The Aviation Working Group has raised Nigeria’s Cape Town Convention compliance index from 49 to 70.5, following the issuance of the Federal High Court (Cape Town Convention and Aircraft Protocol) Practice Direction, 2024, on September 12.
This adjustment by the AWG, a global body co-chaired by Boeing and Airbus that works to develop and promote international standards for the financing, leasing, and sale of aircraft, moves Nigeria’s CTC index rating from a low to a medium rating.
The 70.5 score is the highest Nigeria has attained to date, increasing confidence among aircraft financiers and lessors.
The information was disclosed on Wednesday in a statement by Tunde Moshood, Special Adviser on Media and Communications to the Minister of Aviation and Aerospace Development.
“In a swift response to Nigeria’s bold attempt to fully comply with the Cape Town Convention on dry-leasing of aircrafts by preparing and signing the Practice Direction, the Aviation Working Group (Co-chaired by BOEING AND AIRBUS) has today swiftly adjusted the global score/rating of Nigeria on our compliance status from 49 to 70.5. This is the largest score Nigeria has attained till date to give comfort to financiers and the leasing world,” the statement read in part.
The statement noted that further improvements are expected as Aviation Minister Festus Keyamo has directed the Nigeria Civil Aviation Authority (NCAA) to immediately adjust its administrative rules, including the Irrevocable De-registration and Export Request Authorization (IDERA), to fully align with the Convention, potentially boosting Nigeria’s rating and increasing confidence among financiers and lessors in the coming weeks.
IDERA allows aircraft lessors to request the de-registration and export of an aircraft in case of default by the lessee. This provides an additional layer of security for financiers, ensuring that their assets can be recovered efficiently.
More insight
In an email snapshot sent to Nigeria’s Aviation Minister from the Aviation Working Group (AWG) and accompanying the statement on Nigeria’s CTC compliance index review, it was noted that Nigeria’s variable B score has been increased from 1 to 3.
The email further explained that consistent adherence to the CTC Practice Directions by Nigerian courts in future cases related to the Cape Town Convention could lead to additional increases in the variable B score.
The email also highlighted that due to Nigeria’s corrective actions, AWG no longer recommends a review of Nigeria’s eligibility for the OECD discount, which had previously been considered due to past non-compliance. As a result, Nigeria’s variable C score has been raised from 3 to 5.
Additionally, the email praised Nigeria’s communication channel with AWG, which has worked efficiently to address CTC compliance issues stemming from previous judicial precedents. Consequently, Nigeria’s variable D score has been increased from 3 to 5.
However, AWG noted that Nigeria remains on the CTC compliance watchlist, as a separate compliance-related issue is still under review.
The variables in the CTC index are defined as follows:
- “A” refers to legal implementation, ensuring that the CTC and its declarations take precedence over conflicting national laws, and that no regulatory gaps exist.
- “B” addresses judicial decisions and administrative actions in enforcing the CTC, with further improvements dependent on Nigerian courts applying these directives.
- “C” determines eligibility for the ‘CTC discount’ under the OECD Aircraft Sector Understanding, which Nigeria has now secured by resolving compliance issues.
- “D” evaluates the effectiveness of a country’s communication channel with AWG, which Nigeria has successfully maintained to resolve compliance matters efficiently.
What you should know
Nigeria’s aviation sector took a significant step forward with the issuance of the Federal High Court (Cape Town Convention and Aircraft Protocol) Practice Direction, 2024, on September 12, ensuring full compliance with the Cape Town Convention.
The new Practice Direction establishes legally binding rules that reaffirm Nigeria’s commitment to its CTC obligations, instructing courts to apply the Convention without interference from other legal provisions in relevant cases.
Key provisions of the CTC Practice Direction include (i) setting clear, strict timelines for enforcing CTC remedies, both inside and outside of insolvency, (ii) requiring courts to enforce foreign court orders under the CTC within 10 calendar days, and (iii) addressing jurisdictional issues that had previously led to non-compliant judicial precedents.
