What is Article 83 bis?
Article 83 bis (1997) was the first substantial amendment to the Convention on International Civil Aviation (1944), known as the ‘Chicago Convention’, and came into being as a response to industry growth and leasing trends.
The Chicago Convention sets out an international legal framework and a uniform set of rules in respect of the nationality and registration of civil aircraft (these apply locally in each contracting state).
Signed by 191 states, the Convention includes the principal that an aircraft registered in a contracting state, must comply with the laws and safety regulations that apply to aircraft generally in that state, irrespective of where the aircraft is operated.
Under Article 83 bis, a bilateral agreement can be signed between the aviation authorities of two contracting states. A bilateral transfers and delegates the responsibility for the regulation and safety oversight of an aircraft in accordance with the requirements of the state of registration from that state to the air transport authorities in the airline’s home state.
Article 83 assists with the structuring of cross border aviation transactions by providing interested parties (and in particular lessors and financiers), with a mechanism for increasing the regulation and safety oversight of an aircraft that is operated from a state perceived as high risk.
Article 83 bis in use around the world
Article 83 bis arrangements are regularly used in Russia and a bilateral agreement between Russia and Bermuda has been in effect since 1999.
International lessors and financiers regularly require Russian-operated aircrafts in which they have an interest to be registered in Bermuda. Aircrafts operated by Russian airlines therefore often bear a Bermudian registration mark commencing with “VP-B” or “VQ-B” rather than the Russian registration mark commencing with “R”.
For lessors and financiers, registration of a Russian operated aircraft in Bermuda sits well with other transactional considerations, such as the inability under Russian local law to recognise and record certain preferred security.
Minor changes to the Russian-Bermuda Article 83 bis arrangement have been made since its coming into being: for example, in 2011 Russia’s air transport authority amended its procedure for assuming oversight responsibility of new aircraft types.
Similar Article 83 bis arrangements have proved to be popular with other states that offer transactional benefits. For instance, Ireland, where many fleets originate and are administered, effected numerous Article 83 bis bilateral agreements with Colombia, Italy, Mexico, Mongolia, Norway, the Russia and Spain.