Security Rights and Aircraft Liens in Finland

Lien Rights Under Finnish Law

The exact equivalent of a lien under Finnish law remains unclear. In Finland, the term is often used to describe security rights arising from retention rights, explicit statutory provisions, or hypothecation/pledge. For this article, a lien under Finnish law refers to a statutory right entitling a creditor to a preferred claim over the value of a specific object. This right is protected against title changes without requiring a declaration of intent from involved parties. Our air law specialists will guide you through every aspect of aircraft liens and aviation law.

Distinction Between Lien and Right of Retention

Theoretically, a lien and a right of retention differ. The latter allows a party to retain possession of an object as security for payment of claims related to that object. Similar to a lien, the right of retention remains unaffected by title changes and, under certain conditions, enables the sale of the retained property to meet the claim. This closely aligns with the legal effects of a lien.

Aircraft Liens in Finland

Definition of Aircraft and Registration Requirements

Under the Finnish Aviation Act (864/2014), an aircraft is defined as a device deriving lift from air reactions rather than ground or water surfaces. Aircraft with Finnish nationality must be registered in the Finnish Transport Register, managed by Traficom. Registration requirements include clear identification, even for aircraft under construction.

Priority Claims and Security Rights

The Aircraft Mortgage Act (211/1928) prioritizes claims, such as:

1. Claims secured by a creditor's right of retention.
   
2. Damage claims under the Aviation Act.
   

Such rights, while not matching the strict legal definition of a lien, produce similar legal effects and are treated as liens in this context.

Registration of Aircraft Liens

While Finland lacks a specific registration mechanism for aircraft liens, certain rights, like unpaid service charges, can be recorded in the Aircraft Register. Priority liens as defined in the Mortgages on Aircraft Act automatically outrank registered mortgages without requiring further registration.

Salvage Liens on Aircraft

The Aviation Act mandates search and rescue operations, with the state compensating participants for injury or damage under the Damages Act (412/1974). However, inconsistencies in legislative updates mean salvage costs no longer enjoy a lien under the current framework.

Contractual Liens and Hypothecation

Finnish law does not recognize contractual liens per se, but hypothecation provides a comparable security arrangement. Hypothecary rights are formalized through registered mortgages, which create valid security only when entered into the Aircraft Register with the owner's written consent.

Enforcement and Priority of Aircraft Liens

Priority Order of Claims

The Mortgages on Aircraft Act establishes the priority order:

1. Retention rights with accrued interest.
   
2. Damage claims under the Aviation Act.
   
3. Registered mortgages, ranked by filing order.
   

Enforcement Mechanisms

Retention rights can be enforced through public auction without court intervention. For damage liens or mortgages, a court judgment is required before selling the aircraft via public auction or voluntary sale. The proceeds are distributed based on statutory priorities.

Unpaid Airport Charges: Detention Rights

Airport operators can detain aircraft for unpaid fees but cannot sell them without a court order. While departure on scheduled international flights cannot be prevented for non-payment, detention serves as leverage for fee collection.

Contact aircraft lien specialist in Finland

Secure Expert Guidance on Finnish Aircraft Liens Today.

Navigating the complexities of aircraft liens in Finland requires precise legal knowledge. Our team offers tailored advice to safeguard your interests and optimize your legal strategy. 

Contact us today for expert support in aviation law!

Disclaimer: This article is for informational purposes only.