Aviation Finance & Leasing 2024

Arbitration and Mediation for Aviation

Aviation v inertia

In physics, inertia is the tendency of an object to resist changes in its state. Newton’s first law provides that every object will remain at rest or in uniform motion in a straight line unless compelled to change its state by the action of an external force. The vast global aviation industry has been at war with inertia every second of every day for over a century. In the most obvious sense, we prevail constantly in taking flight by using thrust and lift against inertia. Thankfully so, given that our industry is a crucial artery of world commerce which contributes nearly USD3 trillion to its gross domestic product annually. We have, however, largely failed in the battle against inertia in a less obvious sense over the last century.

Ours is an industry where contractual disputes have been an undeniable reality for over a century, yet our preferred methods of contractual dispute resolution have been grounded in the archaic. Thankfully, we are now amidst an industry and legal paradigm shift – slowly, then suddenly. But a paradigm shift does not happen in a vacuum. It shifts start as a whisper, an idea that slowly gains momentum, challenging the status quo, until, suddenly, the “new” becomes the norm.

Inertia is a key force behind why aviation was somehow left behind and so remained as one of the final nearly untouched frontiers of arbitration and mediation prior to the launch of The Hague Court of Arbitration for Aviation (The Hague CAA). Two years since that launch, The Hague CAA already stands as a beacon of specialised knowledge and expertise in aviation contractual dispute resolution, and it is just getting started.

Far from being a solution looking for a problem, The Hague CAA was born from an awakening by aviation professionals that aviation contractual disputes require not just resolution, but resolution through the lens that understood the complexities of aviation, the commerce of aviation, and the community of aviation. As a non-profit enterprise with the mission to “promote the use of arbitration and mediation as preferred methods of contractual dispute resolution throughout the vast global aviation industry, wherever and however helpful to the parties involved”, The Hague CAA symbolises a movement towards evolved dispute resolution for the aviation industry. It is a cross-industry, cross-cultural, cross-discipline, and collaborative venture that is supported by a core group of nearly 150 senior aviation, arbitration and mediation professionals around the world – not to mention dozens of leading arbitrators and mediators on its lists of neutrals – and one of the oldest and most experienced international arbitration and mediation institutions in the world.

The way we were

The best aviation industry attorneys live in the blank white spaces between the lines and at the edges of contracts, where law meets commerce and strategy in real time rather than frozen in time. They can, at will, escape the gravitational pull of precedent where it best serves the needs of their clients and companies to do so. This includes advising their clients and companies to choose the method or methods of dispute resolution which put them in the best and least painful position should a contractual dispute or need to enforce arise. While a multitude of variables guide this choice in any specific transactional context, it is crucial to recognise that the best choice may no longer be the one that is square-bracketed in the precedent form of document used.

Historically, the hallowed halls of justice that are national courts of law in various jurisdictions have been the primary battlegrounds for contractual disputes within the aviation industry. Yet, litigation (particularly that involving multiple jurisdictions and complex engineering and technical subject matter) has proven to many in the aviation industry to be a ferocious, unedifying, publicly embarrassing and astoundingly expensive exercise when the only clear winners are the battalions of attorneys on either side. It is often a process that consumes vast reserves of bandwidth, capital and sanity. What is worse, the outcomes of litigation occasionally veer into the realm of absurdity when left to the judgement of those bereft of industry-specific knowledge or – worse still – neutrality.

While the exact global total is challenging to pinpoint, it is nevertheless clear that current worldwide arbitration alone represents a staggering sum in dispute that certainly exceeds USD300 billion. The inescapable fact is that in many other industries the strain of litigation has helped usher in the renaissance of arbitration and mediation, which are now embraced as preferred methods for resolving complex transnational contractual disputes generally. The 20th century witnessed arbitration and mediation solidifying their place as the dispute resolution methods of choice in industries such as construction, commodities, shipping, and insurance, where the technical expertise of the arbitrator and mediator was highly valued; this was, in effect, what is now regarded as specialised arbitration and mediation. Indeed, this preference towards arbitration and mediation is not merely a sectoral phenomenon, but rather an international trend. It is also worth noting that courts around the globe, both common law and civil law jurisdictions, increasingly advocate for or at least endorse arbitration, particularly in the specialised context.

It is difficult to reconcile these facts with the fact that the vast global aviation industry somehow remained behind as one of the last nearly untouched frontiers of arbitration and mediation. Ignorance may have been an excuse, but no longer in the case of aviation attorneys at least. It is, however, apparent that two factors influencing persistent inertia within some corners of the industry are reliance on precedent documentation and, bluntly, the greater financial incentives often tied to litigation. On this latter, admittedly controversial point, it does often stem from entrenched litigation practices and the economic benefits they present to certain stakeholders, rather than an objective assessment of the benefits of arbitration and especially mediation to the parties involved.

In the realm of aviation, evolution is inevitable. The history of aviation shows that dismissing advancements based on past endeavours (especially in ignorance of their scope and calibre) while begging the nearly-rhetorical question “is it necessary?” often proves to be myopic in the end. Much like a finely aged wine poured afresh, these age-old methods of conflict resolution have matured. They have rapidly adapted to the demands of our modern industry and era, particularly specialised arbitration and mediation as offered by The Hague CAA, and now offer a panoply of benefits to the aviation industry that warrant much better informed consideration than in days gone by.

The benefits of arbitration for aviation

Historically, aviation industry market participants have been largely reticent towards due consideration of arbitration. Such resistance stems largely from cultural factors and has been fuelled by inertia and standardised documentation. Still, to seasoned deal-makers, litigation is often viewed as a last resort for settling contractual disputes after they arise, whereas arbitration is often viewed as a tool for managing business relationships in the context of contractual disputes that may arise.

In the complex and often turbulent landscape of cross-border aviation deal-making, the five key pillars of efficiency, confidentiality, flexibility, neutrality and finality serve to elevate arbitration as the preferred method of dispute resolution and as a sturdy foundation upon which rests what is by far the most expansive platform for enforceability around the world.

Efficiency

Arbitration can offer aviation market participants an effective antidote to the costly and time-consuming quagmire of litigation. It empowers these parties to shape the proceedings, curbing the scope of the dispute resolution process, and in turn, helping to reduce costs. Bypassing the often tortuous paths of court procedure, arbitration can assist in avoiding the pitfalls of delays and unanticipated costs. Of note, the traditional courtroom spectre of procedural gamesmanship or weaponisation of process is greatly diminished in arbitration. Moreover, the limited scope of discovery compared to litigation in some jurisdictions also serves to truncate timelines and preserve resources, thereby enhancing overall efficiency. This system thus preserves parties’ energies for their true purpose: reaching a fair and tenable resolution to their dispute. In arbitration, efficiency is not a mere buzzword but a fundamental design attribute.

Confidentiality

Among other things, aviation’s volatile landscape of fierce competition and rapidly evolving dynamics necessitates a measure of discretion in handling contractual disputes. In most jurisdictions (most notable in the context of international aviation by published case volume being the United States, England and Canada), court proceedings, by their public nature, can inadvertently expose business conflicts to the public. In contrast, arbitration in most cased offers a veil of confidentiality, protecting businesses’ reputation and avoiding a “trial by press release”. For an industry where public perception can significantly impact trajectories, confidentiality is not a mere benefit but a compelling requirement.

Flexibility

Arbitration’s inherent flexibility affords parties significant control over the proceedings, much like a pilot and co-pilot commanding a flight. From the rules governing the proceedings to the choice of arbitral tribunal, language, and venue (including virtual venues), arbitration offers a level of customisation unique to each dispute, paving the way for a more efficient and palatable resolution for the parties compared to litigation.

Neutrality

In a courtroom, the tune of resolution is occasionally played in discordant notes that are bound by nationalistic or other strings that bind. In stark contrast, arbitration provides a platform of neutrality in the often multi-jurisdictional (and multicultural) theatre of aviation contractual disputes. By enabling the selection of unbiased arbitrators with no geographical or personal ties to the disputing parties, arbitration ensures an impartial approach to dispute resolution.

This process significantly reduces the notorious “home court” advantage occasionally sometimes apparent – sometimes subtle, but still evident – in court litigation, which can skew the balance of justice. The neutrality of arbitration dilutes any disproportionate influence of a party’s domestic laws or practices on the proceedings. In essence, it offers an unprejudiced terrain, fostering a fair and balanced environment indispensable for effective dispute resolution in the international aviation industry.

Finality

Appellate review of arbitral awards is, in most cases, very limited. Judicial scrutiny of awards is typically confined to issues such as jurisdiction, procedural fairness or public policy. In contrast, many national court systems permit rigorous (and often very lengthy) appellate review of first instance judgments and often permit reconsideration of both factual matters as well as matters of law. Avoiding appellate review mechanisms reduces additional litigation costs and delays and enhances the efficiency and finality of the process.

The New York Convention: a 172-state enforceability solution

Given the global footprint of the aviation industry, the enforcement of court judgments often requires a prevailing party to somehow navigate differing legal systems and potential for further contention. The task of ensuring that a resolution in one jurisdiction holds force in another is no small feat, and often a prescription for failure. This is where arbitration, under the robust enforcement framework of the New York Convention (the common name for the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards), stands very well apart from litigation.

Consider a simple but poignant illustrative truth: a properly constituted arbitral award is more readily enforceable in most circumstances in more foreign jurisdictions than, for example, either an English or New York court judgement. With the endorsement of 172 signatory nations, the New York Convention not only serves as a cornerstone of international arbitration, but is also often described as the single most successful treaty in all of private international law. Much like an international peace treaty that seeks to harmonise relations between nations, this convention provides a comprehensive framework to ensure the global enforcement of arbitral awards.

The New York Convention mandates contracting states to recognise and enforce arbitral awards issued abroad, subject to a narrow list of exceptions that relate to very serious defects in the arbitral procedure (such as lack of fundamental due process) or award, thereby casting a wide net of legal jurisdiction that spans the globe. While the undoubtedly high bar for refusal to enforce a foreign arbitral under the New York Convention has been confirmed by courts around the world, the key to successful enforcement of arbitral awards is for parties to nevertheless be aware of peculiarities and risks that arise in each particular jurisdiction where enforcement is sought. Still, in the context of an industry that crosses borders every second of the day, this global reach of the New York Convention provides a semblance of predictability and coherence in an otherwise complex and fluctuating 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 aviation 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 maintenance, 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 schedules and rigorous quality standards. Ground handling services are another area where swift conflict resolution can mean the difference between smooth operations 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 international 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 suitable, 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 tribunals, numerous mechanisms exist within arbitration 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 recently reported that, at 26%, disputes 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 apprehension surrounding the interplay between the application of the Cape Town Convention (CTC) and arbitration. 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 support for the enforcement of arbitral awards more generally.

The CTC, through its asset-based remedies, seeks to enable rapid and predictable recovery and redeployment of aviation assets, while arbitration’s primary focus is addressing rights beyond the scope of these remedies where available. For the time being, no arbitral court is defined as a “court” under the CTC. Of note, this means that the CTC’s Article 42 jurisdiction provisions do not apply to any arbitral court. As such, any arbitral order seeking enforcement lacks the CTC-backed authority of an equivalent court order. Furthermore, the New York Convention provides guardrails to prevent overreach by limiting the enforcement of arbitral awards in certain scenarios. Therein lies the true barrier between CTC and arbitration – the challengeability of an arbitral award that overreaches in so far as two of the rather limited bases for a New York Convention contracting state not recognising and enforcing an arbitral award apply: (i) if the subject matter of the arbitral award is not capable of settlement by arbitration under the law of the contracting state (which would be the case if the CTC applied), or (ii) if the award goes beyond the scope of the submission to arbitration (which, again, would be the case if arbitration applied).

The benefits and use of mediation in aviation contractual disputes

Though much substantive focus and bandwidth is placed on arbitration, it is crucial to highlight the equally significant role that mediation can play in resolving aviation contractual disputes. While there are many forms of mediation, with the three main categories being facilitative, evaluative and transformative, we will focus on the most common facilitative form for our purposes here.

Similar to arbitration, mediation offers numerous advantages tailored to the complex and cross-border nature of the vast global aviation industry. To begin with, mediation, like arbitration, provides an efficient, confidential, and flexible method of dispute resolution. The typically voluntary and collaborative nature of mediation can often lead to a time- and cost-efficient process to reach resolutions compared to the naturally more costly and adversarial processes of arbitration and especially of litigation. This efficiency is particularly valuable where operational delays can have substantial financial and logistical repercussions, for example. Additionally, mediation also maintains confidentiality, safeguarding sensitive business information and protecting the reputations of the parties involved. This is analogous to the confidentiality benefits offered by arbitration, ensuring that the aviation contractual disputes do not become public spectacles.

The flexibility of mediation allows parties to control the process and outcomes more directly even compared to arbitration, but especially compared to litigation. The mediator facilitates dialogue but does not impose decisions, enabling parties to explore creative solutions that might be unavailable in arbitration or litigation. This adaptability is crucial in the aviation industry, where disputes often involve a labyrinth of technical, regulatory, and commercial considerations. By encouraging open communication and fostering mutual understanding, mediation can preserve and even strengthen business relationships, which is invaluable in the interconnected world of aviation.

Much can also be said for an approach that allows parties to benefit from the collaborative and flexible nature of mediation while also having the option to transition to arbitration (or litigation, as the case may be) if a resolution cannot be reached. This ensures that the process remains efficient and that a binding resolution is ultimately achieved, providing parties with both the benefits of consensual agreement and the certainty of an enforceable decision. This approach is particularly useful in high-stakes, complex disputes where maintaining control over the process and outcome is essential.

Mediation also transforms the negotiation process by creating a structured environment that facilitates productive dialogue and mutual understanding. It encourages parties to move beyond entrenched positions and focus on underlying interests, enabling them to find common ground and reach agreements that are more likely to satisfy both parties’ needs. This approach is particularly effective in emerging disputes in complex transactions where the stakes are high, and the relationships between the parties are critical to ongoing commercial dealings. It is fair to say that the role of the mediator(s) in managing emotions, facilitating communication, and helping parties generate options makes the negotiation process more efficient and outcome-oriented.

The Hague CAA

The landscape of arbitration and mediation is dotted with a multitude of generalist institutions around the world. The unique dynamics and needs of aviation fuelled the launch of The Hague CAA – a truly specialised, tenable and neutral arbitration and mediation service designed for and in the genuine service of the vast global aviation industry. It must be noted that the unique mission of The Hague CAA is “to promote the use of arbitration and mediation as preferred methods of contractual dispute resolution throughout the vast global aviation industry, wherever and however helpful to the parties involved.” In this light, the mission of the Hague CAA in service of the industry extends far beyond the institution itself and actually benefits other arbitration and mediation institutions as well. That noted, The Hague CAA has meticulously crafted and continues to meticulously craft the best specialised arbitration and mediation solution for the vast global aviation industry. Thus, the launch of The Hague CAA likely represents the single most significant legal development affecting the vast global aviation industry over the last decade.

Arbitration and mediation “for us, by us”

The Hague CAA truly exemplifies each of the benefits of arbitration and mediation discussed above, and further offers specialised arbitration fine-tuned to the distinctive dynamics of the vast global aviation industry. The true beauty of the “for us, by us” nature of The Hague CAA rests in the fact that it was and continues to be engineered to the contours of aviation contractual disputes by a diverse global consortium consisting of many dozens of senior aviation legal and technical professionals working alongside several dozen senior arbitration professionals under the guidance of a nearly 75 year-old arbitral institution – representing in sum well over 2,000 years of combined aviation expertise and over 2,000 years of combined arbitration (and mediation) expertise.

While generic arbitration and mediation has undoubtedly offered occasional solace, it has failed by design to address the specialist needs of the vast global aviation industry, and thus failed to garner true engagement. The relatively minor and inconsistent use of arbitration by a global industry with more than USD3 trillion in annual economic activity, where the majority of transactions cross borders, amounts to a drop in the ocean. The Hague CAA’s burgeoning efforts – which are even demonstrably benefitting large generalist arbitral institutions – are not just filling a necessary void, they are redirecting the industry’s tide one clause at a time.

There are several aspects of the Hague CAA, beyond its specialised nature discussed below, that set it apart from most generalist arbitration and mediation institutions. To begin with, the Hague CAA is a genuine non-profit foundation, which not only lowers the administrative costs for parties involved relative to most other institutions, but also ensures that its mission remains focused on serving the aviation industry. Indeed, it is also notable that the mission of the Hague CAA is in the bona fide service of the aviation industry and not just the Hague CAA itself – to which end its mission statement reads “

The Hague CAA also mirrors the values of the aviation industry in a number of ways. In terms of gender, race, age, geography and other diversity, The Hague CAA stands as one of, if not possibly the most, diverse arbitral institutions globally. Moreover, the Hague CAA’s commitment to diversity and sustainability are expressly embodied in its rules and procedures.

While arbitration remains a cornerstone of The Hague CAA’s dispute resolution framework, the deep integration of mediation into its offering, underscores a commitment to providing comprehensive, adaptable, and effective solutions for the vast global aviation industry. As discussed above, the benefits of mediation, analogous to those of arbitration and then-some, make it an indispensable tool for managing and resolving the complex, cross-border disputes that characterise the aviation sector.

The role of the NAI and importance of the Hague

The Hague CAA is rooted in the rich arbitration and mediation soil of the Netherlands. To begin with, its arbitration and mediation cases are administered solely by the Netherlands Arbitration Institute (NAI). The Hague CAA may be “new”, but NAI was founded in 1949 and has successfully administered over 5,000 arbitration cases alone. It is one of the oldest and most respected international arbitration and mediation institutions in the world. In 2022 alone, the NAI administered a caseload representing more than USD2 billion in dispute worldwide.

It is noteworthy that for the past century or so, the municipality of the Hague has earned its reputation as the international city of peace and justice. Its unique position as an international centre of decision-making and influence has led to it becoming home to more than 200 international organisations, including the Permanent Court of Arbitration and the International Court of Justice. It is now also the default seat of the Hague CAA.

The seat of arbitration, distinct from its physical location, determines the legal framework. Parties may of course choose a seat different from the institution’s default seat. They may also choose a different physical location – though the majority of arbitration and mediation today occurs mostly via electronic means, avoiding much of the need for physical travel compared to the past. For example, an arbitration administered under the Hague CAA arbitration rules may be seated and/or physically held in, say, London, Paris, Dubai, Singapore, Hong Kong or New York. However, the seat affects crucial aspects of an arbitration, such as parties’ access to national courts (for example, for an order to freeze assets by way of interim measures), challenges to tribunal decisions, and enforcement provisions. Jurisdictional support varies, with interventionist courts posing risks and generally best avoided. The Dutch legal system, however, is highly supportive of arbitration, typically intervening only to assist and uphold the process – including, for example, by way of a comprehensive regime for interim measures before a Dutch court.

Specialised expertise

The arbitrators and mediators involved in The Hague CAA bring with them more than just expert proficiency in arbitration and mediation. An arbitrator or mediator’s insights into the operational, regulatory, technical, legal and commercial aspects of the aviation industry, combined with his or her unique understanding of arbitration, provide a rare blend of expertise that enriches the dispute resolution process. The Hague CAA encourages the use of its two lists of vetted neutrals in both its arbitration and mediation rules.

In terms of arbitration, the first is a list of sole/chair-eligible arbitrators, which consists of highly experienced, “top name” senior arbitrators around the world, a high percentage of whom have experience arbitrating aviation disputes. The second is a list of co-arbitrators, which consists solely of seasoned legal and technical veterans of the aviation industry, with years of practical experience tucked under their wings, who are also trained arbitrators. All mediators on The Hague CAA list are highly experienced in aviation. The Hague CAA also maintains a large and diverse list of senior aviation technical experts, many of whom also serve as members of its one-of-a-kind Technical Standing Committee, which continually provides input and guidance to inform The Hague CAA’s design thinking and especially its rule-making processes.

Specialised rules

The specialised arbitration rules of the Hague CAA are not arbitrary, but carefully crafted to expedite proceedings, improve time and cost efficiency, and avoid absurd outcomes that do not reflect the realities of the industry. Both the arbitration and mediation rules seek to address the industry’s critical pain points with litigation before national courts. There are many, many unique examples to point to, from the electronic submissions to virtual hearings to early determination, but perhaps the most poignant example concerns speed in arbitration in particular. The Hague CAA has broken new ground in the realm of arbitration generally by mandating an unprecedented default expedited procedure with shorter time limits and more potent remedies to reduce delay, providing parties with an arbitral award within only six months from the date of the initial case management conference. The initiation of proceedings, and the proceedings themselves, under the rules are designed to go twice as fast as most international arbitrations. The contrast to litigation is even more pronounced – for example, the median length from the initiation of a claim to the conclusion of a jury or bench trial in civil cases in the United States is over 27 months, and that is not accounting for potential appeals.

Critically, The Hague CAA is not frozen in time or stuck to a founding text or treatise. Its very hallmarks are flexibility and party autonomy, which, along with the overall structure of the project, allow it to develop and adapt in response to the needs of its users. In that light, it is worth noting that although its launch was preceded by many months of work on its arbitration rules and procedures, The Hague CAA undertook a wide-ranging industry consultation process immediately following its launch, which resulted in the release of its first arbitration rule enhancements in February 2023, less than seven months of its launch. At the time of publication, a similar process concerning the mediation rules nears its conclusion, with the launch of a major mediation rules update imminent. These innovative rule enhancements bear testimony to the agility and dynamism of The Hague and reflect its commitment to evolving with the industry’s needs, mirroring the aviation sector’s constant push towards greater efficiency and excellence.

A decades-long mission

The unprecedented early adoption of The Hague CAA is evidenced by the fact that billions of dollars’ worth of aviation transactions are known to have included provision for The Hague CAA arbitration and/or mediation in the two years since its launch. The mission of The Hague CAA extends “beyond the courtroom” to fundamentally alter perceptions and practices around arbitration and mediation in the vast global aviation industry. Thus, The Hague CAA is focused on its campaign to “engage, educate and encourage” as it works to demystify arbitration and mediation in large swaths of the vast global aviation industry. While there have been no final awards rendered by any Hague CAA tribunal yet, the absence of a miraculous early caseload should not be misconstrued as a failure or a true measure of The Hague CAA’s utility or success. To leverage it as such is intellectually dishonest and adheres to a common trope that ignores the complexity of establishing any specialised arbitration and mediation institution, let alone one initiating a seismic shift in how the global aviation industry resolves disputes – a change that, by its nature, is gradual. The Hague CAA’s growing adoption is a clear indicator of its impact and the industry’s readiness for innovative change in this respect, showcasing the potential for collective efforts to drive meaningful advancements.

Specialised arbitration and mediation presently stands as a promising alternative for the aviation industry to traditional court litigation in many cases, and The Hague CAA offers the industry greater expertise, efficacy and efficiency in the resolution of contractual disputes by its industry-specific approach – dynamic, responsive, and acutely attuned to the distinctive nuances of the global aviation industry. As arbitration and mediation slowly but surely continue to be woven into the fabric of aviation deal-making around the world in the years and decades to come, it will progress from “promising alternative” to “standard operating procedure.” A new flight plan has been charted by The Hague CAA, the course set, and the destination clear.

The Hague CAA model clauses

The Hague CAA will continue to transform the vast global aviation industry, one clause at a time. To that end, the following short-form model mediation and arbitration clauses may be included in various aviation industry contracts wherever helpful to the parties involved. These short-form model clauses are only for quick reference, and further variations and detailed information and guidance is available in The Hague CAA rules, available on its website (www.HagueCAA.org):

• Mediation: “The Parties may, at any time and without prejudice to any other proceedings, mutually agree to seek to settle any dispute or part thereof arising out of or in connection with this Agreement through mediation in accordance with the Mediation Rules of The Centre for Mediation at The Hague Court of Arbitration for Aviation for the time being in force.”
• Arbitration: “All disputes arising out of or in connection with this Agreement, including any questions regarding its existence, validity, or termination, shall be referred to and finally resolved by arbitration in accordance with the Arbitration Rules of The Hague Court of Arbitration for Aviation for the time being in force, which Rules are deemed to be incorporated by reference into this clause.”

There are various optional matters which could be addressed in the arbitration clause, most typically including tribunal composition and place and language of arbitration. In the context of aviation finance and leasing, these also include court-ordered interim relief, conservatory measures and relief pursuant to The Cape Town Convention or other applicable law in the context of aircraft leasing or financing, for example:

• “The agreement of the Parties to arbitrate shall not preclude [the Lessor/a Finance Party] from obtaining orders from a court of competent jurisdiction for speedy interim relief, conservatory remedies and/or relief pending final determination pursuant to the Cape Town Convention or applicable law, for the prompt immobilisation, grounding, safe-keeping, possession, control, custody, maintenance and preservation of the Aircraft and its value, including preservation and protection from third party liens and claims, and the deregistration, export, recovery and delivery up of the Aircraft to [the Lessor/a Finance Party].”