From a security registration perspective, aircraft (such as airplanes, helicopters, and jet planes) are unusual types of personal property.

Aircraft financing is not unlike other kinds of financing, whereby a lender loans money to someone to purchase property and typically requires that the purchased property be used as collateral to secure the loan.  For typical financing transactions in Saskatchewan, personal property collateral is subject to registration in the Saskatchewan Personal Property Registry governed by The Personal Property Security Act, 1993, Saskatchewan's provincial personal property security legislation. The highly mobile nature of aircraft, though, creates a unique security enforcement challenge for lenders, as aircraft can be flown out of Canadian airspace into foreign jurisdictions, where Canadian security laws may not be enforceable. 

The registration of aircraft as collateral, therefore, requires a unique process that follows international rules.  For this purpose, aircraft security registration in Saskatchewan is governed by The International Interests in Mobile Aircraft Equipment Act, under which Saskatchewan adopts the followingtwo international aircraft security registration regimes:

  1. The Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment; and,
  2. The Convention on International Interests in Mobile Equipment (that was opened for signature at Cape Town on November 16, 2001).

The above-noted international protocol and convention create an International Registry for aircraft security registration that provides an additional place for the filing of aircraft security interests for certain airframes, helicopters, and aircraft engines, separate from the Saskatchewan Personal Property Registry.  Specifically, the International Registry applies to the following aircraft types:

  1. Airframes that are type certificated to transport:
    • At least eight persons including crew; or,
    • Goods in excess of 2750 kilograms
  2. Helicopters that are type certificated to transport:
    • At least five persons including crew; or,
    • Goods in excess of 450 kilograms; and,
  3. Jet propulsion aircraft engines with at least 1750 pounds of thrust or its equivalent.

The International Registry permits individuals and organizations to register and search financial interests in aircraft assets from various countries, with the intent to standardize the registration of security interests in aircraft across the world.  This registration is done for the purpose of affording remedies, such as repossession, in situations where aircraft owners are in default under financing arrangements, and the aircraft is located outside of Canada. The International Registry provides for the electronic registration and protection of international interests (which are recognized by all ratifying states), with priority being determined on a first-to-file basis.  For the types of aircraft listed above, the registration of the aircraft as collateral will typically be made in both the Saskatchewan Personal Property Registry and the International Registry.  This registration ensures that any collateral related to the aircraft that is not covered by the International Registry is covered by the Saskatchewan Personal Property Registry.

An example of why the registration of aircraft collateral in the International Registry is necessary can be found in a highly-publicized 2015 matter where Export Development Bank of Canada's ("EDC") had loaned  $41 million to a wealthy family from South Africa to purchase a Bombardier jet and, subsequently, the loan went into default.  As a result, EDC needed to take security enforcement measures against the airplane collateral but soon discovered that the tracking device on the airplane had been turned off.  The jet was eventually located in South Africa, where the registration in the International Registry allowed EDC to obtain a Court order from a South African Court to keep the airplane grounded. 

The proper registration of security interests in aircraft in the Saskatchewan Personal Property Registry and the International Registry is necessary to ensure that enforcement on aircraft collateral can be accomplished, and this requires a legal understanding of both the provincial and international security registration regimes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.