working Group’s watchlist.
Despite this progress, industry reactions remain mixed. At a recent meeting, experts raised concerns about the new legal framework. Air Cdr. Ademola Onitiju, ASRTI president, praised the 2024 Practice Directions, which he said gave lenders and investors confidence in Nigeria’s legal system.
However, Roland Iyayi, CEO of TopBrass Aviation, shared concerns about the power imbalance. He recounted a case where a Nigerian airline paid $2 million to lease an aircraft, only for the lessor to repossess it. Despite the misconduct, the Nigerian Civil Aviation Authority (NCAA) did nothing to protect the airline. Iyayi argued that such cases highlight the challenges domestic airlines face with international lessors.
Fubara Anga, lead partner at Aelex Partners, warned that the Practice Directions could grant lessors too much power, potentially leading to exploitation. He called for adjustments to ensure a fair system for both lessors and lessees.
Others, like Dr. Alex Nwuba and lawyer Pekun Sowole, raised concerns about legal loopholes and ambiguous definitions in the Practice Directions. They warned that such gaps could undermine the effectiveness of the new regulations.
Chris Aligbe, MD of Belujane Konzult, called for strict penalties for operators who violate the Convention. He suggested suspending an operator’s Air Operator Certificate for up to 10 years as a deterrent.
Capt. Hamisu Yadudu, former FAAN MD, echoed Aligbe’s call for integrity in contractual agreements. He stressed that operators should only sign agreements they intend to honor to protect Nigeria’s aviation reputation.
While the Cape Town Convention’s reforms are a step forward, industry stakeholders agree that further refinement is necessary. Closing loopholes and ensuring fairness will be key to balancing the interests of all parties involved.