INTRODUCTION Contributed by: Paul P. Jebely, Paul P. Jebely
second of the day, this global reach of the New York Convention provides a semblance of predictability and coherence in an otherwise complex and fluctuat - ing international legal environment when it comes to enforcement. This level of certainty and predictability often proves invaluable. The use of arbitration in aviation contractual disputes The areas of deal-making where arbitration can potentially demonstrate its transformative potential in the aviation industry are as vast and varied as the industry’s deal-making. Arbitration’s scope in the avia - tion industry encompasses a variety of claim subject matters, all predominantly contractual in nature, and also embraces the more specialised segments of the industry. From the ground up The potential uses of arbitration extend from the high- stakes realm of aircraft sale and purchase, where many transactions involve monumental sums and critical business objectives, down to the ground-level services that keep our airports, heliports and – soon – vertiports functioning seamlessly. In the whirl of hangars and tarmac, where mainte - nance, repair, and overhaul (MRO) services keep fleets airborne, disputes can cause significant delays and financial losses. Similar challenges can arise within the sphere of aviation supply chains and the domain of catering services, often operating under tight sched - ules and rigorous quality standards. Ground handling services are another area where swift conflict resolu - tion can mean the difference between smooth opera - tions and logistical nightmares. Disputes involving fuel services are often critical due to their direct impact on flight operations. Aircraft charter disputes are a further example, which often involve a complex interplay of contractual terms, operational realities, and interna - tional regulations. Aircraft lease returns can quickly trigger contention in a critical segment of the industry where equipment and time equals money. Finally, it is worth noting that arbitration can serve as a crucial tool for pursuing and managing investor-state claims, which can involve significant financial stakes and a complex interplay of national and international laws.
Despite the vastness of the forgoing list, it is critical to keep in mind the tenet that the aviation industry is far from monolithic, and its complexities and potential far exceed the scope of a single list. Arbitration and aviation finance generally Any blanket assertion that arbitration is unsuitable for aviation finance or leasing requires a change in perspective. Indeed, it has long been seen as suit - able, but historically mostly in situations where there were jurisdictional limitations on the enforcement of court judgments. Regardless of whether purely in- rem actions are arbitrable, the value of arbitration in aviation finance is not diminished, given the wealth of other dispute contexts it can effectively address. Contrary to the myth that arbitration is unsuited for financial disputes generally due to the limitations on the reach of interim measures ordered by arbitral tri - bunals, numerous mechanisms exist within arbitra - tion that allow for emergency and interim relief and uphold the enforceability of such orders. Furthermore, depending on the applicable laws, disputing parties in arbitration can often also seek interim relief from courts in support of an arbitration. Moreover, many complex financial transactions can benefit from the procedural efficiency, flexibility, privacy, and expert knowledge that arbitration offers. The rising use of arbitration in the banking and finance sector testifies to this evolving perspective. In fact, the London Court of International Arbitration reported that, at 26%, dis - putes in the banking and finance sector represented its biggest industry sector in 2021, overtaking energy and resources disputes. It is not alone in this trend, as an increase in the sector can also be seen in other arbitral institutions as well. Arbitration and the Cape Town Convention specifically There exists a degree of mostly misinformed appre - hension surrounding the interplay between the appli - cation of the Cape Town Convention (CTC) and arbi - tration. Importantly, it is not the intention of arbitration, particularly within specialised contexts, to undermine or supplant the CTC in any way. On the contrary, when the CTC does not apply or applies only indirectly, arbitration serves as a valuable adjunct tool, drawing its strength from the New York Convention’s robust
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