The mortgage therefore usually provides that the mortgagor shall indemnify the mortgagee should any such future parts be subject to any adverse interest of a third party. Such an indemnity is, in reality, of little financial value since recourse is often had to the security as a last resort, the mortgagor having insufficient other assets to meet its obligations. However, with the domestication of the Convention of the International Recognition of Rights in Aircraft (Geneva Convention) 1948 into Nigerian law, it will appear that where the law of a country permits the mortgage of spare parts of an aircraft, the right of the mortgagee to the mortgaged property shall not be extinguished even where the mortgaged spare part is replaced by similar parts. While there is no express provision in Nigerian law for the mortgage of future parts (including engines), in practice the Registrar of Aircraft will permit mortgages which include a term covering future parts to be lodged in the Registry of Aircraft alongside the Certificate of Registration and other particulars. REGITRATION OF AIRCRAFT MORTGAGES The NCAA is obligated to maintain a legal interest Aircraft register in which all mortgages in respect of an aircraft will be registered in order to constitute effective notice to third parties. RECOVERY OF POSSESSION BY THE MORTGAGEE In the event of default, the mortgagee may peacefully take possession of the aircraft and subsequently sell it provided it is a stipulated term in the mortgage or the mortgagor has otherwise agreed. Often, however, there are good practical reasons for the mortgagee to proceed by way of court order in the case where the mortgagor resists repossession rather than convey the property by way of a private sale. The following instances will suffice: (a) In the event of the wrongful taking of possession by the mortgagee, damages may be very high, especially those in relation to third parties such as lessees who may incur loss as a result of such seizure. (b) The taking of possession may involve the mortgagee in the civil offence of trespass (though this possibility is often catered for in the mortgage by a term that the mortgagor indemnifying the mortgagee for any liabilities incurred thereby).
The mortgage therefore usually provides that the mortgagor shall indemnify the mortgagee should any such future parts be subject to any adverse interest of a third party. Such an indemnity is, in reality, of little financial value since recourse is often had to the security as a last resort, the mortgagor having insufficient other assets to meet its obligations. However, with the domestication of the Convention of the International Recognition of Rights in Aircraft (Geneva Convention) 1948 into Nigerian law, it will appear that where the law of a country permits the mortgage of spare parts of an aircraft, the right of the mortgagee to the mortgaged property shall not be extinguished even where the mortgaged spare part is replaced by similar parts. While there is no express provision in Nigerian law for the mortgage of future parts (including engines), in practice the Registrar of Aircraft will permit mortgages which include a term covering future parts to be lodged in the Registry of Aircraft alongside the Certificate of Registration and other particulars. REGITRATION OF AIRCRAFT MORTGAGES The NCAA is obligated to maintain a legal interest Aircraft register in which all mortgages in respect of an aircraft will be registered in order to constitute effective notice to third parties. RECOVERY OF POSSESSION BY THE MORTGAGEE In the event of default, the mortgagee may peacefully take possession of the aircraft and subsequently sell it provided it is a stipulated term in the mortgage or the mortgagor has otherwise agreed. Often, however, there are good practical reasons for the mortgagee to proceed by way of court order in the case where the mortgagor resists repossession rather than convey the property by way of a private sale. The following instances will suffice: (a) In the event of the wrongful taking of possession by the mortgagee, damages may be very high, especially those in relation to third parties such as lessees who may incur loss as a result of such seizure. (b) The taking of possession may involve the mortgagee in the civil offence of trespass (though this possibility is often catered for in the mortgage by a term that the mortgagor indemnifying the mortgagee for any liabilities incurred thereby).
financing-of-roving-assets-ships-and-aircrafts.docx