A December 2012 ruling has effectively called into question the validity of engine leases in Denmark. Ruling in relation to the bankrupt regional airline Cimber Sterling, a judge in the District Court of Sønderborg ordered the trustees of the estate to return seven of the nine engines in question to the engine lessors. However, the two remaining engines, both GE CF34s valued at around USD 2 million each, were to be retained by the trustees as on the date of bankruptcy they had been affixed to the Bombardier CRJ200 aircraft for over three months.
Pending the outcome of appeals expected in this case, the ruling of the District Court has troubling implications for the engine leasing industry. If engines are to be viewed as belonging to the aircraft after three months despite being leased by a discrete owner under a separate lease agreement, engine lessors’ confidence in their ownership rights will inevitably be damaged.
The Cape Town Convention disapplies this “doctrine of accession” in jurisdictions where the Convention applies.