The decision, made by Justice Alexander Oluseyi Owoeye on November 27, 2024, is the first of its kind since Nigeria signed the Cape Town Convention.
The EDC, as a creditor, had been exercising its contractual rights through the sale of the aircraft by JEM Leasing Limited.
According to ch-aviation, the court’s ruling was seen as a positive step by the EDC spokesperson, who noted that the organisation had been working to recover the aircraft.
“EDC has been exercising its contractual rights as a creditor through the sale of the aircraft by [former owner of the aircraft] JEM Leasing Limited and views the court ruling as a positive step,” an EDC spokesperson said.
However, the Economic and Financial Crimes Commission (EFCC) opposed the EDC, arguing that the sale of the aircraft to Alberta Aviation Capital in 2022 was invalid.
Despite this, Justice Owoeye found the transaction to be legal, paving the way for the aircraft’s export, Chi-Aviation reports.
The aircraft had been removed from the Nigerian register in 2022, but the EFCC had blocked an attempt to repossess it in June 2023.
The court’s decision highlighted the importance of complying with international conventions, such as the Cape Town Convention, which aims to standardize laws related to aircraft financing and leasing.
The court according to the report held that this was a violation of Cape Town Convention Article 14.
The applicants in the matter were Captain Samuel Caulcrick and Captain Isiaka Oyeshina Akinfenwa. Caulcrick was the local repossession agent appointed by part-out firm Merchant Express Cargo, who had the CRJ teardown contract. Akinfenwa is the CEO of Merchant Express Cargo. In previous court hearings, both men had criticised the tactics of the EFCC and Arik shareholder and founder Johnson Arumemi-Ikhide.
Among other things, Owoeye’s ruling found that EFCC officials had harassed, threatened, questioned, intimidated, detained, and threatened to detain the applicants who were attempting to repossess the aircraft. In addition to granting the EDC the right to repossess and teardown the aircraft, Owoeye also issued an order preventing EFCC officials from interfering with this process. The CRJ remains in storage at Lagos airport.
The 2013-built regional jet was leased to Arik Air in 2014 by JEM Leasing Limited. The EDC helped finance the aircraft’s acquisition and, consequently, held a mortgage over it. In December 2022, JEM moved to deregister and repossess the aircraft because Arik was in default. Around the same time, JEM entered into an agreement with Alberta Aviation Capital Corporation to sell the CRJ, with EDC retaining the mortgage.
Arik had stopped operating the aircraft in 2019.
According to the ch-aviation fleets module, the airline now has a fleet of 11 aircraft of which just two are active. Arik remains in receivership and under the control of Nigeria’s state-owned Asset Management Corporation of Nigeria (AMCON), which, as the airline’s largest creditor, took control of the ailing carrier in 2017.
Nigeria only signed the Cape Town Convention leasing practice direction in September and, until now, has had a relatively poor record of complying with leasing norms concerning the return of aircraft in disputes.
Aviation minister Festus Keyamo recently blamed that non-compliance record on legal impediments in Nigeria’s judicial process.
