INDONESIA Trends and Developments Contributed by: Enny Purnomo Widhya, Nugrahani Astiyanti and I Gusti Ngurah Oka Anantajaya, Mochtar Karuwin Komar
Since 2023, aircraft financing transactions involving Indonesian airlines have resumed again, which were largely absent between 2021 and 2022. On the other hand, an increase of prepayment of financings by les - sors to financiers have been observed in respect of aircraft leases to Indonesian airlines between 2023 and 2025. Many financings obtained prior to the COVID-19 pandemic have been prepaid and many security release works were also carried out, some - times requiring involvement of the Indonesian airlines to acknowledge the release of any documentations that were previously issued in favour of the financing parties. Enforcement of Cape Town Agreements in Indonesia The Cape Town Agreements and the legal framework in Indonesia The Cape Town Agreements were ratified by the Presidential Regulation in 2007 and the Indonesian government made a declaration that nothing in the Cape Town Convention shall affect its right or that of any entity thereof, or any intergovernmental organisa - tion in which Indonesia is a member, or other private or public services in Indonesia, to arrest or detain an aircraft object under its laws for payment of amounts owed to the government of Indonesia, any such entity, organisation or provider directly relating to the service or services provided by it in respect of that or another aircraft object. Not long after the ratification, the Avia - tion Law was enacted in 2009 to replace the previous Law No 15 of 1992 concerning Aviation. As a result of the enactment of the Aviation Law in 2009, the provisions of the Cape Town Agreements are accommodated in Chapter IX of the Aviation Law, which adopts key principles of the Cape Town Agree - ments. The most noteworthy provision of the Aviation Law is Article 82, which provides that the provisions of the Cape Town Agreements have the force of law in Indonesia and also constitute lex specialis, reinforced by the statement that in the event of any conflict or inconsistency between any provision of the Cape Town Agreements and any law or regulations in Indo - nesia, the provisions of the Cape Town Agreements shall prevail.
Chapter IX of the Aviation Law regulates International Interests over Aircraft Objects where, similarly to the provisions under the Cape Town Agreements, Aircraft Objects that can be encumbered with international interest are objects arising from security agreements, title reservation agreements and/or lease agreements where parties are free to choose the governing law of those agreements. The Aviation Law also requires that any international interests, including any assignment and/or subordination of such interest, must be reg - istered with the International Registry, which is done online in order to obtain priority upon enforcement. In addition, Chapter IX of the Aviation Law also ena - bles a debtor (in this case airline or aircraft opera - tor) to issue an Irrevocable Deregistration and Export Request Authorization (IDERA) in favour of the creditor similar to the provisions stated in the Protocol to the Cape Town Agreements. The creditor under the IDERA is known as the “authorized party”. Under the Avia - tion Law, an IDERA can be issued in respect of the aircraft or helicopters that are registered with an Indo - nesian registration mark and the IDERA needs to be acknowledged by the DGCA and cannot be revoked without the authorised party’s consent. Once the IDE - RA is acknowledged, only the authorised party can file for deregistration of the Aircraft with the DGCA. In addition, only the authorised party can revoke the IDERA and the IDERA shall remain applicable during the debtor’s bankruptcy or its inability to pay its debts. An IDERA that is issued by the debtor shall be in an original prescribed form made available by the DGCA, known as DGCA Form 47-03. Furthermore, under the Aircraft Registration Regula - tion, the authorised party under the IDERA may also appoint another party to be the beneficiary of the IDE - RA, known as the “certified designee”, through a Cer - tified Designee Letter (CDL). In practice, this is usually done if the creditor under the IDERA is a lessor of the relevant aircraft and the aircraft is subject to financing, where the certified designees usually appointed are the financing parties via the CDL. Similar to the IDERA, the CDL needs to be executed by the authorised party of an IDERA in an original prescribed form known as DGCA Form 47-06. The CDL needs to be registered with the DGCA so that it can be acknowledged. Once the CDL is acknowledged, only the certified designee
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