Arbitration for Aviation – The Next Big Thing in Maltese Aviation…Time to Invest?

Considering the multitude of aircraft deals closing every year, it is only a very small portion thereof which ends up in legal disputes before the designated court. As aptly put by Paul Jebely, founder and chair of the new Hague High Court of Arbitration for Aviation (Hague CAA), the ferocity, cost and public embarrassment of court litigation inarguably creates a less-than-optimal scenario for all those involved. It is for this reason, amongst others, that the industry has in recent years, gravitated towards private arbitration and lengthy public court proceedings.

Naturally, in a case where a party to an agreement containing an arbitration clause is sued in court, the defendant may ask the same to force the plaintiff to submit his/her claims to arbitration. The court will further determine two main points: (1) whether there is an agreement to arbitrate and (2) whether the dispute at hand falls within the extent of the arbitration provision.

Disputes of such nature in Malta would be determined by the First Hall Civil Court, and whilst judges’ legal aptitude is often masterly, certain intricacies in niche aviation deals may require highly experienced individuals in the same to assess, explicate and adjudicate on such disputes. This may, in turn, result in unnecessary delays and additional sittings, which may tend to deter prospective aviation parties from providing Maltese courts with exclusive jurisdiction.

In an attempt to jump over the aforementioned hurdle, the non-profit Hague CAA is currently aiming to establish itself as a neutral and private forum for more specialised arbitration and mediation by relying on experts in the aviation sector. As an entity, it provides confidential and binding resolutions when contractual relationships turn sour and also offers voluntary mediation for aviation disputes. It is practically a private court governed by national laws. Jebely further propounds that “an arbitration award is more enforceable internationally than a New York or English court ruling.” He explained that the Hague CAA carries out its function at a faster, more effective and cheaper rate than court proceedings; with the stark difference that you have niche experts analysing your case. This completely eradicates the issue of having to make your case in front of a judge who could have never presided over a private aviation case before. Moreover, it avoids the large unproductive distractions of traditional litigation.

As Matt Potts, general counsel at Jetcraft and also part of the Hague CAA points out, in a perfect world scenario, everything should be bound to function smoothly and effectively without unwanted disagreements, however, unfortunately, this is not always the case.

Concluding remarks

It is evident that investing in such a forum will put the Netherlands at the forefront of all matters pertaining to aviation disputes since having such matters dealt with by highly qualified experts in the industry, as well as fully circumventing the public eye, will be very attractive to aircraft owners and operators alike. Whilst Malta’s rise in the aviation industry has befittingly followed in the footsteps of the island’s excellent maritime reputation, the establishment of such a forum should be on top of the Government’s list to ensure that Malta’s standing as a serious player in this sector is maintained and its competitivity continuously improved upon. With the recent increase in registered aircraft and its current long waiting line for AOC establishments, it would make perfect sense for Malta to act as a one-stop shop by also furthering its reach to intra-EU and/or international private aviation disputes.